FIRST AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
ENTERPRISE PRODUCTS GP, LLC,
A Delaware Limited Liability Company
FIRST AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
ENTERPRISE PRODUCTS GP, LCC,
A Delaware Limited Liability Company
TABLE OF CONTENTS
ARTICLE 1: DEFINITIONS
1.01 Definitions..................................................1
1.02 Construction.................................................1
ARTICLE 2: ORGANIZATION
2.01 Formation....................................................2
2.02 Name.........................................................2
2.03 Registered Office; Registered Agent; Principal Office in the
United States; Other Offices.................................2
2.04 Purposes.....................................................2
2.05 Term.........................................................2
2.06 No State-Law Partnership.....................................2
ARTICLE 3: MATTERS RELATING TO MEMBERS
3.02 Creation of Additional Membership Interest...................3
3.03 Access to Information........................................3
3.04 Liability to Third Parties...................................3
3.05 Withdrawal...................................................3
ARTICLE 4: CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS
4.01 Capital Contributions........................................4
4.02 Loans........................................................4
4.03 Return of Contributions......................................4
4.04 Capital Accounts.............................................4
4.05 Deficit Capital Accounts.....................................5
ARTICLE 5: DISTRIBUTIONS AND ALLOCATIONS
5.01 Distributions................................................5
5.02 Distributions on Dissolution and Winding Up..................5
5.03 Allocations..................................................5
5.04 Varying Interests............................................5
ARTICLE 6: MANAGEMENT
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6.01 Management...................................................6
6.02 Board of Directors...........................................7
6.03 Executive Committee.........................................10
6.04 Officers....................................................11
6.04 Duties of Officers and Directors............................13
6.05 Compensation................................................13
6.06 Indemnification.............................................14
6.07 Limitation of Indemnification...............................15
ARTICLE 7: TAXES
7.01 Tax Returns.................................................16
7.02 Tax Elections...............................................16
7.03 Tax Matters Member..........................................17
ARTICLE 8: BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
8.01 Maintenance of Books........................................17
8.02 Reports.....................................................18
8.03 Bank Accounts...............................................18
ARTICLE 9: DISPOSITION OF COMPANY INTERESTS
9.01 Dispositions and Encumbrances of Membership Interests.......18
9.02 Transfer of Tejas Energy Rights.............................19
9.03 Transfer of EPC II Rights...................................20
ARTICLE 10: REPRESENTATIONS, WARRANTIES AND
COVENANTS OF MEMBERS
10.01 Representations, Warranties and Covenants...................20
ARTICLE 11: DISSOLUTION, WINDING-UP AND TERMINATION
11.01 Dissolution.................................................21
11.02 Winding-Up and Termination..................................21
11.03 Certificate of Cancellation.................................22
ARTICLE 12: GENERAL PROVISIONS
12.01 Intentionally Deleted.......................................22
12.02 Notices.....................................................22
12.03 Entire Agreement; Superseding Effect........................23
12.04 Effect of Waiver or Consent.................................23
12.05 Amendment or Restatement....................................23
12.06 Binding Effect..............................................23
12.07 Governing Law; Severability.................................23
12.08 Further Assurances..........................................23
12.09 Waiver of Certain Rights....................................24
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12.10 Counterparts................................................24
Attachment I Definitions
Exhibit A Members and Sharing Ratios
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FIRST AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
ENTERPRISE PRODUCTS GP, LLC
A Delaware Limited Liability Company
THIS FIRST AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this
"Agreement") of ENTERPRISE PRODUCTS GP, LLC (the "Company"), dated effective as
of September 17, 1999 (the "Effective Date"), is adopted, executed and agreed
to, for good and valuable consideration, by EPC Partners II, Inc. , a Delaware
corporation ("EPC II"), Dan Duncan LLC, a Texas limited liability company
("DDLLC") and Tejas Energy, LLC, a Delaware limited liability company ("Tejas
Energy").
RECITALS
WHEREAS, Enterprise Products Company, a Delaware corporation ("EPC") and
DDLLC formed the Company on April 9, 1998 with EPC as a 95% member and DDLLC as
a 5% member; and
WHEREAS, EPC assigned its 95% membership interest in the Company to EPC II
effective as of July 30, 1998.
AGREEMENTS
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants and agreements set forth herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged and
agreed by the parties, EPC II, DDLLC and Tejas Energy hereby agree as follows:
ARTICLE 1: DEFINITIONS
1.01 Definitions. Each capitalized term used herein shall have the meaning
given such term in Attachment I.
1.02 Construction. Unless the context requires otherwise: (a) the gender
(or lack of gender) of all words used in this Agreement includes the masculine,
feminine, and neuter; (b) references to Articles and Sections refer to Articles
and Sections of this Agreement; (c) references to Exhibits refer to the Exhibits
attached to this Agreement, each of which is made a part hereof for all
purposes; (d) references to Laws refer to such Laws as they may be amended from
time to time, and references to particular provisions of a Law include any
corresponding provisions of any succeeding Law; and (e) references to money
refer to legal currency of the United States of America.
ARTICLE2: ORGANIZATION
2.01 Formation. The Company was organized as a Delaware limited liability
company by the filing of a Certificate of Formation (the "Delaware Certificate")
on April 9, 1998 with the Secretary of State of Delaware pursuant to the Act.
2.02 Name. The name of the Company is "Enterprise Products GP, LLC" and all
Company business must be conducted in that name or such other names that comply
with Law as the Board of Directors may select.
2.03 Registered Office; Registered Agent; Principal Office in the United
States; Other Offices. The registered office of the Company required by the Act
to be maintained in the State of Delaware shall be the office of the initial
registered agent named in the Delaware Certificate or such other office (which
need not be a place of business of the Company) as the Board of Directors may
designate in the manner provided by Law. The registered agent of the Company in
the State of Delaware shall be the initial registered agent named in the
Delaware Certificate or such other Person or Persons as the Board of Directors
may designate in the manner provided by Law. The principal office of the Company
in the United States shall be at such place as the Board of Directors may
designate, which need not be in the State of Delaware, and the Company shall
maintain records there or such other place as the Board of Directors shall
designate and shall keep the street address of such principal office at the
registered office of the Company in the State of Delaware. The Company may have
such other offices as the Board of Directors may designate.
2.04 Purposes. The purposes of the Company are the transaction of any or
all lawful business for which limited liability companies may be organized under
the Act; provided, however, that for so long as it is the general partner of the
MLP, (a) the Company's sole business will be to act as the general partner or
managing member of the MLP, the OLP, and any other partnership or limited
liability company of which the MLP or the OLP is, directly or indirectly, a
partner or managing member and to undertake activities that are ancillary or
related thereto (including being a limited partner in the partnership), and
(b) The Company shall not engage in any business or activity or incur any debts
or liabilities except in connection with or incidental to (i) its performance as
general partner or managing member of one or more Group Members or as described
in or contemplated by the Registration Statement or (ii) the acquiring, owning
or disposing of debt or equity securities in any Group Member.
2.05 Term. The period of existence of the Company (the "Term") commenced on
April 9, 1998, and shall end at such time as a certificate of cancellation is
filed with the Secretary of State of Delaware in accordance with Section 11.03.
2.06 No State-Law Partnership. The Members intend that the Company not be a
partnership (including a limited partnership) or joint venture, and that no
Member be a partner or joint venturer of any other Member, for any purposes
other than federal and state tax purposes, and this Agreement may not be
construed to suggest otherwise.
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ARTICLE 3: MATTERS RELATING TO MEMBERS
3.01 Members. DDLLC and EPC II were previously admitted as Members of the
Company, and Tejas Energy is hereby admitted as a Member of the Company
effective as of the date first set forth above.
3.02 Creation of Additional Membership Interest. Additional Membership
Interests may be created and issued to existing Members only with the unanimous
approval of all Members. Additional Membership Interests may be created and
issued to other Persons, and such other Persons may be admitted to the Company
as Members, only with the unanimous consent of the existing Members, on such
terms and conditions as the existing Members may unanimously determine at the
time of admission. The terms of admission or issuance must specify the Sharing
Ratios applicable thereto and may provide for the creation of different classes
or groups of Members having different rights, powers, and duties. The Board of
Directors may reflect the creation of any new class or group in an amendment to
this Agreement indicating the different rights, powers, and duties, and such an
amendment need be executed only by the Board of Directors. Any such admission is
effective only after the new Member has executed and delivered to the Members an
instrument containing the notice address of the new Member, the Assignee's
ratification of this Agreement and agreement to be bound by it, and its
confirmation that the representations and warranties in Section 10.01 are true
and correct with respect to it. The provisions of this Section 3.02 shall not
apply to Dispositions of Membership Interests or admissions of Assignees in
connection therewith, such matters being governed by Section 9.01.
3.03 Access to Information. Each Member shall be entitled to receive any
information that it may request concerning the Company; provided, however, that
this Section 3.03 shall not obligate the Company, the Board of Directors or the
Officers to create any information that does not already exist at the time of
such request (other than to convert existing information from one medium to
another, such as providing a printout of information that is stored in a
computer database). Each Member shall also have the right, upon reasonable
notice, and at all reasonable times during usual business hours to inspect the
properties of the Company and to audit, examine and make copies of the books of
account and other records of the Company. Such right may be exercised through
any agent or employee of such Member designated in writing by it or by an
independent public accountant, engineer, attorney or other consultant so
designated. The Member making the request shall bear all costs and expenses
incurred in any inspection, examination or audit made on such Member's behalf.
3.04 Liability to Third Parties. No Member shall be liable for the debts,
obligations or liabilities of the Company.
3.05 Withdrawal. A Member does not have the right to Withdraw; provided,
however, a Member shall have the power to Withdraw at any time in violation of
this Agreement. If a Member exercises such power in violation of this Agreement,
(a) such Withdrawing Member shall be liable to the Company and the other Members
and their Affiliates for all monetary damages suffered by them as a result of
such Withdrawal; (b) such other Members shall, in addition thereto, have the
rights set forth in Article 11; and (c) such Withdrawing Member shall not have
any rights
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under Section 18-604 of the Act. In no event shall the Company or any Member
have the right, through specific performance or otherwise, to prevent a Member
from Withdrawing in violation of this Agreement.
ARTICLE 4: CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS
4.01 Capital Contributions. In exchange for its Membership Interest in the
Company, DDLLC has made certain Capital Contributions. EPC II and Tejas Energy
are the assignees of their respective Membership Interests in the Company.
4.02 Loans. If the Company does not have sufficient cash to pay its
obligations, any Member(s) that may agree to do so with the consent of the Board
of Directors may advance all or part of the needed funds to or on behalf of the
Company. An advance described in this Section 4.02 constitutes a loan from the
Member to the Company, bears interest at a rate determined by the Board of
Directors from the date of the advance until the date of payment, and is not a
Capital Contribution.
4.03 Return of Contributions. Except as expressly provided herein, a Member
is not entitled to the return of any part of its Capital Contributions or to be
paid interest in respect of either its Capital Account or its Capital
Contributions. An unrepaid Capital Contribution is not a liability of the
Company or of any Member. A Member is not required to contribute or to lend any
cash or property to the Company to enable the Company to return any Member's
Capital Contributions.
4.04 Capital Accounts. A Capital Account shall be established and
maintained for each Member. Each Member's Capital Account shall be increased by
(a) the amount of money contributed by that Member to the Company, (b) the fair
market value of property contributed by that Member to the Company (net of
liabilities secured by such contributed property that the Company is considered
to assume or take subject to under Section 752 of the Code), and (c) allocations
to that Member of Company income and gain (or items thereof), including income
and gain exempt from tax and income and gain described in Treasury Regulation
Section 1.704-1(b)(2)(iv)(g), but excluding income and gain described in
Treasury Regulation Section 1.704-1(b)(4)(i), and shall be decreased by (d) the
amount of money distributed to that Member by the Company, (e) the fair market
value of property distributed to that Member by the Company (net of liabilities
secured by such distributed property that such Member is considered to assume or
take subject to under Section 752 of the Code), (f) allocations to that Member
of expenditures of the Company described (or treated as described) in
Section 705(a)(2)(B) of the Code, and (g) allocations of Company loss and
deduction (or items thereof), including loss and deduction described in Treasury
Regulation Section 1.704-1(b)(2)(iv)(g), but excluding items described in (f)
above and loss or deduction described in Treasury Regulation
Sections 1.704-1(b)(4)(i) or 1.704-1(b)(4)(iii). The Members' Capital Accounts
shall also be maintained and adjusted as permitted by the provisions of Treasury
Regulation Section 1.704-1(b)(2)(iv)(f) and as required by the other provisions
of Treasury Regulation Sections 1.704-1(b)(2)(iv) and 1.704-1(b)(4), including
adjustments to reflect the allocations to the Members of depreciation,
depletion, amortization, and gain or loss as computed for book purposes rather
than the allocation of the corresponding items as computed for tax purposes, as
required by Treasury Regulation Section 1.704-1(b)(2)(iv)(g). Thus,
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the Members' Capital Accounts shall be increased or decreased to reflect a
revaluation of the Company's property on its books based on the fair market
value of the Company's property on the date of adjustment immediately prior to
(A) the contribution of money or other property to the Company by a new or
existing Member as consideration for a Membership Interest or an increased
Sharing Ratio, (B) the distribution of money or other property by the Company to
a Member as consideration for a Membership Interest, or (C) the liquidation of
the Company. A Member that has more than one Membership Interest shall have a
single Capital Account that reflects all such Membership Interests, regardless
of the class of Membership Interests owned by such Member and regardless of the
time or manner in which such Membership Interests were acquired. Upon the
Disposition of all or a portion of a Membership Interest, the Capital Account of
the Disposing Member that is attributable to such Membership Interest shall
carry over to the Assignee in accordance with the provisions of Treasury
Regulation Section 1.704-1(b)(2)(iv)(l). Within forty-five days following the
Closing Date, the Company shall provide Tejas Energy with a written calculation
of each Member's Capital Account.
4.05 Deficit Capital Accounts. No Member will be required to pay to the
Company, to any other Member or to any third party any deficit balance that may
exist from time to time in the Member's Capital Account.
ARTICLE 5: DISTRIBUTIONS AND ALLOCATIONS
5.01 Distributions. Subject to Section 6.03, distributions shall be made in
such amounts and at such times as shall be determined by the Board of Directors.
5.02 Distributions on Dissolution and Winding Up. Upon the dissolution and
winding up of the Company, after adjusting the Capital Accounts for all
distributions made under Section 5.01 and all allocations under this Article 5,
all available proceeds distributable to the Members as determined under
Section 11.02 shall be distributed to all of the Members in amounts equal to the
Members' positive Capital Account balances.
5.03 Allocations. (a) For purposes of maintaining the Capital Accounts
pursuant to Section 4.04 and for income tax purposes, except as provided in
Section 5.03(b), each item of income, gain, loss, deduction and credit of the
Company shall be allocated to the Members in accordance with their Sharing
Ratios.
(b) For income tax purposes, income, gain, loss, and deduction with respect
to property contributed to the Company by a Member or revalued pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(f) shall be allocated among the
Members in a manner that takes into account the variation between the adjusted
tax basis of such property and its book value, as required by Section 704(c) of
the Code and Treasury Regulation Section 1.704-1(b)(4)(i), using the remedial
allocation method permitted by Treasury Regulation Section 1.704-3(d).
5.04 Varying Interests. All items of income, gain, loss, deduction or
credit shall be allocated, and all distributions shall be made, to the Persons
shown on the records of the Company
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to have been Members as of the last calendar day of the period for which the
allocation or distribution is to be made. Notwithstanding the foregoing, if
during any taxable year there is a change in any Member's Sharing Ratio, the
Members agree that their allocable shares of such items for the taxable year
shall be determined based on any method determined by the Board of Directors to
be permissible under Code Section 706 and the related Treasury Regulations to
take account of the Members' varying Sharing Ratios.
ARTICLE 6: MANAGEMENT
6.01 Management. All management powers over the business and affairs of the
Company shall be exclusively vested in an Executive Committee (the "Executive
Committee") and a Board of Directors (the "Board of Directors") and, subject to
the direction of the Executive Committee and the Board of Directors, the
Officers. The Officers of the Company shall each constitute a "manager" of the
Company within the meaning of the Act and shall have the power and authority to
execute documents and instruments in such capacity in the name and on behalf of
the Company to the same extent they have such power and authority as Officers of
the Company. No Member, by virtue of having the status of a Member, shall have
any management power over the business and affairs of the Company or actual or
apparent authority to enter into contracts on behalf of, or to otherwise bind,
the Company. The authority and functions of the Executive Committee shall be as
set forth in Section 6.03. Except as otherwise specifically provided in this
Agreement (including Section 6.03(c)), the authority and functions of the Board
of Directors on the one hand and of the Officers on the other shall be identical
to the authority and functions of the board of directors and officers,
respectively, of a corporation organized under the Delaware General Corporation
Law. Thus, except as otherwise specifically provided in this Agreement
(including Section 6.03(c)), the business and affairs of the Company shall be
managed under the direction of the Board of Directors, and the day-to-day
activities of the Company shall be conducted on the Company's behalf by the
Officers, who shall be agents of the Company. In addition to the powers that now
or hereafter can be granted to managers under the Act and to all other powers
granted under any other provision of this Agreement and subject to any
provisions of this Agreement that require approval of specified individuals or
entities prior to the taking of certain actions, the Board of Directors and the
Officers (subject to the direction of the Board of Directors) shall have full
power and authority to do all things on such terms as they may deem necessary or
appropriate to conduct, or cause to be conducted, the business and affairs of
the Company, including the following:
(a) the making of any expenditures, the lending or borrowing of money,
the assumption or guarantee of, or other contracting for, indebtedness and
other liabilities, the issuance of evidences of indebtedness and the
incurring of any other obligations;
(b) the making of tax, regulatory and other filings, or rendering of
periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Company;
(c) the merger or other combination of the Company with or into
another entity;
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(d) the use of the assets of the Company (including cash on hand) for
any purpose consistent with the terms of this Agreement and the repayment
of obligations of the Company;
(e) the negotiation, execution and performance of any contracts,
conveyances or other instruments;
(f) the distribution of Company cash;
(g) the selection, engagement and dismissal of Officers, employees and
agents, outside attorneys, accountants, engineers, consultants and
contractors and the determination of their compensation and other terms of
employment or hiring;
(h) the maintenance of such insurance for the benefit of the Company,
as it deems necessary or appropriate;
(i) the acquisition or disposition of assets;
(j) the formation of, or acquisition of an interest in, or the
contribution of property to, any entity;
(k) the control of any matters affecting the rights and obligations of
the Company, including the commencement, prosecution and defense of actions
at law or in equity and otherwise engaging in the conduct of litigation and
the incurring of legal expense and the settlement of claims and litigation;
and
(l) the indemnification of any individual or entity against
liabilities and contingencies to the extent permitted by law.
6.02 Board of Directors. (a) Generally. The Board of Directors shall
consist of not less than five nor more than nine natural persons. Each Director
shall be elected as provided in Section 6.02(b) and shall serve in such capacity
until his successor has been elected and qualified or until such Director dies,
resigns or is removed. The Board of Directors may determine the number of
Directors then constituting the whole Board of Directors, but the Board of
Directors shall not decrease the number of persons that constitute the whole
Board of Directors if such decrease would shorten the term of any Director, nor
may it increase the size during any 12-month period in a manner that would cause
the Board of Directors to elect more than two additional Directors to fill the
vacancies created by such increase. The Board of Directors as of the date hereof
shall consist of nine Directors, consisting of the individuals named below (the
last three of which are the initial Tejas Designated Directors, as defined in
Section 6.02(b)):
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Dan L. Duncan
O. S. Andras
Randa L. Duncan
Gary L. Miller
Ralph S. Cunningham
Lee W. Marshall, Sr.
Charles R. Crisp
Curtis R. Frasier
Stephen H. McVeigh
(b) Election of Directors. Except for Tejas Designated Directors, each
member of the Board of Directors shall serve until such member's death,
resignation or removal, any Director may be removed at any time, with or
without cause, by the Board of Directors, and upon the death, resignation
or removal of such Director, such Director's successor shall be elected by
the Board of Directors. Pursuant to the Unitholder Rights Agreement, Tejas
Energy has the right from time to time as specified therein to appoint
members of the Board of Directors. Such designees are referred to herein as
"Tejas Designated Directors." So long as Tejas Energy has the continuing
right to appoint a Tejas Designated Director pursuant to the Unitholder
Rights Agreement, such Director may only be removed by Tejas Energy, and,
in the event of the death, resignation or removal of such Director, Tejas
Energy shall be entitled to appoint such Director's replacement. If,
pursuant to the Unitholder Rights Agreement, Tejas Energy no longer has the
right to designate a Tejas Designated Director, then such Director may be
removed by the Board of Directors, and the Board of Directors may,
notwithstanding Section 6.02(a), decrease the size of the Board of
Directors accordingly or appoint such Director's replacement (in the event
of removal, resignation or death).
(c) Voting; Quorum; Required Vote for Action. Unless otherwise
required by the Act, other law or the provisions hereof,
(1) each member of the Board of Directors shall have one vote;
(2) the presence at a meeting of a majority of the members of the
Board of Directors shall constitute a quorum at any such meeting for
the transaction of business; and
(3) the act of a majority of the members of the Board of
Directors present at a meeting at which a quorum is present shall be
deemed to constitute the act of the Board of Directors.
(d) Meetings. Regular meetings of the Board of Directors shall be held
at such times and places as shall be designated from time to time by
resolution of the Board of Directors. Notice of such regular meetings shall
not be required. Special meetings of the Board of Directors or meetings of
any committee thereof may be called by written request of any member of the
Board of Directors or a committee thereof on at least 48 hours prior
written notice to the other members of the Board of Directors or such
committee. Any such notice, or waiver thereof, need not state the purpose
of such meeting except as may otherwise be required by law. Attendance of a
Director at a meeting (including pursuant to the last sentence of this
Section 6.02(d)) shall constitute a waiver of notice
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of such meeting, except where such Director attends the meeting for
the express purpose of objecting to the transaction of any business on the
grounds that the meeting is not lawfully called or convened. Any action
required or permitted to be taken at a meeting of the Board of Directors or
any committee thereof may be taken without a meeting, without prior notice
and without a vote if a consent or consents in writing, setting forth the
action so taken, is signed by at least as many members of the Board of
Directors or committee thereof as would have been required to take such
action at a meeting of the Board of Directors or such committee; provided
that, if any such consent has less than the unanimous approval of the
members of the Board of Directors or such committee, as applicable, 48
hours prior written notice shall be provided to the non-approving members
prior to the taking of such action. Members of the Board of Directors or
any committee thereof may participate in and hold a meeting by means of
conference telephone, videoconference or similar communications equipment
by means of which all persons participating in the meeting can hear each
other, and participation in such meetings shall constitute presence in
person at the meeting.
(e) Committees.
(i) The Board of Directors may appoint one or more committees of the
Board of Directors to consist of two or more Directors, which committee(s)
shall have and may exercise such of the powers and authority of the Board
of Directors with respect to the management of the business and affairs of
the Company as may be provided in a resolution of the Board of Directors.
Any committee designated pursuant to this Section 6.02(e) shall choose its
own chairman, shall keep regular minutes of its proceedings and report the
same to the Board of Directors when requested, and, subject to
Section 6.02(d), shall fix its own rules or procedures and shall meet at
such times and at such place or places as may be provided by such rules or
by resolution of such committee or resolution of the Board of Directors. At
every meeting of any such committee, the presence of a majority of all the
members thereof shall constitute a quorum and the affirmative vote of a
majority of the members present shall be necessary for the adoption by it
of any resolution. The Board of Directors may designate one or more
Directors as alternate members of any committee who may replace any absent
or disqualified member at any meeting of such committee; provided, however,
that any such designated alternate of the Audit and Conflicts Committee may
not be a member, officer, or employee of the Company or a member, officer,
director, or employee of any Affiliate of the Company. In the absence or
disqualification of a member of a committee, the member or members present
at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in the place of the absent or
disqualified member; provided, however, that any such replacement member of
the Audit and Conflicts Committee may not be a member, officer, or employee
of the Company or a member, officer, director, or employee of any Affiliate
of the Company.
(ii) In addition to any other committees established by the Board of
Directors pursuant to Section 6.02(e)(i), the Board of Directors shall
establish an "Audit and Conflicts Committee," which shall be composed
entirely of two or more directors who are neither members, officers, nor
employees of the Company nor members, officers, directors, or employees of
any Affiliate of the Company. The Audit and Conflicts Committee shall be
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responsible for approving or disapproving, as the case may be, any
matters regarding the business and affairs of the MLP and the OLP required
to be considered by, or submitted to, such Audit and Conflicts Committee
pursuant to the terms of the MLP Agreement and the Amended and Restated
Agreement of Limited Partnership of the OLP, including the review of the
external financial reporting of the MLP, the recommendation of independent
public accountants to be engaged by the MLP, the review of the MLP's
procedures for internal auditing and the adequacy of its internal
accounting controls and the approval of any proposed increases in the
administrative services fee payable under the EPCO Agreement.
(iii) With respect to any committees established by the Board of
Directors pursuant to the terms and conditions of this Agreement (other
than the Audit and Conflicts Committee and the Executive Committee), Tejas
Energy shall be entitled, from time to time during such time as Tejas
Energy is, pursuant to the Unitholder Rights Agreement, entitled to
designate at least one Director to the Company's Board of Directors, to
designate at least one member or representative to serve on each such
committee.
(f) Chairman. The Board of Directors may elect one of its members as
Chairman of the Board (the "Chairman of the Board"). The Chairman of the
Board, if any, and if present and acting, shall preside at all meetings of
the Board of Directors. Otherwise, the President, if present, acting and a
Director, or any other Director chosen by the Board of Directors, shall
preside. Unless the Board of Directors provides otherwise, the Chairman of
the Board shall be an Officer of the Company and shall have the same power
and authority as the President. The Chairman of the Board as of the Closing
Date shall be Dan L. Duncan.
6.03 Executive Committee. (a) Generally. The Executive Committee shall
consist of five members. The number of members serving on the Executive
Committee can only be increased with a unanimous vote of the members of the
Executive Committee. Each member of the Executive Committee shall be elected as
provided in Section 6.03(b) and shall serve in such capacity until his successor
has been elected and qualified or until such member dies, resigns or is removed.
The initial members of the Executive Committee are the individuals named below
(the last two of which are the initial Tejas Designated Members, as defined in
Section 6.03(b)):
Dan L. Duncan
O. S. Andras
Richard H. Bachmann
Stephen H. McVeigh
Curtis R. Frasier
(b) Election of Executive Committee Members. Except for Tejas
Designated Members, each member of the initial Executive Committee shall
serve until such member's death, resignation or removal, any member of the
Executive Committee may be removed at any time, with or without cause, by
the Board of Directors, and upon the death, resignation or removal of such
member, such member's successor shall be elected by the Board of Directors.
Pursuant to the Unitholder Rights Agreement, Tejas Energy has the right
from time to time as specified therein to appoint members of the Executive
Committee. Such designees are referred to herein as "Tejas Designated
Members."
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So long as Tejas Energy has the continuing right to appoint a Tejas
Designated Member pursuant to the Unitholder Rights Agreement, such member
may only be removed by Tejas Energy, and, in the event of the death,
resignation or removal of such member, Tejas Energy shall be entitled to
appoint such member's replacement. If, pursuant to the Unitholder Rights
Agreement, Tejas Energy no longer has the right to designate a Tejas
Designated Member, then such member may be removed by the Board of
Directors, and the Board of Directors may, notwithstanding Section 6.03(a),
decrease the size of the Executive Committee accordingly or appoint such
member's replacement (in the event of removal, resignation or death).
(c) Approval Authority; Voting. All matters relating to the items
listed in Section 2.2(b) of the Unitholder Rights Agreement must be
submitted to and are subject to the approval of the Executive Committee.
The Executive Committee shall decide matters by majority vote, provided
that, until such time as all of the Special Units (other than any Special
Units not issued as a result of a failure to meet the performance tests
referenced in Section 5.3(d) of the MLP Agreement) have been converted to
Common Units and such Common Units have a Closing Price in excess of $24
per Common Unit (appropriately Adjusted) for each trading day during a
period of 120 consecutive calendar days (with any trading days during which
Tejas Energy is prevented from trading such Common Units, as a result of
(i) black-out provisions under Section 2(b)(ii) of the Registration Rights
Agreement referenced in the Contribution Agreement or (ii) in the event
Tejas Energy desires to sell such Common Units in a manner not requiring
registration under the Securities Act and Tejas Energy advises the MLP of
such intention in writing, Tejas Energy having been advised by the MLP that
there is material non-public information relating to the MLP that would
prevent such a sale, not counting toward such 120-day total) the Executive
Committee must receive the vote of at least one of the Tejas Designated
Members in order to approve any of the actions by the Company, the MLP or
any of their respective Subsidiaries set forth in Section 2.2(b) of the
Unitholder Rights Agreement.
6.04 Officers. (a) Generally. The Board of Directors, as set forth
below, shall appoint agents of the Company, referred to as "Officers" of
the Company. Unless provided otherwise by resolution of the Board of
Directors, the Officers shall have the titles, power, authority and duties
described below in this Section 6.04.
(b) Titles and Number. The Officers of the Company shall be the
Chairman of the Board (unless the Board of Directors provides otherwise),
the President, the Chief Executive Officer, any and all Vice Presidents,
the Secretary, the Chief Financial Officer, any Treasurer and any and all
Assistant Secretaries and Assistant Treasurers and the Chief Legal Officer.
There shall be appointed from time to time, in accordance with
Section 6.04(c) below, such Vice Presidents, Secretaries, Assistant
Secretaries, Treasurers and Assistant Treasurers as the Board of Directors
may desire. Any person may hold two or more offices.
(c) Appointment and Term of Office. The Officers shall be appointed by
the Board of Directors at such time and for such term as the Board of
Directors shall determine. Any Officer may be removed, with or without
cause, only by the Board of Directors. Vacancies in any office may be
filled only by the Board of Directors.
-11-
(d) President. Subject to the limitations imposed by this Agreement, any
employment agreement, any employee plan or any determination of the Board of
Directors, the President, subject to the direction of the Board of Directors,
shall be the Chief Executive Officer of the Company and, as such, shall be
responsible for the management and direction of the day-to-day business and
affairs of the Company, its other Officers, employees and agents, shall
supervise generally the affairs of the Company and shall have full authority to
execute all documents and take all actions that the Company may legally take.
The President shall exercise such other powers and perform such other duties as
may be assigned to him by this Agreement or the Board of Directors, including
any duties and powers stated in any employment agreement approved by the Board
of Directors.
(e) Chief Executive Officer. The President shall be the Chief Executive
Officer of the Company. Subject to the limitation imposed by this Agreement, any
employment agreement, any employee plan or any determination of the Board of
Directors, the Chief Executive Officer, subject to the direction of the Board of
Directors, shall be responsible for the management and direction of the
day-to-day business and affairs of the Company, its other officers, employees
and agents, shall supervise generally the affairs of the Company and shall have
full authority to execute all documents and take all actions that the Company
may legally take. The Chief Executive Officer shall exercise such other powers
and perform such other duties as may be assigned to him by this Agreement or the
Board of Directors, including any duties and powers stated in any employment
agreement approved by the Board of Directors.
(f) Vice Presidents. In the absence of the President, each Vice President
appointed by the Board of Directors shall have all of the powers and duties
conferred upon the President, including the same power as the President to
execute documents on behalf of the Company. Each such Vice President shall
perform such other duties and may exercise such other powers as may from time to
time be assigned to him by the Board of Directors or the President.
(g) Secretary and Assistant Secretaries. The Secretary shall record or
cause to be recorded in books provided for that purpose the minutes of the
meetings or actions of the Board of Directors, shall see that all notices are
duly given in accordance with the provisions of this Agreement and as required
by law, shall be custodian of all records (other than financial), shall see that
the books, reports, statements, certificates and all other documents and records
required by law are properly kept and filed, and, in general, shall perform all
duties incident to the office of Secretary and such other duties as may, from
time to time, be assigned to him by this Agreement, the Board of Directors or
the President. The Assistant Secretaries shall exercise the powers of the
Secretary during that Officer's absence or inability or refusal to act.
(h) Chief Financial Officer. The Chief Financial Officer shall keep and
maintain, or cause to be kept and maintained, adequate and correct books and
records of account of the Company. He shall receive and deposit all moneys and
other valuables belonging to the Company in the name and to the credit of the
Company and shall disburse the same and only in such manner as the Board of
Directors or the appropriate Officer of the company may from time to time
determine, shall render to the Board of Directors and the President, whenever
any of them request it, an account of all his transactions as Chief Financial
Officer and of the financial condition of the Company, and shall perform such
further duties as the Board of Directors or the President may require. The Chief
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Financial Officer shall have the same power as the President to execute
documents on behalf of the Company.
(i) Treasurer and Assistant Treasurers. The Treasurer shall have such
duties as may be specified by the Chief Financial Officer in the performance of
his duties. The Assistant Treasurers shall exercise the power of the Treasurer
during that Officer's absence or inability or refusal to act. Each of the
Assistant Treasurers shall possess the same power as the Treasurer to sign all
certificates, contracts, obligations and other instruments of the Company. If no
Treasurer or Assistant Treasurer is appointed and serving or in the absence of
the appointed Treasurer and Assistant Treasurer, the Senior Vice President, or
such other Officer as the Board of Directors shall select, shall have the powers
and duties conferred upon the Treasurer.
(j) Chief Legal Officer. The Chief Legal Officer, subject to the discretion
of the Board of Directors, shall be responsible for the management and direction
of the day-to-day legal affairs of the Company. The Chief Legal Officer shall
perform such other duties and may exercise such other powers as may from time to
time be assigned to him by the Board of Directors or the President.
(k) Powers of Attorney. The Company may grant powers of attorney or other
authority as appropriate to establish and evidence the authority of the Officers
and other persons.
(l) Delegation of Authority. Unless otherwise provided by resolution of the
Board of Directors, no Officer shall have the power or authority to delegate to
any person such Officer's rights and powers as an Officer to manage the business
and affairs of the Company.
(m) Officers. The Board of Directors initially appoints the following
Officers of the Company to serve from the date hereof until the death,
resignation or removal by the Board of Directors with or without cause of such
officer.
Dan L. Duncan Chairman of the Board
O. S. Andras President and Chief Executive Officer
Randa L. Duncan Group Executive Vice President
Albert W. Bell Executive Vice President
Gary L. Miller Executive Vice President,
Chief Financial Officer and Treasurer
William D. Ray Executive Vice President
Charles E. Crain Senior Vice President
Michael Falco Senior Vice President
Dannine D. Avara Vice President
Frank A. Chapman Vice President
Theodore Helfgott Vice President
Terrance L. Hurlburt Vice President
Michael J. Knesek Vice President and Controller
A.M. (Monty) Wells Vice President
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William R. Morrow Vice President
Rudy A. Nix Vice President
John L. Tomerlin Vice President
Richard H. Bachmann Executive Vice President and
Chief Legal Officer
Michael R. Johnson General Counsel and Secretary
John E. Smith, II Assistant Secretary
6.04 Duties of Officers and Directors. Except as otherwise specifically
provided in this Agreement, the duties and obligations owed to the Company and
to the Board of Directors by the Officers of the Company and by members of the
Board of Directors of the Company shall be the same as the respective duties and
obligations owed to a corporation organized under the Delaware General
Corporation Law by its officers and directors, respectively.
6.05 Compensation. The Officers shall receive such compensation for their
services as may be designated by the Board of Directors. In addition, the
Officers shall be entitled to be reimbursed for out-of-pocket costs and expenses
incurred in the course of their service hereunder. Except for the Tejas
Designated Directors, with respect to which only clause (iii) below shall apply,
the members of the Board of Directors that are neither officers nor employees of
the Company shall be entitled to (i) an annual director's fee set by the Board
of Directors (which fee shall initially equal $24,000), (ii) a per-meeting fee
set by the Board of Directors and payable with respect to each meeting during a
given year in excess of four regular meetings of the Board of Directors and four
meetings of the Audit and Conflicts Committee (which fee shall initially equal
$500 per meeting) and (iii) reimbursement of out-of-pocket expenses incurred in
connection with attending meetings of the Board of Directors or committees
thereof.
6.06 Indemnification. (a) To the fullest extent permitted by law but
subject to the limitations expressly provided in this Agreement, each person
shall be indemnified and held harmless by the Company from and against any and
all losses, claims, damages, liabilities, joint or several, expenses (including
reasonable legal fees and expenses), judgments, fines, penalties, interest,
settlements and other amounts arising from any and all claims, demands, actions,
suits or proceedings, whether civil, criminal, administrative or investigative,
in which any such person may be involved, or is threatened to be involved, as a
party or otherwise, by reason of such person's status as (i) a present or former
member of the Board of Directors or any committee thereof, (ii) a present or
former Officer, employee, partner, agent or trustee of the Company or (iii) a
person serving at the request of the Company in another entity in a similar
capacity as that referred to in the immediately preceding clauses (i) or (ii),
provided, that in each case the person described in the immediately preceding
clauses (i), (ii) or (iii) (the "Indemnitee") acted in good faith and in a
manner which such Indemnitee believed to be in, or not opposed to, the best
interests of the Company and, with respect to any criminal proceeding, had no
reasonable cause to believe such Indemnitee s conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere, or its equivalent, shall not
create a presumption that the Indemnitee acted in a manner contrary to that
specified above. Any indemnification pursuant to this Section 6.06 shall be made
only out of the assets of the Company.
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(b) To the fullest extent permitted by law, expenses (including reasonable
legal fees and expenses) incurred by an Indemnitee who is indemnified pursuant
to Section 6.06(a) in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by the Company prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
the Company of an undertaking by or on behalf of the Indemnitee to repay such
amount if it shall be determined in a judicial proceeding or a binding
arbitration that the Indemnitee is not entitled to be indemnified as authorized
in this Section 6.06.
(c) The indemnification provided by this Section 6.06 shall be in addition
to any other rights to which an Indemnitee may be entitled under any agreement,
as a matter of law or otherwise, both as to actions in the Indemnitee's capacity
as (i) a present or former member of the Board of Directors or any committee
thereof, (ii) a present or former Officer, employee, partner, agent or trustee
of the Company or (iii) a person serving at the request of the Company in
another entity in a similar capacity, and as to actions in any other capacity,
and shall continue as to an Indemnitee who has ceased to serve in such capacity
and shall inure to the benefit of the heirs, successors, assigns and
administrators of the Indemnitee.
(d) The Company may purchase and maintain insurance, on behalf of the
members of the Board of Directors, the Officers and such other persons as the
Board of Directors shall determine, against any liability that may be asserted
against or expense that may be incurred by such person in connection with the
Company's activities, regardless of whether the Company would have the power to
indemnify such person against such liability under the provisions of this
Agreement.
(e) For purposes of this Section 6.06, the Company shall be deemed to have
requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by the Indemnitee of such Indemnitee's duties to the
Company also imposes duties on, or otherwise involves services by, the
Indemnitee to the plan or participants or beneficiaries of the plan; excise
taxes assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute "fines" within the meaning of
Section 6.06(a); and action taken or omitted by the Indemnitee with respect to
an employee benefit plan in the performance of such Indemnitee's duties for a
purpose reasonably believed by such Indemnitee to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is in, or not opposed to, the best interests of the Company.
(f) An Indemnitee shall not be denied indemnification in whole or in part
under this Section 6.06 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(g) The provisions of this Section 6.06 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other persons.
(h) No amendment, modification or repeal of this Section 6.06 or any
provision hereof shall in any manner terminate, reduce or impair either the
right of any past, present or future Indemnitee to be indemnified by the Company
or the obligation of the Company to indemnify any
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such Indemnitee under and in accordance with the provisions of this Section 6.06
as in effect immediately prior to such amendment, modification or repeal with
respect to claims arising from or relating to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when such
claims may be asserted.
(i) THE PROVISIONS OF THE INDEMNIFICATION PROVIDED IN THIS SECTION 6.06 ARE
INTENDED BY THE PARTIES TO APPLY EVEN IF SUCH PROVISIONS HAVE THE EFFECT OF
EXCULPATING THE INDEMNITEE FROM LEGAL RESPONSIBILITY FOR THE CONSEQUENCES OF
SUCH PERSON S NEGLIGENCE, FAULT OR OTHER CONDUCT.
6.07 Limitation of Indemnification. (a) Notwithstanding anything to the
contrary set forth in this Agreement, no Indemnitee shall be liable for monetary
damages to the Company or any other person or entity for losses sustained or
liabilities incurred as a result of any act or omission constituting a breach of
such Indemnitee's fiduciary duty if such Indemnitee acted in good faith.
(b) Subject to its obligations and duties as set forth in this Agreement,
the Board of Directors and any committee thereof may exercise any of the powers
granted to it by this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through the Company's agents, and neither the
Board of Directors nor any committee thereof shall be responsible for any
misconduct or negligence on the part of any such agent appointed by the Board of
Directors or any committee thereof in good faith.
(c) Any amendment, modification or repeal of this Section 6.06 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on liability under this Section 6.06 as in effect immediately prior
to such amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may be asserted.
ARTICLE 7: TAXES
7.01 Tax Returns. The Board of Directors shall cause to be prepared and
timely filed (on behalf of the Company) all federal, state and local tax returns
required to be filed by the Company, including making the elections described in
Section 7.02. Each Member shall furnish to the Board of Directors all pertinent
information in its possession relating to the Company's operations that is
necessary to enable the Company's tax returns to be timely prepared and filed.
The Company shall bear the costs of the preparation and filing of its returns.
7.02 Tax Elections. The Company shall make the following elections on the
appropriate tax returns:
(a) to adopt as the Company's fiscal year the calendar year;
(b) to adopt the accrual method of accounting;
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(c) if a distribution of the Company's property as described in Code
Section 734 occurs or upon a transfer of Membership Interest as described
in Code Section 743 occurs, on request by notice from any Member, to elect,
pursuant to Code Section 754, to adjust the basis of the Company's
properties;
(d) to elect to amortize the organizational expenses of the Company
ratably over a period of 60 months as permitted by Section 709(b) of the
Code; and
(e) any other election the Board of Directors may deem appropriate.
Neither the Company nor any Member shall make an election for the Company to be
excluded from the application of the provisions of subchapter K of chapter 1 of
subtitle A of the Code or any similar provisions of applicable state law and no
provision of this Agreement (including Section 2.07) shall be construed to
sanction or approve such an election. If an election is made under Code
Section 754 as provided in clause (c) above, such election may not be revoked
without the consent of all Members.
7.03 Tax Matters Member. (a) EPC shall be the "tax matters partner" of the
Company pursuant to Section 6231(a)(7) of the Code (the "Tax Matters Member").
The Tax Matters Member shall take such action as may be necessary to cause to
the extent possible each other Member to become a "notice partner" within the
meaning of Section 6223 of the Code.
(b) The Tax Matters Member shall take no action without the
authorization of the Board of Directors, other than such action as may be
required by Law. Any cost or expense incurred by the Tax Matters Member in
connection with its duties, including the preparation for or pursuance of
administrative or judicial proceedings, shall be paid by the Company.
(c) The Tax Matters Member shall not enter into any extension of the
period of limitations for making assessments on behalf of the Members
without first obtaining the consent of the Board of Directors. The Tax
Matters Member shall not bind any Member to a settlement agreement without
obtaining the consent of such Member. Any Member that enters into a
settlement agreement with respect to any Company item (as described in Code
Section 6231(a)(3)) shall notify the other Members of such settlement
agreement and its terms within 90 Days from the date of the settlement.
(d) No Member shall file a request pursuant to Code Section 6227 for
an administrative adjustment of Company items for any taxable year without
first notifying the other Members. If the Board of Directors consents to
the requested adjustment, the Tax Matters Member shall file the request for
the administrative adjustment on behalf of the Members. If such consent is
not obtained within 30 Days from such notice, or within the period required
to timely file the request for administrative adjustment, if shorter, any
Member, including the Tax Matters Member, may file a request for
administrative adjustment on its own behalf. Any Member intending to file a
petition under Code Sections 6226, 6228 or other Code Section with respect
to any item involving the Company shall notify the other Members of such
intention and the nature of the contemplated proceeding. In the case where
the Tax Matters Member is the Member intending to file such petition
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on behalf of the Company, such notice shall be given within a reasonable
period of time to allow the other Members to participate in the choosing of
the forum in which such petition will be filed.
(e) If any Member intends to file a notice of inconsistent treatment
under Code Section 6222(b), such Member shall give reasonable notice under
the circumstances to the other Members of such intent and the manner in
which the Member's intended treatment of an item is (or may be)
inconsistent with the treatment of that item by the other Members.
ARTICLE 8: BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
8.01 Maintenance of Books. (a) The Board of Directors shall keep or cause
to be kept at the principal office of the Company or at such other location
approved by the Board of Directors complete and accurate books and records of
the Company, supporting documentation of the transactions with respect to the
conduct of the Company's business and minutes of the proceedings of its Members
and the Board of Directors, and any other books and records that are required to
be maintained by applicable Law.
(b) The books of account of the Company shall be maintained on the
basis of a fiscal year that is the calendar year and on an accrual basis in
accordance with generally accepted accounting principles, consistently
applied.
8.02 Reports. The Board of Directors shall cause to be prepared and
delivered to each Member such reports, forecasts, studies, budgets and other
information as the Members may reasonably request from time to time.
8.03 Bank Accounts. Funds of the Company shall be deposited in such banks
or other depositories as shall be designated from time to time by the Board of
Directors. All withdrawals from any such depository shall be made only as
authorized by the Board of Directors and shall be made only by check, wire
transfer, debit memorandum or other written instruction.
ARTICLE 9: DISPOSITION OF COMPANY INTERESTS
9.01 Dispositions and Encumbrances of Membership Interests. (a) General
Restriction. A Member may not Dispose of or Encumber all or any portion of its
Membership Interest except in strict accordance with this Section 9.01.
References in this Section 9.01 to Dispositions or Encumbrances of a "Membership
Interest" shall also refer to Dispositions or Encumbrances of a portion of a
Membership Interest. Any attempted Disposition or Encumbrance of a Membership
Interest, other than in strict accordance with this Section 9.01, shall be, and
is hereby declared, null and void ab initio. The Members agree that a breach of
the provisions of this Section 9.01 may cause irreparable injury to the Company
and to the other Members for which monetary damages (or other remedy at law) are
inadequate in view of (i) the complexities and uncertainties in measuring the
actual damages that would be sustained by reason of the failure of a Member to
comply with such provision and (ii) the uniqueness of the Company business and
the relationship among the
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Members. Accordingly, the Members agree that the provisions of this Section 9.01
may be enforced by specific performance.
(b) Dispositions of Membership Interests.
(i) General Restriction. A Member may not Dispose of its Membership
Interest except by complying with all of the following requirements: (A) such
Member must receive the consent of the other Members, which consent shall not be
unreasonably withheld; provided that nothing herein shall restrict the ability
of Tejas Energy to transfer its Membership Interest to a Permitted Affiliate or
the ability of EPC II and DDLLC to transfer their respective Membership
Interests to a Duncan Permitted Affiliate; and (B) such Member must comply with
the requirements of Section 9.01(b)(iii) and, if the Assignee is to be admitted
as a Member, Section 9.01(b)(ii).
(ii) Admission of Assignee as a Member. An Assignee has the right to be
admitted to the Company as a Member, with the Membership Interest (and attendant
Sharing Ratio) so transferred to such Assignee, only if (A) the Disposing Member
making the Disposition has granted the Assignee either (1) the Disposing
Member's entire Membership Interest or (2) the express right to be so admitted;
and (B) such Disposition is effected in strict compliance with this
Section 9.01.
(iii) Requirements Applicable to All Dispositions and Admissions. In
addition to the requirements set forth in Sections 9.01(b)(i) and 9.01(b)(ii),
any Disposition of a Membership Interest and any admission of an Assignee as a
Member shall also be subject to the following requirements, and such Disposition
(and admission, if applicable) shall not be effective unless such requirements
are complied with; provided, however, that the Board of Directors, in its sole
and absolute discretion, may waive any of the following requirements:
(A) Disposition Documents. The following documents must be delivered
to the Board of Directors:
(1) Disposition Instrument. A copy of the instrument pursuant to which
the Disposition is effected.
(2) Ratification of this Agreement. An instrument, executed by the
Disposing Member and its Assignee, containing the following information and
agreements, to the extent they are not contained in the instrument
described in Section 9.01(b)(iii)(A)(1): (aa) the notice address of the
Assignee; (bb) the Sharing Ratios after the Disposition of the Disposing
Member and its Assignee (which together must total the Sharing Ratio of the
Disposing Member before the Disposition); and (cc) the Assignee's
ratification of this Agreement and agreement to be bound by it, and its
confirmation that the representations and warranties in Section 10.01 are
true and correct with respect to it.
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(iv) Clarification Regarding Transfer of Equity Interests in Members. The
transfer or other disposition by the equity owner(s) of a Member of all or any
portion of the equity interests in such Member shall not constitute a
Disposition of a Membership Interest for purposes of this Agreement.
(c) Encumbrances of Membership Interest. A Member may not Encumber its
Membership Interest except by complying with both of the following requirements:
(i) such Member must receive the consent of the other Member, which consent may
be granted or withheld in the sole discretion of such other Member; and (ii) the
instrument creating such Encumbrance must provide that any foreclosure of such
Encumbrance (or Disposition in lieu of such foreclosure) must comply with the
requirements of Section 9.01(b).
9.02 Transfer of Tejas Energy Rights. In the event of a Disposition by
Tejas Energy to a Permitted Affiliate of all of its interest in the Company in
accordance with the terms and conditions of this Agreement and the Unitholder
Rights Agreement, Tejas Energy may transfer to such Permitted Affiliate the
rights of Tejas Energy under this Agreement; provided that such Permitted
Affiliate shall agree to be bound by the terms and conditions of the Unitholder
Rights Agreement and shall execute an assignment in the form required by
Section 9.01(b)(iii).
9.03 Transfer of EPC II Rights. In the event of a Disposition by EPC II to
a Duncan Permitted Affiliate of all or part of its interest in the Company (the
"EPC II Transferred Interest") in accordance with the terms and conditions of
this Agreement, EPC II may transfer to such Duncan Permitted Affiliate the
rights of EPC II under this Agreement relating to the EPC II Transferred
Interest; provided that such Duncan Permitted Affiliate shall agree to be bound
by (i) the terms and conditions of the Unitholder Rights Agreement to the same
extent as EPC II was bound with respect to the EPC II Transferred Interest
(including, without limitation, Section 2.3(b)) and (ii) Section 6.13(a) and (b)
of the Contribution Agreement to the same extent as EPC II was bound with
respect to the EPC II Transferred Interest, and shall execute an assignment in
the form required by Section 9.01(b)(iii).
ARTICLE 10: REPRESENTATIONS, WARRANTIES AND
COVENANTS OF MEMBERS
10.01 Representations, Warranties and Covenants. Each Member hereby
represents, warrants and covenants to the Company and each other Member that the
following statements are true and correct as of the Effective Date and shall be
true and correct at all times that such Member is a Member:
(a) that Member is duly incorporated, organized or formed (as
applicable), validly existing, and (if applicable) in good standing under
the Law of the jurisdiction of its incorporation, organization or
formation; if required by applicable Law, that Member is duly qualified and
in good standing in the jurisdiction of its principal place of business, if
different from its jurisdiction of incorporation, organization or
formation; and that Member has full power and authority to execute and
deliver this Agreement and to perform its obligations hereunder, and all
necessary actions by the board of directors, shareholders,
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managers, members, partners, trustees, beneficiaries, or other applicable
Persons necessary for the due authorization, execution, delivery, and
performance of this Agreement by that Member have been duly taken;
(b) that Member has duly executed and delivered this Agreement and the
other documents contemplated herein, and they constitute the legal, valid
and binding obligation of that Member enforceable against it in accordance
with their terms (except as may be limited by bankruptcy, insolvency or
similar Laws of general application and by the effect of general principles
of equity, regardless of whether considered at law or in equity); and
(c) that Member's authorization, execution, delivery, and performance
of this Agreement does not and will not (i) conflict with, or result in a
breach, default or violation of, (A) the organizational documents of such
Member, (B) any contract or agreement to which that Member is a party or is
otherwise subject, or (C) any Law, order, judgment, decree, writ,
injunction or arbitral award to which that Member is subject; or
(ii) require any consent, approval or authorization from, filing or
registration with, or notice to, any Governmental Authority or other
Person, unless such requirement has already been satisfied.
ARTICLE 11: DISSOLUTION, WINDING-UP AND TERMINATION
11.01 Dissolution. (a) Subject to Section 11.01(b), the Company shall
dissolve and its affairs shall be wound up on the first to occur of the
following events (each a "Dissolution Event"):
(i) the unanimous consent of the Members;
(ii) the dissolution, Withdrawal or Bankruptcy of a Member; or
(iii) entry of a decree of judicial dissolution of the Company under
Section 18-802 of the Act.
(b) If a Dissolution Event described in Section 11.01(a)(ii) shall
occur and there shall be at least one other Member remaining, the Company
shall not be dissolved, and the business of the Company shall be continued,
if such Member elects to do so within 90 days following the occurrence of
such Dissolution Event (such agreement is referred to herein as a
"Continuation Election").
11.02 Winding-Up and Termination. (a) On the occurrence of a Dissolution
Event, unless a Continuation Election has been made, the Board of Directors
shall appoint a liquidator. The liquidator shall proceed diligently to wind up
the affairs of the Company and make final distributions as provided herein and
in the Act. The costs of winding up shall be borne as a Company expense. Until
final distribution, the liquidator shall continue to operate the Company
properties with all of the power and authority of the Members. The steps to be
accomplished by the liquidator are as follows:
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(i) as promptly as possible after dissolution and again after final
winding up, the liquidator shall cause a proper accounting to be made of
the Company's assets, liabilities, and operations through the last calendar
day of the month in which the dissolution occurs or the final winding up is
completed, as applicable;
(ii) the liquidator shall discharge from Company funds all of the
indebtedness and other debts, liabilities and obligations of the Company
(including all expenses incurred in winding up and any loans described in
Section 4.01) or otherwise make adequate provision for payment and
discharge thereof (including the establishment of a cash escrow fund for
contingent liabilities in such amount and for such term as the liquidator
may reasonably determine); and
(iii) all remaining assets of the Company shall be distributed to the
Members as follows:
(A) the liquidator may sell any or all Company property, including to
Members, and any resulting gain or loss from each sale shall be computed
and allocated to the Capital Accounts of the Members in accordance with the
provisions of Article 5;
(B) with respect to all Company property that has not been sold, the
fair market value of that property shall be determined and the Capital
Accounts of the Members shall be adjusted to reflect the manner in which
the unrealized income, gain, loss, and deduction inherent in property that
has not been reflected in the Capital Accounts previously would be
allocated among the Members if there were a taxable disposition of that
property for the fair market value of that property on the date of
distribution; and
(C) Company property (including cash) shall be distributed among the
Members in accordance with Section 5.02; and those distributions shall be
made by the end of the taxable year of the Company during which the
liquidation of the Company occurs (or, if later, 90 Days after the date of
the liquidation).
(b) The distribution of cash or property to a Member in accordance
with the provisions of this Section 11.02 constitutes a complete return to
the Member of its Capital Contributions and a complete distribution to the
Member of its Membership Interest and all the Company s property and
constitutes a compromise to which all Members have consented pursuant to
Section 18-502(b) of the Act. To the extent that a Member returns funds to
the Company, it has no claim against any other Member for those funds.
11.03 Certificate of Cancellation. On completion of the distribution of
Company assets as provided herein, the Members (or such other Person or Persons
as the Act may require or permit) shall file a certificate of cancellation with
the Secretary of State of Delaware, cancel any other filings made pursuant to
Section 2.05, and take such other actions as may be necessary to terminate the
existence of the Company. Upon the filing of such certificate of cancellation,
the existence of the
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Company shall terminate (and the Term shall end), except as may be otherwise
provided by the Act or other applicable Law.
ARTICLE 12: GENERAL PROVISIONS
12.01 Intentionally Deleted
12.02 Notices. Except as expressly set forth to the contrary in this
Agreement, all notices, requests or consents provided for or permitted to be
given under this Agreement must be in writing and must be delivered to the
recipient in person, by courier or mail or by facsimile or other electronic
transmission. A notice, request or consent given under this Agreement is
effective on receipt by the Member to receive it; provided, however, that a
facsimile or other electronic transmission that is transmitted after the normal
business hours of the recipient shall be deemed effective on the next Business
Day. All notices, requests and consents to be sent to a Member must be sent to
or made at the addresses given for that Member on Exhibit A or in the instrument
described in Section 9.01(b)(iii)(A)(2) or 3.02, or such other address as that
Member may specify by notice to the other Members. Any notice, request or
consent to the Company must be given to all of the Members. Whenever any notice
is required to be given by Law, the Delaware Certificate or this Agreement, a
written waiver thereof, signed by the Person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice.
12.03 Entire Agreement; Superseding Effect. This Agreement (together with
the Unitholder Rights Agreement) constitutes the entire agreement of the Members
and their Affiliates relating to the Company and the transactions contemplated
hereby and supersedes all provisions and concepts contained in all prior
contracts or agreements between the Members or any of their Affiliates with
respect to the Company and the transactions contemplated hereby, whether oral or
written.
12.04 Effect of Waiver or Consent. Except as otherwise provided in this
Agreement, a waiver or consent, express or implied, to or of any breach or
default by any Member in the performance by that Member of its obligations with
respect to the Company is not a consent or waiver to or of any other breach or
default in the performance by that Member of the same or any other obligations
of that Member with respect to the Company. Except as otherwise provided in this
Agreement, failure on the part of a Member to complain of any act of any Member
or to declare any Member in default with respect to the Company, irrespective of
how long that failure continues, does not constitute a waiver by that Member of
its rights with respect to that default until the applicable
statute-of-limitations period has run.
12.05 Amendment or Restatement. This Agreement or the Delaware Certificate
may be amended or restated only by a written instrument executed (or, in the
case of the Delaware Certificate, approved) by all Members.
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12.06 Binding Effect. Subject to the restrictions on Dispositions of
Membership Interests set forth in this Agreement, this Agreement is binding on
and shall inure to the benefit of the Members and their respective successors
and permitted assigns.
12.07 Governing Law; Severability. THIS AGREEMENT IS GOVERNED BY AND SHALL
BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. In the event
of a direct conflict between the provisions of this Agreement and any mandatory,
non-waivable provision of the Act, such provision of the Act shall control. If
any provision of the Act provides that it may be varied or superseded in a
limited liability company agreement (or otherwise by agreement of the members or
managers of a limited liability company), such provision shall be deemed
superseded and waived in its entirety if this Agreement contains a provision
addressing the same issue or subject matter. If any provision of this Agreement
or the application thereof to any Member or circumstance is held invalid or
unenforceable to any extent, (a) the remainder of this Agreement and the
application of that provision to other Members or circumstances is not affected
thereby, and (b) the Members shall negotiate in good faith to replace that
provision with a new provision that is valid and enforceable and that puts the
Members in substantially the same economic, business and legal position as they
would have been in if the original provision had been valid and enforceable.
12.08 Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions.
12.09 Waiver of Certain Rights. Each Member irrevocably waives any right it
may have to maintain any action for dissolution of the Company or for partition
of the property of the Company.
12.10 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Members have executed this Agreement as of the date
first
set forth above.
MEMBERS:
EPC PARTNERS II, INC.
By: /s/ Francis B. Jacobs II
Francis B. Jacobs II
President
DAN DUNCAN LLC
By: /s/ Dan L. Duncan
Dan L. Duncan
TEJAS ENERGY, LLC
By: /s/ Curtis R. Frasier
Curtis R. Frasier
Executive Vice President and
Chief Operating Officer
Attachment I
Defined Terms
Act--the Delaware Limited Liability Company Act.
Affiliate--with respect to any Person, (a) each entity that such Person
Controls; (b) each Person that Controls such Person; and (c) each entity that is
under common Control with such Person, including, in the case of a Member.
Agreement--introductory paragraph.
Assignee--any Person that acquires a Membership Interest or any portion
thereof through a Disposition; provided, however, that, an Assignee shall have
no right to be admitted to the Company as a Member except in accordance with
Section 9.01(b)(ii). The Assignee of a dissolved Member is the shareholder,
partner, member or other equity owner or owners of the dissolved Member to whom
such Member's Membership Interest is assigned by the Person conducting the
liquidation or winding up of such Member. The Assignee of a Bankrupt Member is
(a) the Person or Persons (if any) to whom such Bankrupt Member's Membership
Interest is assigned by order of the bankruptcy court or other Governmental
Authority having jurisdiction over such Bankruptcy, or (b) in the event of a
general assignment for the benefit of creditors, the creditor to which such
Membership Interest is assigned.
Bankruptcy or Bankrupt--with respect to any Person, that (a) such Person
(i) makes a general assignment for the benefit of creditors; (ii) files a
voluntary bankruptcy petition; (iii) becomes the subject of an order for relief
or is declared insolvent in any federal or state bankruptcy or insolvency
proceedings; (iv) files a petition or answer seeking for such Person a
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any Law; (v) files an answer or other
pleading admitting or failing to contest the material allegations of a petition
filed against such Person in a proceeding of the type described in subclauses
(i) through (iv) of this clause (a); or (vi) seeks, consents to, or acquiesces
in the appointment of a trustee, receiver, or liquidator of such Person or of
all or any substantial part of such Person's properties; or (b) against such
Person, a proceeding seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any Law has been
commenced and 120 Days have expired without dismissal thereof or with respect to
which, without such Person's consent or acquiescence, a trustee, receiver, or
liquidator of such Person or of all or any substantial part of such Person's
properties has been appointed and 90 Days have expired without the appointment's
having been vacated or stayed, or 90 Days have expired after the date of
expiration of a stay, if the appointment has not previously been vacated.
Board of Directors--Section 6.01.
Business Day--any day other than a Saturday, a Sunday, or a holiday on
which national banking associations in the State of Texas are closed.
Capital Account--the account to be maintained by the Company for each
Member in accordance with Section 4.04.
Capital Contribution--with respect to any Member, the amount of money and
the net agreed value of any property (other than money) contributed to the
Company by the Member. Any reference in this Agreement to the Capital
Contribution of a Member shall include a Capital Contribution of its
predecessors in interest.
Chairman of the Board--Section 6.02(e).
Closing Date--September 17, 1999.
Code--the Internal Revenue Code of 1986, as amended.
Common Units--as defined in the MLP Agreement.
Company--introductory paragraph.
Continuation Election--Section 11.01(b).
Contribution Agreement--Contribution Agreement by and among Tejas Energy,
Tejas Midstream Enterprises, LLC, the MLP, the OLP, EPC, the Company and EPC II,
dated September 17, 1999.
Control--the possession, directly or indirectly, through one or more
intermediaries, of either of the following:
(a) (i) in the case of a corporation, more than 50% of the outstanding
voting securities thereof; (ii) in the case of a limited liability company,
partnership, limited partnership or venture, the right to more than 50% of
the distributions therefrom (including liquidating distributions); (iii) in
the case of a trust or estate, including a business trust, more than 50% of
the beneficial interest therein; and (iv) in the case of any other entity,
more than 50% of the economic or beneficial interest therein; or
(b) in the case of any entity, the power or authority, through
ownership of voting securities, by contract or otherwise, to exercise a
controlling influence over the management of the entity.
Day--a calendar day; provided, however, that, if any period of Days
referred
to in this Agreement shall end on a Day that is not a Business Day, then the
expiration of such period shall be automatically extended until the end of the
first succeeding Business Day.
DDLLC--introductory paragraph.
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Delaware Certificate--Section 2.01.
Dispose, Disposing or Disposition--with respect to a Membership Interest,
the sale, assignment, transfer, conveyance, gift, exchange or other disposition
of such Membership Interest, excluding, however, any sale, assignment, transfer,
conveyance, gift, exchange or other disposition of such Membership Interest that
occurs involuntarily or by operation of Law. With respect to any other asset,
the transfer, sale, assignment or other disposition of the asset in question.
Dissolution Event--Section 11.01(a).
Duncan Permitted Affiliate--means any Person in which Dan L. Duncan, his
wife and heirs, devisees and legatees (and trusts for any of their respective
benefit) (the "Duncan Interests") own, directly or indirectly, more than 50% of
such Person's equity interests and that is controlled by the Duncan Interests.
For the purposes of this definition, "controlled" means that the Duncan
Interests possess, directly or indirectly, the power to direct or cause the
direction of management and policies of such controlled Person, by contract or
otherwise.
Effective Date--introductory paragraph.
Encumber, Encumbering, or Encumbrance--the creation of a security interest,
lien, pledge, mortgage or other encumbrance, whether such encumbrance be
voluntary, involuntary or by operation of Law.
EPC--recitals.
EPC II--introductory paragraph.
EPC II Transferred Interest--Section 9.03.
Executive Committee--Section 6.01.
Governmental Authority--a federal, state, local or foreign governmental
authority; a state, province, commonwealth, territory or district thereof; a
county or parish; a city, town, township, village or other municipality; a
district, ward or other subdivision of any of the foregoing; any executive,
legislative or other governing body of any of the foregoing; any agency,
authority, board, department, system, service, office, commission, committee,
council or other administrative body of any of the foregoing; any court or other
judicial body; and any officer, official or other representative of any of the
foregoing.
Group Member--a member of the Partnership Group.
including--including, without limitation.
Indemnitee--Section 6.06(a).
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Law--any applicable constitutional provision, statute, act, code (including
the Code), law, regulation, rule, ordinance, order, decree, ruling,
proclamation, resolution, judgment, decision, declaration, or interpretative or
advisory opinion or letter of a Governmental Authority having valid
jurisdiction.
Member--any Person executing this Agreement as of the date of this
Agreement as a member or hereafter admitted to the Company as a member as
provided in this Agreement, but such term does not include any Person who has
ceased to be a member in the Company.
Membership Interest--with respect to any Member, (a) that Member's status
as a Member; (b) that Member's share of the income, gain, loss, deduction and
credits of, and the right to receive distributions from, the Company; (c) all
other rights, benefits and privileges enjoyed by that Member (under the Act,
this Agreement, or otherwise) in its capacity as a Member; and (d) all
obligations, duties and liabilities imposed on that Member (under the Act, this
Agreement or otherwise) in its capacity as a Member, including any obligations
to make Capital Contributions.
MLP--Enterprise Products Partners L.P., a Delaware limited partnership.
MLP Agreement--Second Amended and Restated Agreement of Limited Partnership
of Enterprise Products Partners L.P., dated September 17, 1999.
Officer--any Person designated as an officer of the Company as provided in
Section 6.04, but such term does not include any Person who has ceased to be an
officer of the Company.
OLP--Enterprise Products Operating L.P., a Delaware limited partnership.
Permitted Affiliates--as defined in the Unitholder Rights Agreement.
Person--the meaning assigned that term in Section 18-101(11) of the Act and
also includes a Governmental Authority and any other entity.
Partnership Group--the MLP, the OLP and any Subsidiary of either such
entity, treated as a single consolidated entity.
Registration Statement--the Registration Statement on Form S-1
(Registration No. 333-52537) as it has been or as it may be amended or
supplemented from time to time, filed by the Partnership with the United States
Securities and Exchange Commission under the Securities Act to register the
offering and sale of the Common Units in the Initial Offering.
Securities Act--the Securities Act of 1933, as amended, supplemented, or
restated from time to time and any such successor statute.
Sharing Ratio--subject in each case to adjustments in accordance with this
Agreement or in connection with Dispositions of Membership Interests, (a) in the
case of a Member executing this Agreement as of the date of this Agreement or a
Person acquiring such Member's Membership
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Interest, the percentage specified for that Member as its Sharing Ratio on
Exhibit A, and (b) in the case of Membership Interest issued pursuant to
Section 3.02, the Sharing Ratio established pursuant thereto; provided, however,
that the total of all Sharing Ratios shall always equal 100%.
Special Units--as defined in the Unitholder Rights Agreement.
Subsidiary--with respect to any Person, (a) a corporation of which more
than 50% of the voting power of shares entitled (without regard to the
occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of such Person or
a combination thereof, (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the
partnership interests of such partnership (considering all of the partnership
interests of the partnership as a single class) is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person
(other than a corporation or a partnership) in which such Person, one or more
Subsidiaries of such Person, or a combination thereof, directly or indirectly,
at the date of determination, has (i) at least a majority ownership interest or
(ii) the power to elect or direct the election of a majority of the directors or
other governing body of such Person.
Tax Matters Member--Section 7.03(a).
Tejas Designated Directors--Section 6.02(b).
Tejas Designated Members--Section 6.03(b).
Tejas Energy--introductory paragraph.
Term--Section 2.05.
Treasury Regulations--the regulations (including temporary regulations)
promulgated by the United States Department of the Treasury pursuant to and in
respect of provisions of the Code. All references herein to sections of the
Treasury Regulations shall include any corresponding provision or provisions of
succeeding, similar or substitute, temporary or final Treasury Regulations.
Unitholder Rights Agreement--Unitholder Rights Agreement among Tejas
Energy, Tejas Midstream Enterprises, LLC, the MLP, the OLP, EPC, the Company and
EPC II, dated September 17, 1999.
Withdraw, Withdrawing or Withdrawal--the withdrawal, resignation or
retirement of a Member from the Company as a Member. Such terms shall not
include any Dispositions of Membership Interest (which are governed by Section
9.01), even though the Member making a Disposition may cease to be a Member as a
result of such Disposition.
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Exhibit A
MEMBERS AND SHARING RATIOS
Name and Address
Sharing
Ratio
EPC Partners II, Inc.
2727 North Loop West
Houston, Texas 77008
Attn: President
Telecopier: (713) 880-6570
65%
Tejas Energy, LLC
1301 McKinney Street, Suite 700
Houston, Texas 77010
Attn: Chief Operating Officer
Telecopier: (713) 230-1800
30%
Dan Duncan LLC
c/o Dan L. Duncan
2727 North Loop West
Houston, Texas 77008
Attn: President
Telecopier: (713) 880-6570
5%