PURCHASE AND SALE AGREEMENT

Exhibit 10.4

Execution Copy

 

PURCHASE AND SALE AGREEMENT

By and Between

ENTERPRISE GP HOLDINGS L.P.

and

DUKE ENERGY FIELD SERVICES, LLC

February 24, 2005

 

TABLE OF CONTENTS

 

 

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PURCHASE AND SALE AGREEMENT

This PURCHASE AND SALE AGREEMENT (this “ Agreement ”), dated as of February 24, 2005 (the “ Execution Date ”), is entered into by and between Enterprise GP Holdings L.P., a Delaware limited partnership (“ Enterprise ”) and Duke Energy Field Services, LLC, a Delaware limited liability company (“ DEFS ”).

W I T N E S S E T H:

WHEREAS, DEFS owns 100% of the membership interests in Texas Eastern Products Pipeline Company, LLC, a Delaware limited liability company (“ TEPPCO GP ”), and TEPPCO GP is the sole general partner of, and owns 100% of the general partner interest in, TEPPCO Partners, L.P., a Delaware limited partnership (“ TEPPCO MLP ”); and

WHEREAS, subject to the terms and conditions set forth herein, DEFS desires to sell to Enterprise, and Enterprise desires to purchase from DEFS, 100% of the membership interests in TEPPCO GP (the “ Membership Interest ”).

NOW, THEREFORE, in consideration of the premises and the respective representations, warranties, covenants, agreements and conditions contained herein, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions . In this Agreement, unless the context otherwise requires, the following terms shall have the following meanings respectively:

“ Affected Employees ” means (1) all employees of the TEPPCO Partnership Group Entities, and (2) any employees of DEFS who either work on a full-time basis in connection with the TEPPCO Partnership Group Entities or who, at the Closing, work on less than a full-time basis in connection with the TEPPCO Partnership Group Entities and are or will be reassigned in good faith by DEFS on or prior to the close of the Benefits Transition Services Period to work on a full-time basis on TEPPCO Partnership Group Entities’ matters.

“ affiliate ” has the meaning set forth in Rule 405 of the rules and regulations under the Securities Act, unless otherwise expressly stated herein.

“ Agreement ” has the meaning set forth in the Preamble.

“ Benefits Transition Services Period ” has the meaning set forth in Section 4.7(a) .

“ Bonds ” has the meaning set forth in Section 4.14 .

“ Business Day ” means any day on which commercial banks are generally open for business in New York, New York other than a Saturday, a Sunday or a day observed as a holiday in New York, New York under the Laws of the State of New York or the federal Laws of the United States of America.

“ Closing ” has the meaning set forth in Section 2.l(a) .

“ Closing Date ” has the meaning set forth in Section 2.l(a) .

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Damages ” means claims, liabilities, damages, penalties, judgments, assessments, losses, costs, expenses, including reasonable attorneys’ fees and expenses, incurred by the party seeking indemnification under this Agreement.

“ DEFS ” has the meaning set forth in the Preamble.

“ DEFS Indemnified Parties ” has the meaning set forth in Section 5.2 .

“ DEFS Plans ” means a TEPPCO Plan for which DEFS serves as the “plan sponsor” as defined in Section 3(16)(B) of ERISA.

“ Direct Costs ” has the meaning set forth in Section 4.7(c) .

“ Draft 10-K ” has the meaning set forth in Section 3.3(g)(ii) .

“ Encumbrances ” means pledges, restrictions on transfer, rights or options to purchase, rights of first refusal, proxies and voting or other agreements, liens, claims, charges, mortgages, security interests or other legal or equitable encumbrances, limitations or restrictions of any nature whatsoever.

“ Enterprise ” has the meaning set forth in the Preamble.

“ Enterprise GP ” means Enterprise Products GP, LLC, a Delaware limited liability company.

“ Enterprise Group Health Plan ” has the meaning set forth in Section 4.12(b) .

“ Enterprise Indemnified Parties ” has the meaning set forth in Section 5.1 .

“ Enterprise Material Adverse Effect ” means any change, effect, event or occurrence that materially and adversely affects the ability of Enterprise to consummate the transactions contemplated by this Agreement.

“ Enterprise MLP ” means Enterprise Products Partners, L.P., a Delaware limited partnership.

“ Enterprise Partnership Group Entities ” means Enterprise MLP, Enterprise GP and the subsidiaries of Enterprise MLP.

“ EPCO ” means EPCO, Inc., a Delaware corporation.

“ EPE ” means EPE Holdings, LLC, a Delaware limited liability company and the general partner of Enterprise.

 

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“ Environmental Laws ” means any and all applicable laws, statutes, regulations, rules, orders, ordinances, and legally enforceable directives of and agreements between a person that is subject to the applicable representation and any Governmental Entity and rules of common law pertaining to protection of human health (to the extent arising from exposure to Hazardous Substances) or the environment (including any generation, use, storage, treatment, or Release of Hazardous Substances into the environment) including the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq., the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq., the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq., the Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq., the Atomic Energy Act, 42 U.S.C. Section 2014 et seq., the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Section 136 et seq., and the Federal Hazardous Materials Transportation Law, 49 U.S.C. Section 5101 et seq., as each has been amended from time to time, and all other environmental conservation and protection laws, in each case as in effect prior to or as of the Closing Date.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Execution Date ” has the meaning set forth in the Preamble.

“ GAAP ” has the meaning set forth in Section 1.2 .

“ governing documents ” means, with respect to any person, the certificate or articles of incorporation, by-laws, articles of organization, limited liability company agreement, partnership agreement, formation agreement, joint venture agreement, shareholder agreement or declaration or other similar governing documents of such person.

“ Governmental Entity ” means any (a) multinational, federal, provincial, territorial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau or agency, domestic or foreign, (b) subdivision, agent, commission, board, or authority of any of the foregoing, or (c) quasi governmental or private body exercising any regulatory, expropriation or taxing authority under, or for the account of, any of the foregoing.

“ Group Health Plan ” means a group health plan as defined in section 5000(b) of the Code other than a flexible spending account arrangement described in section 125 of the Code and Department of Treasury regulations thereunder.

“ Hazardous Substances ” means any (a) chemical, product, substance, waste, material, pollutant, or contaminant that is defined or listed as hazardous or toxic or that is otherwise regulated under any Environmental Law; (b) friable asbestos containing materials, polychlorinated biphenyls, naturally occurring radioactive materials or radon; and (c) any oil or gas exploration or production waste or any petroleum, petroleum hydrocarbons, petroleum products or crude oil and any components, fractions, or derivatives thereof.

 

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“ holders ” means, when used with reference to the TEPPCO Limited Partner Units, the holders of such units shown from time to time in the registers maintained by or on behalf of TEPPCO MLP.

“ Individual Threshold ” has the meaning set forth in Section 5.1 .

“ Investments ” has the meaning set forth in Section 2.1 (d) .

“ IRS ” means the Internal Revenue Service.

“ knowledge ,” “ known ” or words of similar import mean (a) with respect to DEFS, the actual knowledge of the officers and directors of DEFS and TEPPCO GP, and (b) with respect to Enterprise, the actual knowledge of the officers and directors of EPCO or EPE.

“ Laws ” means all statutes, regulations, statutory rules, orders, judgments, decrees and terms and conditions of any grant of approval, permission, authority, permit or license of any court, Governmental Entity, statutory body (including the NYSE) or self-regulatory authority, but does not include Environmental Laws.

“ LP Units ” has the meaning set forth in the TEPPCO Partnership Agreement.

“ Materiality Requirement ” means any requirement in a representation or warranty that a condition, event or state of fact be “material,” correct or true in “all material respects,” have a “Material Adverse Effect” or be or not be “reasonably expected to have a Material Adverse Effect” (or other words or phrases of similar effect or impact) in order for such condition, event or state of facts to cause such representation or warranty to be inaccurate.

“ Membership Interest ” has the meaning set forth in the Preamble.

“ Notice ” has the meaning set forth in Section 6.1 .

“ NYSE ” means the New York Stock Exchange.

“ Obligations ” has the meaning set forth in Section 4.14 .

“ Open TEPPCO Position ” has the meaning set forth in Section 3.3(w) .

“ Partially Owned Entity ” means, with respect to a specified person, any other person that is not a subsidiary of such specified person but in which such specified person, directly or indirectly, owns 10% or more of the equity interests thereof (whether voting or non-voting and including beneficial interests).

“ PBGC ” has the meaning set forth in Section 3.3(q)(ix) .

“ Permitted Encumbrances ” means any liens, title defects, preferential rights or other encumbrances upon any of the relevant person’s property, assets or revenues, whether now owned or hereafter acquired, that are (i) carriers’, warehousemens’, mechanics’, materialmen’s, repairmen’s or other like liens arising in the ordinary course of business which are not overdue

 

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for a period of more than 60 days or which are being contested in good faith by appropriate proceeding, (ii) pledges or deposits in connection with workers’ compensation, unemployment insurance and other social security legislation and deposits securing liability to insurance carriers under insurance or self-insurance arrangements, (iii) for Taxes not yet due or which are being contested in good faith by appropriate proceedings ( provided that adequate reserves with respect thereto are maintained on the books of such person or its subsidiaries, as the case may be, in conformity with GAAP), (iv) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business, (v) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business which, in the aggregate, are not substantial in amount and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business by such person and its subsidiaries and (vi) created pursuant to construction, operating and maintenance agreements, space lease agreements and other similar agreements, in each case having ordinary and customary terms and entered into in the ordinary course of business by such person and its subsidiaries.

“person” includes any individual, firm, partnership, joint venture, venture capital fund, limited liability company, association, trust, estate, group, body corporate, corporation, unincorporated association or organization, Governmental Entity, syndicate or other entity, whether or not having legal status.

“ Prudent Industry Practices ” has the meaning set forth in Section 4.7(d) .

“ PUHCA ” means the Public Utility Holding Company Act of 1935, as amended.

“ Purchase Price ” has the meaning set forth in Section 2.l(b) .

“ Release ” means any depositing, spilling, leaking, pumping, pouring, placing, emitting, discarding, emptying, discharging, migrating, injecting, escaping, leaching, dumping, or disposing.

“ Reimbursement Obligations ” has the meaning set forth in Section 4.14 .

“ Representative ” means, with respect to any person, such person’s officers, directors or employees, or any investment banker, financial advisor, attorney, accountant or other representative retained by such person.

“ SEC ” means the United States Securities and Exchange Commission.

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Service Standard ” has the meaning set forth in Section 4.7(b) .

“ Services Agreement ” means (i) that certain letter agreement dated as of September 30, 2002 between DEFS and TEPPCO MLP relating to Val Verde Gas Gathering Company, L.P., (ii) that certain letter agreement dated as of June 19, 2002 between DEFS and TEPPCO MLP relating to Chaparral Pipeline Company, L.P., Quanah Pipeline Company, L.P. and Duke Energy NGL Services, LP and (iii) that certain letter agreement dated as of March 18, 2003 between DEFS and TEPPCO MLP relating to Jonah Gas Gathering Company.

 

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“ subsidiary ” means with respect to a specified person, any other person (a) that is a subsidiary as defined in Rule 405 of the Rules and Regulations under the Securities Act of such specified person or (b) of which such specified person or another of its subsidiaries owns beneficially 50% or more of the equity interests.

“ Sureties ” has the meaning set forth in Section 4.14 .

“ Tax ” or “ Taxes ” means any taxes, assessments, fees and other governmental charges imposed by any Governmental Entity, including without limitation income, profits, gross receipts, net proceeds, alternative or add-on minimum, ad valorem, value added, turnover, sales, use, property, personal property (tangible and intangible), environmental, stamp, leasing, lease, user, excise, duty, franchise, capital stock, transfer, registration, license, withholding, social security (or similar), unemployment, disability, payroll, employment, fuel, excess profits, occupational, premium, windfall profit, severance, estimated, or other charge of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

“ Tax Return ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“ TEPPCO Disclosure Letter ” means the disclosure letter for this Agreement dated the Execution Date.

“ TEPPCO Easements ” has the meaning set forth in Section 3.3(p)(iii) .

“ TEPPCO Environmental Permits ” has the meaning set forth in Section 3.3(j) .

“ TEPPCO GP ” has the meaning set forth in the Preamble.

“ TEPPCO GP Financial Statements ” has the meaning set forth in Section 3.3(g)(iii) .

“ TEPPCO GP Balance Sheet ” means the audited balance sheet of TEPPCO GP as of December 31, 2003 included as part of the TEPPCO GP Financial Statements.

“ TEPPCO GP LLC Agreement ” means that certain Limited Liability Company Agreement of Texas Eastern Products Pipeline Company, LLC.

“ TEPPCO Intellectual Property Rights ” has the meaning set forth in Section 3.3(o)(i) .

“ TEPPCO Limited Partner Units ” means the LP Units of TEPPCO MLP issued pursuant to the TEPPCO Partnership Agreement.

“ TEPPCO Material Adverse Effect ” means any change, effect, event or occurrence with respect to the condition (financial or otherwise), properties, assets, earnings, liabilities, obligations (whether absolute, accrued, conditional or otherwise), businesses, operations or

 

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results of operations of the TEPPCO Partnership Group Entities (taken as a whole), that is, or could reasonably be expected to be, material and adverse to the TEPPCO Partnership Group Entities (taken as a whole), material and adverse to TEPPCO GP or that materially and adversely affects the ability of DEFS or TEPPCO GP to consummate the transactions contemplated hereby; provided, however, that a TEPPCO Material Adverse Effect shall not include any change, effect, event or occurrence with respect to the condition (financial or otherwise), properties, assets, earnings, financial condition, liabilities, obligations (whether absolute, accrued, conditional or otherwise), businesses, operations or results of operations of any TEPPCO Partnership Group Entity (or any TEPPCO Partially Owned Entity) directly or indirectly arising out of or attributable to (a) changes in the general state of the industries in which the TEPPCO Partnership Group Entities and the TEPPCO Partially Owned Entities operate to the extent that such changes would have the same general effect on all other companies operating in such industries, or (b) changes in general economic conditions (including changes in commodity prices) that would have the same general effect on companies engaged in the same lines of business as those conducted by the TEPPCO Partnership Group Entities and the TEPPCO Partially Owned Entities.

“ TEPPCO MLP ” has the meaning set forth in the Preamble.

“ TEPPCO MLP Balance Sheet ” means the draft consolidated balance sheet of TEPPCO MLP as of December 31, 2004 included as part of the Draft 10-K.

“ TEPPCO MLP Partially Owned Entities ” means the Partially Owned Entities held, directly or indirectly, by TEPPCO MLP.

“ TEPPCO Operating Partnerships ” means TE Products Pipeline Company, Limited Partnership, a Delaware limited partnership, TCTM, L.P., a Delaware limited partnership, and TEPPCO Midstream Companies, L.P., a Delaware limited partnership, collectively.

“ TEPPCO Parties ” means TEPPCO MLP and TEPPCO GP.

“ TEPPCO Partnership Agreement ” means that certain Third Amended and Restated Agreement of Limited Partnership of TEPPCO MLP dated as of September 21, 2001.

“ TEPPCO Partnership Group Entities ” means TEPPCO GP, TEPPCO MLP and the subsidiaries of TEPPCO MLP.

“ TEPPCO Permits ” has the meaning set forth in Section 3.3(j)(ii) .

“ TEPPCO Pipeline Assets ” means the pipelines, equipment and other tangible personal property used in connection with the TEPPCO Partnership Group Entities’ pipeline operations.

“ TEPPCO Plans ” means all employee benefit plans (as defined in Section 3(3) of ERISA, whether or not subject to ERISA), all employment, change of control and severance agreements (or consulting agreements with natural persons) and any employee compensation plan, including any pension, retirement, profit sharing, stock or unit option, stock or unit purchase, restricted stock or unit, bonus, incentive compensation, health, life, disability or fringe benefit plan, contract or arrangement sponsored or maintained by, participated in or contributed

 

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to by or required to be contributed to by, any of the TEPPCO Partnership Group Entities with respect to any current or former Affected Employees or independent contractors of any of the TEPPCO Partnership Group Entities.

“ TEPPCO SEC Reports ” has the meaning set forth in Section 3.3(g)(i) .

“ TEPPCO Severance Plan ” has the meaning set forth in Section 4.12(e) .

“ Texas Courts ” has the meaning set forth in Section 6.2 .

“ Third Party Payments ” has the meaning set forth in Section 4.7(a) .

“ Transition Services ” has the meaning set forth in Section 4.7(a) .

Section 1.2 Rules of Construction . The division of this Agreement into articles, sections and other portions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation hereof. Unless otherwise indicated, all references to an “Article” or “Section” followed by a number or a letter refer to the specified Article or Section of this Agreement. The terms “this Agreement,” “hereof,” “herein” and “hereunder” and similar expressions refer to this Agreement (including the Disclosure Letter hereto) and not to any particular Article, Section or other portion hereof. Unless otherwise specifically indicated or the context otherwise requires, (a) all references to “dollars” or “$” mean United States dollars, (b) words importing the singular shall include the plural and vice versa and words importing any gender shall include all genders, (c) “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation,” and (d) all words used as accounting terms shall have the meanings assigned to them under United States generally accepted accounting principles applied on a consistent basis during the periods involved (“ GAAP ”). In the event that any date on which any action is required to be taken hereunder by any of the parties hereto is not a Business Day, such action shall be required to be taken on the next succeeding day that is a Business Day. Reference to any party hereto is also a reference to such party’s permitted successors and assigns. The Exhibits attached to this Agreement are hereby incorporated by reference into this Agreement and form a part hereof. Unless otherwise indicated, all references to an “Exhibit” followed by a number or a letter refer to the specified Exhibit to this Agreement. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party hereto by virtue of the authorship of any of the provisions of this Agreement.

ARTICLE II

PURCHASE AND SALE

Section 2.1 Closing .

(a) Closing Date . The closing (the “ Closing ”) of the transactions contemplated under this Section 2.1 shall be held at the offices of Vinson & Elkins L.L.P. at 1001 Fannin Street, Houston, Texas 77002 on the Execution Date. The Execution Date is also referred to herein as the “ Closing Date .”

 

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(b) Purchase of Membership Interest . At the Closing, subject to the terms and conditions of this Agreement, DEFS shall convey to Enterprise the Membership Interest (such conveyance or assignment to be in a form mutually acceptable to DEFS and Enterprise), free and clear of all Encumbrances, except to the extent created under federal and state securities laws and the Delaware Limited Liability Company Act, for an aggregate cash amount equal to $1,100,000,000 (the “ Purchase Price ”). Concurrently with such conveyance, Enterprise shall pay the Purchase Price by delivery to DEFS of the promissory note substantially in the form attached hereto as Exhibit A and the Security Agreement substantially in the form attached hereto as Exhibit B.

(c) FIRPTA Certificate . At the Closing, DEFS shall provide Enterprise with a FIRPTA certificate certifying that DEFS is not a “foreign person” within the meaning of Treasury Regulation 1.1445 2(b).

(d) TEPPCO Investments . Immediately prior to the Closing, TEPPCO Investments LLC (“ Investments ”), a wholly owned subsidiary of TEPPCO GP, has forgiven, discharged and terminated all obligations under or evidenced by that certain $10,000,000 promissory note issued to Investments by DEFS as obligor under such note.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Section 3.1 Representations and Warranties of DEFS . DEFS represents and warrants to Enterprise that:

(a) Formation and Standing . DEFS has been duly formed and is validly existing under the Laws of the State of Delaware with full legal and limited liability company power and authority to own, lease and operate its properties and to conduct its businesses as currently owned and conducted except where, individually or in the aggregate, the failure to be so organized, formed or existing or to have such power or authority could not reasonably be expected to have a material adverse effect on the ability of DEFS to close the transactions contemplated under this Agreement. DEFS is duly qualified to do business in each jurisdiction in which the nature of the business conducted by it or the ownership or leasing of its properties requires it to so qualify, except where, individually or in the aggregate, the failure to be so qualified could not reasonably be expected to have a material adverse effect on the ability of DEFS to close the transactions contemplated under this Agreement.

(b) Authority and No Conflicts .

(i) DEFS has all requisite limited liability company power and authority to enter into this Agreement and to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by DEFS and the consummation by DEFS of the transactions contemplated by this Agreement have been duly and validly authorized by all necessary limited liability company action on the part of DEFS and its members and no other limited liability company proceedings on the part of DEFS or its members are necessary to authorize this Agreement or to consummate the transactions contemplated hereby.

 

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(ii) This Agreement has been duly executed and delivered by DEFS and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as the same may be limited by bankruptcy, insolvency and other applicable Laws affecting creditors’ rights generally, and by general principles of equity.

(iii) Neither the execution and delivery of this Agreement by DEFS nor the performance by DEFS of its obligations hereunder and the completion of the transactions contemplated hereby will:

(A) conflict with, or violate any provision of, the governing documents of DEFS;

(B) other than obtaining or making, as applicable, any consents, approvals, orders, authorizations, registrations, declarations or filings which, if not obtained or made, could not, individually or in the aggregate, reasonably be expected to have a TEPPCO Material Adverse Effect, violate or breach any Laws applicable to DEFS; or

(C) other than obtaining or making, as applicable, any consents, approvals, orders, authorizations, registrations, declarations or filings which, if not obtained or made, could not, individually or in the aggregate, reasonably be expected to have a TEPPCO Material Adverse Effect, violate or conflict with or result in the breach of, or constitute a default (or an event that with the giving of notice, the passage of time, or both would constitute a default) under, or entitle any party (with the giving of notice, the passage of time or both) to terminate, accelerate, modify or call any obligations or rights under any credit agreement, note, bond, mortgage, indenture, deed of trust, contract, agreement, lease, license, franchise, permit, concession, easement or other instrument to which DEFS is a party, or by or to which DEFS or any of its properties are bound or subject.

(c) No Consents . No consent, approval, authorization or order of, or notice to, any court or person is required for the consummation by DEFS of the transactions contemplated by this Agreement except those as have already been obtained or given or those, the failure of which to obtain or give, could not reasonably be expected to have a TEPPCO Material Adverse Effect.

(d) Membership Interest and General Partner Interest .

(i) DEFS is the sole owner of the Membership Interest. The Membership Interest has been duly authorized, validly issued, fully paid and non-assessable (except as set forth in the TEPPCO GP LLC Agreement, for the capital account restoration obligation under the TEPPCO Partnership Agreement and to the extent such non-assessability may be affected by the Delaware Limited Liability Company Act). Except to the extent created under the federal and state securities Laws and the Delaware Limited Liability Company Act, the Membership Interest is held of record by DEFS, free and clear of Encumbrances. TEPPCO GP owns or holds no assets or interests other than the general partner interest in TEPPCO MLP and has not since the date of its formation engaged in any business activities whatsoever other than acting as the general partner of TEPPCO MLP.

 

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(ii) General Partner Interest . TEPPCO GP is the sole general partner of TEPPCO MLP. TEPPCO GP is the sole record and beneficial owner of the general partner interest in TEPPCO MLP, and such general partner interest has been duly authorized and validly issued in accordance with the TEPPCO Partnership Agreement. Except for any Encumbrances arising under the governing documents of any TEPPCO Party, applicable securities Laws or this Agreement, TEPPCO GP owns such general partner interest free and clear of any Encumbrances.

(e) No Defaults . DEFS is not in default under or violation of, and there has been no event, condition or occurrence which, after notice or lapse of time or both, would constitute such a default or violation of, or permit the termination of, any term, condition or provision of (i) its governing documents, (ii) any credit agreement, note, bond, mortgage, indenture, contract, agreement, lease, license, franchise, permit, concession, easement or other instrument to which DEFS is a party or by which DEFS or any of its property is bound or subject, except, in the case of clause (ii), defaults, violations and terminations which, individually or in the aggregate, could not reasonably be expected to have a TEPPCO Material Adverse Effect.

(f) Brokerage and Finder’s Fee . No agent, broker, finder, investment banker, financial advisor or similar person will be entitled to any fee, commission or other compensation in connection with the transactions contemplated by this Agreement on the basis of any action or statement made by DEFS, TEPPCO MLP or TEPPCO GP or any affiliate thereof, or any of their respective partners, shareholders, members, directors, officers or employees acting on behalf of DEFS, TEPPCO MLP, TEPPCO GP or any affiliate thereof.

Section 3.2 Representations and Warranties of Enterprise . Enterprise represents and warrants to DEFS that:

(a) Organization and Standing . Enterprise has been duly organized and is validly existing under the Laws of its jurisdiction of organization with full legal power and authority to own, lease and operate its properties and to conduct its businesses as currently owned and conducted except where, individually or in the aggregate, the failure to be so organized or existing or to have such power or authority could not reasonably be expected to have an Enterprise Material Adverse Effect. Enterprise is duly qualified to do business in each jurisdiction in which the nature of the business conducted by it or the ownership or leasing of its properties requires it to so qualify, except where, individually or in the aggregate, the failure to be so qualified could not reasonably be expected to have an Enterprise Material Adverse Effect.

(b) Authority and No Conflicts .

(i) Enterprise has all requisite corporate or limited liability company power and authority to enter into this Agreement and to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Enterprise and the consummation of the transactions contemplated by this Agreement have been duly and validly authorized by all necessary corporate or limited liability company action, and no other proceedings on the part of Enterprise are necessary to authorize this Agreement or to consummate the transactions contemplated hereby.

 

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(ii) This Agreement has been duly executed and delivered by Enterprise and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as the same may be limited by bankruptcy, insolvency and other applicable Laws affecting creditors’ rights generally, and by general principles of equity.

(iii) Neither the execution and delivery of this Agreement by Enterprise nor the performance by Enterprise of its obligations hereunder and the completion of the transactions contemplated hereby, will:

(A) conflict with, or violate any provision of, the governing documents of Enterprise;

(B) other than obtaining or making, as applicable, any consents, approvals, orders, authorizations, registrations, declarations or filings which, if not obtained or made, could not, individually or in the aggregate, reasonably be expected to have an Enterprise Material Adverse Effect, violate or breach any Laws applicable to Enterprise;

(C) other than obtaining or making, as applicable, any consents, approvals, orders, authorizations, registrations, declarations or filings which, if not obtained or made, could not, individually or in the aggregate, reasonably be expected to have an Enterprise Material Adverse Effect, violate or conflict with or result in the breach of, or constitute a default (or an event that with the giving of notice, the passage of time, or both would constitute a default) under, or entitle any party (with the giving of notice, the passage of time or both) to terminate, accelerate, modify or call any obligations or rights under any credit agreement, note, bond, mortgage, indenture, deed of trust, contract, agreement, lease, license, franchise, permit, concession, easement or other instrument to which Enterprise is a party or by which Enterprise or its property is bound or subject; or

(D) except as could not, individually or in the aggregate, reasonably be expected to have an Enterprise Material Adverse Effect, result in the imposition of any Encumbrance upon or require the sale or give any person the right to acquire any of the assets of Enterprise or restrict, hinder, impair or limit the ability of Enterprise to carry on its business as and where it is now being carried on.

(c) No Consents . No consent, approval, authorization or order of, or notice to, any court or person is required for the consummation of the transactions contemplated by this Agreement except those as have been obtained or given or those, the failure of which to obtain or give, could not reasonably be expected to have an Enterprise Material Adverse Effect.

(d) No Defaults . Enterprise is not in default under or violation of, and there has been no event, condition or occurrence which, after notice or lapse of time or both, would constitute such a default or violation of, or permit the termination of, any term, condition or provision of (i) its governing documents, (ii) any credit agreement, note, bond, mortgage, indenture, contract, agreement, lease, license, franchise, permit, concession, easement or other instrument to which Enterprise is a party or by which Enterprise or its property is bound or subject, except, in the case of clause (ii), defaults, violations and terminations which, individually or in the aggregate, could not reasonably be expected to have an Enterprise Material Adverse Effect.

 

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(e) Brokerage and Finder’s Fee . Except for Lehman Brothers Inc. and Citigroup Global Markets Inc. (the fees of which are payable by Enterprise), no agent, broker, finder, investment banker, financial advisor or similar person will be entitled to any fee, commission or other compensation in connection with the transactions contemplated by this Agreement on the basis of any action or statement made by Enterprise or any of its affiliates, or any of their respective partners, shareholders, members, directors, officers or employees acting on behalf of Enterprise or any affiliate thereof.

(f) Independent Investigation . Enterprise has conducted its own independent investigation, review and analysis of the business, operations, assets, liabilities, results of operations, financial condition and prospects of the TEPPCO Partnership Group Entities, which investigation, review and analysis was done by Enterprise and its affiliates and, to the extent Enterprise deemed necessary or appropriate, by its Representatives (it being understood that Enterprise is also relying on the representations, warranties, covenants and conditions in this Agreement).

(g) Investment Intent; Investment Experience; Restricted Securities . In acquiring the Membership Interest, Enterprise is not offering or selling, and shall not offer or sell the Membership Interest, for DEFS in connection with any distribution of any of such Membership Interest, and Enterprise does not have a participation and shall not participate in any such undertaking or in any underwriting of such an undertaking except in compliance with applicable federal and state securities laws. Enterprise acknowledges that it can bear the economic risk of its investment in the Membership Interest and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in the Membership Interest. Enterprise is an “accredited investor” as such term is defined in Regulation D under the Securities Act. Enterprise understands that the Membership Interest shall not have been registered pursuant to the Securities Act or any applicable state securities laws, that the Membership Interest shall be characterized as “restricted securities” under federal securities laws and that under such laws and applicable regulations the Membership Interest cannot be sold or otherwise disposed of without registration under the Securities Act or an exemption therefrom.

Section 3.3 Representations and Warranties Concerning TEPPCO GP and TEPPCO MLP . DEFS hereby represents and warrants to Enterprise that:

(a)  Organization and Standing . Each of the TEPPCO Partnership Group Entities has been duly organized or formed and is validly existing under the Laws of its jurisdiction of organization or formation with full corporate or legal power and authority to own, lease and operate its properties and to conduct its businesses as currently owned and conducted. Each of the TEPPCO Partnership Group Entities is duly qualified to do business in each jurisdiction in which the nature of the business conducted by it or the ownership or leasing of its properties requires it to so qualify, except where, individually or in the aggregate, the failure to be so qualified could not reasonably be expected to have a TEPPCO Material Adverse Effect. TEPPCO GP was formed on March 31, 2000.

 

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(b) No Defaults . None of the TEPPCO Partnership Group Entities is in default under or violation of, and there has been no event, condition or occurrence which, after notice or lapse of time or both, would constitute such a default or violation of, or permit the termination of, any term, condition or provision of (i) their respective governing documents, (ii) any credit agreement, note, bond, mortgage, indenture, contract, agreement, lease, license, franchise, permit, concession, easement or other instrument to which any of the TEPPCO Partnership Group Entities is a party or by which any of the TEPPCO Partnership Group Entities or any of their respective property is bound or subject, except, in the case of clause (ii), defaults, violations and terminations which, individually or in the aggregate, could not reasonably be expected to have a TEPPCO Material Adverse Effect.

(c) No Conflicts . Neither the execution and delivery of this Agreement by DEFS nor the performance by DEFS of its obligations hereunder and the completion of the transactions contemplated hereby will:

(i) conflict with, or violate any provision of, the governing documents of the TEPPCO Partnership Group Entities or the TEPPCO Partially Owned Entities;

(ii) other than obtaining or making, as applicable, any consents, approvals, orders, authorizations, registrations, declarations or filings which, if not obtained or made, could not, individually or in the aggregate, reasonably be expected to have a TEPPCO Material Adverse Effect, violate or breach any Laws applicable to the TEPPCO Partnership Group Entities or the TEPPCO Partially Owned Entities;

(iii) other than obtaining or making, as applicable, any consents, approvals, orders, authorizations, registrations, declarations or filings which, if not obtained or made, could not, individually or in the aggregate, reasonably be expected to have a TEPPCO Material Adverse Effect, violate or conflict with or result in the breach of, or constitute a default (or an event that with the giving of notice, the passage of time, or both would constitute a default) under, or entitle any party (with the giving of notice, the passage of time or both) to terminate, accelerate, modify or call any obligations or rights under any credit agreement, note, bond, mortgage, indenture, deed of trust, contract, agreement, lease, license, franchise, permit, concession, easement or other instrument to which any of the TEPPCO Partnership Group Entities or the TEPPCO Partially Owned Entities is a party or by which any of the TEPPCO Partnership Group Entities or the TEPPCO Partially Owned Entities or their respective properties are bound or subject; or

(iv) except as could not, individually or in the aggregate, reasonably be expected to have a TEPPCO Material Adverse Effect, result in the imposition of any Encumbrance upon or require the sale or give any person the right to acquire any of the assets of any of the TEPPCO Partnership Group Entities or the TEPPCO Partially Owned Entities or restrict, hinder, impair or limit the ability of any of the TEPPCO Partnership Group Entities or the TEPPCO Partially Owned Entities to carry on their respective businesses as and where they are now being carried on.

 

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(d) Capitalization of TEPPCO MLP and Subsidiaries . As of the Execution Date, TEPPCO MLP has no limited partner interests issued and outstanding other than 62,998,554 TEPPCO Limited Partner Units.

Each of such TEPPCO Limited Partner Units and the limited partner interests represented thereby have been duly authorized and validly issued in accordance with applicable Laws and the TEPPCO Partnership Agreement, and are fully paid (to the extent required under the TEPPCO Partnership Agreement) and non-assessable (except to the extent such non-assessability may be affected by Section 17-607 of the Delaware Revised Uniform Limited Partnership Act). Such TEPPCO Limited Partner Units were not issued in violation of pre-emptive or similar rights or any other agreement or understanding binding on TEPPCO MLP. TEPPCO GP and TEPPCO MLP are the sole record and beneficial owners of the general partner interest and limited partner interest, respectively, of each of the TEPPCO Operating Partnerships. All of the outstanding equity interests of the subsidiaries of TEPPCO MLP and the TEPPCO MLP Partially Owned Entities owned, directly or indirectly, by TEPPCO MLP have been duly authorized and are validly issued (in accordance with their respective governing documents), fully paid (to the extent required under the applicable goveming documents) and non-assessable (except (1) with respect to general partner interests, (2) as set forth to the contrary in the applicable governing documents and (3) to the extent such non-assessability may be affected by the Delaware Revised Uniform Limited Partnership Act or the Delaware Limited Liability Company Act) and were not issued in violation of pre-emptive or similar rights; and all such equity interests are owned, directly or indirectly, by TEPPCO MLP, free and clear of all Encumbrances, except for applicable securities Laws and restrictions on transfers contained in governing documents.

(e) Subsidiaries . Section 3.3(e) of the TEPPCO Disclosure Letter sets forth a list of all of the subsidiaries of TEPPCO MLP and all of the TEPPCO MLP Partially Owned Entities, together with their respective jurisdictions of organization or formation, types of entity, percentages of equity ownership by TEPPCO MLP or its subsidiaries and record owner or owners of such equity. TEPPCO MLP has no subsidiaries or TEPPCO MLP Partially Owned Entities other than those set forth in Section 3.3(e) of the TEPPCO Disclosure Letter.

(f) Derivative Securities; Rights . Except as described in Section 3.3(f) of the TEPPCO Disclosure Letter: (i) there are no outstanding options, warrants, subscriptions, puts, calls or other rights, agreements, arrangements or commitments (pre-emptive, contingent or otherwise) obligating any of the TEPPCO Partnership Group Entities to offer, issue, sell, redeem, repurchase, otherwise acquire or transfer, pledge or Encumber any equity interest in any of the TEPPCO Partnership Group Entities; (ii) there are no outstanding securities or obligations of any kind of any of the TEPPCO Partnership Group Entities which are convertible into or exercisable or exchangeable for any equity interest in any of the TEPPCO Partnership Group Entities or any other person, and none of the TEPPCO Partnership Group Entities has any obligation of any kind to issue any additional securities or to pay for or repurchase any securities; (iii) there are no outstanding stock appreciation rights, phantom equity or similar rights, agreements, arrangements or commitments based on the book value, income or any other attribute of any of the TEPPCO Partnership Group Entities; (iv) there are no outstanding bonds, debentures or other evidence of indebtedness of any of the TEPPCO Partnership Group Entities having the right to vote (or that are exchangeable for or convertible or exercisable into securities having the right to vote) with the holders of the TEPPCO Limited Partner Units on any matter; (v) except as

 

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described in the TEPPCO Partnership Agreement, there are no unitholder agreements, proxies, voting trusts, rights to require registration under securities Laws or other arrangements or commitments to which any of the TEPPCO Partnership Group Entities is a party or by which any of their respective securities are bound with respect to the voting, disposition or registration of any outstanding securities of any of the TEPPCO Partnership Group Entities ( provided that the foregoing shall not apply to any such restriction on voting or disposition that any holder of TEPPCO Limited Partner Units (other than affiliates of DEFS) may have imposed upon such TEPPCO Limited Partner Units); and (vi) there are no outstanding registration rights with respect to any TEPPCO Limited Partner Units or any other equity securities of any of the TEPPCO Partnership Group Entities.

(g) Reports; Financial Statements .

(i) Since January 1, 2003, TEPPCO MLP has filed or furnished all forms, reports, schedules, statements and other documents required by Law to be filed or furnished with the SEC by any of the TEPPCO Partnership Group Entities under applicable securities statutes, regulations, policies and rules (collectively, together with all other documents filed by TEPPCO MLP with the SEC since January 1, 2003 and prior to the Execution Date, the “ TEPPCO SEC Reports ”). The TEPPCO SEC Reports at the time filed or furnished (x) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements contained therein not misleading in light of