Exhibit 10-25

 

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PURCHASE AND SALE AGREEMENT

 

By and Between

 

ENTERPRISE GP HOLDINGS L.P.

 

and

 

DUKE ENERGY FIELD SERVICES, LLC

 

February 24, 2005

 

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TABLE OF CONTENTS

 

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ARTICLE I

DEFINITIONS

   1

    Section 1.1

  

Definitions

   1

    Section 1.2

  

Rules of Construction

   8

ARTICLE II

PURCHASE AND SALE

   8

    Section 2.1

  

Closing

   8

ARTICLE III

REPRESENTATIONS AND WARRANTIES

   9

    Section 3.1

  

Representations and Warranties of DEFS

   9

    Section 3.2

  

Representations and Warranties of Enterprise

   11

    Section 3.3

  

Representations and Warranties Concerning TEPPCO GP and TEPPCO MLP

   13

ARTICLE IV

COVENANTS AND AGREEMENTS

   27

    Section 4.1

  

Confidentiality

   27

    Section 4.2

  

TEPPCO Asset Separation

   28

    Section 4.3

  

Commercially Reasonable Efforts; Further Assurances

   28

    Section 4.4

  

No Public Announcement

   28

    Section 4.5

  

Expenses

   29

    Section 4.6

  

Termination of Services Agreement

   29

    Section 4.7

  

Transition Services

   29

    Section 4.8

  

Tax Matters

   31

    Section 4.9

  

TEPPCO MLP and TEPPCO GP Audit

   31

    Section 4.10

  

Completion of 2004 Annual Report

   31

    Section 4.11

  

Board of Directors

   31

    Section 4.12

  

Benefit Plans

   31

    Section 4.13

  

GPL Insurance

   33

    Section 4.14

  

Surety Bonds

   33

    Section 4.15

  

Other Insurance

   33

ARTICLE V

REMEDIES FOR DEFAULT

   34

    Section 5.1

  

Indemnity Regarding Section 3.1 and Section 3.3 Representations and Covenants

   34

    Section 5.2

  

Indemnity Regarding Section 3.2 Representations and Covenants

   34

    Section 5.3

  

Survival of Representations

   34

    Section 5.4

  

Calculation of Damages

   35

    Section 5.5

  

Enforcement of this Agreement

   35

    Section 5.6

  

Exclusive Remedy

   36

 

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    Section 5.7

  

Limitation on Damages

   36

    Section 5.8

  

No Waiver Relating to Claims for Fraud/Willful Misconduct

   36

    Section 5.9

  

Express Negligence Clause

   36

ARTICLE VI

    

MISCELLANEOUS

   36

    Section 6.1

  

Notices

   36

    Section 6.2

  

Governing Law; Jurisdiction; Waiver of Jury Trial

   37

    Section 6.3

  

Entire Agreement; Amendments and Waivers

   38

    Section 6.4

  

Binding Effect and Assignment

   38

    Section 6.5

  

Severability

   38

    Section 6.6

  

Execution

   38

    Section 6.7

  

Disclosure Letters

   39 Exhibits     

Exhibit A

  

        Form of Promissory Note

    

Exhibit B

  

        Form of Security Agreement

    

 

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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.

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“Closing” has the meaning set forth in Section 2.1 (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” or “TEPPCO 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.

 

11

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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.

 

12

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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.

 

14

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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 governing documents) and
non-assessable (except (1) with respect to general partner interests, (2) as set
forth to the contrary in the applicable governing documents and (3) to the
extent such non-assessability may be affected by the Delaware Revised Uniform
Limited Partnership Act or the Delaware Limited Liability Company Act) and were
not issued in violation of pre-emptive or similar rights; and all such equity
interests are owned, directly or indirectly, by 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

 

15

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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 the circumstances under which they were made, (y)
complied in all material respects with the requirements of applicable Laws
(including the Securities Act, the Exchange Act and the rules and regulations
thereunder) and (z) complied in all material respects with the then applicable
accounting standards. The TEPPCO SEC Reports included all certificates required
to be included therein pursuant to Section 13a-14(a) and Section 13a-14(b) of
the Exchange Act. Other than filings in connection with Rule 144A offerings with
respect to wholly owned subsidiaries of TEPPCO MLP, no subsidiary of TEPPCO MLP
is required to file periodic reports with the SEC, either pursuant to the
requirements of the Exchange Act or by contract.

 

(ii) Attached as Section 3.3(g)(ii) of the TEPPCO Disclosure Letter is a copy of
the draft of the TEPPCO MLP Annual Report on Form 10-K for the year ended
December 31, 2004, which draft was presented to the audit committee of the board
of directors of TEPPCO GP (the “Draft 10-K”). The Draft 10-K is substantially
complete, the appropriate officers of TEPPCO GP are prepared to sign the
certificates required to be included therein pursuant to Section 13a-14(a) and
Section 13a-14(b) of the Exchange Act, management is prepared to deliver the
internal control report required by Section 404 of the Sarbanes-Oxley Act of
2002, and, to the knowledge of DEFS, the outside auditors of TEPPCO MLP are
prepared to sign their audit report and attestation to the internal control
report included therein.

 

(iii) Except for this Agreement and the TEPPCO Plans set forth in Section
3.3(g)(iii) of the TEPPCO Disclosure Letter, the exhibit list included in the
Draft 10-K sets forth a true and complete list of (x) any contracts, agreements,
documents and other instruments not yet filed by TEPPCO MLP with the SEC but
that are currently in effect and that any of the TEPPCO Partnership Group
Entities will be required to or expect to file with or furnish to the SEC as
exhibits in an annual or periodic report after the Execution Date and (y) any
amendments and modifications that have not been filed by TEPPCO MLP with the SEC
but

 

16

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are currently in effect to all agreements, documents and other instruments that
have been filed by any of the TEPPCO Partnership Group Entities with the SEC
since January 1, 2003. All such exhibits have been made available to Enterprise,
as requested.

 

(iv) Attached as Section 3.3(g)(iv) of the TEPPCO Disclosure Letter are copies
of the audited financial statements for the years ended December 31, 2001, 2002
and 2003 of TEPPCO GP (the “TEPPCO GP Financial Statements”). The consolidated
financial statements (including, in each case, any related notes thereto) of
TEPPCO MLP contained in any TEPPCO SEC Reports and in the Draft 10-K and the
TEPPCO GP Financial Statements (x) have been prepared in accordance with GAAP
(subject, in the case of unaudited financial statements, to the absence of
footnote disclosures required by GAAP), (y) complied in all material respects
with the requirements of applicable securities Laws, and (z) fairly present, in
all material respects, the consolidated financial positions, results of
operations, cash flows, partners’ capital and comprehensive income and changes
in accumulated other comprehensive income, as applicable, of the applicable
TEPPCO Partnership Group Entities as of the respective dates thereof and for the
respective periods covered thereby, subject, in the case of unaudited financial
statements, to normal, recurring audit adjustments none of which will be
material. Except as disclosed on the TEPPCO MLP Balance Sheet or the TEPPCO GP
Balance Sheet, none of the TEPPCO Partnership Group Entities has any
indebtedness or liability, absolute or contingent, other than (A) in the case of
TEPPCO MLP, liabilities as of December 31, 2004 that are not required by GAAP to
be included in the TEPPCO MLP Balance Sheet, (B) in the case of TEPPCO GP,
liabilities as of December 31, 2003 that are not required by GAAP to be included
in the TEPPCO GP Balance Sheet, (C) liabilities incurred or accrued in the
ordinary course of business consistent with past practice since December 31,
2004 in the case of TEPPCO MLP (or December 31, 2003, in the case of TEPPCO GP)
and that are not material, individually or in the aggregate, or (D) liabilities
disclosed in the Draft 10-K or any TEPPCO SEC Reports filed since September 30,
2004.

 

(h) Controls.

 

(i) The management of TEPPCO GP has (x) implemented disclosure controls and
procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure that
material information relating to TEPPCO MLP, including its consolidated
subsidiaries, is made known to the management of TEPPCO GP by others within
those entities, and (y) disclosed, based on its most recent evaluation, to
TEPPCO MLP’s outside auditors and the audit committee of the board of directors
of TEPPCO GP (A) all significant deficiencies and material weaknesses in the
design or operation of internal controls over financial reporting (as defined in
Rule 13a-15(f) of the Exchange Act) which are reasonably likely to adversely
affect TEPPCO MLP’s ability to record, process, summarize and report financial
data and (B) any fraud, whether or not material, that involves management or
other employees who have a significant role in TEPPCO MLP’s internal controls
over financial reporting. Since January 1, 2003, any material change in internal
control over financial reporting required to be disclosed in any TEPPCO SEC
Report has been so disclosed.

 

(ii) Since January 1, 2003, (x) to the knowledge of DEFS, none of the TEPPCO
Partnership Group Entities, or any Representative of a TEPPCO Partnership Group
Entity, has received or otherwise had or obtained knowledge of any material
complaint,

 

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allegation, assertion or claim, whether written or oral, regarding the
accounting or auditing practices, procedures, methodologies or methods of the
TEPPCO Partnership Group Entities or their respective internal accounting
controls relating to periods after January 1, 2003, including any material
complaint, allegation, assertion or claim that any of the TEPPCO Partnership
Group Entities has engaged in questionable accounting or auditing practices, and
(y) no attorney representing the TEPPCO Partnership Group Entities, whether or
not employed by the TEPPCO Partnership Group Entities, has reported evidence of
a material violation of securities Laws, breach of fiduciary duty or similar
violation, relating to periods after January 1, 2003, by the officers,
directors, employees or agents of any of the TEPPCO Partnership Group Entities
to the board of directors of TEPPCO GP or any committee thereof or, to the
knowledge of DEFS, to any director or officer of TEPPCO GP.

 

(i) Absence of Certain Changes or Events.

 

(i) Except as set forth in Section 3.3(i) of the TEPPCO Disclosure Letter or as
disclosed in any TEPPCO SEC Report or the Draft 10-K, between September 30, 2004
and the Execution Date, the business of the TEPPCO Partnership Group Entities,
taken as a whole, has been conducted in the ordinary course consistent with past
practices, except in connection with entering into this Agreement.

 

(ii) Since September 30, 2004, except as disclosed in any TEPPCO SEC Report or
the Draft 10-K, there have not been any events or conditions that have had, or
could reasonably be expected to have, a TEPPCO Material Adverse Effect.

 

(j) Compliance; Permits. Except as set forth in Section 3.3(j) of the TEPPCO
Disclosure Letter or, in the case of clauses (i) and (iii) below, the TEPPCO SEC
Reports or the Draft 10-K:

 

(i) The TEPPCO Partnership Group Entities are in compliance, and at all times
since January 1, 2003 have complied, with all applicable Laws, including all
applicable Laws relating to the ownership, use and operation of their properties
and assets, other than non-compliance which could not, individually or in the
aggregate, reasonably be expected to have a TEPPCO Material Adverse Effect.

 

(ii) TEPPCO GP is in compliance, and at all times that it has been the general
partner of the TEPPCO MLP has complied, in all material respects with all of its
obligations under the TEPPCO Partnership Agreement.

 

(iii) The TEPPCO Partnership Group Entities are in possession of all franchises,
grants, authorizations, licenses, permits, easements, variances, exemptions,
consents, certificates, approvals and orders necessary to own, lease and operate
their properties and to lawfully carry on their businesses as they are now being
conducted (collectively, the “TEPPCO Permits”), except as would not,
individually or in the aggregate, reasonably be expected to have a TEPPCO
Material Adverse Effect. None of the TEPPCO Partnership Group Entities is in
conflict with, or in default or violation of any of the TEPPCO Permits, except
for any such conflicts, defaults or violations which could not, individually or
in the aggregate, reasonably be expected to have a TEPPCO Material Adverse
Effect.

 

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(k) Litigation. Except as disclosed in Section 3.3(k) of the TEPPCO Disclosure
Letter, in the TEPPCO SEC Reports or the Draft 10-K or for matters that could
not reasonably be expected to have, individually or in the aggregate, a TEPPCO
Material Adverse Effect, (i) there are no claims, actions, proceedings (public
or private) investigations or reviews pending or, to the knowledge of DEFS,
threatened against any of the TEPPCO Partnership Group Entities by or before any
Governmental Entity, and (ii) DEFS has no knowledge of any facts that such
persons reasonably believe are likely to give rise to any such claim, action,
proceeding, investigation or review. None of the TEPPCO Partnership Group
Entities, nor any of their respective assets and properties, is subject to any
outstanding judgment, order, writ, injunction or decree that has had or could
reasonably be expected to have, individually or in the aggregate, a TEPPCO
Material Adverse Effect.

 

(l) Environmental Matters. Except as disclosed in Schedule 3.3(l) to the TEPPCO
Disclosure Letter or in the TEPPCO SEC Reports or for matters or claims that
would not reasonably be expected to have, individually or in the aggregate, a
TEPPCO Material Adverse Effect: (a) the TEPPCO Partnership Group Entities and
their respective businesses, operations, and properties have been in compliance
for all applicable statutes of limitations and are in compliance with all
Environmental Laws and all permits, registrations, licenses, approvals,
exemptions, variances, and other authorizations required of the TEPPCO
Partnership Group Entities under Environmental Laws (“TEPPCO Environmental
Permits”); (b) the TEPPCO Partnership Group Entities have obtained or filed for
all TEPPCO Environmental Permits required for their respective businesses,
operations, and properties as they currently exist and all such TEPPCO
Environmental Permits are currently in full force and effect; (c) the TEPPCO
Partnership Group Entities and their respective businesses, operations, and
properties are not subject to any pending or, to the knowledge of DEFS,
threatened claims, actions, suits, investigations, inquiries or proceedings
under Environmental Laws; (d) there have been no Releases of Hazardous
Substances on, under or from the properties of the TEPPCO Partnership Group
Entities that have given or may give rise to any obligations within the
applicable statutes of limitations under Environmental Laws; (e) none of the
TEPPCO Partnership Group Entities has, to the knowledge of DEFS, received any
written notice that remains unresolved asserting an alleged liability or
obligation under any Environmental Laws against the TEPPCO Partnership Group
Entities with respect to the actual or alleged Hazardous Substance contamination
of any property offsite of the properties of the TEPPCO Partnership Group
Entities; (f) to the knowledge of DEFS, there has been no exposure of any person
or property to Hazardous Substances in connection with the TEPPCO Partnership
Group Entities’ businesses, operations, or properties that could reasonably be
expected to form the basis for any tort claims by third parties for damages or
compensation; (g) the TEPPCO Partnership Group Entities have made available to
Enterprise all documents requested by Enterprise that are in the possession of
the TEPPCO Partnership Group Entities and relating to their respective
businesses, operations, or properties and relating to the TEPPCO Partnership
Group Entities’ compliance with or obligations under Environmental Laws; and (h)
none of the TEPPCO Partnership Group Entities is a potentially responsible party
under Environmental Laws at any site that is on the National Priorities List,
and no real property owned by any of the TEPPCO Partnership Group Entities is on
the Comprehensive Environmental Response, Compensation and Liability Information
System list.

 

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(m) Contracts. Except for contracts filed as exhibits to the TEPPCO SEC Reports
and TEPPCO Plans (other than with respect to clause (viii)), Section 3.3(m) of
the TEPPCO Disclosure Letter lists as of the Execution Date all written or oral
contracts, agreements, guarantees, leases and executory commitments to which any
of the TEPPCO Partnership Group Entities are a party or by which their assets
are bound and which fall within any of the following categories: (i) contracts
which would have the effect of limiting the freedom of any of the Enterprise
Partnership Group Entities or the TEPPCO Partnership Group Entities to compete
in any line of business or in any geographic area, (ii) contracts relating to
any outstanding commitment for capital expenditures in excess of $2,000,000
which are not included in AFEs for projects reflected in the TEPPCO MLP capital
budget for 2005, a copy of which is attached to Section 3.3(m) of the TEPPCO
Disclosure Letter; (iii) contracts with any labor union or organization, (iv)
indentures, mortgages, liens, promissory notes, loan agreements, guarantees or
other arrangements relating to the borrowing of money by any of the TEPPCO
Partnership Group Entities, (v) contracts providing for the acquisition or
disposition of assets or businesses with a purchase price of $5,000,000 or more;
(vi) contracts containing provisions triggered by change of control of any of
the TEPPCO Partnership Group Entities or other similar provisions, (vii)
contracts in favor of directors or officers that provide rights to
indemnification, and (viii) contracts (including those filed as exhibits to the
TEPPCO SEC Reports and TEPPCO Plans) between one or more TEPPCO Partnership
Group Entities and DEFS or one or more affiliates of DEFS (other than the TEPPCO
Partnership Group Entities). Except as disclosed in Section 3.3(m) of the TEPPCO
Disclosure Letter, the TEPPCO SEC Reports or the Draft 10-K, (x) all such
contracts (including those filed as exhibits to the TEPPCO SEC Reports) and all
other contracts that are individually material to the business or operations of
the TEPPCO Partnership Group Entities taken as a whole are valid and binding
obligations of the TEPPCO Partnership Group Entities that are parties thereto
and, to the knowledge of DEFS, the valid and binding obligation of each other
party thereto except such contracts which if not so valid and binding could not,
individually or in the aggregate, reasonably be expected to have a TEPPCO
Material Adverse Effect and (y) no TEPPCO Partnership Group Entity and, to the
knowledge of DEFS, no other party to any such contract is in breach of or in
default under or has the right to terminate (upon notice or otherwise) any such
contract except for such breaches, defaults that, and rights to terminate which,
if exercised, could not reasonably be expected to have, individually or in the
aggregate, a TEPPCO Material Adverse Effect. True and complete copies of all
such contracts have been delivered or have been made available to Enterprise as
requested by Enterprise.

 

(n) Restrictions on Business Activities. Except as set forth in Section 3.3(n)
of the TEPPCO Disclosure Letter, there is no agreement, judgment, injunction,
order or decree binding upon any of the TEPPCO Partnership Group Entities that
has or could be reasonably expected to have the effect of prohibiting,
restricting or materially impairing any business practice of any of the TEPPCO
Partnership Group Entities, any acquisition of property by any of the TEPPCO
Partnership Group Entities, the purchase of goods or services from any party,
the hiring of any individual or groups of individuals or the conduct of business
by any of the TEPPCO Partnership Group Entities as currently conducted.

 

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(o) Intellectual Property.

 

(i) Except for the items listed in Section 3.3(o) of the TEPPCO Disclosure
Letter, the TEPPCO Partnership Group Entities, directly or indirectly, own,
license or otherwise have legally enforceable rights to use all patents, patent
rights, trademarks, trade names, service marks, copyrights and any applications
therefore, technology, know-how, computer software and applications and tangible
or intangible proprietary information or materials, that are used in the
business of the TEPPCO Partnership Group Entities as presently conducted (the
“TEPPCO Intellectual Property Rights”) and each such ownership, license, and
right to use will not be adversely affected by the transactions contemplated by
this Agreement. Upon satisfaction of the obligations of DEFS pursuant to Section
4.2 of this Agreement, TEPPCO MLP will own, license or otherwise have legally
enforceable rights to use intellectual property of the type described in this
Section 3.3(o) sufficient to operate the business of the TEPPCO Partnership
Group Entities consistent with past practices.

 

(ii) In the case of TEPPCO Intellectual Property Rights owned by any of the
TEPPCO Partnership Group Entities, such TEPPCO Partnership Group Entities own
such TEPPCO Intellectual Property Rights free and clear of any Encumbrances
(other than Permitted Encumbrances). One or more of the TEPPCO Partnership Group
Entities have an adequate right to the use of the TEPPCO Intellectual Property
Rights or the material covered thereby in connection with the services or
products in respect of which such TEPPCO Intellectual Property Rights are being
used except where the lack of any such right could not reasonably be expected to
have, individually or in the aggregate, a TEPPCO Material Adverse Effect. None
of the TEPPCO Partnership Group Entities has received any written notice or
claim, or any other information, stating that the manufacture, sale, licensing,
or use of any of the services or products of any of the TEPPCO Partnership Group
Entities as now manufactured, sold, licensed or used or proposed for
manufacture, sale, licensing or use by any of the TEPPCO Partnership Group
Entities in the ordinary course of their business as presently conducted
infringes on any copyright, patent, trade mark, service mark or trade secret of
a third party except where such infringement could not reasonably be expected to
have, individually or in the aggregate, a TEPPCO Material Adverse Effect. None
of the TEPPCO Partnership Group Entities has received any written notice or
claim, or any other information, stating that the use by any of the TEPPCO
Partnership Group Entities of any trademarks, service marks, trade names, trade
secrets, copyrights, patents, technology or know-how and applications used in
their business as presently conducted infringes on any other person’s
trademarks, service marks, trade names, trade secrets, copyrights, patents,
technology or know-how and applications, except where such infringement could
not reasonably be expected to have, individually or in the aggregate, a TEPPCO
Material Adverse Effect. None of the TEPPCO Partnership Group Entities has
received any written notice or claim, or any other information, challenging the
ownership by any of the TEPPCO Partnership Group Entities or the validity of any
of the TEPPCO Intellectual Property Rights except where the absence of any such
ownership could not reasonably be expected to have, individually or in the
aggregate, a TEPPCO Material Adverse Effect. All registered patents, trademarks,
service marks and copyrights held by any of the TEPPCO Partnership Group
Entities are subsisting, except to the extent any failure to be subsisting could
not reasonably be expected to have, individually or in the aggregate, a TEPPCO
Material Adverse Effect. To the knowledge of DEFS, there is no unauthorized use,
infringement or misappropriation of any of the TEPPCO Intellectual Property
Rights by any third party,

 

 

21

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including any employee or former employee of any of the TEPPCO Partnership Group
Entities. No TEPPCO Intellectual Property Right is subject to any known
outstanding decree, order, judgment, or stipulation restricting in any manner
the licensing thereof by any of the TEPPCO Partnership Group Entities.

 

(p) Property.

 

(i) Immediately after the Closing TEPPCO MLP will own or have the right to use
tangible personal property sufficient to operate the businesses of the TEPPCO
Partnership Group Entities consistent with past practices.

 

(ii) Except for Permitted Encumbrances or failures that could not reasonably be
expected to have, individually or in the aggregate, a TEPPCO Material Adverse
Effect, the TEPPCO Partnership Group Entities have good and indefeasible title
or enforceable rights to use (or, with respect to the TEPPCO Pipeline Assets,
title to or interest in the applicable TEPPCO Pipeline Assets sufficient to
enable the TEPPCO Partnership Group Entities to conduct their businesses with
respect thereto without interference as it is currently being conducted) all
their properties and assets, whether tangible or intangible, real, personal or
mixed, free and clear of all liens.

 

(iii) Except for violations that could not reasonably be expected to have,
individually or in the aggregate, a TEPPCO Material Adverse Effect, the
businesses of the TEPPCO Partnership Group Entities have been and are being
operated in a manner which does not violate the terms of any easements, rights
of way, permits, servitudes, licenses, leasehold estates and similar rights
relating to real property (collectively, “TEPPCO Easements”) used by the TEPPCO
Partnership Group Entities in such businesses. All TEPPCO Easements are valid
and enforceable in accordance with their terms, except as the enforceability
thereof may be affected by bankruptcy, insolvency or other Laws of general
applicability affecting the rights of creditors generally or principles of
equity, and grant the rights purported to be granted thereby and all rights
necessary thereunder for the current operation of such businesses, except where
the failure of any such TEPPCO Easement to be valid and enforceable or to grant
the rights purported to be granted thereby or necessary thereunder would have a
TEPPCO Material Adverse Effect. Except as set forth in Section 3.3(p)(iii) of
the TEPPCO Disclosure Letter, there are no gaps in the TEPPCO Easements that
would impair the conduct of such businesses in a manner that could reasonably be
expected to have, individually or in the aggregate, a TEPPCO Material Adverse
Effect, and no part of the TEPPCO Pipeline Assets is located on property that is
not owned in fee by a TEPPCO Partnership Group Entity or subject to an easement
in favor of a TEPPCO Partnership Group Entity, where the failure of such TEPPCO
Pipeline Asset to be so located could reasonably be expected to have,
individually or in the aggregate, a TEPPCO Material Adverse Effect.

 

(q) Employee Benefit Plans; ERISA.

 

(i) Section 3.3(q)(i) of the TEPPCO Disclosure Letter sets forth a complete and
accurate list of all TEPPCO Plans. With respect to each TEPPCO Plan, as
applicable, true and complete copies of (A) the TEPPCO Plan documents (including
all amendments thereto), (B) the summary plan description, (C) the funding
instrument, (D) the

 

22

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most recent favorable determination letter issued by the IRS, and (E) the most
recent actuarial valuation report and most recent asset liability study have
been furnished to Enterprise. Except for the TEPPCO Plans, none of the TEPPCO
Partnership Group Entities maintains or has any liability or obligations, fixed,
contingent or otherwise, with respect to any other employee benefit or
compensation plan, program, policy, arrangement or agreement.

 

(ii) With respect to the TEPPCO Plans, all contributions required to be made to
or pursuant to the terms of each of the TEPPCO Plans or applicable Law by the
TEPPCO Partnership Group Entities have been timely made or accrued on the
financial statements of the TEPPCO Partnership Group Entities.

 

(iii) The TEPPCO Plans have been maintained, operated and administered, in all
material respects, in accordance with their terms and all applicable Laws.

 

(iv) Except as otherwise set forth in Section 3.3(q)(iv) of the TEPPCO
Disclosure Letter, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby (either alone or in
conjunction with another event, such as termination of employment) will result
in (A) any payment becoming due to any employee or director of any of the TEPPCO
Partnership Group Entities or being nondeductible under section 280G of the Code
or (B) the vesting of any compensation or benefit payable to any employee or
director of any of the TEPPCO Partnership Group Entities.

 

(v) The IRS has issued a favorable determination letter with respect to each
TEPPCO Plan that is intended to be a qualified plan under section 401(a) of the
Code and each such TEPPCO Plan has been operated and administered in all
material respects in accordance with its terms and applicable Law, except for
such compliance failures that, individually or in the aggregate, may be
corrected under the EPCRS program of the IRS without material liability to the
TEPPCO Partnership Group Entities.

 

(vi) There are no pending or, to the knowledge of DEFS, threatened actions,
suits, audits, investigations, claims or proceedings against or relating to any
TEPPCO Plan (other than routine claims for benefits thereunder).

 

(vii) Except as set forth in Section 3.3(q)(vii) of the TEPPCO Disclosure
Letter, each TEPPCO Plan covers only employees or directors of the TEPPCO
Partnership Group Entities. No TEPPCO Plan is a multiemployer plan as defined in
Section 3(37) of ERISA.

 

(viii) Except as set forth in Section 3.3(q)(viii) of the TEPPCO Disclosure
Letter, each TEPPCO Plan that is not a DEFS Plan may be unilaterally terminated
at any time by any of the TEPPCO Partnership Group Entities without liability,
other than for benefits accrued thereunder prior to such termination.

 

(ix) As to any TEPPCO Plan subject to Title IV of ERISA, there has been no event
or condition which presents the material risk of plan termination by the Pension
Benefit Guaranty Corporation (“PBGC”), no accumulated funding deficiency,
whether or not waived, within the meaning of Section 302 of ERISA or section 412
of the Code has been incurred, no reportable event within the meaning of Section
4043 of ERISA (for which the

 

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disclosure requirements of Regulation section 4043.1 et seq., promulgated by the
PBGC, have not been waived) has occurred, no notice of intent to terminate the
plan has been given under Section 4041 of ERISA, no proceeding has been
instituted under Section 4042 of ERISA to terminate the plan and no liability to
the PBGC has been incurred (other than for premium payments under Section 4007
of ERISA).

 

(x) No act, omission or transaction has occurred which would result in
imposition on any of the TEPPCO Partnership Group Entities or any indemnitee
thereof of (A) breach of fiduciary liability damages under Section 409 of ERISA,
(B) a civil penalty assessed pursuant to Section 502 of ERISA, or (C) a Tax
imposed pursuant to Chapter 43 of Subtitle D of the Code.

 

(r) Labor Matters; Employees.

 

(i) Section 3.3(r) of the TEPPCO Disclosure Letter sets forth a true and
complete list as of the Execution Date of all employees of the TEPPCO
Partnership Group Entities and all other full-time DEFS employees who work
substantially or full time on TEPPCO Partnership Group Entity matters, together
with their respective titles and employers. Except as otherwise set forth in
Section 3.3(r) of the TEPPCO Disclosure Letter, all individuals who work
substantially full time on TEPPCO Partnership Group Entities’ matters are
employees of one of the TEPPCO Partnership Group Entities and no Affected
Employee is included in a unit of employees covered by a collective bargaining
agreement. None of the TEPPCO Partnership Group Entities is a party to or
subject to a collective bargaining agreement. No union certification petition
has been filed (with service of process having been made on a TEPPCO Partnership
Group Entity), or to the knowledge of DEFS, any union organization activity
threatened, that relates to Affected Employees.

 

(ii) Except as disclosed in the TEPPCO SEC Reports or the Draft 10–K, each of
the TEPPCO Partnership Group Entities is in compliance with all laws, rules,
regulations and orders relating to the employment of labor, including all such
laws, rules, regulations and orders relating to wages, hours, collective
bargaining, discrimination, civil rights, safety and health, workers’
compensation and the collection and payment of withholding or social security
taxes and similar taxes, except where the failure to comply would not,
individually or in the aggregate, reasonably be expected to have a TEPPCO
Material Adverse Effect.

 

(s) Insurance. Each of the TEPPCO Partnership Group Entities and their
respective businesses and properties are, and have been continuously since
January 1, 2003, insured by reputable and financially responsible insurers in
amounts and against risks and losses as are customary for companies conducting
their respective businesses. The insurance policies covering the TEPPCO
Partnership Group Entities and their respective businesses and properties are in
all material respects in full force and effect in accordance with their terms,
no notice of cancellation or termination has been received, and there is no
existing default or event which, with the giving of notice or lapse of time or
both would constitute a default thereunder. Section 3.3(s) of the TEPPCO
Disclosure Letter sets forth a correct and complete list of all such policies
and, with respect to each such policy, a correct and complete description of (i)
the scope of coverage, (ii) deductibles and similar amounts and retentions,
(iii) the aggregate limits and

 

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available coverage (if less than the aggregate limits) as of the Execution Date
and (iv) whether such policy is written on a “claims made” or “occurrence”
basis. Except as set forth in Section 3.3(s) of the TEPPCO Disclosure Letter,
there are no outstanding claims made by any of the insured parties in excess of
the deductibles identified on Section 3.3(s) of the TEPPCO Disclosure Letter
that are not covered under such policies, and, to the knowledge of DEFS, there
has not occurred any event that might reasonably form the basis of any claim in
excess of the deductibles identified on Section 3.3(s) of the TEPPCO Disclosure
Letter that is not covered under such policies.

 

(t) Taxes.

 

(i) Except as set forth in Section 3.3(t)(i) of the TEPPCO Disclosure Letter,
(A) each of the TEPPCO Partnership Group Entities has filed when due, after
giving effect to applicable extensions, all Tax Returns required to be filed
with the IRS or other applicable Governmental Entity through the date hereof;
(B) all items of income, gain, loss, deduction and credit or other items
required to be included in each such Tax Return have been so included and each
such Tax Return is true, complete and correct in all material respects; (C) each
of the TEPPCO Partnership Group Entities has timely paid or has provided an
adequate accrual for all Taxes for which such entity has liability and are or
have become due (whether or not shown on any such Tax Return), and has withheld
and paid to the appropriate Governmental Entity any Tax that it is required by
Applicable Law to withhold and pay to a Governmental Entity on or before the
date hereof; (D) no claim has been made by any Governmental Entity in a
jurisdiction in which any of the TEPPCO Partnership Group Entities does not
currently file a Tax Return that it is or may be subject to Tax by such
jurisdiction; (E) none of the TEPPCO Partnership Group Entities has entered into
any agreement or arrangement with any Governmental Entity that requires any of
the TEPPCO Partnership Group Entities to take or refrain from taking any action;
(F) none of the TEPPCO Partnership Group Entities is a party to any agreement or
arrangement, whether written or unwritten, providing for the payment of Taxes,
payment of Tax losses, payment of Tax indemnification payments, the sharing or
allocation of Taxes, entitlements to refunds or similar Tax matters, and no
payments are due or will become due by any of the TEPPCO Partnership Group
Entities pursuant to any such agreement or arrangement; (G) none of the TEPPCO
Partnership Group Entities has elected to be treated as a corporation for Tax
purposes; (H) there is no written claim against any of the TEPPCO Partnership
Group Entities for any Taxes, and no assessment, deficiency or adjustment has
been asserted, proposed, or threatened in writing with respect to any Tax Return
of or with respect to any of the TEPPCO Partnership Group Entities; (I) there is
not in force any extension of time with respect to the due date for the filing
of any Tax Return of or with respect to any of the TEPPCO Partnership Group
Entities or any waiver or agreement for any extension of time for the assessment
or payment of any Tax of or with respect to any of the TEPPCO Partnership Group
Entities; (J) none of the TEPPCO Partnership Group Entities will be required to
include any amount in income for any taxable period beginning after December 31,
2003 as a result of a change in accounting method for any taxable period ending
on or before the Closing Date or pursuant to any agreement with any Governmental
Entity with respect to any such taxable period; (K) none of the TEPPCO
Partnership Group Entities has been a member of an affiliated group filing a
consolidated federal income Tax Return or has any liability for the Taxes of any
person under Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local, or foreign Law), as a transferee or successor, by contract, or
otherwise; (L) at least 90% of the gross

 

25

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income of TEPPCO MLP for each taxable year since its formation has been from
sources that constitute “qualifying income” within the meaning of section
7704(d) of the Code, (M) none of the TEPPCO Partnership Group Entities has any
material liability for Taxes other than those incurred in the ordinary course of
business and in respect of which adequate reserves are being maintained in
accordance with GAAP; (N) There are no Encumbrances related to Taxes upon any
asset of any of a TEPPCO Partnership Group Entities except for liens arising as
a matter of applicable Law relating to current Taxes not yet due; (O) TEPPCO GP
is properly disregarded as an entity separate from its owner pursuant to Treas.
Reg. § 301.7701-3; and (P) none of the TEPPCO Partnership Group Entities has
entered into any transaction that is subject to the reporting requirements of
Treas. Reg. § 1.6011-4 or any predecessor thereto.

 

(ii) Section 3.3(t)(ii) of the TEPPCO Disclosure Letter lists all federal or
state income and franchise Tax Returns filed by any of the TEPPCO Partnership
Group Entities or any affiliated, consolidated, combined, unitary or similar
group of which any the TEPPCO Partnership Group Entities is or was a member, (A)
that are as of the date hereof the subject of audit, (B) in respect of which
there is any other suit, action, investigation or claim in progress by any
Governmental Entity or (C) in respect of which any issue has been raised by any
taxing authority at an earlier time that is reasonably expected to be raised at
a later time.

 

(iii) None of the TEPPCO Partnership Group Entities has made any payment, is
obligated to make any payment, or is a party to any agreement that under certain
circumstances could obligate it to make any payment that will not be deductible
under Section 280G of the Code.

 

(iv) Each of the TEPPCO Partnership Group Entities treated as partnerships for
federal income tax purposes have currently effective elections under Section 754
of the Code.

 

(u) Regulatory Proceedings. Except as set forth in Section 3.3(u) of the TEPPCO
Disclosure Letter, none of the TEPPCO Partnership Group Entities, all or part of
whose rates or services are regulated by a Governmental Entity, is a party to
any proceeding before a Governmental Entity which could reasonably be expected
to result in orders having a TEPPCO Material Adverse Effect (except to the
extent that such orders would have the same general effect on other companies
operating in the industries in which the TEPPCO Partnership Group Entities
operate), nor has written notice of any such proceeding been received by any of
the TEPPCO Partnership Group Entities.

 

(v) Regulation as a Utility. None of the TEPPCO Partnership Group Entities is
(i) a “public-utility company” or a “holding company” or (ii) a “subsidiary
company” or an “affiliate” of a “public-utility company” or a “holding company,”
as such terms are defined in PUHCA.

 

(w) Futures Trading and Fixed Price Exposure. Prior to the Execution Date and in
the ordinary course of business, TEPPCO MLP has established risk parameters to
restrict the level of risk that the TEPPCO Partnership Group Entities are
authorized to take with respect to the open position resulting from all physical
commodity transactions, exchange traded futures and options and over-the-counter
derivative instruments (the “Open TEPPCO Position”) and

 

26

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monitors the compliance by the TEPPCO Partnership Group Entities with such risk
parameters. Such risk parameters as of the Execution Date are set forth on
Section 3.3(w) of the TEPPCO Disclosure Letter. Such risk parameters may be
modified only by the TEPPCO MLP. The Open TEPPCO Position is within such risk
parameters.

 

(x) Customers and Suppliers. Except as set forth in Section 3.3(x) of the TEPPCO
Disclosure Letter, to the knowledge of DEFS, neither DEFS nor any of the TEPPCO
Partnership Group Entities has received any written notice that any shipper or
customer will discontinue its business relationship with any of the TEPPCO
Partnership Group Entities and no such action has been threatened by any shipper
or customer, which discontinuation would reasonably be expected to have a TEPPCO
Material Adverse Effect.

 

(y) Books and Records.

 

(i) TEPPCO GP (A) makes and keeps books, records and accounts, which, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of assets and (B) maintains systems of internal accounting controls
sufficient to provide reasonable assurances that (I) transactions are executed
in accordance with management’s general or specific authorization; (II)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets;
(III) access to assets is permitted only in accordance with management’s general
or specific authorization; and (IV) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.

 

(ii) The minute books and other similar records of the TEPPCO Partnership Group
Entities contain true and complete copies of all actions taken at all meetings
of the board of directors of TEPPCO GP, and any committees thereof, and the
limited partners of TEPPCO MLP and all written consents executed in lieu of any
such meetings. True and complete copies of all such minute books and other
similar records have been made available to Enterprise.

 

ARTICLE IV

COVENANTS AND AGREEMENTS

 

Section 4.1 Confidentiality. For a period of 24 months after the Closing Date,
DEFS and its affiliates shall not, directly or indirectly, disclose to any
person any confidential information, in any form, whether acquired prior to or
after the Closing Date, relating to the business and operations of the TEPPCO
Partnership Group Entities; provided, however, that this obligation shall not
apply to information that is or becomes generally available to the public other
than as a result of disclosure by DEFS or its affiliates or Representatives and
information that becomes available to DEFS and its affiliates on a
non-confidential basis from a source other than Enterprise and its affiliates
(including the TEPPCO Partnership Group Entities) and Representatives provided
that such source is not known to DEFS or its affiliates to be bound by a
confidentiality agreement with Enterprise or such affiliates. Notwithstanding
the foregoing, DEFS may disclose such confidential information if required by
Law. After the Closing Date, DEFS and its affiliates shall, to the extent
requested by Enterprise, return to Enterprise or destroy all information not in
the public domain or not generally known in the industry, in any form, whether
acquired prior to or after the Closing Date, relating to Enterprise or the
TEPPCO Partnership Group Entities.

 

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Section 4.2 TEPPCO Asset Separation.

 

(a) DEFS shall, and shall cause its affiliates to, execute and deliver, or cause
to be executed and delivered, such instruments of assignment, transfer,
conveyance, endorsement, direction or authorization and take such other action
as may be necessary to transfer to one of the TEPPCO Partnership Group Entities
all of the right, title and interest of DEFS or any of its affiliates in assets
(including the types of assets described in Section 4.2 of the TEPPCO Disclosure
Letter) that are currently used in the business of the TEPPCO Partnership Group
Entities (including those used in the ordinary course of business) but that are
owned by DEFS or any of its affiliates (other than a member of the TEPPCO
Partnership Group Entities); provided, however, that the assets included in this
Section 4.2 shall specifically exclude DEFS’s and its affiliates’ phone systems,
DEFS’s Denver and Midland offices, DEFS’s Houston office located at 5718
Westheimer Road and all assets of Duke Energy Corporation and its affiliates
(but not including for this purpose DEFS or any of its subsidiaries) other than
software and hardware of Duke Energy Corporation and any such affiliates as
appropriate. In addition, where a joint use agreement would be appropriate, the
parties agree to enter into such an agreement on commercially reasonable terms.

 

(b) Enterprise shall cause the TEPPCO Partnership Group Entities to assign and
transfer to DEFS all of the right, title and interest of the TEPPCO Partnership
Group Entities or any of their affiliates in the office lease in Oklahoma City,
Oklahoma leased by a TEPPCO Partnership Group Entity but used solely for the
business of DEFS or, if such lease is not assignable, to maintain such lease in
effect for the remaining term thereof provided that DEFS shall reimburse the
TEPPCO Partnership Group Entities for all costs incurred by the TEPPCO
Partnership Group Entities in connection with such lease.

 

Section 4.3 Commercially Reasonable Efforts; Further Assurances. Upon the terms
and subject to the conditions hereof, each party hereto shall use its
commercially reasonable efforts to take, or cause to be taken, all appropriate
action, and to do or cause to be done, all things necessary, proper or advisable
under applicable Laws to consummate and make effective the transactions
contemplated under this Agreement. Without limiting the foregoing but subject to
the other terms of this Agreement, the parties hereto agree that, from time to
time, each of them will execute and deliver, or cause to be executed and
delivered, such instruments of assignment, transfer, conveyance, endorsement,
direction or authorization as may be necessary to consummate and make effective
such transactions.

 

Section 4.4 No Public Announcement. No party hereto shall issue any other press
release or make any other public announcement concerning this Agreement and the
transactions contemplated hereby without prior consultation with the other party
hereto. Notwithstanding the foregoing, DEFS may respond to inquiries from
securities analysts and the news media to the extent necessary to respond to
such inquiries, provided that such responses are in compliance with applicable
securities Laws.

 

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Section 4.5 Expenses. All costs and expenses incurred in connection with this
Agreement, including legal fees, accounting fees, financial advisory fees and
other professional and non-professional fees and expenses, shall be paid by the
party hereto incurring such expenses.

 

Section 4.6 Termination of Services Agreement. For a period of one year
following the Closing Date, DEFS shall not, and shall cause its affiliates not
to, terminate any of the Services Agreements; provided, however, that Enterprise
agrees that the services provided under such Services Agreements will be earlier
modified or terminated, as appropriate, as the Affected Employees who are
employees of DEFS are transferred to TEPPCO GP or its affiliates or terminated
from DEFS employment.

 

Section 4.7 Transition Services.

 

(a) In order to facilitate the full transition of operating activities and
functions in TEPPCO MLP’s business following the Execution Date, for a period of
one year commencing on the Execution Date, upon the request from time to time
from Enterprise on behalf of TEPPCO GP, DEFS shall provide or cause to be
provided to TEPPCO GP support services of the same or substantially similar
nature which DEFS or its affiliates have provided to TEPPCO GP during the twelve
months immediately preceding the Execution Date, including payroll and employee
benefit plan administrative services, and shall second to TEPPCO GP, for the
Benefits Transition Services Period, the Affected Employees who are employees of
DEFS on the same basis as such employees were provided to TEPPCO GP immediately
prior to the Closing (“Transition Services”); provided, however, that Enterprise
shall use reasonable commercial efforts to cause such Transition Services to be
provided by Enterprise or its affiliates as promptly as practicable after the
Closing and in no event shall the payroll and employee benefit plan
administrative services be provided after April 30, 2005 (the “Benefits
Transition Services Period”). DEFS shall perform or cause to be performed the
Transition Services in accordance with the Service Standard (as defined below).
TEPPCO GP, upon not less than ten days’ written notice from Enterprise to DEFS,
at any time and from time to time may, as of the date set forth in that notice,
terminate any or all of the Transition Services. If DEFS makes any payments to
third parties on behalf of TEPPCO GP in the process of providing Transition
Services (such as paying payroll to TEPPCO GP employees on behalf of TEPPCO GP),
TEPPCO GP will reimburse DEFS for the actual out-of-pocket amount of such
payments actually made by DEFS (“Third Party Payments”). TEPPCO GP also shall
reimburse DEFS for 110% of the Direct Costs (as defined below) incurred by DEFS
in providing the Transition Services provided in accordance with this Section
4.7 and the Service Standard. No later than the tenth Business Day of each
calendar month, beginning with the calendar month immediately following the
Closing, DEFS will submit an invoice to TEPPCO GP for such Third Party Payments
and Direct Costs incurred during the prior calendar month which invoice shall
include reasonable supporting documentation such as the nature and amount of
Third Party Payments and Direct Costs and the Transition Services to which they
are attributable. If the Execution Date is on a day other than the last day of a
month, the invoice shall be only for those Transition Services provided from the
Execution Date until the end of the month in which the Closing took place.
TEPPCO GP shall pay the undisputed portion of each invoice within 30 days after
its receipt. Records relating to the Transition Services and invoices shall be
maintained by DEFS for a period of two years after an invoice is paid by TEPPCO
GP. Upon reasonable prior notice, TEPPCO GP (and its representatives and

 

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agents) shall have the right to audit and inspect, at its own expense, the
books, records and other documents applicable to the Transition Services and
invoices during normal business hours at DEFS’s Denver, Colorado location for a
period of two years following the date an invoice is delivered to TEPPCO GP.
Notwithstanding the foregoing, DEFS and its affiliates shall have no obligation
pursuant to this Section 4.7 with regard to any comparable service provided by
DEFS or any of its affiliates to the extent that Enterprise or its affiliates
can offer the same or substantially the same service to the TEPPCO Partnership
Group Entities at no out-of-pocket incremental cost.

 

(b) As used in this Section 4.7 the term “Service Standard” means, with respect
to the standard of performance for the Transition Services performed or caused
to be performed under this Section 4.7, the good-faith undertaking, on a
commercially reasonable basis, to perform the Transition Services (i) in at
least the same quality and manner as the same or comparable services were
provided by DEFS or its affiliates during the twelve months immediately
preceding the Execution Date, and (ii) in all material respects in compliance
with all applicable Laws, Environmental Laws and Prudent Industry Practices (as
defined below).

 

(c) As used in this Section 4.7, the term “Direct Costs” means the costs or
expenses other than Third Party Payments actually incurred by DEFS and
affiliates of DEFS to employees and third parties directly attributable to the
provision of Transition Services pursuant to this Section 4.7, including a
portion of the wages, employee benefits and employment taxes of the DEFS
employees providing such services based upon how much time such employees spend
providing such services relative to their other work, but excluding any overhead
of DEFS and any overhead and/or profit components that might be charged by an
affiliate of DEFS to DEFS.

 

(d) As used in this Section 4.7, the term “Prudent Industry Practices” means, at
a particular time, any of the practices, methods and acts which, in the exercise
of reasonable judgment, will result in the proper operation and maintenance of
the assets owned by TEPPCO MLP and shall include without limitation, the
practices, methods and acts engaged in or approved by a significant portion of
the industry at such time with respect to assets of the same or similar types as
the assets owned by TEPPCO MLP. Prudent Industry Practices is not intended to be
limited to the optimum practice, method or act, to the exclusion of all others,
but rather is a spectrum of possible practices, methods and acts which could
have been expected to accomplish the desired result at a commercially reasonable
cost consistent with reliability, safety, timeliness, and compliance in all
material respects with all applicable Laws and Environmental Laws. Prudent
Industry Practices is intended to mean at least the same standard as the Parties
would, in the prudent management of their own properties, use from time to time.

 

(e) Enterprise shall indemnify and hold harmless DEFS and its affiliates from
any and all Damages incurred by any such person in connection with the provision
of Transition Services so long as such services are performed in accordance with
the Service Standard.

 

(f) For purposes of this Section 4.7, Transition Services shall not include
services provided under the Services Agreements.

 

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Section 4.8 Tax Matters.

 

(a) Enterprise shall cause TEPPCO GP to provide a copy of the TEPPCO MLP 2005
federal income Tax Returns to DEFS for its review and comment on or before the
tenth Business Day prior to the due date (including extensions) for such Tax
Returns and use reasonable efforts to consult with DEFS with respect to the
preparation of the schedules K-l relating to such Tax Returns.

 

(b) For federal income tax purposes, Enterprise and DEFS agree to treat the sale
of the Membership Interest pursuant to this Agreement as a sale of the general
partner interest in TEPPCO MLP by DEFS to Enterprise.

 

Section 4.9 TEPPCO MLP and TEPPCO GP Audit. DEFS agrees to use reasonable
commercial efforts to cause KPMG LLP to support completion as promptly as
practicable after the Closing of the audit of the consolidated financial
statements of TEPPCO MLP for the year ended December 31, 2004 and the audit of
the consolidated financial statements of TEPPCO GP for the year ended December
31, 2004.

 

Section 4.10 Completion of 2004 Annual Report. From and after the Closing, DEFS
will take, and will cause its affiliates to take, all reasonable action to cause
the executive officers and directors of TEPPCO GP (other than the independent
directors) as of the Execution Date to remain executive officers and directors
of TEPPCO GP, respectively, and be available and prepared to sign the Draft 10-K
in the form approved by the audit committee of the board of directors of TEPPCO
GP and management of TEPPCO GP for filing with the SEC. In the event that any
such executive officers or directors are unable or unwilling to serve in such
capacities, DEFS will cause to be available for election a sufficient number of
representatives of DEFS to serve as executive officers and directors of TEPPCO
GP such that the Draft 10-K in the form approved for filing with the SEC
(including all required certifications and reports included therein or filed or
furnished therewith) is signed by the requisite executive officers and directors
of TEPPCO GP and timely filed with the SEC.

 

Section 4.11 Board of Directors. From and after the Closing and until such time
that the TEPPCO MLP Annual Report on Form 10-K for the year ended December 31,
2004 has been filed with the SEC, DEFS will take, and will cause its affiliates
to take, all reasonable action to cause the directors of TEPPCO GP that are
affiliated with DEFS (a) to give Enterprise not less than 72 hours prior written
notice of any meeting of the board of directors of TEPPCO GP or any committee
thereof or any action to be taken by written consent in lieu of any such meeting
and (b) not to take any action, or approve or adopt any resolutions, at any
meeting or by written consent in lieu thereof without the prior written consent
of Enterprise. Notwithstanding the foregoing, nothing in this Section 4.11 shall
require any member of the board of directors of TEPPCO GP to violate his or her
fiduciary duties in order to comply with this Section 4.11.

 

Section 4.12 Benefit Plans.

 

(a) As soon as administratively practicable following the Closing, Enterprise
shall take such actions as are necessary to cause a section 401(k) plan
maintained by Enterprise or one of its affiliates to accept direct rollovers of
Affected Employees’ eligible rollover distributions in cash (including plan loan
notes in accordance with the Enterprise 401(k) plan loan rules) from the Duke
Energy Field Services 401(k) and Retirement Plan as elected by the Affected
Employees.

 

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(b) Effective no later than the close of the Benefits Transition Services
Period, Enterprise or one of its affiliates shall offer the Affected Employees
who are then employed by Enterprise or one of its affiliates (including but not
limited to TEPPCO GP) and their eligible spouses and dependents coverage under a
Group Health Plan maintained by it (the “Enterprise Group Health Plan”) and
shall cause each Enterprise Group Health Plan to (i) waive any exclusions,
restrictions or limitations with respect to pre-existing conditions or waiting
periods thereunder to the extent that the same were waived or satisfied by the
Affected Employees on the end of the Benefits Transition Services Period under
an analogous TEPPCO Group Health Plan and (ii) credit any health expenses paid
by an Affected Employee or his covered dependents during the year in which the
Benefits Transition Services Period ends for purposes of satisfying any
applicable deductible, coinsurance and maximum out-of-pocket provisions under
such Enterprise Group Health Plan.

 

(c) Enterprise shall take such actions as are necessary to ensure that an
Affected Employee’s vacation entitlement accrued under a TEPPCO Plan as of the
Closing shall be recognized following the Closing under the vacation policy of
Enterprise and its affiliates.

 

(d) Enterprise shall take such actions as are necessary to ensure that the
Affected Employees are provided credit for their service prior to the Closing
for all purposes (including for purposes of eligibility to participate, vesting
and accrual of benefits) under all employee benefit plans and vacation policies
maintained by Enterprise and its affiliates in which the Affected Employees
participate on or after the Closing to the same extent such Affected Employees’
service prior to the Closing was recognized under the corresponding plans and
vacation policies in which such Affected Employees participated immediately
prior to the Closing Date; provided, however, that in the case of pension plans
(as defined in Section 3(2) of ERISA) such credit shall be given only for
purposes of vesting and initial eligibility to participate.

 

(e) If within the two-year period commencing on the Closing Date an Affected
Employee incurs an “involuntary termination of employment” within the meaning of
the Texas Eastern Products Pipeline Company, LLC Transition Severance Plan, as
amended and restated effective February 1, 2005 (the “TEPPCO Severance Plan”),
Enterprise shall, within ten days following the termination of employment, pay
or cause a subsidiary of Enterprise to pay the Affected Employee in a single sum
in cash the benefit he would have been eligible to receive at such time under
the terms of the TEPPCO Severance Plan as in effect immediately prior to the
Closing. DEFS shall not terminate an Affected Employee without Enterprise’s
prior written consent.

 

(f) With the exception of the Duke Energy Field Services 401(k) and Retirement
Plan, during the Benefits Transition Services Period, DEFS shall permit the
Affected Employees to continue to participate in the DEFS Plans in which such
Affected Employees participated immediately prior to the Closing (or any
successor thereto) on the same basis as provided before the Closing. DEFS shall
also cause all insurance contracts issued with respect to such plans, including
any stop loss issued to the Employer, to be amended to provide for the coverage
of (or with respect to) the Affected Employees during the Benefits Transition
Services Period.

 

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(g) On or prior to the Closing Date, DEFS shall cause any Affected Employee who
is receiving long-term disability benefits under a long-term disability plan
maintained by DEFS to be transferred to the employ of DEFS.

 

(h) Effective no later than the close of the Benefits Transition Services
Period, Enterprise shall offer, or shall cause one of its affiliates to offer,
employment to all Affected Employees who are then employed by DEFS, other than
any such employees described in paragraph (g) of this Section.

 

(i) DEFS shall permit any retired TEPPCO GP employee covered by the TEPPCO GP
retiree health plan on the Closing to continue such coverage during the Benefits
Transition Services Period on the same basis as immediately prior to the
Closing.

 

Section 4.13 GPL Insurance. For a period of six years after the Closing, DEFS
shall cause to be maintained, at its expense, GPL (General Partners Liability)
insurance for individuals who are or were before the Closing covered under the
existing TEPPCO MLP GPL insurance policy on terms substantially no less
advantageous.

 

Section 4.14 Surety Bonds. DEFS has advised Enterprise that DEFS or its
affiliates have caused certain sureties (the “Sureties”) to issue surety bonds
(the “Bonds”) pursuant to which DEFS or its affiliates are obligated to
reimburse the Sureties (the “Reimbursement Obligations”) for any payments made
by the Sureties under the Bonds and for certain other obligations under or in
connection with the Bonds (with the Reimbursement Obligations, the
“Obligations”). The Bonds are set forth on Section 4.14 of the TEPPCO Disclosure
Letter. Enterprise agrees to use commercially reasonable efforts to enter into
agreements with the Sureties to assume as soon as practical the Obligations and
to cause the Sureties to release DEFS or its affiliates from the Obligations. To
the extent that Enterprise is unable to cause the Sureties to effect such
assumption and release on terms acceptable to Enterprise, DEFS agrees to
maintain and to cause its affiliates to maintain the Bonds in effect, and
Enterprise agrees to indemnify and hold harmless DEFS and its affiliates for any
Damages incurred by DEFS and its affiliates as a result of being required to
perform any obligations under the Bonds. The indemnity obligations set forth in
this Section 4.14 shall not be subject to any of the limitations on amount set
forth in Article V.

 

Section 4.15 Other Insurance. DEFS or its affiliates will obtain insurance
coverage promptly following Closing to provide a six month extended period for
claims reporting for all insurance policies covering the TEPPCO Partnership
Group Entities and their operations which policies were written on a “claims
made” basis. After the expiration of such six-month period, at the request of
Enterprise, DEFS or its affiliates will continue to maintain extended coverage
for each such policy as is specified by Enterprise. The costs for such coverage
shall be reimbursed by Enterprise. DEFS or its affiliates will administer all
claims made on such insurance coverage, as well as all claims made on all of the
insurance policies listed in Section 3.3(s) of the TEPPCO Disclosure Letter,
other than the TEPPCO MLP GPL insurance policy and the environmental liability
policies listed in Section 3.3(s) of the TEPPCO Disclosure Letter.

 

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ARTICLE V

REMEDIES FOR DEFAULT

 

Section 5.1 Indemnity Regarding Section 3.1 and Section 3.3 Representations and
Covenants. Subject to the provisions of this Article V, DEFS shall indemnify and
hold harmless Enterprise and its partners and their respective officers,
directors and employees (the “Enterprise Indemnified Parties”) from any and all
Damages incurred by any such person in connection with the breach of (a) a
representation or warranty set forth in Section 3.1 or Section 3.3 or (b) a
covenant or agreement made by DEFS hereunder; provided that, for purposes of
calculating the amount of any Damages pursuant to Section 5.1(a), such
representations and warranties shall be read and interpreted as if any
Materiality Requirement contained therein were not contained therein.
Notwithstanding the forgoing, DEFS will not have any obligation to indemnify any
Enterprise Indemnified Party for Damages arising pursuant to Section 5.1(a) for
an individual claim or series of related claims arising out of the same event or
occurrence that do not exceed $250,000 (the “Individual Threshold”) and then
only for such claim or series of related claims arising out of the same event or
occurrence exceeding the Individual Threshold that, in the aggregate, exceed
$10,000,000, in which event DEFS shall be liable for all Damages only in excess
of $10,000,000 (provided, however, that the Individual Threshold and $10,000,000
limitation shall not apply to Damages arising pursuant to Section 5.1(a)
resulting from a breach of the representations and warranties set forth in
Section 3.1); and the liability of DEFS under Section 5.1(a) shall not exceed
$200,000,000 in the aggregate. For the avoidance of doubt, DEFS shall have no
obligation to indemnify and hold harmless any member of the TEPPCO Partnership
Group Entities or the TEPPCO MLP Partially Owned Entities pursuant to Section
5.1; provided, however, that should the Enterprise Indemnified Parties incur or
suffer Damages from the breach of a representation or warranty set forth in
Section 3.1 or Section 3.3 or a covenant or agreement made by DEFS hereunder,
DEFS shall be obligated to indemnify and hold harmless the Enterprise
Indemnified Parties to the extent of such Damages. To the extent that a claim
for indemnification under this Section 5.1 includes a claim for remediation
costs to address a Release of Hazardous Substance at or from any of the TEPPCO
Pipeline Assets, such remediation costs shall be limited to remediations that
are performed in a manner consistent with the current use of the property and
consistent with then prevailing laws and contracts and leases existing as of the
Closing Date.

 

Section 5.2 Indemnity Regarding Section 3.2 Representations and Covenants.
Subject to the provisions of this Article V, Enterprise shall indemnify and hold
harmless DEFS and its members and their respective officers, directors and
employees (collectively, the “DEFS Indemnified Parties”) from any and all
Damages incurred by any such person in connection with the breach of (a) a
representation or warranty set forth in Section 3.2 or (b) a covenant or
agreement made by such party hereunder; provided that, for purposes of
calculating the amount of any Damages pursuant to Section 5.2(a), such
representations and warranties shall be read and interpreted as if any
Materiality Requirement contained therein were not contained therein.
Notwithstanding the forgoing, the liability of Enterprise under Section 5.2(a)
shall not exceed $200,000,000 in the aggregate.

 

Section 5.3 Survival of Representations. The representations, warranties,
covenants and agreements contained in this Agreement or made in any certificate
or document delivered pursuant hereto shall survive the Closing regardless of
any investigation made by the parties

 

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hereto, any person controlling such party or any of their Representatives and
regardless of any knowledge acquired or capable of being acquired whether before
or after the Closing. The representations and warranties of the parties
contained in Section 3.1, Section 3.2 and Section 3.3 shall survive the Closing
and any investigation by the parties with respect thereto until the expiration
of 12 months after the Closing Date; provided, however, that (i) the
representations and warranties of DEFS set forth in Section 3.1(d) shall survive
indefinitely, and (ii) the representations and warranties of DEFS set forth in
Section 3.3(l) shall survive until the expiration of 36 months after the Closing
Date and (iii) the representations and warranties in Section 3.3(q), and Section
3.3(t) shall survive for the applicable statute of limitations, including all
periods of extension thereof, whether automatic or permissive. Notwithstanding
the foregoing, in the event that TEPPCO MLP is merged with or into Enterprise or
an affiliate of Enterprise (it being acknowledged and agreed by the parties that
there is no such obligation to effect such merger), the representations and
warranties of the parties contained in Section 3.3 shall terminate immediately
upon the effective time of the merger and any and all obligations of DEFS to
indemnify and hold harmless the Enterprise Indemnified Parties pursuant to
Section 5.1 with respect to a breach of the representations and warranties
contained in Section 3.3 shall also terminate as of such effective time,
including with respect to any claims for Damages that have been discovered or
asserted but not satisfied prior to such effective time. Except to the extent
expressly provided otherwise in the preceding sentence, the expiration of any
survival period under this Agreement will not affect the liability of any party
under Section 5.1 or Section 5.2, as the case may be, for any Damages as to
which a bona fide claim relating thereto is asserted prior to the termination of
such survival period.

 

Section 5.4 Calculation of Damages.

 

(a) Any calculation of Damages for purposes of this Article V shall be net of
any insurance proceeds or other payments received by or on behalf of such
indemnified party with respect thereto after taking into account retrospective
premium adjustments, experience-based premium adjustments and indemnification
obligations. If an indemnified party hereunder shall have received an indemnity
payment in respect of Damages and shall subsequently receive, directly or
indirectly, insurance or other proceeds in respect of the claims or losses
giving rise to such Damages, then such indemnified party and indemnifying party
shall reimburse each other as appropriate to reflect the amount of Damages the
indemnified party is entitled to receive in accordance with the preceding
sentence.

 

(b) For the avoidance of doubt, any calculation of Damages for purposes of this
Article V shall be net of amounts reflected as reserves on the TEPPCO MLP
Balance Sheet.

 

Section 5.5 Enforcement of this Agreement. The parties hereto acknowledge and
agree that an award of money damages would be inadequate for any breach of this
Agreement by any party and any such breach would cause the non-breaching parties
irreparable harm. Accordingly, the parties hereto agree that, in the event of
any breach or threatened breach of this Agreement by one of the parties, the
parties will also be entitled, without the requirement of posting a bond or
other security, to equitable relief, including injunctive relief and specific
performance, provided such party is not in material default hereunder.

 

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Section 5.6 Exclusive Remedy. Except as set forth in Section 5.5 and Section
5.8, the parties agree that the indemnification provisions in this Article V
shall be the exclusive remedy of the parties with respect to breaches of
representations and warranties and failures to perform covenants or agreements
hereunder.

 

Section 5.7 Limitation on Damages. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN
THIS AGREEMENT, IN NO EVENT SHALL ANY PARTY HERETO BE LIABLE TO ANY OTHER PARTY
HERETO, OR TO SUCH OTHER PARTY’S INDEMNITEES, UNDER THIS AGREEMENT FOR ANY
EXEMPLARY OR PUNITIVE DAMAGES OR DAMAGES ARISING FROM LOST BUSINESS
OPPORTUNITIES, LOSS OF BUSINESS REPUTATION, OR THE COST OF BORROWING; PROVIDED
THAT, IF ANY INDEMNIFIED PARTY HEREUNDER IS HELD LIABLE TO A THIRD PARTY FOR ANY
SUCH DAMAGES AND THE INDEMNIFYING PARTY HEREUNDER IS OBLIGATED TO INDEMNIFY SUCH
INDEMNIFIED PARTY FOR THE MATTER THAT GAVE RISE TO SUCH DAMAGES, THE
INDEMNIFYING PARTY SHALL BE LIABLE FOR, AND OBLIGATED TO REIMBURSE SUCH
INDEMNIFIED PARTY FOR SUCH DAMAGES. THE PARTIES FURTHER AGREE THAT IN CLAIMS
ARISING UNDER ARTICLE V HEREOF, CHANGES IN THE TRADING PRICE OF AN LP UNIT IN
THE PUBLIC MARKETS SHALL NOT ESTABLISH OR NEGATE SUCH A DAMAGE CLAIM.

 

Section 5.8 No Waiver Relating to Claims for Fraud/Willful Misconduct. The
liability of any party under this Article V shall be in addition to, and not
exclusive of, any other liability that such party may have at law or in equity
based on such party’s (a) fraudulent acts or omissions or (b) willful
misconduct. None of the provisions set forth in this Agreement shall be deemed
to be a waiver by or release of any party of any right or remedy which such
party may have at law or equity based on any other party’s fraudulent acts or
omissions or willful misconduct nor shall any such provisions limit, or be
deemed to limit, (i) the amounts of recovery sought or awarded in any such claim
for fraud or willful misconduct, (ii) the time period during which a claim for
fraud or willful misconduct may be brought, or (iii) the recourse which any such
party may seek against another party with respect to a claim for fraud or
willful misconduct.

 

Section 5.9 Express Negligence Clause. ALL RELEASES, DISCLAIMERS, LIMITATIONS ON
LIABILITY AND INDEMNITIES IN THIS AGREEMENT, INCLUDING THOSE IN THIS ARTICLE V,
SHALL APPLY EVEN IN THE EVENT OF THE SOLE, JOINT OR CONCURRENT NEGLIGENCE,
STRICT LIABILITY OR OTHER FAULT OF THE PARTY WHOSE LIABILITY IS RELEASED,
DISCLAIMED, LIMITED OR INDEMNIFIED.

 

ARTICLE VI

MISCELLANEOUS

 

Section 6.1 Notices. Any notice, request, instruction, correspondence or other
document to be given hereunder by any party to another party (each, a “Notice”)
shall be in writing and delivered in person or by courier service requiring
acknowledgment of receipt of delivery or mailed by U.S. registered or certified
mail, postage prepaid and return receipt

 

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requested, or by telecopier, as follows; provided, that copies to be delivered
below shall not be required for effective notice and shall not constitute
effective notice:

 

If to DEFS, addressed to:

 

Duke Energy Field Services, LLC

370 17th Street, Suite 2500

Denver, Colorado 80202

Attention: Chief Executive Officer

Telecopy: (303)605-1605

 

with a copy to:

 

370 17th Street, Suite 2500

Denver, Colorado 80202

Attention: General Counsel

Telecopy: (303)605-1605

 

If to Enterprise, addressed to:

 

Enterprise Holdings GP L.P.

c/o EPE Holdings, LLC

2727 North Loop West

Houston, Texas 77008

Attention: President

Telecopy: (713) 880-6570

 

with a copy to:

 

Enterprise Holdings GP L.P.

c/o EPE Holdings, LLC

2727 North Loop West

Houston, Texas 77008

Attention: Chief Legal Officer

Telecopy: (713) 880-6570

 

Notice given by personal delivery, courier service or mail shall be effective
upon actual receipt. Notice given by telecopier shall be confirmed by
appropriate answer back and shall be effective upon actual receipt if received
during the recipient’s normal business hours, or at the beginning of the
recipient’s next Business Day after receipt if not received during the
recipient’s normal business hours. All Notices by telecopier shall be confirmed
promptly after transmission in writing by certified mail or personal delivery.
Any party may change any address to which Notice is to be given to it by giving
Notice as provided above of such change of address.

 

Section 6.2 Governing Law; Jurisdiction; Waiver of Jury Trial. To the maximum
extent permitted by applicable Law, the provisions of this agreement shall be
governed by and

 

37

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construed and enforced in accordance with the laws of the State of Texas,
without regard to principles of conflicts of law. Each party thereto hereby
irrevocably and unconditionally (a) consents and submits to the exclusive
jurisdiction of any federal or state court located in Houston, Texas (the “Texas
Courts”) for any actions, suits or proceedings arising out of or relating to
this Agreement or the transactions contemplated by this Agreement (and agrees
not to commence any litigation relating thereto except in such courts), (b)
waives any objection to the laying of venue of any such litigation in the Texas
Courts and agrees not to plead or claim in any Texas Court that such litigation
brought therein has been brought in any inconvenient forum and (c) acknowledges
and agrees that any controversy which may arise under this Agreement is likely
to involve complicated and difficult issues, and therefore each such party
hereby irrevocably and unconditionally waives any right such party may have to a
trial by jury in respect of any litigation directly or indirectly arising or
relating to this Agreement or the transactions contemplated by this Agreement.

 

Section 6.3 Entire Agreement; Amendments and Waivers. This Agreement constitutes
the entire agreement between and among the parties hereto pertaining to the
subject matter hereof and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties, and there
are no warranties, representations or other agreements between or among the
parties in connection with the subject matter hereof except as set forth
specifically herein. No supplement, modification or waiver of this Agreement
shall be binding unless executed in writing by the party to be bound thereby.
The failure of a party to exercise any right or remedy shall not be deemed or
constitute a waiver of such right or remedy in the future. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (regardless of whether similar), nor shall any such
waiver constitute a continuing waiver unless otherwise expressly provided.

 

Section 6.4 Binding Effect and Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective permitted
successors and assigns. Nothing in this Agreement, express or implied, is
intended to confer upon any person other than the parties hereto and their
respective permitted successors and assigns, any rights, benefits or obligations
hereunder. No party hereto may assign, transfer, dispose of or otherwise
alienate this Agreement or any of its rights, interests or obligations under
this Agreement (whether by operation of law or otherwise). Any attempted
assignment, transfer, disposition or alienation in violation of this Agreement
shall be null, void and ineffective.

 

Section 6.5 Severability. If any term or other provision of this Agreement is
invalid, illegal, or incapable of being enforced by any rule of applicable Law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated herein are not affected in any manner
materially adverse to any party hereto. Upon such determination that any term or
other provision is invalid, illegal, or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties hereto as closely as possible in a mutually
acceptable manner in order that the transactions contemplated herein are
consummated as originally contemplated to the fullest extent possible.

 

Section 6.6 Execution. This Agreement may be executed in multiple counterparts
each of which shall be deemed an original and all of which shall constitute one
instrument.

 

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Section 6.7 Disclosure Letters. Each disclosure identified in the TEPPCO
Disclosure Letter (other than the Draft 10-K) or elsewhere in this Agreement
constitutes a disclosure by the disclosing party with respect to the specific
section of this Agreement identified in the TEPPCO Disclosure Letter as
applicable, and with respect to any other section of this Agreement reasonably
related thereto.

 

[The remainder of this page is blank]

 

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IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of
the date first written above.

 

DUKE ENERGY FIELD SERVICES, LLC

By:

 

/s/    Brent Backes

--------------------------------------------------------------------------------

Name:

 

 

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Title:

  VP & General Counsel ENTERPRISE GP HOLDINGS L.P.

By:

 

EPE Holdings, LLC, its general partner

By:

 

Dan Duncan LLC, its sole member

By:

 

/s/    Richard H. Bachman

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Name:

 

 

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Title:

 

 

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EXHIBIT A

 

FORM OF PROMISSORY NOTE

 

Exhibit A

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EXHIBIT B

 

FORM OF SECURITY AGREEMENT

 

Exhibit B