EXHIBIT 2.2
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PARENT COMPANY AGREEMENT
BY AND AMONG
ENTERPRISE PRODUCTS PARTNERS L.P.
ENTERPRISE PRODUCTS GP, LLC
ENTERPRISE PRODUCTS GTM, LLC
AND
SABINE RIVER INVESTORS I, L.L.C.
SABINE RIVER INVESTORS II, L.L.C.
EL PASO EPN INVESTMENTS, L.L.C.
EL PASO CORPORATION
GULFTERRA GP HOLDING COMPANY
DECEMBER 15, 2003
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS..........................................................................................2
Section 1.1 Definitions..................................................................................2
Section 1.2 Rules of Construction.......................................................................12
ARTICLE II PURCHASE AND SALE..................................................................................13
Section 2.1 Step One Closing............................................................................13
Section 2.2 Step Two Closing............................................................................14
ARTICLE III REPRESENTATIONS AND WARRANTIES....................................................................16
Section 3.1 Representations and Warranties of El Paso Parent and
El Paso GP Holdco Concerning the Transaction...............................................16
Section 3.2 Representations and Warranties of El Paso Parent and the Unitholders........................19
Section 3.3 Representations and Warranties of Enterprise Parties Concerning the Transaction.............21
Section 3.4 Representations and Warranties Concerning GulfTerra GP and GulfTerra MLP....................23
ARTICLE IV COVENANTS AND AGREEMENTS...........................................................................34
Section 4.1 Conduct of Business.........................................................................34
Section 4.2 Access to Information.......................................................................34
Section 4.3 Certain Filings.............................................................................34
Section 4.4 Debt Tender Offers and New Debt Offering....................................................35
Section 4.5 No Solicitation.............................................................................36
Section 4.6 GulfTerra Asset Separation..................................................................37
Section 4.7 Commercially Reasonable Efforts; Further Assurances.........................................37
Section 4.8 No Public Announcement......................................................................38
Section 4.9 Expenses....................................................................................38
Section 4.10 FIRPTA Certificate..........................................................................38
Section 4.11 Termination of G&A Services Agreement.......................................................38
Section 4.12 Agreement Not to Use Exchange Rights........................................................38
Section 4.13 Letter of GulfTerra MLP's Accountants.......................................................38
Section 4.14 Regulatory Issues...........................................................................39
Section 4.15 Transition Services.........................................................................40
Section 4.16 Covenants Regarding Unitholders.............................................................41
Section 4.17 Tax Matters.................................................................................41
Section 4.18 Allocation of Partnership Liabilities Among Partners........................................41
Section 4.19 El Paso Parent Payment......................................................................42
Section 4.20 GulfTerra Employees.........................................................................42
Section 4.21 GulfTerra Plans.............................................................................42
ARTICLE V REMEDIES FOR DEFAULT................................................................................43
Section 5.1 Indemnity Regarding Section 3.1 Representations and Selected Covenants......................43
Section 5.2 Indemnity Regarding Section 3.2 Representations and Selected Covenants......................43
Section 5.3 Indemnity Regarding Section 3.3 Representations and Selected Covenants......................43
(i)
Section 5.4 Indemnity Regarding Breach of Section 3.4 Representations and Selected Covenants............43
Section 5.5 Survival of Representations.................................................................44
Section 5.6 Enforcement of this Agreement...............................................................44
Section 5.7 Exclusive Remedy............................................................................44
Section 5.8 General Limitation of Damages...............................................................44
Section 5.9 No Waiver Relating to Claims for Fraud/Willful Misconduct...................................44
ARTICLE VI MISCELLANEOUS......................................................................................45
Section 6.1 Notices.....................................................................................45
Section 6.2 Governing Law; Jurisdiction; Waiver of Jury Trial...........................................46
Section 6.3 Entire Agreement; Amendments and Waivers....................................................46
Section 6.4 Binding Effect and Assignment...............................................................46
Section 6.5 Severability................................................................................47
Section 6.6 Execution...................................................................................47
Section 6.7 Disclosure Letters..........................................................................47
EXHIBITS
Exhibit 2.1(d)(i) Form of Legal Opinion from ▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP
Exhibit 2.1(d)(ii) Form of Legal Opinion from Akin Gump ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP
Exhibit 2.2(c) Form of Second Amended and Restated Limited Liability Company Agreement of Enterprise
Products GP, LLC
SCHEDULES
Schedule 1 GulfTerra MLP's Equity Interests
(ii)
PARENT COMPANY AGREEMENT
This
PARENT COMPANY AGREEMENT (this "Agreement"), dated as of December
15, 2003 (the "Execution Date"), 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").
WITNESSETH:
WHEREAS, El Paso Parent owns, directly or indirectly, 100% of the
outstanding equity interests in each of the El Paso Parent Parties; and
WHEREAS, El Paso GP Holdco owns 100% of the Class B Membership Interest
in GulfTerra Energy Company, L.L.C. ("GulfTerra GP"), and GulfTerra GP is the
sole general partner of, and owns 100% of the 1% general partner interest in,
GulfTerra Energy Partners, L.P. ("GulfTerra MLP"); and
WHEREAS, subject to the terms and conditions set forth herein, El Paso
GP Holdco desires to sell to Enterprise GTM, and Enterprise GTM desires to
purchase from El Paso GP Holdco, a Class C Membership Interest in GulfTerra GP
having a 50% Sharing Ratio; and
WHEREAS, El Paso GP Holdco is and, on the date hereof, El Paso GP
Holdco and Enterprise GTM will be, parties to that certain Second Amended and
Restated Limited Liability Company Agreement of GulfTerra Energy Company,
L.L.C., of even date herewith (the "Second Amended and Restated GulfTerra GP LLC
Agreement"); and
WHEREAS, pursuant to the Merger Agreement (the "Merger Agreement"), of
even date herewith, by and among (a) Enterprise MLP, Enterprise GP and
Enterprise Products Management LLC, a
Delaware limited liability company
("Enterprise Merger Sub"), and (b) GulfTerra MLP and GulfTerra GP, Enterprise
Merger Sub will, on the terms and conditions set forth in the Merger Agreement,
merge with and into GulfTerra MLP, with GulfTerra MLP surviving such merger; and
WHEREAS, the Conflicts and Audit Committee and the Board of Directors
of GulfTerra GP has approved and adopted the Merger Agreement and has
recommended that the holders of outstanding units of GulfTerra MLP vote "for"
approval and adoption of the Merger Agreement; and
WHEREAS, approval of the Merger Agreement by a majority of the holders
of the outstanding GulfTerra Common Units and GulfTerra Series C Units, each
voting separately as a class, is a condition to the consummation of the Merger;
and
WHEREAS, the Unitholders own (beneficially and of record) the number of
GulfTerra Units (as defined below) listed on Schedule 1 hereto; and
WHEREAS, the 10,937,500 GulfTerra Series C Units owned by El Paso Sub 3
constitute all of the units of that class issued and outstanding on the date
hereof; and
WHEREAS, as a condition to entering into the Merger Agreement,
Enterprise GP has required that the Unitholders agree, and the Unitholders have
so agreed, to enter into this Agreement and the GulfTerra Proxy (as defined
below); and
WHEREAS, subject to the terms and conditions hereof, the Unitholders
desire to sell, and Enterprise MLP desires to purchase, certain of the GulfTerra
Units owned by the Unitholders; and
WHEREAS, subject to the terms and conditions hereof, El Paso GP Holdco
and Enterprise GP desire to have El Paso GP Holdco contribute its remaining
membership interest with a 50% Sharing Ratio in GulfTerra GP to Enterprise GP in
exchange for a newly issued 50% membership interest in Enterprise GP; and
WHEREAS, Enterprise GP desires to contribute such remaining membership
interest having a 50% Sharing Ratio in GulfTerra GP to Enterprise MLP;
NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. In this Agreement, unless the context
otherwise requires, the following terms shall have the following meanings
respectively:
"affiliate" has the meaning set forth in Rule 405 of the rules and
regulations under the Securities Act, unless otherwise expressly stated herein.
"Agreement" has the meaning set forth in the Preamble.
"Business Day" means any day on which commercial banks are generally
open for business in New York, New York other than a Saturday, a Sunday or a day
observed as a holiday in New York, New York under the Laws of the State of New
York or the federal Laws of the United States of America.
"Class A Membership Interest" has the meaning set forth in the
GulfTerra GP LLC Agreement.
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"Class A Transaction Agreements" means the Transaction Agreements (as
defined in the Purchase and Sale Agreement by and between the El Paso Sub 1 and
Goldman, dated October 2, 2003).
"Class B Membership Interest" has the meaning set forth in the
GulfTerra GP LLC Agreement or, as applicable, the Second Amended and Restated
GulfTerra GP LLC Agreement.
"Class C Membership Interest" has the meaning set forth in the Second
Amended and Restated GulfTerra GP LLC Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" means that certain Confidentiality
Agreement dated April 4, 2002 between Enterprise Products Company, Enterprise
MLP, El Paso Parent and GulfTerra MLP.
"Continuing Employees" has the meaning set forth in Section 4.20.
"Damages" means claims, liabilities, damages, penalties, judgments,
assessments, losses, costs, expenses, including reasonable attorneys' fees and
expenses, incurred by the party seeking indemnification under this Agreement.
"
Delaware Courts" has the meaning set forth in Section 6.2.
"Designated Severance Plans" has the meaning set forth in Section
3.4(p)(i).
"Direct Costs" has the meaning set forth in Section 4.15(c).
"Effective Time" has the meaning assigned to such term in the Merger
Agreement.
"El Paso Disclosure Letter" means the disclosure letter for this
Agreement and the Merger Agreement dated the Execution Date.
"El Paso Field Services Entities" means El Paso Field Operations
Company, El Paso Field Services Holding Company, CFS Louisiana Midstream
Company, El Paso Dauphin Island Company, LLC and El Paso Gas Gathering &
Processing Company.
"El Paso GP Holdco" has the meaning set forth in the Preamble.
"El Paso Parent" has the meaning set forth in the Preamble.
"El Paso Parent Consent Decree" means the Decision and Order of the
Federal Trade Commission, Docket No. C-3996, issued to El Paso Parent on March
19, 2001.
"El Paso Parent Consent Decree Assets" means the assets owned by any of
the Enterprise Partnership Group Entities that were purchased pursuant to the El
Paso Parent Consent Decree.
"El Paso Parent Parties" has the meaning set forth in the Preamble.
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"El Paso Parties" means El Paso Parent and the El Paso Parent Parties.
"El Paso Plans" means all employee benefit plans (as defined in Section
3(3) of ERISA), all employment and severance agreements (or consulting
agreements with natural persons) and any employee compensation plan, including
any pension, retirement, profit sharing, stock or unit option, stock or unit
purchase, restricted stock or unit, bonus, health, life, disability or fringe
benefit plan sponsored or maintained by, participated in or contributed to by or
required to be contributed to by, El Paso Parent or any subsidiary of El Paso
Parent.
"El Paso Sub 1" has the meaning set forth in the Preamble.
"El Paso Sub 2" has the meaning set forth in the Preamble.
"El Paso Sub 3" has the meaning set forth in the Preamble.
"El Paso Unitholders' Meeting" has the meaning set forth in Section
4.3.
"Encumbrances" means pledges, restrictions on transfer, proxies and
voting or other agreements, liens, claims, charges, mortgages, security
interests or other legal or equitable encumbrances, limitations or restrictions
of any nature whatsoever.
"Enterprise Common Units" means the Common Units of Enterprise MLP
issued pursuant to the Enterprise Partnership Agreement.
"Enterprise Disclosure Letter" means the disclosure letter for this
Agreement and the Merger Agreement dated the Execution Date.
"Enterprise GP" has the meaning set forth in the Preamble.
"Enterprise GP Interests" has the meaning set forth in Section 2.2(c).
"Enterprise GP LLC Agreement" has the meaning set forth in Section
2.2(c).
"Enterprise GTM" has the meaning set forth in the Preamble.
"Enterprise Material Adverse Effect" means any change, effect, event or
occurrence with respect to the condition (financial or otherwise), properties,
assets, earnings, financial condition, liabilities, obligations (whether
absolute, accrued, conditional or otherwise), businesses, operations or results
of operations of the Enterprise Partnership Group Entities (taken as a whole),
that is, or could reasonably be expected to be material and adverse to the
Enterprise Partnership Group Entities (taken as a whole) or materially and
adversely affects the ability of the Enterprise Parties to consummate the
transactions contemplated by this Agreement and the Merger Agreement; provided,
however, that an Enterprise Material Adverse Effect shall not include any
change, effect, event or occurrence with respect to the condition (financial or
otherwise), properties, assets, earnings, financial condition, liabilities,
obligations (whether absolute, accrued, conditional or otherwise), businesses,
operations or results of operations of any Enterprise Partnership Group Entity
(or any Enterprise Partially Owned Entity) directly or indirectly arising out of
or attributable to (a) any decrease in the market price of Enterprise
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MLP's publicly traded securities (but not any change or effect underlying such
decrease to the extent such change or effect would otherwise constitute an
Enterprise Material Adverse Effect), (b) the general state of the industries in
which the Enterprise Partnership Group Entities and the Enterprise Partially
Owned Entities operate, (c) changes in general economic conditions (including
changes in commodity prices) that would have the same general effect on
companies engaged in the same lines of business as those conducted by the
Enterprise Partnership Group Entities and the Enterprise Partially Owned
Entities, or (d) the announcement or proposed consummation of this Agreement and
the Merger Transactions.
"Enterprise Merger Sub" has the meaning set forth in the Preamble.
"Enterprise MLP" has the meaning set forth in the Preamble.
"Enterprise Parent 1" means EPC Partners II, Inc., a
Delaware
corporation.
"Enterprise Parent 2" means ▇▇▇ ▇▇▇▇▇▇ LLC, a Texas limited liability
company.
"Enterprise Parties" has the meaning set forth in the Preamble.
"Enterprise Partnership Agreement" means that certain Third Amended and
Restated Limited Partnership Agreement of Enterprise Products Partners L.P.
dated as of May 15, 2002, as amended by that certain Amendment No. 1 dated as of
August 7, 2002, that certain Amendment No. 2 dated as of December 17, 2002, and
that certain Reorganization Agreement dated December 10, 2003, and as amended
from time to time after the Execution Date in accordance with the Merger
Agreement.
"Enterprise Partnership Group Entities" has the meaning set forth in
the Merger Agreement.
"Enterprise Unitholders" means the holders of Enterprise Common Units.
"Enterprise Unitholders' Meeting" means the meeting of the holders of
Enterprise Common Units to be called and held pursuant to the Merger Agreement
at which such holders will vote upon the issuance of Enterprise Common Units in
the Merger.
"Environmental Laws" means any and all applicable laws, statutes,
regulations, rules, orders, ordinances, and legally enforceable directives of
and agreements between a person that is subject to the applicable representation
and any Governmental Entity and rules of common law pertaining to protection of
human health (to the extent arising from exposure to Hazardous Substances) or
the environment (including any generation, use, storage, treatment, or Release
of Hazardous Substances into the environment) including the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601
et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et
seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq., the Federal Water
Pollution Control Act, 33 U.S.C. Section 1251 et seq., the Oil Pollution Act of
1990, 33 U.S.C. Section 2701 et seq., the Toxic Substances Control Act, 15
U.S.C. Section 2601 et seq., the Safe Drinking Water Act, 42 U.S.C. Section 300f
et seq., the Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq.,
the Atomic Energy Act, 42 U.S.C. Section 2014 et seq., the Federal Insecticide,
Fungicide, and Rodenticide Act, 7 U.S.C.
-5-
Section 136 et seq., and the Federal Hazardous Materials Transportation Law, 49
U.S.C. Section 5101 et seq., as each has been amended from time to time, and all
other environmental conservation and protection laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange and Registration Rights Agreement" means the Exchange and
Registration Rights Agreement dated as of October 2, 2003 among GulfTerra GP,
GulfTerra MLP and Goldman.
"Execution Date" has the meaning set forth in the Preamble.
"Existing GulfTerra Indebtedness" means the indebtedness of GulfTerra
MLP consisting of its 10 3/8% Senior Subordinated Notes due 2009, its 8 1/2%
Senior Subordinated Notes due 2010, its 6 1/4% Senior Notes due 2010, its 8 1/2%
Senior Subordinated Notes due 2011 and its 10 5/8% Senior Subordinated Notes due
2012, in each case as issued and outstanding on the Execution Date.
"▇▇▇▇▇▇▇▇" has the meaning set forth in Section 3.4(d)(v).
"GAAP" has the meaning set forth in Section 1.2.
"Gas Plant Purchase and Sale Agreement" means the Purchase and Sale
Agreement (Gas Plants), of even date herewith, by and between El Paso Parent, El
Paso Field Services Management, Inc., El Paso Transmission, L.L.C., El Paso
Field Service Holding Company and Enterprise Products Operating L.P.
"Global El Paso Entities" means El Paso Parent and all of its
subsidiaries and Partially Owned Entities.
"Goldman" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., a New York limited partnership.
"Goldman Agreement" has the meaning assigned to such term in Section
2.1(b).
"governing documents" means, with respect to any person, the
certificate or articles of incorporation, by-laws, articles of organization,
limited liability company agreement, partnership agreement, formation agreement,
joint venture agreement, unanimous shareholder agreement or declaration or other
similar governing documents of such person.
"Governmental Entity" means any (a) multinational, federal, provincial,
territorial, state, regional, municipal, local or other government, governmental
or public department, central bank, court, tribunal, arbitral body, commission,
board, bureau or agency, domestic or foreign, (b) subdivision, agent,
commission, board, or authority of any of the foregoing, or (c)
quasi-governmental or private body exercising any regulatory, expropriation or
taxing authority under, or for the account of, any of the foregoing.
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"GulfTerra Common Units" means the Series A Common Units issued
pursuant to the GulfTerra Partnership Agreement.
"GulfTerra Conflicts and Audit Committee" means the Conflicts and Audit
Committee of the Board of Directors of GulfTerra GP.
"GulfTerra Designated Account" means the account designated by
GulfTerra GP in writing to Enterprise GP on the day prior to the Step One
Closing Date and to which the Purchase Price will be wired.
"GulfTerra Disclosure Letter" means the disclosure letter for this
Agreement and the Merger Agreement dated the Execution Date.
"GulfTerra Easements" has the meaning set forth in Section 3.4(n)(iii).
"GulfTerra Environmental Permits" has the meaning set forth in Section
3.4(j).
"GulfTerra GP" has the meaning set forth in the Preamble.
"GulfTerra GP Financial Statements" has the meaning set forth in
Section 3.4(f)(iii).
"GulfTerra GP LLC Agreement" means that certain First Amended and
Restated Limited Liability Company Agreement of GulfTerra GP, dated as of
October 2, 2003.
"GulfTerra GP September 30, 2003 Balance Sheet" has the meaning set
forth in Section 3.4(f)(iii).
"GulfTerra Guaranty Agreement" has the meaning set forth in Section
2.1(e).
"GulfTerra Intellectual Property Rights" has the meaning set forth in
Section 3.4(m)(i).
"GulfTerra Material Adverse Effect" means any change, effect, event or
occurrence with respect to the condition (financial or otherwise), properties,
assets, earnings, financial condition, liabilities, obligations (whether
absolute, accrued, conditional or otherwise), businesses, operations or results
of operations of the GulfTerra Partnership Group Entities (taken as a whole),
that is, or could reasonably be expected to be, material and adverse to the
GulfTerra Partnership Group Entities (taken as a whole), material and averse to
GulfTerra GP or materially and adversely affects the ability of El Paso Parent,
El Paso GP Holdco, the Unitholders, or GulfTerra GP to consummate the
transactions contemplated hereby or on the ability of GulfTerra GP and GulfTerra
MLP to consummate the Merger Transactions; provided, however, that a GulfTerra
Material Adverse Effect shall not include any change, effect, event or
occurrence with respect to the condition (financial or otherwise), properties,
assets, earnings, financial condition, liabilities, obligations (whether
absolute, accrued, conditional or otherwise), businesses, operations or results
of operations of any GulfTerra Partnership Group Entity (or any GulfTerra
Partially Owned Entity) directly or indirectly arising out of or attributable to
(a) any decrease in the market price of GulfTerra MLP's publicly traded
securities (but not any change or effect underlying such decrease to the extent
such change or effect would otherwise constitute a GulfTerra Material Adverse
Effect), (b) the general state of the industries in which the GulfTerra
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Partnership Group Entities and the GulfTerra Partially Owned Entities operate,
(c) changes in general economic conditions (including changes in commodity
prices) that would have the same general effect on companies engaged in the same
lines of business as those conducted by the GulfTerra Partnership Group Entities
and the GulfTerra Partially Owned Entities, or (d) the announcement or proposed
consummation of this Agreement and the Merger Transactions.
"GulfTerra MLP" has the meaning set forth in the Preamble.
"GulfTerra MLP September 30, 2003 Balance Sheet" means the unaudited
condensed consolidated balance sheet of GulfTerra MLP as of September 30, 2003
included as part of the GulfTerra SEC Reports.
"GulfTerra Parties" means GulfTerra MLP and GulfTerra GP.
"GulfTerra Partnership Agreement" means that certain Second Amended and
Restated Agreement of Limited Partnership of GulfTerra MLP dated as of February
19, 1993, amended and restated effective as of August 31, 2000, as further
amended by amendments dated November 27, 2002, May 5, 2003, May 16, 2003, July
23, 2003 and August 21, 2003, as amended from time to time after Execution Date.
"GulfTerra Partnership Group Entities" has the meaning set forth in the
Merger Agreement.
"GulfTerra Permits" has the meaning set forth in Section 3.4(h)(ii).
"GulfTerra Pipeline Assets" has the meaning set forth in Section
3.4(n)(ii).
"GulfTerra Plan" means any employee benefit plan (as defined in Section
3(3) of ERISA), all employment and severance agreements (or consulting
agreements with natural persons) and any employee compensation plan, including
any pension, retirement, profit sharing, stock or unit option, stock or unit
purchase, restricted stock or unit, bonus, health, life, disability or fringe
benefit plan sponsored or maintained by, participated in or contributed to by or
required to be contributed to by any of the GulfTerra Partnership Group Entities
or, with respect to any GulfTerra Related Employees, by any of the GulfTerra
Parties or by any other entity required to be aggregated with a GulfTerra Party
pursuant to Section 414 of the Code.
"GulfTerra Proxy" means that certain Voting Agreement and Irrevocable
Proxy of even date herewith among the Unitholders and Enterprise MLP attached as
Annex I hereto.
"GulfTerra Reaffirmation" shall have the meaning set forth in the
Merger Agreement.
"GulfTerra Related Employees" means employees of El Paso Parent or an
affiliate of El Paso Parent that work primarily for the benefit of the GulfTerra
Partnership Group Entities.
"GulfTerra SEC Reports" has the meaning set forth in Section 3.4(f)(i).
"GulfTerra Series C Units" means the GulfTerra MLP securities issued as
"Series C Units" pursuant to the GulfTerra Partnership Agreement.
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"GulfTerra Series F Units" means those certain Series F Convertible
Units of GulfTerra MLP, more fully described in the Statement of Rights,
Privileges and Limitations of Series F Convertible Units of the GulfTerra MLP
dated May 16, 2003.
"GulfTerra Unitholders" means the holders of GulfTerra Common Units,
the holders of GulfTerra Series C Units and the holders of GulfTerra Series F
Units, collectively.
"GulfTerra Unitholders' Meeting" means the meeting of the holders of
GulfTerra Common Units to be called and held pursuant to the Merger Agreement at
which such holders will vote upon the adoption and approval of the Merger
Agreement.
"GulfTerra Units" means the GulfTerra Common Units, the GulfTerra
Series C Units and the GulfTerra Series F Units.
"Hazardous Substances" means any (a) chemical, product, substance,
waste, material, pollutant, or contaminant that is defined or listed as
hazardous or toxic or that is otherwise regulated under any Environmental Law;
(b) asbestos containing materials, whether in a friable or non-friable
condition, polychlorinated biphenyls, naturally occurring radioactive materials
or radon; and (c) any oil or gas exploration or production waste or any
petroleum, petroleum hydrocarbons, petroleum products or crude oil and any
components, fractions, or derivatives thereof.
"holders" means, when used with reference to the GulfTerra Common Units
and the GulfTerra Series C Units, the holders of such units shown from time to
time in the registers maintained by or on behalf of GulfTerra MLP, as
applicable.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Joint Proxy Statement/Prospectus" has the meaning set forth in Section
4.3.
"knowledge" means (a) with respect to El Paso Parties, the actual
knowledge of each person listed on Section 1.1(a) of the El Paso Disclosure
Letter, and (b) with respect to the Enterprise Parties, the actual knowledge of
the officers and directors of the Enterprise Parties.
"Laws" means all statutes, regulations, statutory rules, orders,
judgments, decrees and terms and conditions of any grant of approval,
permission, authority, permit or license of any court, Governmental Entity,
statutory body (including the NYSE) or self-regulatory authority, but does not
include Environmental Laws.
"Materiality Requirement" means any requirement in a representation or
warranty that a condition, event or state of fact be "material," correct or true
in "all material respects," have a "Material Adverse Effect" or be or not be
"reasonably expected to have a Material Adverse Effect" (or other words or
phrases of similar effect or impact) in order for such condition, event or state
of facts to cause such representation or warranty to be inaccurate.
"Merger" has the meaning set forth in the Merger Agreement.
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"Merger Agreement" has the meaning set forth in the Preamble.
"Merger Transactions" has the meaning set forth in the Merger
Agreement.
"Notice" has the meaning set forth in Section 6.1.
"NYSE" means the New York Stock Exchange.
"Open GulfTerra Position" has the meaning set forth in Section 3.4(u).
"Partially Owned Entity" means, with respect to a specified person, any
other person that is not a subsidiary of such specified person but in which such
specified person, directly or indirectly, owns 30% or more of the equity
interests thereof (whether voting or non-voting and including beneficial
interests).
"Permitted Encumbrances" means any liens, title defects, preferential
rights or other encumbrances upon any of the relevant person's property, assets
or revenues, whether now owned or hereafter acquired, that are (i) carriers',
warehousemens', mechanics', materialmen's, repairmen's or other like liens
arising in the ordinary course of business which are not overdue for a period of
more than 60 days or which are being contested in good faith by appropriate
proceeding, (ii) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements, (iii) for taxes not yet due or which are being contested in good
faith by appropriate proceedings (provided that adequate reserves with respect
thereto are maintained on the books of such person or its subsidiaries, as the
case may be, in conformity with GAAP), (iv) deposits to secure the performance
of bids, trade contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature incurred in the ordinary course of business, (v) easements,
rights-of-way, restrictions and other similar encumbrances incurred in the
ordinary course of business which, in the aggregate, are not substantial in
amount and which do not in any case materially detract from the value of the
property subject thereto or materially interfere with the ordinary conduct of
the business by such person and its subsidiaries and (vi) created pursuant to
construction, operating and maintenance agreements, space lease agreements and
other similar agreements, in each case having ordinary and customary terms and
entered into in the ordinary course of business by such person and its
subsidiaries.
"person" includes any individual, firm, partnership, joint venture,
venture capital fund, limited liability company, association, trust, estate,
group, body corporate, corporation, unincorporated association or organization,
Governmental Entity, syndicate or other entity, whether or not having legal
status.
"Possible Alternative" has the meaning set forth in Section 4.5(a).
"Prudent Industry Practices" has the meaning set forth in Section
4.15(d).
"PUHCA" means the Public Utility Holding Company Act of 1935, as
amended.
"Purchase Price" has the meaning set forth in Section 2.1(c).
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"Registration Statement" has the meaning set forth in the Merger
Agreement.
"Release" means any depositing, spilling, leaking, pumping, pouring,
placing, emitting, discarding, abandoning, emptying, discharging, migrating,
injecting, escaping, leaching, dumping, or disposing.
"Remaining Interest" has the meaning set forth in Section 2.2(c).
"Representative" has the meaning set forth in Section 4.5(a).
"Required Enterprise Divestiture" has the meaning set forth in Section
4.14.
"Required FS Divestiture" has the meaning set forth in Section 4.14.
"Required GulfTerra Divestiture" has the meaning set forth in Section
4.14.
"Required MLP Divestiture" has the meaning set forth in Section 4.14.
"Restricted Damages" has the meaning set forth in Section 5.4.
"SEC" means the United States Securities and Exchange Commission.
"Second Amended and Restated GulfTerra GP LLC Agreement" has the
meaning set forth in the Preamble.
"Securities Act" means the Securities Act of 1933, as amended.
"Service Standard" has the meaning set forth in Section 4.15(b).
"Sharing Ratio" has the meaning assigned to such term in the GulfTerra
GP LLC Agreement or the Second Amended and Restated GulfTerra GP LLC Agreement,
as applicable.
"Solvent" means, with respect to the applicable person on any date of
determination, that on such date (a) such applicable person's property, at a
fair valuation, exceeds the sum of such applicable person's debts, (b) the
present fair saleable value of the assets of such applicable person is not less
than the amount that will be required to pay its debts as they become absolute
and matured, (c) such applicable person does not intend to incur, or believes
that such applicable person has not incurred, debts that would be beyond such
applicable person's ability to pay as such debts matured, and (d) such
applicable person is not engaged in business or a transaction and does not
intend to engage in business or a transaction, for which such applicable
person's property remaining after such transaction would constitute unreasonably
small capital.
"Step One Closing" has the meaning set forth in Section 2.1(a).
"Step One Closing Date" has the meaning set forth in Section 2.1(a).
"Step Two Closing" has the meaning set forth in Section 2.2(a).
"Step Two Closing Date" has the meaning set forth in Section 2.2(a).
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"Subject Interest" has the meaning set forth in Section 2.1(c).
"subsidiary" means with respect to a specified person, any other person
(a) that is a subsidiary as defined in Rule 405 of the Rules and Regulations
under the Securities Act of such specified person and (b) of which such
specified person or another of its subsidiaries owns beneficially more than 50%
of the equity interests.
"Superior Transaction" has the meaning set forth in Section 4.5(b).
"Tax" or "Taxes" means any taxes, assessments, fees and other
governmental charges imposed by any Governmental Entity, including without
limitation income, profits, gross receipts, net proceeds, alternative or add-on
minimum, ad valorem, value added, turnover, sales, use, property, personal
property (tangible and intangible), environmental, stamp, leasing, lease, user,
excise, duty, franchise, capital stock, transfer, registration, license,
withholding, social security (or similar), unemployment, disability, payroll,
employment, fuel, excess profits, occupational, premium, windfall profit,
severance, estimated, or other charge of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Transaction Documents" means this Agreement, the Second Amended and
Restated GulfTerra GP LLC Agreement, the Merger Agreement, the GulfTerra
Guaranty Agreement and the officer's certificate of El Paso Parent attached as
Exhibit A, and the agreements, certificates and documents listed as Annex I to
such Exhibit A, to the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP delivered at the Step One
Closing in accordance with Section 2.1(d).
"Transaction Parties" means El Paso Parent, GulfTerra GP, GulfTerra
MLP, El Paso GP Holdco and the Unitholders.
"Transition Services" has the meaning set forth in Section 4.15(a).
"Unitholders" has the meaning set forth in the Preamble.
Section 1.2 Rules of Construction. The division of this Agreement into
articles, sections and other portions and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation hereof. Unless otherwise indicated, all references to an
"Article" or "Section" followed by a number or a letter refer to the specified
Article or Section of this Agreement. The terms "this Agreement," "hereof,"
"herein" and "hereunder" and similar expressions refer to this Agreement
(including the Disclosure Letters hereto) and not to any particular Article,
Section or other portion hereof. Unless otherwise specifically indicated or the
context otherwise requires, (a) all references to "dollars" or "$" mean United
States dollars, (b) words importing the singular shall include the plural and
vice versa and words importing any gender shall include all genders, (c)
"include," "includes" and "including" shall be deemed to be followed by the
words "without limitation," and (d) all words used as accounting terms shall
have the meanings assigned to them under United States generally accepted
accounting principles applied on a consistent basis during the periods involved
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("GAAP"). In the event that any date on which any action is required to be taken
hereunder by any of the parties hereto is not a Business Day, such action shall
be required to be taken on the next succeeding day that is a Business Day.
Reference to any party hereto is also a reference to such party's permitted
successors and assigns. The Exhibits attached to this Agreement are hereby
incorporated by reference into this Agreement and form part hereof. Unless
otherwise indicated, all references to an "Exhibit" followed by a number or a
letter refer to the specified Exhibit to this Agreement. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party
hereto by virtue of the authorship of any of the provisions of this Agreement.
ARTICLE II
PURCHASE AND SALE
Section 2.1 Step One Closing.
(a) Closing Date. The closing (the "Step One Closing") of the
transactions contemplated under this Section 2.1 shall be held at the offices of
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ on the
Execution Date. The "Step One Closing Date," as referred to herein, shall mean
the date of the Step One Closing.
(b) Transaction with Goldman. On the Step One Closing Date,
the following shall occur: (i) El Paso GP Holdco shall pay to Goldman the
consideration required to be paid to Goldman pursuant to Section 3.11(b) of the
GulfTerra GP LLC Agreement as a result of the Proposed Drag-Along Transfer (as
defined in the GulfTerra GP LLC Agreement), and (ii) Goldman shall convey its
Class A Membership Interest in GulfTerra GP to El Paso GP Holdco, and the Class
A Membership Interest in GulfTerra GP then owned by El Paso GP Holdco shall
automatically be converted into a Class B Membership Interest in GulfTerra GP
pursuant to the terms of the Second Amended and Restated GulfTerra GP LLC
Agreement. The transactions between El Paso GP Holdco and Goldman shall be
effected pursuant to that certain Transfer of Class A Membership Interest of
even date herewith among Goldman, El Paso Parent and El Paso GP Holdco (the
"Goldman Agreement").
(c) Purchase of Class C Membership Interest. On the Step One
Closing Date, after consummation of the transactions described in Section
2.1(b), El Paso GP Holdco shall convey to Enterprise GTM a portion of the Class
B Membership Interest in GulfTerra GP (such conveyance or assignment to be in a
form mutually acceptable to El Paso GP Holdco and Enterprise GTM), with such
portion having a Sharing Ratio (as defined in the Second Amended and Restated
GulfTerra GP LLC Agreement) of 50% (the "Subject Interest"), free and clear of
all Encumbrances (other than those set forth in the Second Amended and Restated
GulfTerra GP LLC Agreement), for an aggregate cash amount equal to $425,000,000
(the "Purchase Price"). Concurrently with such conveyance, (i) such portion of
the Class B Membership Interest of GulfTerra GP shall automatically be converted
into the Class C Membership Interest pursuant to the terms of the Second Amended
and Restated GulfTerra GP LLC Agreement, (ii) Enterprise GTM shall be admitted
as a Member (as defined in the Second Amended and Restated GulfTerra GP LLC
Agreement) in GulfTerra GP, and (iii) El Paso GP Holdco and Enterprise GTM shall
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execute and deliver a counterpart of the Second Amended and Restated GulfTerra
GP LLC Agreement. Enterprise GTM shall pay the Purchase Price by wire transfer
in immediately available funds to the GulfTerra Designated Account.
(d) El Paso GP Holdco Non-Contravention Opinions. On the Step
One Closing Date, Enterprise GTM shall receive (i) a legal opinion from ▇▇▇▇▇▇▇
▇▇▇▇▇ LLP, counsel to El Paso GP Holdco, substantially in the form of Exhibit
2.1(d)(i) and (ii) a legal opinion from Akin Gump ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP,
counsel to GulfTerra MLP, substantially in the form of Exhibit 2.1(d)(ii).
(e) Guaranties. On the Step One Closing Date, each of El Paso
Parent and Enterprise MLP shall execute and deliver a guaranty of the
obligations of El Paso GP Holdco (the guaranty of the obligations of El Paso GP
Holdco being referred to herein as the "GulfTerra Guaranty Agreement") and
Enterprise GTM, respectively, under the Second Amended and Restated GulfTerra GP
LLC Agreement, in a form reasonably acceptable to each of El Paso Parent and
Enterprise MLP.
Section 2.2 Step Two Closing.
(a) Closing Date. The closing of the transactions contemplated
by this Section 2.2 (the "Step Two Closing") shall take place at the offices of
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, on the
date of the Merger, but immediately prior to the consummation of the Merger
(such date the "Step Two Closing Date").
(b) Conditions to Closing.
(i) The obligation of the El Paso Parties to proceed
with the Step Two Closing is subject to the satisfaction on or prior to the
Closing Date of all of the following conditions, any one or more of which may be
waived in writing, in whole or in part:
(A) All of the conditions of the GulfTerra
Parties (as defined in the Merger Agreement) to the consummation of the Merger
(other than completing the transactions referred to in this Section 2.2), and
the 20 Business Day requirement contained in Section 2.1(a) of the Merger
Agreement, shall have been satisfied or waived; and
(B) Enterprise Products Operating L.P. shall
not have breached its obligation to close the acquisition contemplated by the
Gas Plant Purchase and Sale Agreement.
(C) The representations and warranties of
the Enterprise Parties set forth in Section 3.3 (without regard to Materiality
Requirements therein) shall be correct as of the Second Closing Date, as if
remade on such date (except for representations and warranties made as of a
specific date, which shall be correct as of such specific date), and each of the
Enterprise Parties shall have performed all of the obligations of such party
hereunder (without regard to Materiality Requirements therein) except where the
failure of such representations and warranties to be correct and the failure of
such obligations to be performed could not, in the aggregate, reasonably be
expected to result in (A) an adverse effect on the Enterprise Parties involving
$100,000,000 or more or (B) an Enterprise Material Adverse Effect and (ii)
GulfTerra
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MLP shall have received a certificate, dated as of the Closing Date, of an
executive officer of Enterprise GP certifying to the matters set forth in this
Section 2.2(b)(i)(C).
(ii) The obligation of the Enterprise Parties to
proceed with the Step Two Closing is subject to the satisfaction on or prior to
the Closing Date of all of the following conditions, any one or more of which
may be waived in writing, in whole or in part:
(A) All of the conditions of the Enterprise
Parties (as defined in the Merger Agreement) to the consummation of the Merger
(other than completing the transactions referred to in this Section 2.2), and
the 20 Business Day requirement contained in Section 2.1(a) of the Merger
Agreement, shall have been satisfied or waived; and
(B) Neither El Paso Parent nor any of its
affiliates shall have breached its obligation to close the sale contemplated by
the Gas Plant Purchase and Sale Agreement.
(C) The representations and warranties of
the El Paso Parties set forth in Sections 3.1, 3.2 and 3.4 (without regard to
Materiality Requirements therein) other than those set forth in Section
3.4(g)(ii) shall be correct as of the Second Closing Date, as if remade on such
date (except for representations and warranties made as of a specific date,
which shall be correct as of such specific date), and each of the El Paso
Parties shall have performed all of the obligations of such party hereunder
(without regard to Materiality Requirements therein) except where the failure of
such representations and warranties to be correct and the failure of such
obligations to be performed could not, in the aggregate, reasonably be expected
to result in (A) an adverse effect on the GulfTerra Parties involving
$100,000,000 or more or (B) a GulfTerra Material Adverse Effect and (ii)
Enterprise MLP shall have received a certificate, dated as of the Closing Date,
of an executive officer of GulfTerra GP certifying to the matters set forth in
this Section 2.2(b)(ii)(C).
(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 the issuance by Enterprise GP to El Paso GP Holdco of a member
interest constituting 50% 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 (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), and
(ii) 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
thereunder.
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(d) Purchase and Sale of GulfTerra Units. On the Step Two
Closing Date and prior to the consummation of the Merger, (i) El Paso Sub 3
shall, and El Paso Parent shall cause El Paso Sub 3 to, sell to Enterprise MLP,
and Enterprise MLP shall purchase from El Paso Sub 3, 10,937,500 GulfTerra
Series C Units, and (ii) El Paso Sub 1 and/or El Paso Sub 2 shall, and El Paso
Parent shall cause El Paso Sub 1 and/or El Paso Sub 2 to, sell to Enterprise
MLP, and Enterprise MLP shall purchase from El Paso Sub 1 and/or El Paso Sub 2,
a total of 2,876,620 Common Units, respectively for a total purchase price of
$500 million.
(e) Deliveries at Step Two Closing. At the Step Two Closing:
(i) El Paso GP Holdco shall execute and deliver to
Enterprise GP an assignment agreement, in form and substance mutually
satisfactory to El Paso GP Holdco and Enterprise GP, pursuant to which El Paso
GP Holdco contributes the Remaining Interests to Enterprise GP free and clear of
any Encumbrance (other than restrictions on transfer under the GulfTerra GP LLC
Agreement or applicable securities Laws);
(ii) Enterprise GP will issue to El Paso GP Holdco
the Enterprise GP Interests, which interests will be validly issued, fully paid
and non-assessable and will be free and clear of any Encumbrance (other than
restrictions on transfer under the Enterprise GP LLC Agreement or applicable
securities Laws);
(iii) El Paso Sub 3 shall sell, transfer and convey
to Enterprise MLP 10,937,500 GulfTerra Series C Units, and El Paso Sub 1 and/or
El Paso Sub 2, shall sell, transfer and convey to Enterprise MLP 2,876,620
GulfTerra Common Units, in each case, free and clear of any Encumbrance (other
than restrictions on transfer arising under (A) the agreement of limited
partnership of GulfTerra MLP as in effect immediately prior to the Step Two
Closing and (B) applicable securities Laws) and, in each case, pursuant to an
assignment, in form mutually satisfactory to the applicable Unitholder and
Enterprise MLP; and
(iv) Enterprise MLP shall pay, or cause to be paid,
to El Paso Sub 3 $395,881,171.00 and to El Paso Sub 1 and/or El Paso Sub 2 a
total of $104,118,829.00, such payments to be made by wire transfer of
immediately available funds to the accounts specified to Enterprise MLP in
writing by each of El Paso Sub 3, and El Paso Sub 1 and (if applicable) El Paso
Sub 2 not less than two Business Days prior to the Step Two Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of El Paso Parent and El
Paso GP Holdco Concerning the Transaction. Each of El Paso Parent and El Paso GP
Holdco, jointly and severally, represents and warrants to the Enterprise Parties
that:
(a) Formation and Standing. Each of El Paso GP Holdco and El
Paso Parent has been duly formed and is validly existing under the Laws of its
jurisdiction of organization or formation with full legal or corporate power and
authority to own, lease and operate its properties and to conduct its businesses
as currently owned and conducted except where, individually or in the aggregate,
the failure to be so organized, formed or existing or to have such power or
authority could not reasonably be expected to have a material adverse effect on
the
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ability of El Paso GP Holdco to close the transactions contemplated under this
Agreement. Each of El Paso GP Holdco and El Paso Parent is duly qualified to do
business in each jurisdiction in which the nature of the business conducted by
it or the ownership or leasing of its properties requires it to so qualify,
except where, individually or in the aggregate, the failure to be so qualified
could not reasonably be expected to have a material adverse effect on the
ability of El Paso Parent or El Paso GP Holdco to close the transactions
contemplated under this Agreement.
(b) Authority and No Conflicts. (i) Each of El Paso Parent and
El Paso GP Holdco has all requisite corporate or limited liability company power
and authority to enter into this Agreement and to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by each of El Paso Parent and El Paso GP Holdco
and the consummation by each of El Paso Parent and El Paso GP Holdco of the
transactions contemplated by this Agreement have been duly and validly
authorized by all necessary limited liability company action on the part of El
Paso GP Holdco and corporate action on the part of El Paso Parent and no other
limited liability company or corporate proceedings on the part of El Paso GP
Holdco or El Paso Parent are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby.
(i) This Agreement has been duly executed and
delivered by each of El Paso GP Holdco and El Paso Parent and constitutes its
legal, valid and binding obligation, enforceable against it in accordance with
its terms, except as the same may be limited by bankruptcy, insolvency and other
applicable Laws affecting creditors' rights generally, and by general principles
of equity.
(ii) Neither the execution and delivery of this
Agreement by El Paso Parent or El Paso GP Holdco nor the performance by El Paso
Parent or El Paso GP Holdco of its obligations hereunder and the completion of
the transactions contemplated hereby, will:
(A) conflict with, or violate any provision
of, the governing documents of El Paso GP Holdco or El Paso Parent;
(B) other than (I) satisfying applicable
requirements of the El Paso Parent Consent Decree and the HSR Act and (II)
obtaining or making, as applicable, any other consents, approvals, orders,
authorizations, registrations, declarations or filings which, if not obtained or
made, could not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the ability of El Paso Parent or El Paso GP
Holdco to close the transactions contemplated under this Agreement, violate or
breach any Laws applicable to El Paso GP Holdco or El Paso Parent;
(C) other than obtaining or making, as
applicable, any other consents, approvals, orders, authorizations,
registrations, declarations or filings which, if not obtained or made, could
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of El Paso GP Holdco or El Paso Parent to close
the transactions contemplated under this Agreement, violate or conflict with or
result in the breach of, or constitute a default (or an event that with the
giving of notice, the passage of time, or both would constitute a default)
under, or entitle any party (with the giving of notice, the passage of time or
both) to terminate, accelerate, modify or call any obligations or rights under
any credit
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agreement, note, bond, mortgage, indenture, deed of trust, contract, agreement,
lease, license, franchise, permit, concession, easement or other instrument to
which El Paso GP Holdco or El Paso Parent is a party or by which El Paso GP
Holdco, on the one hand, or El Paso Parent or any of its subsidiaries, on the
other hand, or their respective properties are bound or subject; or
(D) other than pursuant to the HSR Act and
except as could not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the ability of El Paso GP Holdco or El Paso
Parent to close the transactions contemplated under this Agreement, result in
the imposition of any Encumbrance upon or require the sale or give any person
the right to acquire any of the assets of El Paso GP Holdco or El Paso Parent or
restrict, hinder, impair or limit the ability of El Paso GP Holdco or El Paso
Parent to carry on its business as and where it is now being carried on.
(c) Subject Interest and Remaining Interest. El Paso GP Holdco
owns the Class B Membership Interest, a portion of which constitutes the Subject
Interest and a portion of which will constitute a portion of the Remaining
Interest. The Subject Interest has been, and at the time of the Step Two Closing
the Remaining Interest will be, duly authorized, validly issued, fully paid (to
the extent required under the GulfTerra GP LLC Agreement) and non-assessable
(except as set forth in the GulfTerra GP LLC Agreement and to the extent such
non-assessability may be affected by the Delaware Limited Liability Company
Act). Except to the extent created under the federal and state securities Laws,
the Delaware LLC Act, the Class A Transaction Agreements and for restrictions
arising under the Second Amended and Restated GulfTerra GP LLC Agreement, the
Subject Interest is, and at the time of the Step Two Closing the Remaining
Interest will be, held of record by the El Paso GP Holdco, free and clear of
Encumbrances.
(d) No Defaults. Neither El Paso GP Holdco nor El Paso Parent
is in default under or violation of, and there has been no event, condition or
occurrence which, after notice or lapse of time or both, would constitute such a
default or violation of, or permit the termination of, any term, condition or
provision of (i) their respective governing documents, (ii) any credit
agreement, note, bond, mortgage, indenture, contract, agreement, lease, license,
franchise, permit, concession, easement or other instrument to which El Paso GP
Holdco or El Paso Parent is a party or by which El Paso GP Holdco or El Paso
Parent or any of their respective property is bound or subject, except, in the
case of clause (ii), defaults, violations and terminations which, individually
or in the aggregate, could not reasonably be expected to have a material adverse
effect on the ability of El Paso GP Holdco or El Paso Parent to close the
transactions contemplated under this Agreement.
(e) Drag Notice. El Paso GP Holdco has given Goldman the
notice required pursuant to Section 3.11(b) of the GulfTerra GP LLC Agreement
and all notice time periods under Section 3.11(b) of the GulfTerra GP LLC
Agreement have either expired or been waived by Goldman.
(f) Solvency. El Paso Parent, El Paso GP Holdco and GulfTerra
GP are, and immediately after giving effect to the transactions contemplated by
this Agreement will be, Solvent.
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(g) Brokerage and Finder's Fee. Except for Credit Suisse First
Boston Corporation (the fees of which are payable by El Paso Parent) none of El
Paso Parent, GulfTerra GP, El Paso GP Holdco, any of their affiliates, nor any
shareholder, director, officer or employee thereof, has incurred or will incur
on behalf of El Paso Parent, GulfTerra GP, El Paso GP Holdco or any affiliate
thereof any brokerage, finders' or similar fee in connection with the
transactions contemplated by this Agreement.
(h) No Conflicts. Except as set forth in Section 3.2(d)(iii)
of the GulfTerra Disclosure Letter, neither the execution and delivery of any of
the Transaction Documents by any of the Transaction Parties nor the performance
by any of the Transaction Parties of their obligations under the Transaction
Documents, including the completion of the transactions contemplated by the
Merger Agreement, will violate or conflict with or result in the breach of, or
constitute a default (or an event that with the giving of notice, the passage of
time, or both, would constitute a default) under, or entitle any person (with
the giving of notice, the passage of time, or both) to terminate, accelerate,
modify, or call any obligations or rights under any credit agreement, note,
bond, mortgage, indenture, deed of trust, contract, agreement, lease, license,
franchise, permit, concession, easement, or other instrument to which any of the
Global El Paso Entities is a party, or by or to which any of the Global El Paso
Entities or their properties are bound or subject.
Section 3.2 Representations and Warranties of El Paso Parent and the
Unitholders. Each of El Paso Parent and each Unitholder, jointly and severally,
represents and warrants to the Enterprise Parties that:
(a) Ownership, Etc. of Units. Each Unitholder is the record or
beneficial owner of the equity interests listed across from the name of such
Unitholder on Schedule 1 hereto. Such equity interests are the only equity
interests of the GulfTerra MLP that are owned (either beneficially or of record)
by such Unitholder. Such Unitholder holds such equity interests free and clear
of all Encumbrances other than (i) Encumbrances existing under that certain
Security and Intercreditor Agreement, dated as of April 16, 2003, among El Paso
Parent, the Persons referred to therein as Pipeline Company Borrowers, the
Persons referred to therein as Grantors, each of the Representative Agents, and
JPMorgan Chase Bank, as Credit Agreement Administrative Agent and as Collateral
Agent, Intercreditor Agent and Depository Bank, which shall be released at or
prior to the Step Two Closing and (ii) the obligations of El Paso Parent under
the Goldman Agreement to deliver Common Units to Goldman that are held by El
Paso Sub 1 in accordance with and subject to the terms and conditions of that
agreement. Such Unitholder does not have any commitments to acquire any other
equity interests of the Acquirer.
(b) Authority. Each of the Unitholders has all requisite
limited liability company power and authority to enter into this Agreement and
the GulfTerra Proxy and to perform its obligations hereunder and to consummate
the transactions contemplated by this Agreement and the GulfTerra Proxy. The
execution and delivery of this Agreement and the GulfTerra Proxy by the
Unitholders and the consummation by the Unitholders of the transactions
contemplated by this Agreement and the GulfTerra Proxy have been duly and
validly authorized by all necessary limited liability company action and no
other limited liability company proceedings on the part of any of the
Unitholders are necessary to authorize this Agreement or the GulfTerra Proxy or
to consummate the transactions contemplated hereby or thereby.
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(c) Execution and Delivery. This Agreement and the GulfTerra
Proxy have been duly executed and delivered by each of the Unitholders and
constitute their respective legal, valid and binding obligation, enforceable
against it in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency and other applicable Laws affecting creditors' rights
generally, and by general principles of equity.
(d) Non-Contravention. Neither the execution and delivery of
this Agreement or the GulfTerra Proxy by any of the Unitholders nor the
performance by any of them of their obligations hereunder or thereunder and the
completion of the transactions contemplated hereby or thereby will:
(i) conflict with, or violate any provision of, the
governing documents of the Unitholders;
(ii) other than (A) satisfying applicable
requirements of the HSR Act, (B) any filing or filings required or approvals
necessary pursuant to any state securities or "blue sky" Laws and (B) obtaining
or making, as applicable, any other consents, approvals, orders, authorizations,
registrations, declarations or filings which, if not obtained or made, could
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of the Unitholders to consummate the transactions
contemplated by this Agreement or the GulfTerra Proxy, violate or breach any
applicable Laws;
(iii) other than obtaining or making, as applicable,
any other consents, approvals, orders, authorizations, registrations,
declarations or filings which, if not obtained or made, could not, individually
or in the aggregate, reasonably be expected to have a material adverse effect on
the ability of the Unitholders to consummate the transactions contemplated by
this Agreement or the GulfTerra Proxy, violate or conflict with or result in the
breach of, or constitute a default (or an event that with the giving of notice,
the passage of time, or both would constitute a default) under, or entitle any
party (with the giving of notice, the passage of time or both) to terminate,
accelerate, modify or call any obligations or rights under any credit agreement,
note, bond, mortgage, indenture, deed of trust, contract, agreement, lease,
license, franchise, permit, concession, easement or other instrument to which
any of the Unitholders is a party or by which any of the Unitholders or their
property is bound or subject; or
(iv) other than pursuant to the HSR Act and except as
could not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the ability of the Unitholders to consummate the
transactions contemplated by this Agreement or the GulfTerra Proxy, result in
the imposition of any Encumbrance upon or require the sale or give any person
the right to acquire any of the assets of any of the Unitholders, other than the
transactions contemplated by this Agreement, or restrict, hinder, impair or
limit the ability of any of the Unitholders to carry on their businesses as and
where they are now being carried on.
(e) No Defaults. None of the Unitholders is in default under
or violation of, and there has been no event, condition or occurrence which,
after notice or lapse of time or both, would constitute such a default or
violation of, or permit the termination of, any term, condition or provision of
(i) their respective governing documents, (ii) any credit agreement, note, bond,
mortgage, indenture, contract, agreement, lease, license, franchise, permit,
concession, easement
-20-
or other instrument to which any of the Unitholders is a party or by which any
of the Unitholders or any of their property is bound or subject, except, in the
case of clause (ii), defaults, violations and terminations which, individually
or in the aggregate, could not reasonably be expected to have a material adverse
effect on the ability of the Unitholders to consummate the transactions
contemplated by this Agreement or the GulfTerra Proxy.
Section 3.3 Representations and Warranties of Enterprise Parties
Concerning the Transaction. Each of Enterprise GP, Enterprise GTM and Enterprise
MLP, jointly and severally, represents and warrants to El Paso GP Holdco and the
Unitholders that:
(a) Organization and Standing. Each of Enterprise GP,
Enterprise GTM and Enterprise MLP has been duly organized and is validly
existing under the Laws of its jurisdiction of organization with full legal
power and authority to own, lease and operate its properties and to conduct its
businesses as currently owned and conducted except where, individually or in the
aggregate, the failure of to be so organized or existing or to have such power
or authority could not reasonably be expected to have an Enterprise Material
Adverse Effect. Each of Enterprise GP, Enterprise GTM and Enterprise MLP is duly
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the ownership or leasing of its properties requires
it to so qualify, except where, individually or in the aggregate, the failure to
be so qualified could not reasonably be expected to have an Enterprise Material
Adverse Effect.
(b) Authority and No Conflicts.
(i) Each of Enterprise GP and Enterprise MLP has all
requisite limited liability company or partnership power and authority to enter
into this Agreement and to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by Enterprise GP, Enterprise GTM and Enterprise MLP and the
consummation thereby of the transactions contemplated by this Agreement have
been duly and validly authorized by all necessary limited liability company or
partnership action and no other proceedings on the part of Enterprise GP,
Enterprise GTM or Enterprise MLP are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby.
(ii) This Agreement has been duly executed and
delivered by Enterprise GP, Enterprise GTM and Enterprise MLP and constitutes
its legal, valid and binding obligation, enforceable against it in accordance
with its terms, except as the same may be limited by bankruptcy, insolvency and
other applicable Laws affecting creditors' rights generally, and by general
principles of equity.
(iii) Neither the execution and delivery of this
Agreement by Enterprise GP, Enterprise GTM or Enterprise MLP nor the performance
by Enterprise GP, Enterprise GTM or Enterprise MLP of its obligations hereunder
and the completion of the transactions contemplated hereby, will:
(A) conflict with, or violate any provision
of, the governing documents of Enterprise GP, Enterprise GTM or Enterprise MLP;
(B) other than satisfying applicable
requirements of the HSR Act and obtaining or making, as applicable, any other
consents, approvals, orders, authorizations,
-21-
registrations, declarations or filings which, if not obtained or made, could
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of Enterprise GP, Enterprise GTM or Enterprise MLP
to close the transactions contemplated under this Agreement, violate or breach
any Laws applicable to Enterprise GP, Enterprise GTM or Enterprise MLP;
(C) except as set forth in Section
3.3(b)(iii)(C) of the Enterprise Disclosure Letter and other than obtaining or
making, as applicable, any other consents, approvals, orders, authorizations,
registrations, declarations or filings which, if not obtained or made, could
not, individually or in the aggregate, reasonably be expected to have an
Enterprise Material Adverse Effect, violate or conflict with or result in the
breach of, or constitute a default (or an event that with the giving of notice,
the passage of time, or both would constitute a default) under, or entitle any
party (with the giving of notice, the passage of time or both) to terminate,
accelerate, modify or call any obligations or rights under any credit agreement,
note, bond, mortgage, indenture, deed of trust, contract, agreement, lease,
license, franchise, permit, concession, easement or other instrument to which
Enterprise GP, Enterprise GTM or Enterprise MLP is a party or by which
Enterprise GP, Enterprise GTM or Enterprise MLP or its property is bound or
subject; or
(D) other than pursuant to the HSR Act and
except as could not, individually or in the aggregate, reasonably be expected to
have an Enterprise Material Adverse Effect, result in the imposition of any
Encumbrance upon or require the sale or give any person the right to acquire any
of the assets of Enterprise GP, Enterprise GTM or Enterprise MLP or restrict,
hinder, impair or limit the ability of Enterprise GP, Enterprise GTM or
Enterprise MLP to carry on its business as and where it is now being carried on.
(c) No Defaults. None of Enterprise GP, Enterprise GTM or
Enterprise MLP is in default under or violation of, and there has been no event,
condition or occurrence which, after notice or lapse of time or both, would
constitute such a default or violation of, or permit the termination of, any
term, condition or provision of (i) its governing documents, (ii) any credit
agreement, note, bond, mortgage, indenture, contract, agreement, lease, license,
franchise, permit, concession, easement or other instrument to which Enterprise
GP, Enterprise GTM or Enterprise MLP is a party or by which Enterprise GP,
Enterprise GTM or Enterprise MLP any of its property is bound or subject,
except, in the case of clause (ii), defaults, violations and terminations which,
individually or in the aggregate, could not reasonably be expected to have an
Enterprise Material Adverse Effect.
(d) Brokerage and Finder's Fee. Except for Enterprise OLP's
obligations to ▇▇▇▇▇▇ Brothers Inc. set forth in the engagement letter dated
January 23, 2003 from ▇▇▇▇▇▇ Brothers Inc. to Enterprise MLP (a correct and
complete copy of which has been delivered to GulfTerra MLP), none of Enterprise
GP, Enterprise GTM, Enterprise MLP, its affiliates nor any shareholder,
director, officer or employee thereof, has incurred or will incur on behalf of
any of Enterprise GP, Enterprise GTM, Enterprise MLP, its affiliates, any
brokerage, finders' or similar fee in connection with the transactions
contemplated by this Agreement.
(e) Independent Investigation. Each of Enterprise GP,
Enterprise GTM and Enterprise MLP has conducted its own independent
investigation, review and analysis of the
-22-
business, operations, assets, liabilities, results of operations, financial
condition and prospects of GulfTerra GP and each of the members of the GulfTerra
Partnership Group Entities, both individually and on a consolidated basis, which
investigation, review and analysis was done by Enterprise GP, Enterprise GTM or
Enterprise MLP, as the case may be, and its respective affiliates and, to the
extent Enterprise GP, Enterprise GTM or Enterprise MLP deemed necessary or
appropriate, by its representatives (it being understood that Enterprise GP,
Enterprise GTM and Enterprise MLP are relying on the representations,
warranties, covenants and conditions in this Agreement).
(f) Investment Intent; Investment Experience; Restricted
Securities. In acquiring the Remaining Interest and the Subject Interest, none
of Enterprise GP, Enterprise GTM or Enterprise MLP is offering or selling, and
shall not offer or sell the Remaining Interest or the Subject Interest, for El
Paso GP Holdco in connection with any distribution of any of such Remaining
Interest or Subject Interest, and none of Enterprise GP, Enterprise GTM or
Enterprise MLP has 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. Each of Enterprise GP,
Enterprise GTM and Enterprise MLP acknowledges that it is able to fend for
itself, can bear the economic risk of its investment in the Remaining Interest
and the Subject Interest, respectively, 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 all of such Remaining Interest or Subject Interest, as
applicable. Enterprise GP, Enterprise GTM and Enterprise MLP are "accredited
investors" as such term is defined in Regulation D under the Securities Act.
Each of Enterprise GP, Enterprise GTM and Enterprise MLP understands that none
of the Remaining Interest or the Subject Interest shall have been registered
pursuant to the Securities Act or any applicable state securities laws, that all
of such Remaining Interest or Subject Interest shall be characterized as
"restricted securities" under federal securities laws and that under such laws
and applicable regulations none of such Remaining Interest or Subject Interest
can be sold or otherwise disposed of without registration under the Securities
Act or an exemption therefrom.
(g) Status. Enterprise MLP is not an employee benefit plan or
other organization exempt from taxation pursuant to Section 501(a) of the Code,
a non-resident alien, a foreign corporation or other foreign Person, or a
regulated investment company within the meaning of Section 851 of the Code.
Section 3.4 Representations and Warranties Concerning GulfTerra GP and
GulfTerra MLP. El Paso GP Holdco hereby represents and warrants to Enterprise
GP, Enterprise GTM and Enterprise MLP that:
(a) Organization and Standing. Each of the GulfTerra
Partnership Group Entities has been duly organized or formed and is validly
existing under the Laws of its jurisdiction of organization or formation with
full corporate or legal power and authority to own, lease and operate its
properties and to conduct its businesses as currently owned and conducted except
where, individually or in the aggregate, the failure of a GulfTerra Partnership
Group Entity to be so organized, formed or existing or to have such power or
authority could not reasonably be expected to have a GulfTerra Material Adverse
Effect. Each of the GulfTerra Partnership Group Entities is duly qualified to do
business in each jurisdiction in which the nature of the business conducted by
it or the ownership or leasing of its properties requires it to
-23-
so qualify, except where, individually or in the aggregate, the failure to be so
qualified could not reasonably be expected to have a GulfTerra Material Adverse
Effect. GulfTerra GP was formed on May 2, 2003.
(b) No Defaults. None of the GulfTerra Partnership Group
Entities is in default under or violation of, and there has been no event,
condition or occurrence which, after notice or lapse of time or both, would
constitute such a default or violation of, or permit the termination of, any
term, condition or provision of (i) their respective governing documents, (ii)
any credit agreement, note, bond, mortgage, indenture, contract, agreement,
lease, license, franchise, permit, concession, easement or other instrument to
which any of the GulfTerra Partnership Group Entities is a party or by which any
of the GulfTerra Partnership Group Entities or any of their respective property
is bound or subject, except, in the case of clause (ii), defaults, violations
and terminations which, individually or in the aggregate, could not reasonably
be expected to have a GulfTerra Material Adverse Effect.
(c) Capitalization of GulfTerra GP. GulfTerra GP is the sole
general partner of GulfTerra MLP. GulfTerra GP is the sole record and beneficial
owner of the general partner interest in GulfTerra MLP, and such general partner
interest has been duly authorized and validly issued in accordance with the
GulfTerra Partnership Agreement. Except for any Encumbrances arising under the
governing documents of any GulfTerra Party, applicable securities Laws, the
Exchange and Registration Rights Agreement or this Agreement, GulfTerra GP owns
such general partner interest free and clear of any Encumbrances.
(d) Capitalization of GulfTerra MLP. As of the Execution Date,
GulfTerra MLP has no limited partner interests issued and outstanding other than
the following:
(i) 58,361,149 GulfTerra Common Units, which includes
the following (the balance of GulfTerra Common Units having been issued to the
general public):
(A) 8,262,902 GulfTerra Common Units issued
to El Paso Sub 1, and with respect to which El Paso Sub 1 is the sole holder of
record;
(B) 2,821,343 GulfTerra Common Units issued
to El Paso Sub 2, and with respect to which El Paso Sub 2 is the sole holder of
record; and
(C) 3,000,000 GulfTerra Common Units issued
to Goldman, and with respect to which Goldman is the sole holder of record;
(ii) outstanding options to purchase 1,159,500
GulfTerra Common Units at the exercise prices and with the vesting schedules set
forth in Section 3.4(d) of the GulfTerra Disclosure Letter;
(iii) outstanding awards for the issuance of 37,292
restricted GulfTerra Common Units having the vesting schedules set forth in
Section 3.4(d) of the GulfTerra Disclosure Letter;
(iv) 10,937,500 GulfTerra Series C Units issued to El
Paso Sub 3, and with respect to which El Paso Sub 3 is the sole holder of
record;
-24-
(v) 80 GulfTerra Series F Units (consisting of 80
Series F1 Convertible Units and 80 Series F2 Convertible Units as defined in the
Statement of Rights, Privileges and Limitations of Series F Convertible Units of
GulfTerra MLP dated May 16, 2003) issued to ▇▇▇▇▇▇▇▇ International, Inc.
("▇▇▇▇▇▇▇▇"), and with respect to which ▇▇▇▇▇▇▇▇ is the sole holder of record;
and
(vi) ▇▇▇▇▇▇▇'▇ right to acquire GulfTerra Common
Units from GulfTerra MLP under the Exchange and Registration Rights Agreement,
which rights are being waived pursuant to the Goldman Agreement.
Each of such GulfTerra Units and the limited partner interests represented
thereby have been duly authorized and validly issued in accordance with
applicable Laws and the GulfTerra Partnership Agreement, and are fully paid (to
the extent required under the GulfTerra Partnership Agreement) and
non-assessable (except to the extent such non-assessability may be affected by
Section 17-607 of the Delaware Revised Uniform Limited Partnership Act). Such
GulfTerra Units were not issued in violation of pre-emptive or similar rights or
any other agreement or understanding binding on GulfTerra MLP. All of the
outstanding equity interests of the subsidiaries of GulfTerra MLP and the
Partially Owned Entities which are held, directly or indirectly, by GulfTerra
MLP have been duly authorized and are validly issued, fully paid (to the extent
required under the applicable governing documents) and non-assessable (except
(1) with respect to general partner interests, (2) as set forth to the contrary
in the applicable governing documents and (3) to the extent such
non-assessability may be affected by the Delaware Revised Uniform Limited
Partnership Act or the Delaware Limited Liability Company Act) and were not
issued in violation of pre-emptive or similar rights; and all such equity
interests are owned, directly or indirectly, by GulfTerra MLP, free and clear of
all Encumbrances, except for applicable securities Laws, restrictions on
transfers contained in governing documents and as set forth in Section 3.4(b) of
the GulfTerra Disclosure Letter.
(e) Except as described in Sections 3.4(b) and 3.4(c) of the
GulfTerra Disclosure Letter: (i) there are no outstanding options, warrants,
subscriptions, puts, calls or other rights, agreements, arrangements or
commitments (pre-emptive, contingent or otherwise) obligating any of the
GulfTerra Partnership Group Entities to offer, issue, sell, redeem, repurchase,
otherwise acquire or transfer, pledge or Encumber any equity interest in any of
the GulfTerra Partnership Group Entities; (ii) there are no outstanding
securities or obligations of any kind of any of the GulfTerra Partnership Group
Entities which are convertible into or exercisable or exchangeable for any
equity interest in any of the GulfTerra Partnership Group Entities or any other
person, and none of the GulfTerra Partnership Group Entities has any obligation
of any kind to issue any additional securities or to pay for or repurchase any
securities; (iii) there are not outstanding any stock appreciation rights,
phantom equity or similar rights, agreements, arrangements or commitments based
on the book value, income or any other attribute of any of the GulfTerra
Partnership Group Entities; (iv) there are no outstanding bonds, debentures or
other evidence of indebtedness of any of the GulfTerra Partnership Group
Entities having the right to vote (or that are exchangeable for or convertible
or exercisable into securities having the right to vote) with the holders of the
GulfTerra Common Units on any matter; and (v) except as described in the
GulfTerra Partnership Agreement, there are no unitholder agreements, proxies
(other than the GulfTerra Proxy), voting trusts, rights to require registration
under securities Laws or other arrangements or commitments to which any of the
GulfTerra
-25-
Partnership Group Entities is a party or by which any of their securities are
bound with respect to the voting, disposition or registration of any outstanding
securities of any of the GulfTerra Partnership Group Entities (provided that the
foregoing shall not apply to any such restriction on voting or disposition that
any holder of GulfTerra Common Units (other than affiliates of El Paso Parent)
may have imposed upon such GulfTerra Common Units).
(f) Reports; Financial Statements.
(i) Since January 1, 2000, GulfTerra MLP has filed all forms,
reports, schedules, statements and other documents required by Law to be filed
or furnished with the SEC by any of the GulfTerra Partnership Group Entities
under the Exchange Act or the Securities Act (collectively, together with all
other documents filed by GulfTerra MLP with the SEC since January 1, 2000, the
"GulfTerra SEC Reports"), except in each case where the failure to file any such
forms, reports, schedules, statements or other documents could not reasonably be
expected to have a GulfTerra Material Adverse Effect. The GulfTerra SEC Reports
at the time filed (x) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements contained therein not misleading in light of the
circumstances under which they were made and (y) complied in all material
respects with the requirements of applicable Laws (including the Securities Act,
the Exchange Act and the rules and regulations thereunder). Other than filings
in connection with Rule 144A offerings with respect to wholly-owned subsidiaries
of GulfTerra MLP, no subsidiary of GulfTerra MLP is required to file periodic
reports with the SEC, either pursuant to the requirements of the Exchange Act or
by contract.
(ii) GulfTerra MLP has heretofore furnished to Enterprise MLP
complete and correct copies of (i) all contracts, agreements, documents and
other instruments not yet filed by GulfTerra MLP with the SEC but that are
currently in effect and that any of the GulfTerra Partnership Group Entities
will be required to or expect to file with or furnish to the SEC as exhibits in
an annual or periodic report after the Execution Date and (ii) all amendments
and modifications that have not been filed by GulfTerra MLP with the SEC but are
currently in effect to all agreements, documents and other instruments that have
been filed by any of the GulfTerra Partnership Group Entities with the SEC since
January 1, 2000.
(iii) Attached as Section 3.5(c) of the GulfTerra Disclosure
Letter are copies of the unaudited financial statements as of September 30, 2003
of GulfTerra GP (the "GulfTerra GP Financial Statements"). The consolidated
financial statements (including, in each case, any related notes thereto) of
GulfTerra MLP contained in any GulfTerra SEC Reports and the GulfTerra GP
Financial Statements (i) have been prepared in accordance with GAAP (subject, in
the case of unaudited financial statements, to the absence of footnote
disclosures required by GAAP), (ii) complied in all material respects with the
requirements of applicable securities Laws, and (iii) fairly present, in all
material respects, the consolidated financial positions, results of operations,
cash flows, partners' capital and comprehensive income and changes in
accumulated other comprehensive income, as applicable, of the applicable
GulfTerra Partnership Group Entities as of the respective dates thereof and for
the respective periods covered thereby, subject, in the case of unaudited
financial statements, to normal, recurring audit adjustments none of which will
be material. Except as disclosed on the GulfTerra MLP September 30, 2003 Balance
Sheet or the GulfTerra GP September 30, 2003 Balance Sheet, none
-26-
of the GulfTerra Partnership Group Entities has any indebtedness or liability,
absolute or contingent, other than (i) liabilities as of September 30, 2003 that
are not required by GAAP to be included in the GulfTerra MLP September 30, 2003
Balance Sheet or the GulfTerra GP September 30, 2003 Balance Sheet, (ii)
liabilities incurred or accrued in the ordinary course of business consistent
with past practice since September 30, 2003, (iii) liabilities disclosed in any
GulfTerra SEC Reports filed since September 30, 2003 or (iv) liabilities
incurred or accrued as permitted under Section 5.1(b) of the Merger Agreement.
(g) Absence of Certain Changes or Events.
(i) Except as set forth on Section 3.6 of the
GulfTerra Disclosure Letter or as disclosed in any GulfTerra SEC Report filed
before the Execution Date, between September 30, 2003 and the Execution Date,
the business of the GulfTerra Partnership Group Entities, taken as a whole, has
been conducted in the ordinary course consistent with past practices, and none
of the GulfTerra Partnership Group Entities has taken any of the actions
prohibited by Section 5.1(b) of the Merger Agreement, except in connection with
entering into this Agreement.
(ii) Since September 30, 2003, except as disclosed in
any GulfTerra SEC Report filed before the Execution Date, there have not been
any events or conditions that have had, or could reasonably be expected to have,
a GulfTerra Material Adverse Effect.
(h) Compliance with Laws; Permits.
(i) The GulfTerra Partnership Group Entities are in
compliance, and at all times since January 1, 2001 have complied, with all
applicable Laws other than non-compliance which could not, individually or in
the aggregate, reasonably be expected to have a GulfTerra Material Adverse
Effect.
(ii) The GulfTerra Partnership Group Entities are in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate their properties and to lawfully carry on
their businesses as they are now being conducted (collectively, the "GulfTerra
Permits"), except as disclosed in Section 3.7(b) of the GulfTerra Disclosure
Letter, in the GulfTerra SEC Reports or where the failure to be in possession of
such GulfTerra Permits could not, individually or in the aggregate, be
reasonably expected to have a GulfTerra Material Adverse Effect. None of the
GulfTerra Partnership Group Entities is in conflict with, or in default or
violation of any of the GulfTerra Permits, except for any such conflicts,
defaults or violations which could not, individually or in the aggregate,
reasonably be expected to have a GulfTerra Material Adverse Effect.
(i) Litigation. Except as disclosed in Section 3.8 of the
GulfTerra Disclosure Letter, in the GulfTerra SEC Reports, or for matters that
could not reasonably be expected to have, individually or in the aggregate, a
GulfTerra Material Adverse Effect, (i) there are no claims, actions, proceedings
(public or private) investigations or reviews pending or, to the knowledge of El
Paso GP Holdco, threatened against any of the GulfTerra Partnership Group
Entities by or before any Governmental Entity, and (ii) El Paso GP Holdco has no
knowledge of
-27-
any facts that such persons reasonably believe are likely to give rise to any
such claim, action, proceeding, investigation or review. Other than the El Paso
Parent Consent Decree, none of the GulfTerra Partnership Group Entities, nor any
of their respective assets and properties, is subject to any outstanding
judgment, order, writ, injunction or decree that has had or could reasonably be
expected to have, individually or in the aggregate, a GulfTerra Material Adverse
Effect.
(j) Environmental Matters. Except as disclosed in the
GulfTerra SEC Reports or for matters that could not reasonably be expected to
have, individually or in the aggregate, a GulfTerra Material Adverse Effect: (a)
the GulfTerra Partnership Group Entities and their respective businesses,
operations, and properties have been and are in compliance with all
Environmental Laws and all permits, registrations, licenses, approvals,
exemptions, variances, and other authorizations required of the GulfTerra
Partnership Group Entities under Environmental Laws ("GulfTerra Environmental
Permits"); (b) the GulfTerra Partnership Group Entities have obtained or filed
for all GulfTerra Environmental Permits for their respective businesses,
operations, and properties as they currently exist and all such GulfTerra
Environmental Permits are currently in full force and effect; (c) the GulfTerra
Partnership Group Entities and their respective businesses, operations, and
properties are not subject to any pending or, to the knowledge of El Paso GP
Holdco, threatened claims, actions, suits, investigations, inquiries or
proceedings under Environmental Laws; (d) there have been no Releases or, to the
knowledge of El Paso GP Holdco, threatened Releases of Hazardous Substances on,
under or from the properties of the GulfTerra Partnership Group Entities; (e)
none of the GulfTerra Partnership Group Entities has, to the knowledge of El
Paso GP Holdco, received any written notice asserting an alleged liability or
obligation under any Environmental Laws against the GulfTerra Partnership Group
Entities with respect to the actual or alleged Hazardous Substance contamination
of any property offsite of the properties of the GulfTerra Partnership Group
Entities; (f) to the knowledge of El Paso GP Holdco, there has been no exposure
of any person or property to Hazardous Substances in connection with the
GulfTerra Partnership Group Entities' businesses, operations, or properties that
could reasonably be expected to lead to tort claims by third parties for damages
or compensation; and (g) the GulfTerra Partnership Group Entities have made
available to the Enterprise Parties complete and correct information regarding
compliance matters relating to Environmental Laws in the possession of the
GulfTerra Partnership Group Entities and relating to their respective
businesses, operations, or properties.
(k) Contracts. Except for contracts filed as exhibits to the
GulfTerra SEC Reports, Section 3.10 of the GulfTerra Disclosure Letter lists as
of the Execution Date all written or, to the knowledge of El Paso GP Holdco,
oral contracts, agreements, guarantees, leases and executory commitments other
than GulfTerra Plans to which any of the GulfTerra Partnership Group Entities
are a party or by which their assets are bound and which fall within any of the
following categories: (i) contracts not entered into in the ordinary course of
the GulfTerra Partnership Group Entities' business other than those that are not
material to the business of the GulfTerra Partnership Group Entities, (ii)
contracts which after the Effective Time would have the effect of limiting the
freedom of any of the Enterprise Partnership Group Entities (other than the
GulfTerra Partnership Group Entities) to compete in any line of business in any
geographic area, (iii) contracts relating to any outstanding commitment for
capital expenditures in excess of $10,000,000, (iv) contracts with any labor
union or organization, (v) except as reflected in the financial statements
included in the GulfTerra SEC Reports, indentures, mortgages, liens, promissory
notes, loan agreements, guarantees or other arrangements relating to the
borrowing of
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money by any of the GulfTerra Partnership Group Entities, (vi) contracts
containing provisions triggered by change of control of any of the GulfTerra
Partnership Group Entities or other similar provisions, (vii) contracts in favor
of directors or officers that provide rights to indemnification, and (viii)
contracts between one or more GulfTerra Partnership Group Entities and El Paso
Parent or one or more affiliates of El Paso Parent (other than the GulfTerra
Partnership Group Entities). All such contracts (including those filed as
exhibits to the GulfTerra SEC Reports) and all other contracts that are
individually material to the business or operations of the GulfTerra Partnership
Group Entities taken as a whole are valid and binding obligations of the
GulfTerra Partnership Group Entities that are parties thereto and, to the
knowledge of El Paso GP Holdco, the valid and binding obligation of each other
party thereto except such contracts which if not so valid and binding could not,
individually or in the aggregate, reasonably be expected to have a GulfTerra
Material Adverse Effect. True and complete copies of all such contracts have
been delivered or have been made available by GulfTerra MLP to Enterprise MLP.
No GulfTerra Partnership Group Entity is in breach of or in default under any
such contract except for such breaches and defaults that could not reasonably be
expected to have, individually or in the aggregate, a GulfTerra Material Adverse
Effect.
(l) Restrictions on Business Activities. Except as set forth
on Section 3.11 of the GulfTerra Disclosure Letter, there is no agreement,
judgment, injunction, order or decree binding upon any of the GulfTerra
Partnership Group Entities that has or could be reasonably expected to have the
effect of prohibiting, restricting or materially impairing any business practice
of any of the GulfTerra Partnership Group Entities, any acquisition of property
by any of the GulfTerra Partnership Group Entities, the purchase of goods or
services from any party, the hiring of any individual or groups of individuals
or the conduct of business by any of the GulfTerra Partnership Group Entities as
currently conducted other than such agreements, judgments, injunctions, orders
or decrees which could not, individually or in the aggregate, reasonably be
expected to have a GulfTerra Material Adverse Effect.
(m) Intellectual Property.
(i) Except for the items listed on Section 5.9 of the
GulfTerra Disclosure Letter, the GulfTerra Partnership Group Entities, directly
or indirectly, own, license or otherwise have legally enforceable rights to use
all patents, patent rights, trademarks, trade names, service marks, copyrights
and any applications therefore, technology, know-how, computer software and
applications and tangible or intangible proprietary information or materials,
that are used in the business of the GulfTerra Partnership Group Entities as
presently conducted (the "GulfTerra Intellectual Property Rights") and each such
ownership, license, and right to use will not be adversely affected by the
transactions contemplated by this Agreement or the Merger Agreement. Upon
satisfaction of the obligations of El Paso Parent pursuant to Section 4.6,
GulfTerra MLP will own, license or otherwise have legally enforceable rights to
use intellectual property of the type described in this Section 3.4(m)
sufficient to operate the business of the GulfTerra Partnership Group Entities
consistent with past practices.
(ii) In the case of GulfTerra Intellectual Property
Rights owned by any of the GulfTerra Partnership Group Entities, such GulfTerra
Partnership Group Entities own such GulfTerra Intellectual Property Rights free
and clear of any Encumbrances (other than Permitted Encumbrances) except where
the presence of any such Encumbrances could not
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reasonably be expected to have, individually or in the aggregate, a GulfTerra
Material Adverse Effect. One or more of the GulfTerra Partnership Group Entities
have an adequate right to the use of the GulfTerra Intellectual Property Rights
or the material covered thereby in connection with the services or products in
respect of which such GulfTerra Intellectual Property Rights are being used
except where the lack of any such right could not reasonably be expected to
have, individually or in the aggregate, a GulfTerra Material Adverse Effect.
None of the GulfTerra Partnership Group Entities has received any written notice
or claim, or any other information, stating that the manufacture, sale,
licensing, or use of any of the services or products of any of the GulfTerra
Partnership Group Entities as now manufactured, sold, licensed or used or
proposed for manufacture, sale, licensing or use by any of the GulfTerra
Partnership Group Entities in the ordinary course of their business as presently
conducted infringes on any copyright, patent, trade ▇▇▇▇, service ▇▇▇▇ or trade
secret of a third party except where such infringement could not reasonably be
expected to have, individually or in the aggregate, a GulfTerra Material Adverse
Effect. None of the GulfTerra Partnership Group Entities has received any
written notice or claim, or any other information, stating that the use by any
of the GulfTerra Partnership Group Entities of any trademarks, service marks,
trade names, trade secrets, copyrights, patents, technology or know-how and
applications used in their business as presently conducted infringes on any
other person's trademarks, service marks, trade names, trade secrets,
copyrights, patents, technology or know-how and applications, except where such
infringement could not reasonably be expected to have, individually or in the
aggregate, a GulfTerra Material Adverse Effect. None of the GulfTerra
Partnership Group Entities has received any written notice or claim, or any
other information, challenging the ownership by any of the GulfTerra Partnership
Group Entities or the validity of any of the GulfTerra Intellectual Property
Rights except where the absence of any such ownership could not reasonably be
expected to have, individually or in the aggregate, a GulfTerra Material Adverse
Effect. All registered patents, trademarks, service marks and copyrights held by
any of the GulfTerra Partnership Group Entities are subsisting, except to the
extent any failure to be subsisting could not reasonably be expected to have,
individually or in the aggregate, a GulfTerra Material Adverse Effect. To the
knowledge of El Paso GP Holdco, there is no unauthorized use, infringement or
misappropriation of any of the GulfTerra Intellectual Property Rights by any
third party, including any employee or former employee of any of the GulfTerra
Partnership Group Entities, except where any such unauthorized use, infringement
or misappropriation would not have or would reasonably be expected not to have,
individually or in the aggregate, a GulfTerra Material Adverse Effect. No
GulfTerra Intellectual Property Right is subject to any known outstanding
decree, order, judgment, or stipulation restricting in any manner the licensing
thereof by any of the GulfTerra Partnership Group Entities, except to the extent
any such restriction could not reasonably be expected to have, individually or
in the aggregate, a GulfTerra Material Adverse Effect.
(n) Property.
(i) Upon the satisfaction of the obligations of El
Paso Parent pursuant to Section 4.6, GulfTerra MLP will own tangible personal
property sufficient to operate the businesses of the GulfTerra Partnership Group
Entities consistent with past practices.
(ii) Except for Permitted Encumbrances, failures that
could not reasonably be expected to have, individually or in the aggregate, a
GulfTerra Material Adverse
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Effect or as set forth in the GulfTerra SEC Reports or on Section 3.13(b) of the
GulfTerra Disclosure Letter, the GulfTerra Partnership Group Entities have
defensible title or enforceable rights to use (or, with respect to pipelines,
equipment and other tangible personal property used in connection with the
GulfTerra Partnership Group Entities' pipeline operations (collectively,
"GulfTerra Pipeline Assets"), title to or interest in the applicable GulfTerra
Pipeline Assets sufficient to enable the GulfTerra Partnership Group Entities to
conduct their businesses with respect thereto without interference as it is
currently being conducted) to all their properties and assets, whether tangible
or intangible, real, personal or mixed, free and clear of all liens.
(iii) Except for violations that could not reasonably
be expected to have, individually or in the aggregate, a GulfTerra Material
Adverse Effect or as set forth in the GulfTerra SEC Reports or on Section
3.13(c) of the GulfTerra Disclosure Letter, the businesses of the GulfTerra
Partnership Group Entities have been and are being operated in a manner which
does not violate the terms of any easements, rights of way, permits, servitudes,
licenses, leasehold estates and similar rights relating to real property
(collectively, "GulfTerra Easements") used by the GulfTerra Partnership Group
Entities in such businesses. All GulfTerra Easements are valid and enforceable,
except as the enforceability thereof may be affected by bankruptcy, insolvency
or other Laws of general applicability affecting the rights of creditors
generally or principles of equity, and grant the rights purported to be granted
thereby and all rights necessary thereunder for the current operation of such
businesses, except where the failure of any such GulfTerra Easement to be valid
and enforceable or to grant the rights purported to be granted thereby or
necessary thereunder would have a GulfTerra Material Adverse Effect. Except as
set forth in Section 3.13(c) of the GulfTerra Disclosure Letter, there are no
special gaps in the GulfTerra Easements that would impair the conduct of such
businesses in a manner that could reasonably be expected to have, individually
or in the aggregate, a GulfTerra Material Adverse Effect, and no part of the
GulfTerra Pipeline Assets is located on property that is not owned in fee by a
GulfTerra Partnership Group Entity or subject to an Easement in favor of a
GulfTerra Partnership Group Entity, where the failure of such GulfTerra Pipeline
Asset to be so located could reasonably be expected to have, individually or in
the aggregate, a GulfTerra Material Adverse Effect.
(o) Labor Matters. Except as set forth on Section 3.14 of the
GulfTerra Disclosure Letter, none of the GulfTerra Partnership Group Entities
(a) is a party to, or bound by, any collective bargaining agreement or other
contract with a labor union or labor organization or knows of any claims
initiated by any labor organization to represent any of its employees not
currently represented by a labor organization or (b) is the subject of any
proceeding asserting that it has committed an unfair labor practice or knows of
any threatened claims alleging that it has committed an unfair labor practice or
(c) is the subject of any strike, work stoppage or other labor dispute.
(p) Employee Benefit Matters.
(i) Section 3.15 of the GulfTerra Disclosure Letter
contains a correct and complete list of the GulfTerra Related Employees. Section
3.15 of the GulfTerra Disclosure Letter sets forth separately (A) the aggregate
monetary liability that will be payable by any GulfTerra Partnership Group
Entity under or with respect to each GulfTerra Plan and each El Paso Plan as a
result of the consummation of the transactions contemplated by this Agreement
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(without giving effect to Enterprise MLP's or GulfTerra MLP's obligations under
Section 4.21 and based on the assumptions set forth in Section 3.15 of the
GulfTerra Disclosure Letter) and (B) the maximum aggregate monetary liability of
El Paso Parent and its affiliates for severance obligations under all El Paso
Plans relating to the GulfTerra Related Employees based on the assumptions set
forth in Section 3.15 of the GulfTerra Disclosure Letter. The El Paso Plans
described in the preceding sentence are listed in Section 3.15 of the GulfTerra
Disclosure Letter and are referred to herein as the "Designated Severance
Plans." Except as set forth on Section 3.15 of the GulfTerra Disclosure Letter
or otherwise required by Section 4.21, the transactions contemplated by this
Agreement will not accelerate the time of payment or vesting, increase the
amount of compensation due or result in a severance payment for any GulfTerra
Related Employee or any current or former director, officer or employee (or any
beneficiary thereof) for which any of the GulfTerra Partnership Group Entities
or Enterprise Partnership Group Entities will be liable.
(ii) None of the GulfTerra Partnership Group Entities
or any entity required to be aggregated therewith pursuant to Section 414 of the
Code has any liability with respect to or based upon any pension plan that is or
was subject to the provisions of Title IV of ERISA or Section 412 of the Code,
including a multiemployer pension plan as defined in Section 3(37) of ERISA,
other than contingent joint and several liability pursuant to a GulfTerra Plan
that is subject to Title IV of ERISA and which has not been terminated.
(iii) Although GulfTerra Partnership Group Entities
receive services from personnel on the payroll of El Paso Parent and its
affiliates, on the Execution Date, none of the GulfTerra Partnership Group
Entities has any employees.
(q) Insurance. Each of the GulfTerra Partnership Group
Entities and their respective businesses and properties are, and have been
continuously since January 1, 2000, insured by reputable and financially
responsible insurers in amounts, against risks and losses, and with retentions
as are customary for companies conducting their respective businesses. The
insurance policies covering the GulfTerra Partnership Group Entities and their
respective businesses and properties are in all material respects in full force
and effect in accordance with their terms, no notice of cancellation or
termination has been received, and there is no existing default or event which,
with the giving of notice or lapse of time or both would constitute a default
thereunder. Section 3.16 of the GulfTerra Disclosure Letter sets forth a correct
and complete list of all such policies and, with respect to each such policy, a
correct and complete description of (a) the scope of coverage, (b) deductibles
and similar amounts, (c) the aggregate limits and available coverage (if less
than the aggregate limits) as of the Execution Date and (d) whether such policy
is written on a "claims made" or "occurrence" basis. There are no outstanding
claims made by any of the insured parties in excess of the deductibles
identified on Section 3.16 of the GulfTerra Disclosure Letter that are not
covered under such policies, and, to the knowledge of El Paso GP Holdco, there
has not occurred any event that might reasonably form the basis of any claim in
excess of the deductibles identified on Section 3.16 of the GulfTerra Disclosure
Letter that is not covered under such policies.
(r) Taxes. Except as set forth in Section 3.17 of the
GulfTerra Disclosure Letter: (i) all Tax Returns that were required to be filed
by or with respect to any of the GulfTerra Partnership Group Entities have been
duly and timely filed, (ii) all items of income,
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gain, loss, deduction and credit or other items required to be included in each
such Tax Return have been so included, (iii) all Taxes owed by any of the
GulfTerra Partnership Group Entities that are or have become due have been
timely paid in full or an adequate reserve for the payment of such Taxes has
been established, (iv) all Tax withholding and deposit requirements imposed on
or with respect to any of the GulfTerra Partnership Group Entities have been
satisfied in full in all respects, (v) there are no Encumbrances on any of the
assets of any of the GulfTerra Partnership Group Entities that arose in
connection with any failure (or alleged failure) to pay any Tax, (vi) there is
no written claim against the GulfTerra Partnership Group Entities for any Taxes,
and no assessment, deficiency or adjustment has been asserted, proposed, or
threatened in writing with respect to any Tax Return of or with respect to any
of the GulfTerra Partnership Group Entities, (vii) there is not in force any
extension of time with respect to the due date for the filing of any Tax Return
of or with respect to any of the GulfTerra Partnership Group Entities or any
waiver or agreement for any extension of time for the assessment or payment of
any Tax of or with respect to any of the GulfTerra Partnership Group Entities,
(viii) none of the GulfTerra Partnership Group Entities will be required to
include any amount in income for any taxable period beginning after December 31,
2003 as a result of a change in accounting method for any taxable period ending
on or before the Closing Date or pursuant to any agreement with any Tax
authority with respect to any such taxable period, (ix) none of the GulfTerra
Partnership Group Entities is a party to a Tax allocation or sharing agreement,
and no payments are due or will become due by any of the GulfTerra Partnership
Group Entities pursuant to any such agreement or arrangement or any tax
indemnification agreement, (x) none of the GulfTerra Partnership Group Entities
has been a member of an affiliated group filing a consolidated federal income
Tax Return or has any liability for the Taxes of any Person (other than a
GulfTerra Partnership Group Entity) under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local, or foreign Law), as a transferee or
successor, by contract, or otherwise, and (xi) at least 90% of the gross income
of GulfTerra MLP for each taxable year since its formation has been from sources
that GulfTerra MLP's counsel has opined will be treated as "qualifying income"
within the meaning of section 7704(d) of the Code.
(s) Regulatory Proceedings. Except as set forth in the
GulfTerra SEC Reports or in Section 3.18 of the GulfTerra Disclosure Letter,
none of the GulfTerra Partnership Group Entities, all or part of whose rates or
services are regulated by a Governmental Entity, is a party to any proceeding
before a Governmental Entity which could reasonably be expected to result in
orders having a GulfTerra Material Adverse Effect, nor to the knowledge of El
Paso GP Holdco, has written notice of any such proceeding been received by any
of the GulfTerra Partnership Group Entities.
(t) Regulation as a Utility. None of the GulfTerra Partnership
Group Entities is (a) a "public-utility company" or a "holding company" or (b) a
"subsidiary company" or an "affiliate" of a "public-utility company" or a
"holding company," as such terms are defined in PUHCA.
(u) Futures Trading and Fixed Price Exposure. Prior to the
Execution Date and in the ordinary course of business, GulfTerra MLP has
established risk parameters to restrict the level of risk that the GulfTerra
Partnership Group Entities are authorized to take with respect to the open
position resulting from all physical commodity transactions, exchange traded
futures and options and over-the-counter derivative instruments (the "Open
GulfTerra Position") and
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monitors the compliance by the GulfTerra Partnership Group Entities with such
risk parameters. Such risk parameters as of the Execution Date are set forth on
Section 3.20 of the GulfTerra Disclosure Letter. Such risk parameters may be
modified only by the GulfTerra MLP. The Open GulfTerra Position is within such
risk parameters.
ARTICLE IV
COVENANTS AND AGREEMENTS
Section 4.1 Conduct of Business. El Paso Parent and El Paso GP Holdco
shall use their commercially reasonable efforts to cause their respective
affiliates to comply with the provisions of Section 5.1 of the Merger Agreement.
Section 4.2 Access to Information.
(a) Subject to Section 4.2(b) and applicable Laws, upon
reasonable notice to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇ with respect to the
Enterprise Parties and ▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇ with respect to the El Paso
Parties, El Paso Parent shall use its commercially reasonable efforts to cause
the GulfTerra Partnership Group Entities to afford the officers, employees,
counsel, accountants and other authorized representatives and advisors of the
Enterprise Parties reasonable access, during normal business hours from the
Execution Date until the earlier to occur of the Effective Time and the
termination of the Merger Agreement, to GulfTerra Partnership Group Entities'
properties, books, contracts and records as well as to their management
personnel; provided that such access shall be provided on a basis that minimizes
the disruption to the operations of the GulfTerra Partnership Group Entities.
Subject to Section 4.2(b) and applicable Laws, during such period, El Paso
Parent shall use its commercially reasonable efforts to cause the GulfTerra
Partnership Group Entities to furnish promptly to the Enterprise Parties all
information concerning the disclosing GulfTerra Partnership Group Entities'
business, properties and personnel as the Enterprise Parties may reasonably
request. Notwithstanding the foregoing, El Paso Parent shall have no obligation
to use any efforts to cause the GulfTerra Partnership Group Entities to disclose
or provide access to any information the disclosure of which El Paso Parent or
the GulfTerra Partnership Group Entities have concluded may jeopardize any
privilege available to such parties relating to such information or would be in
violation of a confidentiality obligation binding on El Paso Parent or the El
Paso Partnership Group.
(b) The parties acknowledge that certain information received
pursuant to Section 4.2(a) will be non-public or proprietary in nature and as
such will be deemed to be "Confidential Information" for purposes of the
Confidentiality Agreement. Each party further agrees to be bound by the terms
and conditions of the Confidentiality Agreement (except that the term of the
Confidentiality Agreement set forth in Section 13 thereof shall be two years
from the Execution Date) and to maintain the confidentiality of such
Confidential Information in accordance with the Confidentiality Agreement.
Section 4.3 Certain Filings. El Paso Parent shall use its commercially
reasonable efforts, as promptly as practicable following the Execution Date, (a)
to cause the GulfTerra Partnership Group Entities to prepare and file with the
Federal Trade Commission and the U.S. Department of Justice the appropriate
filings and any supplemental information which may be
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reasonably requested in connection therewith under the HSR Act, (b) to cause
GulfTerra MLP to duly call and hold a GulfTerra Unitholders' Meeting as soon as
practicable after the Execution Date to consider and vote upon the adoption of
the Merger Agreement, (c) to cause GulfTerra MLP to prepare and file with the
SEC a joint proxy statement/prospectus to be distributed to the GulfTerra
Unitholders and Enterprise Unitholders in connection with the GulfTerra
Unitholders' Meeting and Enterprise Unitholders' Meeting (the "Joint Proxy
Statement/Prospectus") and to be part of the Registration Statement, and (d) to
cause the GulfTerra Partnership Group Entities to make all required filings
under applicable state securities and blue sky Laws; provided, however, that no
such filings shall be required in any jurisdiction where, as a result thereof,
El Paso Parent or any of the GulfTerra Partnership Group Entities would become
subject to general service of process or to taxation or qualification to do
business as a foreign partnership doing business in such jurisdiction solely as
a result of such filing. The El Paso Parties agree that if they have knowledge
prior to the date of the GulfTerra Unitholders' Meeting of any information that
would cause any of the statements in the Joint Proxy Statement/Prospectus to
become false or misleading with respect to any material fact, or omit to state
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not false or misleading, they will
promptly inform the other parties thereof and use commercially reasonable
efforts to cause GulfTerra MLP to take the necessary steps to correct the Joint
Proxy Statement/Prospectus. Enterprise MLP will provide GulfTerra MLP, and El
Paso Parent will use its commercially reasonable efforts to cause GulfTerra MLP
to provide Enterprise MLP, with reasonable opportunity to review and comment on
the Joint Proxy Statement/Prospectus and any amendment or supplement thereto
prior to filing the Joint Proxy Statement/Prospectus or any such amendment or
supplement, and further agree that each of them will be provided with such
number of copies of all filings made with the SEC as such party shall reasonably
request. Enterprise MLP will provide GulfTerra MLP with reasonable opportunity
to review and comment on the Registration Statement and any amendment or
supplement thereto prior to filing any such document with the SEC. El Paso
Parent shall use its commercially reasonable efforts to prevent GulfTerra MLP
from making any filings of the Registration Statement or the Joint Proxy
Statement/Prospectus (or any amendments or supplements to either of them)
without the consent of Enterprise MLP (which consent shall not be unreasonably
withheld, delayed or conditioned).
Section 4.4 Debt Tender Offers and New Debt Offering.
(a) If prior to the Step Two Closing, Enterprise MLP
determines to make a cash tender offer for any of the Existing GulfTerra
Indebtedness or to solicit consents to amend the related indentures so as to
eliminate financial or other covenants or events of default therefrom, then,
upon the request of Enterprise MLP, the El Paso Parties shall assist Enterprise
MLP with the preparation and distribution of offering materials and provide such
other cooperation as Enterprise MLP may reasonably request in connection with
any such tender offer or consent solicitation, it being understood that
Enterprise MLP shall fund the consummation, and pay the expenses, of any such
tender offer. Enterprise MLP shall not launch a tender offer for the Existing
GulfTerra Indebtedness before 30 Business Days prior to the Step Two Closing.
(b) If Enterprise MLP shall determine to fund any tender offer
referred to in this Section 4.4 with the proceeds of an offering of debt
securities to be issued on or after the Step Two Closing Date that is to be
guaranteed by one or more of GulfTerra MLP and its subsidiaries, then the El
Paso Parties shall provide such cooperation as Enterprise MLP may
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reasonably request in connection with any such offering, including participating
in (i) the preparation of the offering documentation and, if the offering is
registered under the Securities Act, joining with Enterprise MLP in preparing
and filing the related registration statement with the SEC, (ii) due diligence
or other meetings with any underwriters or initial purchasers of such
indebtedness, (iii) meetings with rating agencies and (iv) road show
presentations. Enterprise MLP will provide GulfTerra MLP with a reasonable
opportunity to review and comment on any such offering documentation,
registration statement, meeting presentation materials and road show
presentation materials.
Section 4.5 No Solicitation.
(a) Subject to Section 4.5(b), El Paso Parent and El Paso GP
Holdco agree that from and after the Execution Date, they shall terminate all
discussions and negotiations with others regarding a sale or other transaction
involving (i) 5% or more of any class of equity securities in GulfTerra MLP or
Enterprise MLP, as applicable, (ii) any of the membership interests in GulfTerra
GP or Enterprise GP, as applicable, (iii) 5% or more of the assets, business (as
measured by either net income or revenue) or securities of any of the GulfTerra
Partnership Group Entities (other than those permitted under Section 5.1(b) of
the Merger Agreement), or (iv) any other transaction similar to the transactions
contemplated by the Merger Agreement (each, a "Possible Alternative"), and shall
enforce any confidentiality or similar agreement relating to side discussions or
negotiations, except for any offerings and sales of securities by GulfTerra MLP
or Enterprise MLP, or any offerings of options, warrants, convertible
securities, exchangeable securities, subscription rights, conversion rights,
exchange rights or other contracts that are otherwise permitted by the terms of
the Merger Agreement and that could require such person to issue, redeem,
purchase or sell any of its equity interests with respect thereto. From and
after the Execution Date, El Paso Parent and El Paso GP Holdco shall not,
directly or indirectly, nor shall they authorize or permit any of their
officers, directors or employees, or any investment banker, financial advisor,
attorney, accountant or other representative (a "Representative") retained by
them, (A) to solicit, initiate, encourage (including by way of furnishing
information or assistance), conduct discussions regarding or engage in
negotiations regarding or take any other action to facilitate, any inquiries, or
the making of any proposal (including any offer or proposal to its unitholders)
which constitutes or may reasonably be expected to lead to a Possible
Alternative, (B) to enter into an agreement (including any letter of intent or
similar document) with any person, other than the Enterprise Parties, providing
for or relating to a Possible Alternative or (C) to make or authorize any
statement, recommendation or solicitation in support of any Possible Alternative
by any person, other than by the Enterprise Parties.
(b) Notwithstanding the provisions of Section 4.4(a), El Paso
Parent, El Paso GP Holdco and their Representatives shall be entitled, prior to
the GulfTerra Unitholders' Meeting, to take any action otherwise prohibited by
Section 4.4(a) in response to any third party proposal with respect to a
Possible Alternative received by any or all of them if (i) the initial proposal
from any third party was not received in violation of Section 4.4(a) and
contains no financing condition (unless the GulfTerra GP Board of Directors
determines in good faith upon advice of counsel that its fiduciary duties
require it to consider an applicable proposal where the initial proposal
contained a financing condition), (ii) the GulfTerra GP Board of Directors shall
have determined, in its good faith judgment, that the proposal, if accepted, is
reasonably likely to
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be consummated taking into account all legal, financial, regulatory and other
aspects of the proposal, and that such proposal would, in its good faith
judgment, if consummated, result in a transaction more favorable to the holders
of GulfTerra Common Units (other than the GulfTerra Common Units and GulfTerra
Series C Units to be purchased by Enterprise MLP pursuant to this Agreement)
than the transactions contemplated hereby (a "Superior Transaction"), and (iii)
the GulfTerra GP Board of Directors shall have determined, in its good faith
judgment, after consultation with and based on the advice of its legal counsel,
that the failure to take such action would be inconsistent with GulfTerra GP's
or its Board of Directors' fiduciary duties to holders of GulfTerra Common Units
under applicable Law; provided that neither El Paso Parent nor El Paso GP Holdco
may enter into negotiations or discussions or supply any information in
connection with a Possible Alternative unless it shall have first entered into a
confidentiality agreement at least as restrictive as the Confidentiality
Agreement, and provided further, that neither El Paso Parent nor El Paso GP
Holdco shall take any action prohibited by Section 4.5(a)(B)-(D) (except as
expressly required by the immediately preceding proviso) unless the Merger
Agreement has first been (or is contemporaneously) terminated. El Paso Parent
agrees that it will notify the Enterprise Parties promptly if any inquiry,
contact or proposal is received by, any such information is requested from, or
any such discussions or negotiations are sought to be initiated or continued
with, it or any of its Representatives, and thereafter shall keep the Enterprise
Parties informed in writing, on a current basis, regarding the status of any
such inquiry, contact or proposal and the status of any such negotiations or
discussions. Nothing contained in this Agreement shall prevent GulfTerra GP's
Board of Directors from complying with Rule 14e-2 under the Exchange Act with
respect to a Possible Alternative proposal. In addition, for the avoidance of
doubt, if such Board of Directors reasonably believes that its fiduciary duties
so require, El Paso Parent's Board of Directors or El Paso GP Holdco's Board of
Directors, as applicable, may continue to consider any Possible Alternative or
Superior Transaction notwithstanding any GulfTerra Reaffirmation with respect to
such Possible Alternative or Superior Transaction.
Section 4.6 GulfTerra Asset Separation. Commencing on the Execution
Date such that all such assets shall be transferred by the Step Two Closing
Date, El Paso Parent shall, and shall cause its affiliates to, execute and
deliver, or cause to be executed and delivered, such instruments of assignment,
transfer, conveyance, endorsement, direction or authorization and take such
other action as may be necessary to transfer to one of the GulfTerra Partnership
Group Entities title to assets of the types described in Section 5.9 of the
GulfTerra's Disclosure Letter that are used in the business of the GulfTerra
Partnership Group Entities but are owned by El Paso Parent or any of its
affiliates (other than a member of the GulfTerra Partnership Group Entities).
Section 4.7 Commercially Reasonable Efforts; Further Assurances. From
and after the Execution Date, upon the terms and subject to the conditions
hereof, El Paso Parent shall use its commercially reasonable efforts to take, or
cause to be taken, all appropriate action, and to do or cause to be done, all
things necessary, proper or advisable under applicable Laws to consummate and
make effective the transactions contemplated under this Agreement and under the
Merger Agreement. Without limiting the foregoing but subject to the other terms
of this Agreement, the parties hereto agree that, from time to time, whether
before, at or after the Step Two Closing Date, each of them will execute and
deliver, or cause to be executed and delivered, such instruments of assignment,
transfer, conveyance, endorsement, direction or authorization as
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may be necessary to consummate and make effective such transactions. The
Enterprise Parties shall cause the Enterprise Partnership Group Entities to sell
to any of one or more persons (other than El Paso Parent, Enterprise Parent 1,
Enterprise Parent 2 or any affiliate of any of them to the extent doing so would
violate the El Paso Parent Consent Decree) all of the El Paso Parent Consent
Decree Assets; provided, that such sales may be conditioned on the closing of
the Merger.
Section 4.8 No Public Announcement. On the Execution Date, El Paso
Parent shall issue with Enterprise MLP and GulfTerra MLP a joint press release
with respect to the execution of this Agreement and the Merger Agreement and the
transactions contemplated hereby and thereby. El Paso Parent shall not issue any
other press release or make any other public announcement concerning this
Agreement or the Merger Agreement and the transactions contemplated hereby and
thereby (other than public announcements at industry road shows and conferences
and otherwise as may be required by Law or by obligations pursuant to any
listing agreement with the NYSE, in which event it shall, to the extent
practicable, notify Enterprise MLP in advance of such public announcement or
press release) without the prior approval of Enterprise MLP, which approval
shall not be unreasonably withheld, delayed or conditioned. Notwithstanding the
foregoing, El Paso Parent may respond to inquiries from securities analysts and
the news media to the extent necessary to respond to such inquiries, provided
that such responses are in compliance with applicable securities Laws.
Section 4.9 Expenses. Whether or not the transactions contemplated
under this Agreement and the Merger Agreement are consummated, all costs and
expenses incurred in connection with this Agreement, including legal fees,
accounting fees, financial advisory fees and other professional and
non-professional fees and expenses, shall be paid by the party hereto incurring
such expenses.
Section 4.10 FIRPTA Certificate. Concurrently with the closing of the
Merger, El Paso Parent shall provide Enterprise MLP with a FIRPTA certificate
certifying that neither GulfTerra GP nor GulfTerra MLP is a "foreign person"
within the meaning of Treasury Regulation 1.1445-2(b).
Section 4.11 Termination of G&A Services Agreement. El Paso Parent
shall take all actions necessary or appropriate to cause DeepTech International,
Inc. and El Paso Field Services, L.P. to terminate the Amended and Restated
General and Administrative Services Agreement, dated November 12, 2002, among
DeepTech International, Inc., El Paso Field Services, L.P. and GulfTerra MLP,
such termination to be effective as of the Effective Time.
Section 4.12 Agreement Not to Use Exchange Rights. In connection with
the transactions to be effected pursuant to the Goldman Agreement, El Paso GP
Holdco shall not, and El Paso Parent shall cause El Paso GP Holdco not to,
exercise its right under Section 3.11(b)(iii)(B) of the GulfTerra GP LLC
Agreement to cause GulfTerra MLP to deliver newly issued Class A Common Units as
any portion of the consideration payable by El Paso GP Holdco to Goldman
pursuant to the Goldman Agreement.
Section 4.13 Letter of GulfTerra MLP's Accountants. In connection with
the information regarding the GulfTerra Partnership Group Entities or the Merger
Transactions
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provided by the El Paso Parent Parties or the GulfTerra Partnership Group
Entities specifically for inclusion in, or incorporation by reference into, the
Joint Proxy Statement/Prospectus and the Registration Statement, El Paso Parent
shall use its commercially reasonable efforts to cause to be delivered to
Enterprise MLP a letter of PricewaterhouseCoopers LLP, dated the date on which
the Registration Statement shall become effective and addressed to Enterprise
MLP, in form and substance reasonably satisfactory to Enterprise MLP and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the
Registration Statement.
Section 4.14 Regulatory Issues. Unless otherwise agreed to by El Paso
Parent and Enterprise MLP, if as a condition to obtaining an agreement from any
Governmental Entity not to seek an injunction preventing or delaying the
consummation of the Merger Transactions or to satisfy any condition to a consent
or approval of any Governmental Entity necessary for the consummation of the
transactions contemplated under this Agreement or the Merger Agreement, such
Governmental Entity shall require the divestiture (or the execution of a consent
decree that contemplates such a divestiture) of any asset of (a) any of the El
Paso Field Services Entities (a "Required FS Divestiture"), (b) Enterprise MLP
or any of its subsidiaries (other than the El Paso Parent Consent Decree Assets)
(a "Required Enterprise Divestiture") or (c) GulfTerra MLP or any of its
subsidiaries (a "Required GulfTerra Divestiture" and, together with the Required
Enterprise Divestitures, the "Required MLP Divestitures"), or any combination
thereof, then the following provisions shall apply:
(i) if requested by Enterprise GP, El Paso Parent shall cause
any Required FS Divestiture to be consummated;
(ii) Enterprise GP agrees to cause an aggregate amount of
Required MLP Divestitures up to $150,000,000 in value;
(iii) notwithstanding clause (ii) preceding, if the
Governmental Entity permits the consummation of either a Required FS Divestiture
or a Required MLP Divestiture, then El Paso Parent shall cause the consummation
of the Required FS Divestiture; and
(iv) if the Governmental Entity permits the consummation of
either a Required GulfTerra Divestiture or a Required Enterprise Divestiture,
then Enterprise GP shall have the right in its sole discretion to select the
divestiture to be consummated.
Notwithstanding anything to the contrary in this Agreement, (A) Enterprise MLP
and (with Enterprise MLP's consent) GulfTerra MLP shall have the right to divest
any assets as may be required to prevent an injunction preventing or delaying
the consummation of the Merger Transactions or to satisfy any condition to a
consent or approval of any Governmental Entity necessary for the consummation of
the Merger Transactions, (B) subject to clause (C) immediately below, El Paso
Parent shall use its commercially reasonable efforts to cause GulfTerra MLP to
effect promptly any GulfTerra Required Divestitures recommended by Enterprise
MLP, (C) unless otherwise agreed by GulfTerra MLP, all Required GulfTerra
Divestitures shall be conditioned on the closing of the Merger, (D) unless
otherwise agreed by Enterprise MLP, all Required Enterprise Divestitures shall
be conditioned on the closing of the
-39-
Merger and (E) unless otherwise agreed by El Paso Parent, all Required FS
Divestitures shall be conditioned on the closing of the Merger.
Section 4.15 Transition Services.
(a) In order to facilitate the full transition of operating
activities and functions in GulfTerra MLP's business following the Effective
Time, for a period of three years commencing on the date of the Merger, upon the
request from time to time from Enterprise GP on behalf of GulfTerra MLP or
GulfTerra GP, El Paso Parent shall provide or cause to be provided to GulfTerra
MLP or GulfTerra GP support services of the same or substantially similar nature
which any of the El Paso Parent or its affiliates have provided to GulfTerra MLP
or GulfTerra GP during calendar year 2003 ("Transition Services"). El Paso
Parent shall perform or cause to be performed the Transition Services in
accordance with the Service Standard (as defined below). GulfTerra MLP, upon not
less than ten days' written notice from Enterprise GP to El Paso Parent, at any
time and from time to time may, as of the date set forth in that notice (which
may not precede the end of such 10-day period without El Paso Parent's
approval), terminate any or all of the Transition Services. GulfTerra MLP shall
reimburse El Paso Parent for 110% of the Direct Costs (as defined below) of the
Transition Services provided in accordance with this Section 4.15 and the
Service Standard and billed as a direct cost. No later than the tenth Business
Day of each calendar month, beginning with the calendar month immediately
following Closing, El Paso Parent will submit an invoice to GulfTerra MLP for
the Direct Costs incurred during the prior calendar month which invoice shall
include reasonable supporting documentation such as the nature and amount of
Direct Costs and the Transition Services to which they are attributable. If the
date of the Merger is on a day other than the last day of a month, the invoice
shall be only for those Transition Services provided from such date until the
end of the month in which the Merger took place. GulfTerra MLP shall pay the
undisputed portion of each invoice within 30 days after its receipt. Records
relating to the Transition Services and invoices shall be maintained by El Paso
Parent for a period of two years after an invoice is paid by GulfTerra MLP. Upon
reasonable prior notice of not less than five Business Days, GulfTerra MLP (and
its representatives and agents) shall have the right to audit and inspect, at
its own expense, the books, records and other documents applicable to the
Transition Services and invoices during normal business hours at El Paso
Parent's Houston, Texas location for a period of two years following the date an
invoice is delivered to GulfTerra MLP.
(b) As used in this Section 4.15 the term "Service Standard"
means, with respect to the standard of performance for the Transition Services
performed or caused to be performed under this Section 4.15, the good-faith
undertaking, on a commercially reasonable basis, to perform the Transition
Services (i) in at least the same quality and manner as the same or comparable
services were provided by El Paso Parent or its affiliates during calendar year
2003, and (ii) in all material respects in compliance with all applicable Laws,
Environmental Laws and Prudent Industry Practices (as defined below).
(c) As used in this Section 4.15, the term "Direct Costs"
means the costs or expenses actually incurred by El Paso Parent and affiliates
of El Paso Parent to employees and third parties directly attributable to the
provision of Transition Services pursuant to this
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Section 4.15, but excluding any overhead of El Paso Parent and any overhead
and/or profit components that might be charged by an affiliate of El Paso Parent
to El Paso Parent.
(d) As used in this Section 4.15, the term "Prudent Industry
Practices" means, at a particular time, any of the practices, methods and acts
which, in the exercise of reasonable judgment, will result in the proper
operation and maintenance of the assets owned by GulfTerra MLP and shall include
without limitation, the practices, methods and acts engaged in or approved by a
significant portion of the industry at such time with respect to assets of the
same or similar types as the assets owned by GulfTerra MLP. Prudent Industry
Practices is not intended to be limited to the optimum practice, method or act,
to the exclusion of all others, but rather is a spectrum of possible practices,
methods and acts which could have been expected to accomplish the desired result
at a commercially reasonable cost consistent with reliability, safety,
timeliness, and all applicable Laws and Environmental Laws. Prudent Industry
Practices is intended to mean at least the same standard as the Parties would,
in the prudent management of their own properties, use from time to time.
Section 4.16 Covenants Regarding Unitholders. (a) During the period
that commences on the Execution Date and ends on the earlier to occur of the
Effective Time and the termination of the Merger Agreement in accordance with
its terms, except in accordance with the express provisions of this Agreement,
each Unitholder, jointly and severally, agrees that it will not, and El Paso
Parent agrees that it will not permit any of the Unitholders to, sell, transfer,
assign or otherwise dispose of, or enter into any contract, option or other
agreement with respect to the sale, transfer, assignment or other disposition
of, any equity interest of GulfTerra MLP, whether now owned or hereafter
acquired, except that El Paso Sub 1 may sell, transfer and convey such number of
Common Units as are contemplated to be sold, transferred and conveyed pursuant
to the Goldman Agreement.
Section 4.17 Tax Matters.
(a) Enterprise GP and Enterprise MLP, on the one hand, and El
Paso Parent and the El Paso Parent Parties, on the other hand, agree and consent
to treat the purchase of GulfTerra Units pursuant to Section 2.2(d) as a sale of
such GulfTerra Units as described in Treasury Regulation Section 1.708-1(c)(4).
(b) Following the Merger, Enterprise MLP shall cause GulfTerra
GP to provide a copy of the GulfTerra MLP and GulfTerra GP federal income Tax
Returns for any period ending on or before the date of the Merger to El Paso
Parent for its review and comment on or before the tenth Business Day prior to
the due date (including extensions) for such Tax Returns and use reasonable
efforts to consult with El Paso Parent with respect to the preparation of the
schedules K-1 relating to such Tax Returns.
Section 4.18 Allocation of Partnership Liabilities Among Partners. From
and after the Step Two Closing for purposes of allocating Nonrecourse
Liabilities of Enterprise MLP (including for this purpose any subsidiary or
Partially Owned Entity of Enterprise MLP) after the Merger among the partners of
Enterprise MLP, Enterprise MLP will to the extent permissible under Treasury
Regulation Section 1.752-3 cause such Nonrecourse Liabilities to be allocated
among the properties of Enterprise MLP (including for this purpose any
subsidiary or Partially
-41-
Owned Entity of Enterprise MLP) in such a manner so as to cause the amount of
Nonrecourse Liabilities of Enterprise MLP (including for this purpose any
subsidiary or Partially Owned Entity of Enterprise MLP) allocated under Treasury
Regulation Section 1.752-3(a)(2) to a partner (or a transferee of such partner)
to equal the Nonrecourse Liabilities allocated to such partner as a partner of
Enterprise MLP or GulfTerra MLP prior to the Merger pursuant to Treasury
Regulation Section 1.752-3(a)(2).
Section 4.19 El Paso Parent Payment. For the three year period
immediately following the Effective Time, El Paso Parent shall pay Enterprise
MLP an annual amount equal to $18,000,000, $15,000,000 and $12,000,000 for the
first, second and third years of such period, respectively, which annual amounts
shall be payable in 12 monthly installments on the last day of each whole or
partial calendar month during the applicable period, prorated on a daily basis.
Section 4.20 GulfTerra Employees. Enterprise Parent 1 or an affiliate
thereof shall have the right to offer employment effective on the Step Two
Closing Date to such GulfTerra Related Employees, if any, as it may choose, in
its sole discretion, and El Paso Parent shall and shall cause its affiliates to,
cooperate in good faith with Enterprise Parent 1 or any such affiliate in its
attempt to employ such individuals, including providing such information as may
reasonably be requested by Enterprise Parent 1 or any such affiliate. No
GulfTerra Related Employee shall be transferred to a GulfTerra Partnership Group
Entity on or prior to the Effective Time. The GulfTerra Related Employees who
become employees of Enterprise Parent 1 or an affiliate thereof on the Step Two
Closing shall be the "Continuing Employees."
Section 4.21 GulfTerra Plans. Immediately prior to the Step Two
Closing, El Paso Parent will use its commercially reasonable efforts to cause
the GulfTerra Partnership Group Entities (a) to withdraw from and cease
participating in all GulfTerra Plans and (b) to transfer the sponsorship of all
GulfTerra Plans they may sponsor, if any, to El Paso Parent or an affiliate
thereof (other than a GulfTerra Partnership Group Entity). Prior to the
Effective Time, El Paso Parent shall use commercially reasonable efforts to
cause GulfTerra MLP to take all such actions as are necessary to cause any
outstanding options to purchase GulfTerra Common Units under the GulfTerra Plans
to be exercised or cancelled, including through the repurchase, at reasonable
purchase prices, of outstanding options from the holders thereof. El Paso Parent
shall cause each Continuing Employee to be 100% vested in his accrued benefits
under each GulfTerra Plan and each El Paso Plan intended to be qualified under
Section 401(a) of the Code. As of the Effective Time, El Paso Parent or an
affiliate thereof (other than a GulfTerra Partnership Group Entity) shall
retain, or assume as the case may be, the sole liability and responsibility for
(i) all claims, benefits, compensation (including accrued vacation and
severance) and other employment-based obligations and liabilities to all current
and former GulfTerra Related Employees and their beneficiaries (except for any
such obligations and liabilities arising from the employment of Continuing
Employees with Enterprise Parent 1 or its affiliates following the Step Two
Closing) and (ii) all liabilities and obligations under, based upon or arising
with respect to any GulfTerra Plans or any El Paso Plan. Enterprise MLP shall
reimburse El Paso Parent (or its applicable affiliate) for severance costs
incurred by El Paso Parent or such affiliate with respect to a GulfTerra Related
Employee listed on Section 3.15 of the GulfTerra Disclosure Letter if (i) such
costs are required to be paid by El Paso Parent or such affiliate pursuant to
the Designated Severance Plans, (ii) such GulfTerra Related Employee is not a
Continuing Employee, and (iii) such GulfTerra Related Employee's employment is
terminated by El Paso Parent or such affiliate
-42-
within 30 days following the Closing; provided that Enterprise MLP's aggregate
liability for such reimbursement obligation shall not exceed $14,000,000.
ARTICLE V
REMEDIES FOR DEFAULT
Section 5.1 Indemnity Regarding Section 3.1 Representations and
Selected Covenants. Subject to the provisions of this Article V, El Paso Parent
and El Paso GP Holdco shall indemnify and hold harmless the Enterprise Parties
and their respective affiliates from any and all Damages incurred by any such
party or any of their respective affiliates in connection with the breach of a
representation or warranty set forth in Section 3.1 or a covenant or agreement
(other than a covenant or agreement in Sections 4.1 through 4.4 and 4.12) made
by El Paso Parent or El Paso GP Holdco hereunder.
Section 5.2 Indemnity Regarding Section 3.2 Representations and
Selected Covenants. Subject to the provisions of this Article V, El Paso Parent
and the Unitholders shall indemnify and hold harmless the Enterprise Parties and
their respective affiliates from any and all Damages incurred by any such party
or any of their respective affiliates in connection with the breach of a
representation or warranty set forth in Section 3.2 or a covenant or agreement
made by the Unitholders hereunder.
Section 5.3 Indemnity Regarding Section 3.3 Representations and
Selected Covenants. Subject to the provisions of this Article V, the Enterprise
Parties shall indemnify and hold harmless the El Paso Parties and their
respective affiliates from any and all Damages incurred by any such party or any
of their respective affiliates in connection with the breach of a representation
or warranty set forth in Section 3.3 or a covenant or agreement made by such
Enterprise Party hereunder.
Section 5.4 Indemnity Regarding Breach of Section 3.4 Representations
and Selected Covenants. Subject to the provisions of this Article V, El Paso
Parent and El Paso GP Holdco shall indemnify and hold harmless the Enterprise
Parties and their respective affiliates from any and all Damages incurred by any
such party or any of their respective affiliates in connection with the breach
of a representation or warranty of El Paso GP Holdco set forth in Section 3.4 or
a covenant or agreement made by El Paso Parent or El Paso GP Holdco in Section
4.1 through 4.4 or 4.12 hereunder (such Damages, the "Restricted Damages");
provided, that (a) no claim for indemnification for Restricted Damages shall be
due and payable unless and until the Merger Agreement is terminated regardless
of when such indemnification claim arose or was asserted (and upon termination
of the Merger Agreement, any uncontested claim for indemnification asserted
prior to such termination shall become due and payable and any contested claim
for indemnification asserted prior to such termination shall survive and may
continue to be pursued), (b) no claim for indemnification for Restricted Damages
shall be brought after 18 months after the date of termination of the Merger
Agreement, (c) indemnification for Restricted Damages will only be provided to
the extent that such Restricted Damages exceed, in the aggregate, $25,000,000;
and (d) El Paso Parent and El Paso GP Holdco shall not be liable for any
indemnification claims for Restricted Damages under this Agreement after the
aggregate amount of Restricted Damages for which indemnification payments are
made hereunder equals an amount equal to the Purchase Price.
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Section 5.5 Survival of Representations. The representations,
warranties, covenants and agreements contained in this Agreement or made in any
certificate or document delivered pursuant hereto shall survive the Step One
Closing and the Step Two Closing regardless of any investigation made by the
parties hereto and regardless of any knowledge acquired or capable of being
acquired whether before or after the Step One Closing Date and Step Two Closing
Date.
Section 5.6 Enforcement of this Agreement. The parties hereto
acknowledge and agree that an award of money damages would be inadequate for any
breach of this Agreement by any party and any such breach would cause the
non-breaching parties irreparable harm. Accordingly, the parties hereto agree
that, in the event of any breach or threatened breach of this Agreement by one
of the parties, the parties will also be entitled, without the requirement of
posting a bond or other security, to equitable relief, including injunctive
relief and specific performance, provided such party is not in material default
hereunder. Such remedies will not be the exclusive remedies for any breach of
this Agreement but will be in addition to all other remedies available at law or
equity to each of the parties.
Section 5.7 Exclusive Remedy. Except as set forth in Section 5.6, the
parties agree that the indemnification provisions in this Article V shall be the
exclusive remedy of the parties with respect to breaches of representations and
warranties and failures to perform covenants or agreements hereunder.
Section 5.8 General Limitation of Damages. NOTWITHSTANDING ANY OTHER
PROVISION OF THIS AGREEMENT TO THE CONTRARY, EXCEPT AS SET FORTH IN SECTION 5.9,
THE ENTERPRISE PARTIES AND THEIR AFFILIATES SHALL NOT BE LIABLE TO THE EL PASO
PARTIES AND THEIR AFFILIATES, NOR SHALL THE EL PASO PARTIES AND THEIR AFFILIATES
BE LIABLE TO THE ENTERPRISE PARTIES OR THEIR AFFILIATES, FOR ANY EXEMPLARY,
PUNITIVE, SPECIAL, INDIRECT, CONSEQUENTIAL, REMOTE OR SPECULATIVE DAMAGES
(INCLUDING ANY DAMAGES ON ACCOUNT OF LOST PROFITS OR OPPORTUNITIES) ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 5.9 No Waiver Relating to Claims for Fraud/Willful Misconduct.
The liability of any party under this Article V shall be in addition to, and not
exclusive of, any other liability that such party may have at law or in equity
based on such party's (a) fraudulent acts or omissions or (b) willful
misconduct. None of the provisions set forth in this Agreement shall be deemed
to be a waiver by or release of any party of any right or remedy which such
party may have at law or equity based on any other party's fraudulent acts or
omissions or willful misconduct nor shall any such provisions limit, or be
deemed to limit, (i) the amounts of recovery sought or awarded in any such claim
for fraud or willful misconduct, (ii) the time period during which a claim for
fraud or willful misconduct may be brought, or (iii) the recourse which any such
party may seek against another party with respect to a claim for fraud or
willful misconduct.
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ARTICLE VI
MISCELLANEOUS
Section 6.1 Notices. Any notice, request, instruction, correspondence
or other document to be given hereunder by any party to another party (each, a
"Notice") shall be in writing and delivered in person or by courier service
requiring acknowledgment of receipt of delivery or mailed by U.S. registered or
certified mail, postage prepaid and return receipt requested, or by telecopier,
as follows; provided, that copies to be delivered below shall not be required
for effective notice and shall not constitute effective notice:
If to any of El Paso Corporation, El Paso GP Holdco or any of the
Unitholders, addressed to:
El Paso Corporation
El Paso Building
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: G. ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to any of the Enterprise Parties, addressed to:
Enterprise Products Partners L.P.
c/o Enterprise Products GP, LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Enterprise Products Partners L.P.
c/o Enterprise Products GP, LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Legal Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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Notice given by personal delivery, courier service or mail shall be
effective upon actual receipt. Notice given by telecopier shall be confirmed by
appropriate answer back and shall be effective upon actual receipt if received
during the recipient's normal business hours, or at the beginning of the
recipient's next business day after receipt if not received during the
recipient's normal business hours. All Notices by telecopier shall be confirmed
promptly after transmission in writing by certified mail or personal delivery.
Any party may change any address to which Notice is to be given to it by giving
Notice as provided above of such change of address.
Section 6.2 Governing Law; Jurisdiction; Waiver of Jury Trial. 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. Each
party thereto hereby irrevocably and unconditionally (a) consents and submits to
the exclusive jurisdiction of any federal or state court located in the State of
Delaware (the "Delaware Courts") for any actions, suits or proceedings arising
out of or relating to this Agreement or the transactions contemplated by this
Agreement (and agrees not to commence any litigation relating thereto except in
such courts), (b) waives any objection to the laying of venue of any such
litigation in the Delaware Courts and agrees not to plead or claim in any
Delaware Court that such litigation brought therein has been brought in any
inconvenient forum and (c) acknowledges and agrees that any controversy which
may arise under this Agreement is likely to involve complicated and difficult
issues, and therefore each such party hereby irrevocably and unconditionally
waives any right such party may have to a trial by jury in respect of any
litigation directly or indirectly arising or relating to this Agreement or the
transactions contemplated by this Agreement.
Section 6.3 Entire Agreement; Amendments and Waivers. This Agreement
constitutes the entire agreement between and among the parties hereto pertaining
to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties, and there are no warranties, representations or other agreements
between or among the parties in connection with the subject matter hereof except
as set forth specifically herein or contemplated hereby. No supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. The failure of a party to exercise any
right or remedy shall not be deemed or constitute a waiver of such right or
remedy in the future. No waiver of any of the provisions of this Agreement shall
be deemed or shall constitute a waiver of any other provision hereof (regardless
of whether similar), nor shall any such waiver constitute a continuing waiver
unless otherwise expressly provided.
Section 6.4 Binding Effect and Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns. Nothing in this Agreement, express or implied,
is intended to confer upon any person other than the parties hereto and their
respective permitted successors and assigns, any rights, benefits or obligations
hereunder. No party hereto may assign, transfer, dispose of or otherwise
alienate this Agreement or any of its rights, interests or obligations under
this Agreement (whether by operation of law or otherwise). Any attempted
assignment, transfer, disposition or alienation in violation of this Agreement
shall be null, void and ineffective.
-46-
Section 6.5 Severability. If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any rule of
applicable Law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated herein are not
affected in any manner materially adverse to any party hereto. Upon such
determination that any term or other provision is invalid, illegal, or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties hereto as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated herein are consummated as originally contemplated to
the fullest extent possible.
Section 6.6 Execution. This Agreement may be executed in multiple
counterparts each of which shall be deemed an original and all of which shall
constitute one instrument.
Section 6.7 Disclosure Letters. Each disclosure identified in the
GulfTerra Disclosure Letter and the Enterprise Disclosure Letter or elsewhere in
this Agreement constitutes a disclosure by the disclosing party with respect to
the specific section of this Agreement identified in the GulfTerra Disclosure
Letter or Enterprise Disclosure Letter, as applicable.
[The remainder of this page is blank]
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IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
as of the date first written above.
EL PASO CORPORATION
By: /s/ D. ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: D. ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
GULFTERRA GP HOLDING COMPANY
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
SABINE RIVER INVESTORS I, L.L.C.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
SABINE RIVER INVESTORS II, L.L.C.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
EL PASO EPN INVESTMENTS, L.L.C.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
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ENTERPRISE PRODUCTS GP, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
ENTERPRISE PRODUCTS PARTNERS L.P.
By: Enterprise Products GP, LLC
its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
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/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President
-49-
SCHEDULE 1
Name and Address of Class of Number of
Unitholder Units Units
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EL PASO SUB 1: Series A Common Units 8,262,902
Sabine River Investors I, L.L.C.
El Paso Building
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Attention: General Counsel
EL PASO SUB 2: Series A Common Units 2,821,343
Sabine River Investors II, L.L.C.
El Paso Building
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Attention: General Counsel
EL PASO SUB 3: Series C Common Units 10,937,500
El Paso EPN Investments, L.L.C.
El Paso Building
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Attention: General Counsel
Schedule 1-1
Exhibit 2.2(c)
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............................................................. 3
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.......................................... 4
ARTICLE 4
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS
4.01 Capital Contributions............................................... 4
4.02 Loans............................................................... 4
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............................ 6
5.03 Allocations for Tax Purposes........................................ 8
ARTICLE 6
MANAGEMENT
6.01 Management.......................................................... 9
6.02 Board of Directors.................................................. 10
6.03 Officers............................................................ 14
6.04 Duties of Officers and Directors.................................... 16
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6.05 Compensation........................................................ 17
6.06 Indemnification..................................................... 17
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......................................... 23
9.04 Change of Member Control............................................ 25
ARTICLE 10
REPRESENTATIONS, WARRANTIES AND COVENANTS OF MEMBERS
10.01 Representations and Warranties...................................... 27
10.02 Subject Business Activities......................................... 27
10.03 Bankrupt Members.................................................... 28
ARTICLE 11
DISSOLUTION, WINDING-UP AND TERMINATION
11.01 Dissolution......................................................... 28
11.02 Winding-Up and Termination.......................................... 29
11.03 Deficit Capital Accounts............................................ 30
ARTICLE 12
MERGER
12.01 Authority........................................................... 30
12.02 Procedure for Merger or Consolidation............................... 30
12.03 Approval by Members of Merger or Consolidation...................... 31
12.04 Certificate of Merger or Consolidation.............................. 32
12.05 Effect of Merger or Consolidation................................... 32
ARTICLE 13
GENERAL PROVISIONS
13.01 Notices............................................................. 32
ii
13.02 Entire Agreement; Supersedure....................................... 33
13.03 Effect of Waiver or Consent......................................... 33
13.04 Amendment or Restatement............................................ 33
13.05 Binding Effect...................................................... 33
13.06 Governing Law; Severability......................................... 33
13.07 Confidentiality..................................................... 34
13.08 Further Assurances.................................................. 36
13.09 Waiver of Certain Rights............................................ 36
13.10 Counterparts........................................................ 36
EXHIBITS
Exhibit A -Initial Sharing Ratios and Capital Accounts of Members
Exhibit B -Initial Directors
Exhibit C -Initial Officers
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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"), ▇▇▇ ▇▇▇▇▇▇ 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
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 50% membership interest in the Company as of the Effective Date.
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, the "EXISTING AGREEMENT").
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.
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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, 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. During the period that El
Paso GP Holdco (including, for this purpose, Permitted Transferees admitted as
Substitute Members pursuant to Section 9.02(a)) maintains the Required Economic
Interest, additional Membership Interests may be created and issued to (a)
existing Members or (b) other Persons (such other Persons to be admitted to the
Company as Members), in each case only with the prior written consent of all
existing Members, which consent may be granted or withheld in each such Member's
sole discretion, and upon such terms and conditions as the existing Members may
unanimously determine at the time of admission. The terms of admission or
issuance must specify the Sharing Ratios applicable to such Membership
Interests, and may provide for the creation of different classes or groups of
Members having different rights, powers, and duties. The Board of Directors may
reflect the creation of any new class or group of Members in an amendment to
this Agreement indicating the different rights, powers, and duties thereof;
provided, that, during the period that El Paso GP Holdco (including, for this
purpose, Permitted
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Transferees admitted as Substitute Members pursuant to Section 9.02(a))
maintains the Required Economic Interest, such an amendment must be executed by
each of the existing Members. 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. If at any time after El Paso
GP Holdco (including, for this purpose, Permitted Transferees admitted as
Substitute Members pursuant to Section 9.02(a)) ceases to maintain the Required
Economic Interest the Board of Directors proposes to issue additional Membership
Interests in the Company in consideration for cash pursuant to this Section
3.02, the Board shall promptly give notice thereof ("ISSUE NOTICE") to each
Member, and each Member shall have the right, but not the obligation, to
subscribe for such additional Membership Interests in an amount equal to their
respective Sharing Ratios within ten Business Days following the receipt of the
Issue Notice. The Issue Notice shall state all relevant information with respect
to the additional Membership Interests proposed to be created and issued
pursuant to the immediately preceding sentence, including the class of
Membership Interests to be issued, the rights, powers and duties of Members of
such class and the cash price.
3.03 LIABILITY TO THIRD PARTIES. No Member or beneficial owner of any
Membership Interest shall be liable for the debts, obligations or liabilities of
the Company.
ARTICLE 4
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS
4.01 CAPITAL CONTRIBUTIONS.
(a) In exchange for its Membership Interest in the Company, 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. Original Enterprise
Parent I is the assignee of its predecessor's Membership Interest. The parties
hereto agree that in no event shall El Paso GP Holdco be required to make any
Capital Contribution to the Company 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.
(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.
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
4
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.
(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 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.
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(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.
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.
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(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 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
7
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.
(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.
8
(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. No Member, by virtue of having the
status of a Member, shall have any management power over the business and
affairs of the Company or actual or apparent authority to enter into contracts
on behalf of, or to otherwise bind, the Company. 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
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 at a meeting or by written
consent by an act of the Board of Directors that includes at least one
Enterprise Designated Insider and, during the period that El Paso GP Holdco
(including, for this purpose, Permitted Transferees admitted as Substitute
Members pursuant to Section 9.02(a)) maintains the Required Economic Interest,
one El Paso GP Holdco Designated Insider:
9
(i) any merger or consolidation of the Company;
(ii) any merger or consolidation involving the MLP in respect
of which the MLP would not control at least 51% of the Voting Power 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 MLP;
(iv) any declaration or payment of any distributions or
dividends in respect of Membership Interests other than as permitted under
Section 5.01;
(v) make (on behalf of the Company or the MLP) a general
assignment for the benefit of creditors;
(vi) 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;
(vii) file (on behalf of the Company or the MLP) a petition or
answer seeking for the Company or the MLP a voluntary bankruptcy petition;
(viii) 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)(vi) or Section 6.01(b)(vii) above or (B) any
federal or state bankruptcy or insolvency proceeding;
(ix) 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; and
(x) amending, repealing or modifying this Agreement or the
Organizational Certificate in any respect.
6.02 BOARD OF DIRECTORS.
(a) Generally. The Board of Directors shall consist of not less than
five nor more than ten natural persons. Each of Enterprise Parent 2 and El Paso
GP Holdco shall have the right to appoint five of the Directors, of which at
least three of each group of five shall meet the independence, qualification and
experience requirements of the New York Stock Exchange (each, an "INDEPENDENT
DIRECTOR"), and at least two of such three Independent Directors shall also meet
the independence, qualification and experience requirements of Section 10A(m)(3)
of the Securities Exchange Act of 1934, the rules and regulations of the SEC,
other applicable Law and the charter of the Audit and Conflicts Committee (each,
a "SPECIAL INDEPENDENT DIRECTOR"). The five Directors appointed by Enterprise
Parent 2 shall be referred to as the "ENTERPRISE APPOINTED DIRECTORS" and the
three of such five who are Independent Directors shall be referred to as the
"ENTERPRISE INDEPENDENT DIRECTORS." The five Directors appointed by El Paso GP
Holdco shall be referred to as the "EL PASO GP HOLDCO APPOINTED DIRECTORS" and
the three of
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such five who are Independent Directors shall be referred to as the "EL PASO GP
HOLDCO INDEPENDENT DIRECTORS." Enterprise Parent 2 shall designate one or more
of the Enterprise Appointed Directors as "ENTERPRISE DESIGNATED Insiders", and
El Paso GP Holdco shall designate one or more of the El Paso GP Holdco Appointed
Directors as "EL PASO GP HOLDCO DESIGNATED INSIDERS." Notwithstanding the
foregoing, the number of directors appointed by El Paso GP Holdco shall be
decreased automatically, and the number of directors appointed by Enterprise
Parent 2 shall be increased automatically, upon reductions in El Paso GP
Holdco's ownership of Membership Interests, as follows:
(i) If El Paso GP Holdco's Membership Interest constitutes
between 40%-49.9% of the Outstanding Membership Interests, El Paso GP Holdco
shall have the right to appoint four members of the ten-member Board of
Directors (of which four members, two shall be Independent Directors), and
Enterprise Parent 2 shall have the right to appoint a total of six members of
the ten-member Board of Directors (of which group of six, four shall be
Independent Directors);
(ii) If El Paso GP Holdco's Membership Interest constitutes
between 30%-39.9% of the Outstanding Membership Interests, El Paso GP Holdco
shall have the right to appoint three members of the ten-member Board of
Directors (of which three members, one shall be an Independent Director), and
Enterprise Parent 2 shall have the right to appoint a total of seven members of
the ten-member Board of Directors (of which group of seven, four shall be
Independent Directors);
(iii) If El Paso GP Holdco's Membership Interest constitutes
between 10%-29.9% of the Outstanding Membership Interests, El Paso GP Holdco
shall have the right to appoint one member of the ten-member Board of Directors
(and such one member shall not be required to be an Independent Director), and
Enterprise Parent 2 shall have the right to appoint a total of nine members of
the ten-member Board of Directors (of which group of nine, five shall be
Independent Directors); and
(iv) If El Paso GP Holdco's Membership Interest constitutes
between 0%-9.9% of the Outstanding Membership Interests, El Paso GP Holdco shall
not have the right to appoint any member to the Board of Directors, and
Enterprise Parent 2 shall have the right to appoint all ten members of the
ten-member Board of Directors (of which group of ten, six shall be Independent
Directors).
(b) Appointment of Directors. The initial Enterprise Appointed
Directors, Enterprise Independent Directors, Enterprise Designated Insiders, El
Paso GP Holdco Appointed Directors, El Paso GP Holdco Independent Directors and
El Paso GP Holdco Designated Insiders are listed on Exhibit B. A Director shall
serve on the Board of Directors until such time as the applicable Member ceases
to be a Member, ceases to have the right to appoint a Director pursuant to
Section 6.02(a) (and at such time El Paso GP Holdco shall specify which of its
Directors shall so cease to be a Director, or if El Paso GP Holdco fails to so
specify within five Business Days following El Paso GP Holdco's receipt of
written notice from Enterprise Parent 2, Enterprise Parent 2 shall so specify),
or such Director resigns, dies or is removed by the Member that appointed the
Director. Each Member has the right to remove any Director appointed by
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such Member at any time, and any such removal of a Director from the Board of
Directors shall become effective as of the date specified by the applicable
Member.
(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;
(ii) except as provided in Section 6.02(c)(iii) and
6.02(c)(iv), the presence at a meeting of a majority of the members of the Board
of Director shall constitute a quorum at any such meeting for the transaction of
business; provided, however, that (A) if none of the El Paso GP Holdco Appointed
Directors are present at any meeting duly called in accordance with Section
6.02(d), the presence at such meeting of five Directors shall constitute a
quorum, and (B) during the period that El Paso GP Holdco (including, for this
purpose, Permitted Transferees admitted as Substitute Members pursuant to
Section 9.02(a)) maintains the Required Economic Interest, the presence of at
least one El Paso GP Holdco Designated Insider shall be required to vote on any
actions described in Section 6.01(b);
(iii) except as provided in Section 6.02(c)(iv), 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; provided, however, (A)
if there is a tie vote among the Board of Directors with respect to any matter
brought before them for a vote, and Enterprise Parent 2 Individual is one of the
Directors, then the vote of Enterprise Parent 2 Individual shall be the
tie-breaking vote and the vote by the Enterprise Parent 2 Individual and other
Directors that collectively represent half of the members of the Board of
Directors present at a meeting at which a quorum is present shall be deemed to
constitute the act of the Board of Directors, and (B) during the period that El
Paso GP Holdco (including, for this purpose, Permitted Transferees admitted as
Substitute Members pursuant to Section 9.02(a)) maintains the Required Economic
Interest, no actions described in Section 6.01(b) shall be approved pursuant to
clause (A) of this Section 6.02(c)(iii) absent the approval of at least one El
Paso GP Holdco Designated Insider; and
(iv) if Subject Business is to be discussed at a meeting of
the Board of Directors in accordance with the provisions of Section 10.02, then
the notice of such meeting delivered pursuant to Section 6.02(d) shall so
specify, and (A) the Directors appointed by any Member whose Affiliate desires
to pursue such Subject Business may recuse themselves from any discussions and
votes with respect to such Subject Business by the Board, the Company or the
MLP, (B) the presence at a meeting of a majority of the members of the Board of
Directors (excluding the recused Directors) (the "SUBJECT BUSINESS BOARD") shall
constitute a quorum at any such meeting for the transaction of business, and (C)
the act of a majority of the members of the Subject Business Board present at a
meeting at which a quorum is present shall be deemed to constitute the act of
the Board of Directors.
(d) Meetings. Regular meetings of the Board of Directors shall be
held at such times and places as shall be designated from time to time by
resolution of the Board of Directors. 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
12
at least 48 hours prior written notice to the other members of such Board or
committee. Each Enterprise Appointed Director and each El Paso GP Holdco
Appointed Director shall be entitled to receive ten 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 each Enterprise Appointed Director
and each El Paso GP Holdco Appointed Director, 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 6.01(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 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.
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During the period that El Paso GP Holdco (including, for this purpose, Permitted
Transferees admitted as Substitute Members pursuant to Section 9.02(a))
maintains the Required Economic Interest, the Board shall appoint, as members of
the Audit and Conflicts Committee, the lesser of two El Paso GP Holdco Special
Independent Directors or the number of Directors that El Paso GP Holdco has the
right to appoint pursuant to Section 6.02(a). The Board shall appoint two
Enterprise Special Independent Directors as the other members of the Audit and
Conflicts Committee. When El Paso GP Holdco (including, for this purpose,
Permitted Transferees admitted as Substitute Members pursuant to Section
9.02(a)) ceases to maintain the Required Economic Interest, all of the members
of the Audit and Conflicts Committee shall be Enterprise 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
proposed increases in the administrative services fee payable under the EPCO
Agreement, (E) approving or disapproving, as the case may be, entering into any
transaction with any Affiliate of a Member, other than any transaction 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.
(f) Ability of El Paso GP Holdco to Transfer Voting and Other
Rights. 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 Permitted Transferee, such Transferee shall succeed to all of El
Paso GP Holdco's rights and obligations under this Agreement, including (i) its
consent and preemptive rights with respect to the creation and issuance of
additional Membership Interests pursuant to Section 3.02, (ii) its rights
pursuant to Section 6.01(b), (iii) its ability to appoint directors pursuant to
6.02(a), (v) its rights pursuant to Section 6.02(c), (vi) its preferential
purchase rights pursuant to Section 9.03, and (vii) its consent rights in
respect of amendments and restatements of this Agreement pursuant to Section
13.04.
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
14
Secretary, the Chief Financial Officer, any Treasurer and any and all Assistant
Secretaries and Assistant Treasurers and the Chief Legal Officer. At the
Effective Time, the Chairman of the Board, the Vice Chairman and Chief Executive
Officer and the President and Chief Operating Officer shall be the individuals
so named on Exhibit C hereto. 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.
(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
15
the office of Secretary and such other duties as may, from time to time, be
assigned to him by this Agreement, the Board of Directors or the President. The
Assistant Secretaries shall exercise the powers of the Secretary during that
Officer's absence or inability or refusal to act.
(h) Chief Financial Officer. The Chief Financial Officer shall keep
and maintain, or cause to be kept and maintained, adequate and correct books and
records of account of the Company. He shall receive and deposit all moneys and
other valuables belonging to the Company in the name and to the credit of the
Company and shall disburse the same and only in such manner as the Board of
Directors or the appropriate Officer of the Company may from time to time
determine, shall render to the Board of Directors and the President, whenever
any of them request it, an account of all his transactions as Chief Financial
Officer and of the financial condition of the Company, and shall perform such
further duties as the Board of Directors or the President may require. The Chief
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 ▇▇▇▇▇ ▇▇▇▇▇▇ 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.
16
6.05 COMPENSATION. The Officers shall receive such compensation for their
services as may be designated by the Board of Directors. In addition, the
Officers shall be entitled to be reimbursed for out-of-pocket costs and expenses
incurred in the course of their service hereunder. 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.
(a) To the fullest extent permitted by Law but subject to the
limitations expressly provided in this Agreement, each person shall be
indemnified and held harmless by the Company from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including
reasonable legal fees and expenses), judgments, fines, penalties, interest,
settlements and other amounts arising from any and all claims, demands, actions,
suits or proceedings, whether civil, criminal, administrative or investigative,
in which any such person may be involved, or is threatened to be involved, as a
party or otherwise, by reason of such person's status as (i) a present or former
member of the Board of Directors or any committee thereof, (ii) a present or
former Officer, employee, agent or trustee of the Company, or (iii) a person
serving at the request of the Company in another entity in a similar capacity as
that referred to in the immediately preceding clauses (i) or (ii), provided,
that in each case the person described in the immediately preceding clauses (i),
(ii) or (iii) ("INDEMNITEE") acted in good faith and in a manner which such
Indemnitee believed to be in, or not opposed to, the best interests of the
Company and, with respect to any criminal proceeding, had no reasonable cause to
believe such Indemnitee's conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction or upon a plea of
nolo contendere, or its equivalent, shall not create a presumption that the
Indemnitee acted in a manner contrary to that specified above. Any
indemnification pursuant to this Section 6.06 shall be made only out of the
assets of the Company.
(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 Officer, employee,
agent or trustee of the Company, or (iii) a Person serving at the request of the
Company in another entity in a similar capacity, and as to actions in any other
capacity, and shall continue as to an Indemnitee who has ceased to serve in such
capacity and shall inure to the benefit of the heirs, successors, assigns and
administrators of the Indemnitee.
17
(d) The Company may purchase and maintain insurance, on behalf of
the members of the Board of Directors, the Officers and such other persons as
the Board of Directors shall determine, against any liability that may be
asserted against or expense that may be incurred by such person in connection
with the Company's activities, regardless of whether the Company would have the
power to indemnify such person against such liability under the provisions of
this Agreement.
(e) For purposes of this Section 6.06, the Company shall be deemed
to have requested an Indemnitee to serve as fiduciary of an employee benefit
plan whenever the performance by the Indemnitee of such Indemnitee's duties to
the Company also imposes duties on, or otherwise involves services by, the
Indemnitee to the plan or participants or beneficiaries of the plan; excise
taxes assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute "fines" within the meaning of
Section 6.06(a); and action taken or omitted by the Indemnitee with respect to
an employee benefit plan in the performance of such Indemnitee's duties for a
purpose reasonably believed by such Indemnitee to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is in, or not opposed to, the best interests of the Company.
(f) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 6.06 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(g) The provisions of this Section 6.06 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
(h) No amendment, modification or repeal of this Section 6.06 or any
provision hereof shall in any manner terminate, reduce or impair either the
right of any past, present or future Indemnitee to be indemnified by the Company
or the obligation of the Company to indemnify any 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.
18
(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 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;
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(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 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
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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 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.
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. 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
21
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 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.
9.02 PERMITTED DISPOSITIONS OF MEMBERSHIP INTERESTS AND GENERAL
RESTRICTIONS.
(a) Permitted Dispositions. Any Member may transfer all or any
portion of its Membership Interest hereunder 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
Substitute 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 12.03, (ii) Sections 9.03 and 9.04 shall not apply to
Dispositions to Permitted Transferees and (iii) Sections 9.03 and 9.04 shall not
apply to any Dispositions by Enterprise Parent, its Permitted Transferees, or
its other Transferees and successors at any time after El Paso GP Holdco
(including, for this purpose, Permitted Transferees admitted as Substitute
Members pursuant to Section 9.02(a)) ceases to maintain the Required Economic
Interest, at which time Enterprise Parent, its Permitted Transferees, and its
other transferees and successors shall have the right to Dispose of Membership
Interests in compliance with Section 9.02(b).
(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 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
22
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.
9.03 PREFERENTIAL PURCHASE RIGHT.
(a) Procedure. If at any time any Member proposes to Dispose of all
or a portion of its Membership Interest to anyone other than a Permitted
Transferee, the Disposing Member shall promptly give notice thereof
("DISPOSITION NOTICE") to the other Members. Such Disposition Notice shall
constitute an offer to sell such Membership Interest and any interest in the MLP
to be Disposed of in connection therewith 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 Membership Interest (and interest in
the MLP, if applicable) that is the subject of the Disposition, the price to be
paid for such Membership Interest (and interest in the MLP, if applicable), 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 (and interest in the MLP, if applicable) 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
23
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
(and interest in the MLP, if applicable) 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 (and interest in the
MLP, if applicable) 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 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 Members waive or are deemed
to have waived the Preferential Right, the Disposing Member shall have the right
to Dispose of the Membership Interest (and interest in the MLP, if applicable)
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,
24
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
("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. The
Company, first, and the other Members, second, shall have the right ("BUY-OUT
RIGHT") 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.
(b) 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.
(c) 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
25
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 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(d). 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(c) 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.
(d) Closing. If the Buy-out Right is exercised in accordance with
Section 9.04(b) or (c), 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) or (c) (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) or (c)), 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
26
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(a), and the
Membership Interests, Sharing Ratios and Capital Accounts of the Members shall
be deemed adjusted to reflect the effect of the purchase.
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.
(a) Nothing in this Agreement (except Section 10.02(b)), 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 ("SUBJECT BUSINESS"); 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.
(b) Notwithstanding the foregoing, no Member shall, and each Member
shall cause its Affiliates not to, pursue or engage in any Subject Business
directly or indirectly, whether by acting as a manager or operator of assets or
companies that relate to any Subject Business or by participating in any Subject
Business as an owner, investor, joint venturer, member or shareholder or
otherwise, if (i) such Member or any of its Affiliates or any of their officers,
directors or employees receive Confidential Information regarding such Subject
Business from a Director appointed by such Member or a director of the MLP and
such Member or its Affiliates use, in a manner competitive or adverse to the
Company or the MLP, or disclose such Confidential Information or fail to provide
notice to Enterprise Parent of receipt of such
27
Confidential Information within ten Business Days or (ii) if any of the
non-Independent Directors appointed by such Member participate in discussions or
review information regarding such Subject Business in their capacities as
Directors or Officers of the Company subject to receipt of a notice that
conforms to Section 6.02(b)(iv).
10.03 BANKRUPT MEMBERS. If any Member becomes Bankrupt (a "BANKRUPT
Member"), the Company, by approval of a Majority Interest (excluding any
Bankrupt Member) or, if the Company does not exercise the relevant 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
28
(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 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
29
(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).
(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. Merger or consolidation of
the Company pursuant to this Article 12 requires the prior approval of the Board
of Directors in compliance with Section 6.01(b). If the Board of Directors shall
determine, in compliance with Section 6.01(b), to consent to the merger or
consolidation, the Board of Directors shall approve the Merger Agreement, which
shall set forth:
(a) The names and jurisdictions of formation or organization of each
of the business entities proposing to merge or consolidate;
(b) The name and jurisdiction of formation or organization of the
business entity that is to survive the proposed merger or consolidation
("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,
30
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, 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
Members 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) Subject to Section 6.01(b), the Merger Agreement shall be
approved upon receiving the affirmative vote or consent of at least a Majority
Interest unless the Merger Agreement contains any provision which, if contained
in an amendment to this Agreement, the provisions of this Agreement or the Act
would require the vote or consent of a greater percentage of the Membership
Interest or of any class thereof, in which case such greater percentage vote or
consent shall be required for approval of the Merger Agreement.
(c) After such 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
31
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 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
32
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.
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. Notwithstanding the
foregoing, each Member agrees that the Board of Directors, without the approval
of any Member, may amend any provision of this Agreement, and may authorize any
Officer to execute, swear to, acknowledge, deliver, file and record whatever
documents may be required in connection therewith, to reflect any change that is
expressly permitted under this Agreement or does not adversely affect the
Members in any material respect; provided, however, that any amendment to the
following rights of El Paso GP Holdco or its successors or Permitted Transferees
shall be deemed to materially affect the Members: (a) the consent and preemptive
rights with respect to the creation and issuance of additional Membership
Interests pursuant to Section 3.02, (b) the rights pursuant to Section 6.01(b),
(c) the rights to appoint directors pursuant to 6.02(a), (d) the rights pursuant
to Section 6.02(c), (e) the preferential purchase rights pursuant to Section
9.03, and (f) the consent rights in respect of amendments and restatements of
this Agreement pursuant to this Section 13.04.
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
33
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.
(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;
34
(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
(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.
35
(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.
13.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.
[Signature Page Follows]
36
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:
---------------------------------
▇▇▇ ▇▇▇▇▇▇ LLC
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
GULFTERRA GP HOLDING COMPANY
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
37
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. The Agreed Value of the
property contributed to the Company by El Paso GP Holdco is $ 425,000,000.
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).
38
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) (x) determined to be appropriate by the Board of
Directors and (y) during the period that El Paso GP Holdco (including, for this
purpose, Permitted Transferees admitted as Substitute Members pursuant to
Section 9.02(a)) maintains the Required Economic Interest, consented to by each
Member, which consent shall not be unreasonably withheld.
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
39
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
dispositions and acquisitions of Company properties, as deemed appropriate by
the Board of Directors. The aggregate Carrying Value of the Company's property
after adjustment pursuant to Section 4.04(d)(i) immediately before the admission
of El Paso GP Holdco and after taking into account any cash contributions, if
any, made by Enterprise Parent 1 or Enterprise Parent 2 in connection with the
consummation of the transactions contemplated by the Merger Agreement, was
$425,000,000.
CHANGE EXERCISE NOTICE - Section 9.04(c).
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 (i) a Member ceasing to be Controlled by the Person that was such
Member's Parent immediately prior to such event, or (ii) a Required Economic
Interest ceasing to be owned, directly or indirectly, by the Person that was
such Member's Parent immediately prior to such event.
CHANGE PURCHASING MEMBER - Section 9.04(c).
CHANGE UNEXERCISED PORTION - Section 9.04(c).
CHANGING MEMBER - Section 9.04(a).
CODE - the Internal Revenue Code of 1986, as amended from time to
time.
COMPANY - initial paragraph.
COMPANY MINIMUM GAIN - that amount determined in accordance with the
principles of Treasury Regulation Section 1.704-2(d).
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 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
40
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.
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.
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).
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.
EL PASO GP HOLDCO APPOINTED DIRECTORS - Section 6.02(a).
EL PASO GP HOLDCO DESIGNATED INSIDERS - Section 6.02(a).
EL PASO GP HOLDCO INDEPENDENT DIRECTORS - Section 6.02(a).
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.
41
ENTERPRISE PARENT 1 - initial paragraph.
ENTERPRISE PARENT 2 - initial paragraph.
ENTERPRISE PARENT 2 INDIVIDUAL - [▇▇▇ ▇▇▇▇▇▇].
ENTERPRISE APPOINTED DIRECTORS - Section 6.02(a).
ENTERPRISE DESIGNATED INSIDERS - Section 6.02(a).
ENTERPRISE INDEPENDENT DIRECTORS - Section 6.02(a).
EPCO AGREEMENT -- _________.
EXISTING AGREEMENT - Recitals.
FAIR MARKET VALUE - Section 9.04(a).
FMV NOTICE - Section 9.04(a).
INDEMNITEE - Section 6.06(a).
INDEPENDENT DIRECTOR - Section 6.02(a).
ISSUE NOTICE - Section 3.02.
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.
MAJORITY INTEREST - with respect to any matter, Members holding
Sharing Ratios possessing a majority of the voting power of all Outstanding
Membership Interests entitled to vote with respect to such matter.
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.
42
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.
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.
43
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.
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).
QUARTER - unless the context requires otherwise, a calendar quarter.
REQUIRED ECONOMIC INTEREST - the right, directly or indirectly, to
more than 25% of the distributions from the Company (including liquidating
distributions).
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.
SHARING RATIO - subject in each case to adjustments in accordance
with this Agreement or in connection with Dispositions of Membership Interests,
(a) in the case of a Member executing this Agreement as of the date of this
Agreement or a Person acquiring such Member's Membership Interest, the
percentage specified for that Member as its Sharing Ratio on Exhibit A, and (b)
in the case of Membership Interest issued pursuant to Section 3.02, the Sharing
Ratio established pursuant thereto; provided, however, that the total of all
Sharing Ratios shall always equal 100%.
SHELL - Recitals.
44
SPECIAL INDEPENDENT DIRECTOR - Section 6.02(a).
SUBJECT BUSINESS - Section 10.02(a).
SUBJECT BUSINESS BOARD - Section 6.02(c)(iv).
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).
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.
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
45
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 POWER - means, with respect to any Person, the possession of
direct or indirect equity interests in such Person qualified, in the absence of
contingencies, to vote for the election of 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.
46
EXHIBIT A
MEMBER SHARING RATIO(1) CAPITAL ACCOUNT(2)
------ ---------------- ------------------
EPC Partners II, Inc. % $
▇▇▇ ▇▇▇▇▇▇ LLC % $
------ ------------------
50% $ 425,000,000
GulfTerra GP Holding Company 50% $ 425,000,000
ADDRESSES:
EPC Partners II, Inc.
---------------------------------
---------------------------------
---------------------------------
▇▇▇ ▇▇▇▇▇▇ LLC
---------------------------------
---------------------------------
---------------------------------
GulfTerra GP Holding Company
---------------------------------
---------------------------------
---------------------------------
----------
(1) EPC Partners II, Inc. and ▇▇▇ ▇▇▇▇▇▇ LLC to collectively equal 50%, and
GulfTerra GP Holding Company to equal 50%.
(2) EPC Partners II, Inc. and ▇▇▇ ▇▇▇▇▇▇ LLC to collectively equal $425,000,000,
and GulfTerra GP Holding Company to equal $425,000,000.
Exhibit A
EXHIBIT B
INITIAL DIRECTORS
[To Come]
Exhibit B
EXHIBIT C
INITIAL OFFICERS
1. Chariman ▇. ▇▇▇▇▇▇
2. President and Chief Operating Officer ▇. ▇▇▇▇▇▇▇▇
3. Vice Chairman and Chief Executive Officer ▇. ▇▇▇▇▇▇
Exhibit D