EXHIBIT 10.1

JONAH GAS GATHERING COMPANY

(A Wyoming General Partnership)

AMENDED AND RESTATED

AGREEMENT OF PARTNERSHIP

CERTAIN RESTRICTIONS ON TRANSFERS OF INTERESTS

ARE SET FORTH HEREIN

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

TABLE OF CONTENTS

 

 

 

Page

 

 

 

 

 

ARTICLE 1

 

DEFINITIONS

 

2

 

 

 

 

 

ARTICLE 2

 

ORGANIZATION

 

10

Section 2.1.

 

Formation

 

10

Section 2.2.

 

Name, Place of Business and Office

 

10

Section 2.3.

 

Purposes and Character of Business; Powers

 

10

Section 2.4.

 

Term

 

11

 

 

 

 

 

ARTICLE 3

 

PARTNERSHIP CAPITAL

 

12

Section 3.1.

 

Initial Capital Accounts and Contributions of the Partners

 

12

Section 3.2.

 

Additional Capital Contributions of the Partners

 

12

Section 3.3.

 

Partnership Capital

 

12

Section 3.4.

 

Liability of Partners

 

13

Section 3.5.

 

Loans by Partners or Affiliates

 

13

Section 3.6.

 

Capital Accounts

 

13

Section 3.7.

 

Sharing Ratios

 

14

Section 3.8.

 

No Right to Priority of Return of Capital

 

15

 

 

 

 

 

ARTICLE 4

 

RIGHTS, POWERS AND DUTIES OF THE PARTNERS, THE MANAGEMENT COMMITTEE, THE
PRESIDENT AND THE OTHER OFFICERS

 

15

Section 4.1.

 

Management and Control of the Partnership

 

15

Section 4.2.

 

Delegation to President

 

18

Section 4.3.

 

Other Officers

 

18

Section 4.4.

 

Authority of the Partners, the Management Committee Representatives or the
President as to Third Persons

 

20

Section 4.5.

 

Actions Requiring Consent of the Management Committee

 

21

Section 4.6.

 

Restrictions on the Authority of the Management Committee

 

21

Section 4.7.

 

Transactions or Disputes with Related Parties

 

22

Section 4.8.

 

Compensation of the Management Committee Representatives, Officers and Partners;
Reimbursement of Expenses

 

22

Section 4.9.

 

Indemnification and Exculpation of the Partners, Management Committee
Representatives, Officers and Employees

 

22

Section 4.10.

 

Competition.

 

24

Section 4.11.

 

Liability of the Management Committee Representatives and Partners

 

24

Section 4.12.

 

Transactions with Related Parties

 

25

 

 

 

 

 

ARTICLE 5

 

DISTRIBUTIONS AND ALLOCATIONS; TAX MATTERS

 

26

Section 5.1.

 

Allocation of Profit and Loss

 

26

Section 5.2.

 

Tax Provisions

 

26

Section 5.3.

 

Regular Distributions

 

30

 

i

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

 

ARTICLE 6

 

TRANSFERABILITY OF PARTNER’S PARTNERSHIP INTEREST AND OTHER RESTRICTIONS

 

31

Section 6.1.

 

Transfers to Affiliates

 

31

Section 6.2.

 

Transfers to Parties Other Than Affiliates

 

32

Section 6.3.

 

Changes in Control

 

34

Section 6.4.

 

General Conditions of Transfers

 

34

Section 6.5.

 

Limitation on Dispositions to Avoid Termination

 

34

 

 

 

 

 

ARTICLE 7

 

BOOKS AND RECORDS; ACCOUNTING; REPORTING; TAX ELECTIONS; ETC.

 

35

Section 7.1.

 

Books and Records

 

35

Section 7.2.

 

Accounting Basis for Tax Reporting Purposes; Fiscal Year

 

35

Section 7.3.

 

Accounts

 

35

Section 7.4.

 

Reports

 

36

Section 7.5.

 

Valuation of Contributions for Financial Purposes

 

36

 

 

 

 

 

ARTICLE 8

 

DISSOLUTION, LIQUIDATION AND TERMINATION OF THE PARTNERSHIP

 

36

Section 8.1.

 

Events Causing Dissolution

 

36

Section 8.2.

 

Liquidation and Termination

 

38

Section 8.3.

 

Provision for Contingent Claims

 

39

Section 8.4.

 

Partner’s Purchase of Property

 

39

 

 

 

 

 

ARTICLE 9

 

POWER OF ATTORNEY

 

40

Section 9.1.

 

Appointment of the President as Attorney-in-Fact

 

40

 

 

 

 

 

ARTICLE 10

 

MISCELLANEOUS PROVISIONS

 

41

Section 10.1.

 

Address for Notices

 

41

Section 10.2.

 

Additional Documents and Acts

 

41

Section 10.3.

 

Assumed Name

 

41

Section 10.4.

 

Qualification in Foreign Jurisdictions

 

41

Section 10.5.

 

Application of Wyoming Law

 

41

Section 10.6.

 

No Action for Partition

 

42

Section 10.7.

 

Creditors Not Benefited

 

42

Section 10.8.

 

Benefits of Agreement Restricted to Partners

 

42

Section 10.9.

 

Headings and Sections

 

42

Section 10.10.

 

Reservation of Rights

 

42

Section 10.11.

 

Principles of Construction and Interpretation

 

42

Section 10.12.

 

Amendment of Agreement

 

43

Section 10.13.

 

Acknowledgment

 

43

Section 10.14.

 

Gender

 

43

Section 10.15.

 

Binding Effect

 

43

Section 10.16.

 

Severability

 

43

Section 10.17.

 

No Waiver

 

44

Section 10.18.

 

Exhibits and Schedules

 

44

Section 10.19.

 

Prior Agreement is Superseded; Entire Agreement

 

44

Section 10.20.

 

Additional Remedies

 

45

 

ii

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

 

Section 10.21.

 

Counterparts

 

45

Section 10.22.

 

Approvals

 

45

Section 10.23.

 

Dispute Resolution

 

45

Section 10.24.

 

Confidentiality

 

45

 

SCHEDULES AND EXHIBITS

EXHIBIT A

 

Names, Addresses, Capital Contributions and Sharing Ratios of the Partners

 

 

 

SCHEDULE 3.2

 

Capital Contributions

SCHEDULE 4.2

 

Management Authorization Policy

SCHEDULE 5.2

 

Tax Matters

SCHEDULE 6.1

 

Financial Responsibility Requirements

SCHEDULE 10.23

 

Dispute Resolution Procedures

 

iii

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

 

JONAH GAS GATHERING COMPANY

AMENDED AND RESTATED

AGREEMENT OF PARTNERSHIP

 

This Amended and Restated Agreement of Partnership (the “Agreement”) of Jonah
Gas Gathering Company, dated effective as of the 1st day of August, 2006 (the
“Effective Date”), is made and entered into by and among Enterprise Gas
Processing, LLC, a Delaware limited liability company (hereinafter sometimes
referred to as “Enterprise”), TEPPCO GP, Inc., a Delaware corporation (“TGP”)
and TEPPCO Midstream Companies, L.P., a Delaware limited partnership (“TMC” and
together with TGP, the “TEPPCO Parties”), each as a Partner of the Partnership.

WHEREAS, the Partnership was formed on June 20, 1996 by the execution of the
Agreement of Partnership (“Original Agreement”) by and between Green River
Pipeline LLC, a Wyoming limited liability company (“Green River”), and Jonah
Pipeline Company, a Michigan corporation;

WHEREAS, McMurray Oil Company, a Wyoming corporation (“MOC”) acquired the
Partnership Interest of Jonah Pipeline Company in the Partnership;

WHEREAS, on September 28, 2001, (i) TGP acquired from MOC and Green River,
0.001% of their respective Partnership Interests in the Partnership and (ii) TMC
acquired from MOC and Green River, 99.999% of their respective Partnership
Interests in the Partnership;

WHEREAS, immediately prior to the execution of this Agreement, TGP held a 0.001%
Partnership Interest and TMC held a 99.999% Partnership Interest;

WHEREAS, on February 13, 2006, Enterprise Products Operating L.P., a Delaware
limited partnership (“Enterprise Products”) and TEPPCO Partners, L.P., a
Delaware limited partnership (“TEPPCO Partners”) entered into a letter of intent
relating to the formation of a joint venture with respect to the Partnership
which letter of intent is superseded and replaced upon execution of this
Agreement;

WHEREAS, prior to the date of this Agreement, Enterprise Products has funded
certain portions of the expansion of the Jonah Gas Gathering System held by the
Partnership on behalf of Enterprise and in contemplation of Enterprise entering
into this Agreement on the terms herein set forth;

WHEREAS, prior to the Effective Date, all intercompany accounts payable of Jonah
to TEPPCO Partners, L.P. and its Affiliates have been converted into Partners’
capital so that on the Effective Date Jonah does not have any amounts which are
payable to any of its Partners or Affiliates;

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

 

WHEREAS, on the Effective Date, TMC will contribute all of its interest in Jonah
Gas Marketing, LLC to the Partnership pursuant to the Contribution Agreement and
after such contribution the Partnership will own 100% of the outstanding
membership interests in Jonah Gas Marketing, LLC;

WHEREAS, on the Effective Date, Enterprise and the TEPPCO Parties have made and
agree to make certain Capital Contributions to the Partnership as more
particularly set forth in the Contribution Agreement and Exhibit A hereto and
Enterprise shall be admitted as a Partner with all of the rights and obligations
set forth in this Agreement;

WHEREAS, on the Effective Date, TMC intends to acquire the Partnership Interest
owned by TGP so that TGP will no longer hold a Partnership Interest and thus
will no longer be a Partner;

WHEREAS, the Partnership is a continuation of the Partnership in all respects,
including the ownership and operations of its business and assets under
applicable state and local law and for federal tax purposes; and

WHEREAS, the Partners have agreed to amend and restate the Original Agreement in
its entirety and the Partnership shall be governed by this Agreement as of the
Effective Date.

NOW, THEREFORE, in consideration of the mutual promises made herein, the
parties, intending to be legally bound, hereby agree as follows:

ARTICLE 1

DEFINITIONS

The definitions used in this Agreement shall, unless the context otherwise
requires, have the meanings specified in this Article 1.  Other terms defined in
this Agreement shall have such meaning assigned to such term in the applicable
provisions of this Agreement.

1.             “ACT” MEANS THE WYOMING UNIFORM PARTNERSHIP ACT, AS AMENDED FROM
TIME TO TIME.

2.             “ACTION” MEANS ANY ACTUAL, THREATENED OR POTENTIAL CLAIMS, CAUSES
OF ACTION, ACTIONS, SUITS, PROCEEDINGS, OR GOVERNMENTAL AUTHORITY INVESTIGATIONS
OR ORDERS.

3.             “ADDITIONAL CAPITAL CONTRIBUTION” MEANS, AS TO ANY PARTNER, ANY
AMOUNT CONTRIBUTED, REQUIRED TO BE CONTRIBUTED OR DEEMED TO BE CONTRIBUTED TO
THE CAPITAL OF THE PARTNERSHIP BY THE PARTNER PURSUANT TO SECTION 3.2.

2

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

 

4.             “ADDITIONAL EXPANSION” MEANS AN EXPANSION OF THE JONAH GAS
GATHERING SYSTEM BEYOND THE JONAH EXPANSION WHICH IS APPROVED BY THE MANAGEMENT
COMMITTEE AND WHICH IS NOT AN ENCANA EXPANSION.

5.             “AFE” MEANS AUTHORIZATION FOR EXPENDITURE.

6.             “AFFILIATE” MEANS ANY PERSON WHO DIRECTLY OR INDIRECTLY THROUGH
ONE OR MORE INTERMEDIARIES CONTROLS OR IS CONTROLLED BY OR IS UNDER COMMON
CONTROL WITH THE PERSON TO WHOM REFERENCE IS MADE; PROVIDED THAT, (I) ANY PERSON
WHO IS A DIRECT OR INDIRECT SUBSIDIARY OF ENTERPRISE PRODUCTS PARTNERS L.P.
SHALL NOT BE CONSIDERED AN AFFILIATE OF TGP OR TMP AND ANY PERSON WHO IS A
DIRECT OR INDIRECT SUBSIDIARY OF TEPPCO PARTNERS, L.P. SHALL NOT BE CONSIDERED
AN AFFILIATE OF ENTERPRISE AND (II) NO PARTNER WILL BE DEEMED TO BE AN AFFILIATE
OF ANOTHER PARTNER SOLELY BECAUSE OF THEIR OWNERSHIP OF PARTNERSHIP INTERESTS.

7.             “AGREEMENT” MEANS THIS AMENDED AND RESTATED AGREEMENT OF
PARTNERSHIP OF THE PARTNERSHIP.

8.             “APPLICABLE LAW” MEANS ALL APPLICABLE AND VALID LAWS, RULES,
REGULATIONS, STATUTES, CODES, ORDINANCES, OR OTHER REQUIREMENTS OF THE UNITED
STATES OR ANY REGIONAL, STATE OR LOCAL GOVERNMENT, WHETHER SUCH APPLICABLE LAWS
NOW EXIST OR HEREAFTER COME INTO EFFECT (UNLESS OTHERWISE PROVIDED IN THIS
AGREEMENT).

9.             “AVAILABLE CASH” MEANS UNRESTRICTED CASH AND CASH EQUIVALENTS OF
THE PARTNERSHIP LESS REASONABLE CASH RESERVES SET ASIDE PURSUANT TO SECTION 5.3.

10.           “BUSINESS” MEANS TO (A) HOLD, IMPROVE, DEVELOP, AND OPERATE THE
JONAH GAS GATHERING SYSTEM AND SUCH OTHER FACILITIES AS MAY BE USEFUL FOR THE
GATHERING, TREATING, PROCESSING, AND TRANSPORTATION OF NATURAL GAS AND THE
VARIOUS PRODUCTS DERIVED THEREFROM FROM WELLS LOCATED IN THE JONAH FIELD AREA
(SAID AREA COMPRISING: ALL OF TOWNSHIPS 27 NORTH THROUGH 30 NORTH, RANGE 107
WEST; ALL OF TOWNSHIPS 27 NORTH THROUGH 29 NORTH, RANGES 108 AND 109 WEST; ALL
OF TOWNSHIP 30 NORTH, RANGE 109 WEST; AND ALL OF SECTION 36 IN TOWNSHIP 30
NORTH, RANGE 108 WEST), SUBLETTE COUNTY, WYOMING, TO ONE OR MORE DELIVERY POINTS
OWNED BY PARTIES OTHER THAN THE PARTNERSHIP, (B) PERFORM THE JONAH EXPANSION,
THE ENCANA EXPANSION AND THE ADDITIONAL EXPANSION, AS THE CASE MAY BE, AND (C)
PERFORM OR CAUSE TO BE PERFORMED ANY OTHER ACTIVITIES NECESSARY TO, IN
CONNECTION WITH, OR INCIDENTAL TO THE ACCOMPLISHMENT OF THE FOREGOING BUSINESS
ACTIVITIES.

11.           “BUSINESS DAY” MEANS ANY DAY EXCEPT A SATURDAY, SUNDAY OR OTHER
DAY ON WHICH COMMERCIAL BANKING INSTITUTIONS IN HOUSTON, TEXAS ARE AUTHORIZED TO
CLOSE.

12.           “CAPITAL CONTRIBUTIONS” MEANS THE TOTAL OF ALL CAPITAL
CONTRIBUTIONS OF THE PARTNERS PURSUANT TO SECTIONS 3.1 AND 3.2 INCLUDING, BUT
NOT LIMITED TO, THE INITIAL CAPITAL CONTRIBUTIONS, THE ADDITIONAL CAPITAL
CONTRIBUTIONS AND THE AMOUNTS SET FORTH ON SCHEDULE 3.2.

3

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

 

13.           “CAPITAL EXPENDITURES” SHALL MEAN ALL EXPENDITURES NECESSARY FOR
THE CONSTRUCTION OF ENLARGEMENTS OR ADDITIONS TO ANY OF THE ASSETS OR FACILITIES
OWNED BY THE PARTNERSHIP OR FOR ANY OTHER ACQUISITIONS OR IMPROVEMENTS THERETO
OF A CAPITAL NATURE, INCLUDING, WITHOUT LIMITATION, EXPENDITURES FOR MATERIALS,
LABOR, EQUIPMENT, PERMITS, CONSULTING FEES, ACCOUNTING AND LEGAL FEES, INSURANCE
COSTS, CONTRACTORS’ FEES, AND LAND AND EASEMENT COSTS.

14.           “CHANGE OF CONTROL” MEANS, WITH RESPECT TO ANY PARTNER, A CHANGE
IN THE PERSON OR PERSONS THAT ULTIMATELY CONTROLS SUCH PARTNER INCLUDING, THE
ACQUISITION BY ANY PERSON OR TWO OR MORE PERSONS ACTING IN CONCERT, OTHER THAN
THE MANAGEMENT OR THE SHAREHOLDERS OF SUCH CONTROLLING PERSON OR PERSONS
IMMEDIATELY PRIOR TO THE CHANGE, OF BENEFICIAL OWNERSHIP (WITHIN THE MEANING OF
RULE 13D-3 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED) OF 50% OR MORE
OF THE ISSUED AND OUTSTANDING SHARES OF VOTING STOCK OF SUCH CONTROLLING PERSON
OR PERSONS.

15.           “CLAIM” MEANS ANY AND ALL CLAIMS, DEMANDS, SUITS, ACTIONS, CAUSES
OF ACTION, LOSSES, DAMAGES, LIABILITIES, JUDGMENTS, FINES, PENALTIES, COSTS
(INCLUDING REASONABLE ATTORNEYS’ FEES AND COSTS OF MEDIATION, ARBITRATION OR
LITIGATION), INVESTIGATIONS OR ORDERS.

16.           “CODE” MEANS THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.

17.           “CONTEMPLATED TOTAL EXPANSION CAPITAL” MEANS AN AMOUNT EQUAL TO
$415.2 MILLION.

18.           “CONTRIBUTION AGREEMENT” MEANS THAT CERTAIN CONTRIBUTION AGREEMENT
DATED AS OF THE DATE HEREOF, AMONG ENTERPRISE, TGP, TMC AND THE PARTNERSHIP.

19.           “CONTRIBUTION DATE VALUE” HAS THE MEANING SET FORTH IN SECTION
5.2(C) AND IS EQUAL TO THE GROSS ASSET VALUE OF THE PARTNERSHIP ASSETS
IMMEDIATELY BEFORE THE EFFECTIVE DATE AND ADMISSION OF ENTERPRISE AS A PARTNER
IN THE PARTNERSHIP.  THE MANAGEMENT COMMITTEE SHALL APPROVE THE ALLOCATION OF
INCREASE IN THE GROSS ASSET VALUE OF THE ASSETS OF THE PARTNERSHIP AND FUTURE
DEPRECIATION ON SAME, ON A BASIS CONSISTENT WITH GAAP AND APPLICABLE REGULATIONS
AND THE CODE.

20.           “DEPRECIATION” MEANS, FOR EACH FISCAL YEAR OR OTHER PERIOD, AN
AMOUNT EQUAL TO THE DEPRECIATION, AMORTIZATION, OR OTHER COST RECOVERY DEDUCTION
ALLOWABLE WITH RESPECT TO AN ASSET FOR SUCH YEAR OR OTHER PERIOD, EXCEPT THAT IF
THE GROSS ASSET VALUE OF AN ASSET DIFFERS FROM ITS ADJUSTED BASIS FOR FEDERAL
INCOME TAX PURPOSES, AS DESCRIBED IN REGULATIONS SECTION 1.704-1(B)(2)(IV)(G),
AT THE BEGINNING OF SUCH YEAR OR OTHER PERIOD, DEPRECIATION SHALL BE AN AMOUNT
WHICH BEARS THE SAME RATIO TO SUCH BEGINNING GROSS ASSET VALUE AS THE FEDERAL
INCOME TAX DEPRECIATION, AMORTIZATION, OR OTHER COST RECOVERY DEDUCTION FOR SUCH
YEAR OR OTHER PERIOD BEARS TO SUCH BEGINNING ADJUSTED TAX BASIS; PROVIDED,
HOWEVER, THAT IF THE FEDERAL INCOME TAX DEPRECIATION, AMORTIZATION, OR OTHER
COST RECOVERY DEDUCTION FOR SUCH YEAR IS ZERO, DEPRECIATION SHALL BE DETERMINED
WITH REFERENCE TO SUCH BEGINNING GROSS ASSET VALUE USING ANY REASONABLE METHOD
SELECTED BY THE PARTNERS.

4

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

 

21.           “DISPOSITION,” “DISPOSING,” “DISPOSE” OR “DISPOSED” MEANS, WITH
RESPECT TO ANY ASSET (INCLUDING PARTNERSHIP INTERESTS OR ANY PORTION THEREOF), A
SALE, ASSIGNMENT, TRANSFER, CONVEYANCE, GIFT, EXCHANGE OR OTHER DISPOSITION OF
SUCH ASSET.

22.           “ENCANA AGREEMENT” MEANS THAT CERTAIN GAS GATHERING AGREEMENT
DATED AS OF FEBRUARY 1, 2006, BETWEEN ENCANA OIL & GAS (USA) INC. AND THE
PARTNERSHIP.

23.           “ENCANA EXPANSION” MEANS SUCH EXPANSION OF THE JONAH GAS GATHERING
SYSTEM WHICH IS NOT THE JONAH EXPANSION BUT WHICH IS REQUESTED BY ENCANA
PURSUANT TO SECTION 6 OF THE ENCANA AGREEMENT AND WHICH THE PARTNERSHIP IS
REQUIRED TO COMPLETE PURSUANT THERETO.

24.           “ENTERPRISE PARENT ENTITY” MEANS ENTERPRISE PRODUCTS OPERATING
L.P., ENTERPRISE PRODUCTS PARTNERS L.P. AND ANY CONTROLLING PERSON OR GROUP OF
CONTROLLING PERSONS OF EITHER OF SUCH PERSONS.

25.           “ENTITY” MEANS ANY PERSON OTHER THAN A NATURAL PERSON.

26.           “EXCESS EXPANSION COSTS” MEANS THE AMOUNT BY WHICH THE QUALIFIED
COSTS EXCEED THE CONTEMPLATED TOTAL EXPANSION CAPITAL.

27.           “FISCAL YEAR” MEANS THE FISCAL YEAR OF THE PARTNERSHIP AS
ESTABLISHED IN SECTION 7.2 HEREOF.

28.           “GAAP” MEANS GENERALLY ACCEPTED ACCOUNTING PRINCIPLES,
CONSISTENTLY APPLIED.

29.           “GOVERNMENTAL AUTHORITY” MEANS ANY FOREIGN GOVERNMENTAL AUTHORITY,
THE UNITED STATES OF AMERICA, ANY STATE OF THE UNITED STATES, ANY LOCAL
AUTHORITY AND ANY POLITICAL SUBDIVISION OF ANY OF THE FOREGOING, ANY
MULTI-NATIONAL ORGANIZATION OR BODY, ANY AGENCY, DEPARTMENT, COMMISSION, BOARD,
BUREAU, COURT OR OTHER AUTHORITY THEREOF, OR ANY QUASI-GOVERNMENTAL OR PRIVATE
BODY EXERCISING, OR PURPORTING TO EXERCISE, ANY EXECUTIVE, LEGISLATIVE,
JUDICIAL, ADMINISTRATIVE, POLICE, REGULATORY OR TAXING AUTHORITY OR POWER OF ANY
NATURE.

30.           “GROSS ASSET VALUE” MEANS, WITH RESPECT TO ANY ASSET, THE ASSET’S
ADJUSTED BASIS FOR FEDERAL INCOME TAX PURPOSES, EXCEPT AS FOLLOWS:

(i)            The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such asset as
determined by the contributing Partner and the Management Committee;

(ii)           The Gross Asset Value of all Partnership assets shall be adjusted
to equal their respective gross fair market values, as determined by the
Management Committee, and in accordance with Regulations Section
1.704-1(b)(2)(iv)(f) and 1.704-1(b)(2)(iv)(g), as of the following times: (a)
the acquisition of an additional Partnership Interest by any new or existing
Partner in exchange for more than a de minimis Capital Contribution; (b) the
distribution by the Partnership to a Partner of more than a de minimis amount of

5

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

 

Partnership property as consideration for a Partnership Interest; and (c) the
liquidation of the Partnership within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g);

(iii)         The Gross Asset Value of any Partnership asset distributed to any
Partner shall be the gross fair market value of such asset on the date of
distribution; and

(iv)        The Gross Asset Values of Partnership assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Regulations Section 1.704-l(b)(2)(iv)(m) and Section 3.6(d) hereof;
provided, however, that Gross Asset Values shall not be adjusted pursuant to
this subparagraph (iv) to the extent the Management Committee determines that an
adjustment to subparagraph (ii) hereof is necessary or appropriate in connection
with a transaction that would otherwise result in an adjustment pursuant to this
subparagraph (iv).  If the Gross Asset Value of an asset has been determined or
adjusted pursuant to subparagraph (i), (ii) or (iv) hereof, such Gross Asset
Value shall thereafter be adjusted by the Depreciation taken into account with
respect to such asset for purposes of computing Profits and Losses.

31.           “GUARANTEED PAYMENT” MEANS A PAYMENT BY THE PARTNERSHIP TO A
PARTNER AS PROVIDED UNDER REGULATIONS SECTION 1.707-1(C).  SUCH PAYMENT IS TO BE
DETERMINED WITHOUT REGARD TO THE INCOME OF THE PARTNERSHIP AND IS CONSIDERED AS
MADE TO A PARTNER WHO IS NOT ACTING IN ITS CAPACITY AS A PARTNER.

32.           “INITIAL CAPITAL CONTRIBUTION” MEANS, AS TO ANY PARTNER, ANY
AMOUNT CONTRIBUTED OR REQUIRED TO BE CONTRIBUTED TO THE CAPITAL OF THE
PARTNERSHIP BY A PARTNER PURSUANT TO SECTION 3.1 AND AS CONTEMPLATED BY EXHIBIT
A.

33.           “INITIAL COMMENCEMENT DATE” MEANS, THE DATE THAT ANY PIPELINE
PORTION OF THE JONAH EXPANSION IS PLACED IN SERVICE.

34.           “JONAH EXPANSION” MEANS THE INSTALLATION OF NEW COMPRESSION,
RELATED NEW PIPING AND CERTAIN RELATED FACILITIES, ALL AS MORE PARTICULARLY
DESCRIBED IN SECTION 4 OF THE ENCANA AGREEMENT.  THE CONSTRUCTION OF THE JONAH
EXPANSION IS CONTEMPLATED TO BE COMPLETED IN TWO PHASES, BEING PHASE I OF THE
JONAH EXPANSION AND PHASE II OF THE JONAH EXPANSION, EACH AS DESCRIBED IN
SECTIONS 4.2 AND 4.3 OF THE ENCANA AGREEMENT.

35.           “JONAH GAS GATHERING SYSTEM” MEANS THE GAS GATHERING SYSTEM KNOWN
AS THE “JONAH GAS GATHERING SYSTEM” WHICH IS OWNED AND OPERATED BY THE
PARTNERSHIP.

36.           “LIABILITY” OR “LIABILITIES” MEANS ANY DEBT, OBLIGATION, DUTY OR
LIABILITY OF ANY NATURE (INCLUDING ANY UNDISCLOSED, UNFIXED, UNLIQUIDATED,
UNSECURED, UNMATURED, UNACCRUED, UNASSERTED, CONTINGENT, CONDITIONAL, STRICT
LIABILITY, INCHOATE, IMPLIED, VICARIOUS, JOINT, SEVERAL OR SECONDARY LIABILITY),
REGARDLESS OF WHETHER SUCH DEBT, OBLIGATION, DUTY OR LIABILITY WOULD BE REQUIRED
TO BE DISCLOSED ON A BALANCE SHEET PREPARED IN ACCORDANCE WITH GAAP.

6

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

 

37.           “MANAGEMENT COMMITTEE” MEANS THE PERSONS APPOINTED TO MANAGE THE
OPERATIONS AND AFFAIRS OF THE PARTNERSHIP AS PROVIDED IN SECTION 4.1.

38.           “NONRECOURSE DEDUCTIONS” HAS THE MEANING SET FORTH IN REGULATIONS
SECTION 1.704-2(B).  THE AMOUNT OF NONRECOURSE DEDUCTIONS FOR A PARTNERSHIP
FISCAL YEAR IS DETERMINED IN ACCORDANCE WITH REGULATIONS SECTION 1.704-2(C) AND
EQUALS THE NET INCREASE IN PARTNERSHIP MINIMUM GAIN DURING THE YEAR, REDUCED
(BUT NOT BELOW ZERO) BY THE AGGREGATE DISTRIBUTIONS MADE DURING THE YEAR OF
PROCEEDS OF A NONRECOURSE LIABILITY THAT ARE ALLOCABLE TO AN INCREASE IN
PARTNERSHIP MINIMUM GAIN; PROVIDED THAT INCREASES IN PARTNERSHIP MINIMUM GAIN
RESULTING FROM CONVERSIONS, REFINANCING, OR OTHER CHANGES TO A DEBT INSTRUMENT
DESCRIBED IN REGULATIONS SECTION 1.704-2(G)(3) SHALL NOT GENERATE NONRECOURSE
DEDUCTIONS.

39.           “NONRECOURSE LIABILITIES” HAS THE MEANING SET FORTH IN REGULATIONS
SECTION 1.752-1(A)(2) OR 1.704-2(B)(3).

40.           “ORDER” MEANS ANY JUDGMENT, ORDER, REQUIREMENT, INJUNCTION,
RULING, WRIT OR DECREE OF A GOVERNMENTAL AUTHORITY.

41.           “PARTNER” MEANS ENTERPRISE, TMP OR TMC FOR SO LONG AS SUCH PERSON
REMAINS A PARTNER UNDER THE AGREEMENT, OR ANY PARTY ADMITTED AS AN ADDITIONAL OR
SUBSTITUTED PARTNER IN ACCORDANCE WITH THIS AGREEMENT AND THE ACT FOR SO LONG AS
SUCH PERSON REMAINS A PARTNER UNDER THE AGREEMENT, EACH IN THE CAPACITY AS A
PARTNER OF THE PARTNERSHIP.  “PARTNERS” MEANS SUCH PERSONS COLLECTIVELY.

42.           “PARTNER NONRECOURSE DEBT” OR “PARTNER NONRECOURSE LIABILITY” AS
SET FORTH IN REGULATIONS SECTION 1.704-2(B)(4), MEANS ANY PARTNERSHIP LIABILITY
TO THE EXTENT THAT THE LIABILITY IS NONRECOURSE FOR PURPOSES OF REGULATIONS
SECTION 1.1001-2, AND A PARTNER (OR RELATED PERSON WITHIN THE MEANING OF
REGULATIONS SECTION 1.752-4(B)) BEARS THE ECONOMIC RISK OF LOSS WITHIN THE
MEANING OF REGULATIONS SECTION 1.754-2.

43.           “PARTNER NONRECOURSE DEBT MINIMUM GAIN” MEANS AN AMOUNT, WITH
RESPECT TO EACH PARTNER NONRECOURSE DEBT, DETERMINED IN ACCORDANCE WITH
REGULATIONS SECTIONS 1.704-2(I)(2) AND 1.704-2(I)(3).

44.           “PARTNER NONRECOURSE DEDUCTIONS,” AS SET FORTH IN REGULATIONS
SECTION 1.704-2(I)(2) AND 1.704-2(I)(3), MEANS FOR ANY PARTNERSHIP TAXABLE YEAR,
THE NET INCREASE DURING THE YEAR IN PARTNER NONRECOURSE DEBT MINIMUM GAIN,
REDUCED (BUT NOT BELOW ZERO) BY THE PROCEEDS OF THE LIABILITY DISTRIBUTED DURING
THE YEAR TO THE PARTNER BEARING THE ECONOMIC RISK OF LOSS FOR THE LIABILITY THAT
IS BOTH ATTRIBUTABLE TO THE LIABILITY AND ALLOCABLE TO AN INCREASE IN THE
PARTNER NONRECOURSE DEBT MINIMUM GAIN.

45.           “PARTNERSHIP” MEANS JONAH GAS GATHERING COMPANY, A WYOMING GENERAL
PARTNERSHIP.

7

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

 

46.           “PARTNERSHIP INTEREST” MEANS WITH RESPECT TO ANY PARTNER, ALL OF
SUCH PARTNER’S OWNERSHIP INTEREST AS A PARTNER IN THE PARTNERSHIP AT ANY
PARTICULAR TIME, INCLUDING BUT NOT LIMITED TO THE RIGHT TO ANY ALLOCATIONS OF
PROFITS AND LOSSES AND THE RIGHT TO RECEIVE DISTRIBUTIONS AND ANY OBLIGATION TO
MAKE CAPITAL CONTRIBUTIONS UNDER THIS AGREEMENT.

47.           “PARTNERSHIP MINIMUM GAIN” HAS THE MEANING SET FORTH IN
REGULATIONS SECTIONS 1.704-2(B)(2) AND 1.704-2(D).

48.           “PERSON” OR “PERSON” MEANS AN INDIVIDUAL, A CORPORATION, A SOLE
PROPRIETORSHIP, A PARTNERSHIP, A LIMITED LIABILITY COMPANY, AN ASSOCIATION, A
TRUST, A JOINT VENTURE OR ANY OTHER ENTITY OR ORGANIZATION.

49.           “PHASE I COMMENCEMENT DATE” MEANS THE DATE THAT THE BRIDGER
COMPRESSION STATION (AS DEFINED IN THE ENCANA AGREEMENT) IS PLACED IN SERVICE.

50.           “PHASE II COMMENCEMENT DATE” MEANS THE DATE OF THE COMPLETION OF
THE JONAH EXPANSION.

51.           “PROFITS AND LOSSES” MEANS, FOR EACH FISCAL YEAR OR OTHER PERIOD,
AN AMOUNT EQUAL TO THE PARTNERSHIP’S TAXABLE INCOME OR LOSS FOR SUCH YEAR OR
PERIOD, DETERMINED IN ACCORDANCE WITH CODE SECTION 703(A) (FOR THIS PURPOSE, ALL
ITEMS OF INCOME, GAIN, LOSS, OR DEDUCTION REQUIRED TO BE STATED SEPARATELY
PURSUANT TO CODE SECTION 703(A)(1) SHALL BE INCLUDED IN TAXABLE INCOME OR LOSS),
WITH THE FOLLOWING ADJUSTMENTS:

(i)            Any income described in Code Section 705(a)(1)(B) of the
Partnership that is exempt from federal income tax and not otherwise taken into
account in computing Profits and Losses pursuant to this definition shall be
added to such taxable income or loss;

(ii)           Any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Profits or Losses pursuant to this definition, shall be subtracted
from such taxable income or loss;

(iii)          In the event the Gross Asset Value of any Partnership property is
adjusted pursuant to subparagraph (ii) or subparagraph (iii) of the definition
of Gross Asset Value, the amount of such adjustments shall be taken into account
as gain or loss from the Disposition of such asset for purposes of computing
Profits and Losses;

(iv)          Gain or loss resulting from any Disposition of Partnership
property with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the property
Disposed of, notwithstanding that the adjusted tax basis of such property may
differ from its Gross Asset Value;

8

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

 

(v)           In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account depreciation for such Fiscal Year or other period,
computed in accordance with the definition of “Depreciation”; and

(vi)          Notwithstanding any other provisions of this definition, any items
which are specially allocated pursuant to Section 5.2(d)(2) or Section 5.2(d)(3)
shall not be taken into account in computing Profits or Losses.

52.           “QUALIFIED COSTS” MEANS THE PROJECT COSTS ASSOCIATED WITH THE
JONAH EXPANSION AS APPROVED BY THE MANAGEMENT COMMITTEE OR EACH OF ENTERPRISE
AND THE TEPPCO PARTIES AS NECESSARY TO COMPLETE THE JONAH EXPANSION AND SHALL
INCLUDE, WITHOUT LIMITATION BUT ALSO WITHOUT DUPLICATION, (A) ALL FUNDS ACTUALLY
PAID OR COSTS INCURRED BY ENTERPRISE IN CONNECTION WITH THE JONAH EXPANSION,
INCLUDING ANY COSTS OR EXPENSES PAID OR INCURRED (WHETHER INTERNALLY OR TO A
THIRD PARTY) BY ENTERPRISE IN PLANNING, ENGINEERING, CONSTRUCTING OR COMPLETING
THE JONAH EXPANSION, (B) AN AMOUNT EQUAL TO ENTERPRISE’S COST OF CAPITAL IN
FUNDING THE JONAH EXPANSION THROUGH AUGUST 31, 2006 FOR EXPENSES ACTUALLY PAID
BY ENTERPRISE PRIOR TO THE EFFECTIVE DATE WITH SUCH COST OF CAPITAL TO BE EQUAL
TO ENTERPRISE’S BORROWING COST UNDER ITS SENIOR CREDIT FACILITY AND IRRESPECTIVE
OF WHETHER ENTERPRISE HAS ACTUALLY INCURRED BORROWINGS OR MADE RELATED PAYMENTS
UNDER SUCH FACILITY (THE “ENTERPRISE COST OF CAPITAL”), (C) AMOUNTS THAT
ENTERPRISE IS REQUIRED TO PAY FOR ORDERS FOR EQUIPMENT, RAW MATERIALS AND
SIMILAR MATERIALS FOR THE JONAH EXPANSION TO THE EXTENT THAT ENTERPRISE USES
SUCH MATERIALS IN CONNECTION WITH THE JONAH EXPANSION, OR IF SUCH MATERIALS ARE
NOT ULTIMATELY USED IN THE JONAH EXPANSION, FOR THOSE ORDERS WHICH ENTERPRISE IS
UNABLE TO CANCEL AND THUS WOULD BE REQUIRED TO MAKE PAYMENTS THEREON, OR FOR
CANCELLATION FEES AND PENALTIES ON THOSE ORDERS WHICH ENTERPRISE IS ABLE TO
CANCEL ONLY UPON PAYMENT OF A CANCELLATION FEE OR PENALTY, AND (D) THE COSTS
INCURRED BY ENTERPRISE RELATING TO AFE NO’S. P11062, P12084, P12085 AND P12086
IN THE RESPECTIVE AMOUNTS OF $334,000,000, $2,006,609, $12,003,571 AND
$65,039,223 AND PURSUANT TO WHICH ENTERPRISE HAS PREVIOUSLY INCURRED (OR EXPECTS
TO INCUR) COSTS RELATING TO THE JONAH EXPANSION (WHICH AFES SHALL BE DEEMED TO
HAVE BEEN APPROVED BY THE TEPPCO PARTIES AND ENTERPRISE, IT BEING UNDERSTOOD
THAT FURTHER AMENDMENTS TO THE AFES WILL BE SUBJECT TO MANAGEMENT COMMITTEE
APPROVAL AND THAT ANY NON-APPROVAL OF SUCH FURTHER AMENDMENT SHALL NOT BE DEEMED
TO BE A NON-APPROVAL OF THE ORIGINAL AFE).

53.           “REGULATIONS” MEANS THE INCOME TAX REGULATIONS PROMULGATED UNDER
THE CODE AS AMENDED FROM TIME TO TIME, INCLUDING THE CORRESPONDING PROVISIONS OF
ANY SUCCEEDING REGULATIONS.

54.           “SHARING RATIO” MEANS THE PERCENTAGE OF OWNERSHIP INTEREST OF A
PARTNER IN THE PARTNERSHIP AS STATED ON EXHIBIT A ATTACHED HERETO, AS SUCH
SHARING RATIO MAY BE ADJUSTED FROM TIME TO TIME AS PROVIDED IN THIS AGREEMENT.

55.           “TAX MATTERS PARTNER” MEANS ENTERPRISE AND THE TAX MATTERS PARTNER
SHALL TAKE SUCH ACTIONS ON BEHALF OF THE PARTNERSHIP AS SET FORTH IN SCHEDULE
5.2.

9

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

 

56.           “THIRD PARTY” MEANS ANY PERSON OTHER THAN THE PARTNERSHIP, ANY
PARTNER, ANY AFFILIATE OF A PARTNER, OR ANY PERMITTED SUCCESSOR OR ASSIGNEE OF A
PARTNER.

57.           “TEPPCO PARENT ENTITY” MEANS TEPPCO PARTNERS, L.P., TEPPCO
MIDSTREAM COMPANIES, L.P. AND ANY CONTROLLING PERSON OR GROUP OF CONTROLLING
PERSONS OF EITHER OF SUCH PERSONS.

ARTICLE 2

ORGANIZATION

SECTION 2.1.  FORMATION

The Partnership was formed on June 20, 1996 by the execution of the Original
Agreement and such other applicable filings for the Partnership pursuant to the
Act.

SECTION 2.2.  NAME, PLACE OF BUSINESS AND OFFICE

(A)           THE BUSINESS SHALL BE CONDUCTED UNDER THE NAME AND STYLE OF JONAH
GAS GATHERING COMPANY, ALTHOUGH THE BUSINESS MAY BE CONDUCTED UNDER ANY OTHER
NAME AS MAY BE ALLOWED BY LOCAL LAW AND APPROVED BY THE MANAGEMENT COMMITTEE. 
THE PARTNERSHIP SHALL MAINTAIN ITS PRINCIPAL OFFICE AT 1100 LOUISIANA, SUITE
1300, HOUSTON, TEXAS 77002, AS THE SAME MAY BE CHANGED FROM TIME TO TIME BY THE
MANAGEMENT COMMITTEE.  THE MANAGEMENT COMMITTEE SHALL PROMPTLY GIVE THE PARTNERS
WRITTEN NOTICE OF ANY CHANGE IN LOCATION OF THE PRINCIPAL OFFICE OF THE
PARTNERSHIP.

(B)           THE MANAGEMENT COMMITTEE SHALL TAKE SUCH STEPS AS ARE NECESSARY TO
QUALIFY THE PARTNERSHIP TO CONDUCT THE BUSINESS IN ANY STATES IN WHICH THE
PARTNERSHIP CONDUCTS THE BUSINESS AS REQUIRED BY LOCAL LAW.

SECTION 2.3.  PURPOSES AND CHARACTER OF BUSINESS; POWERS

(A)           THE PURPOSE OF THE PARTNERSHIP IS TO ENGAGE, EITHER DIRECTLY OR
THROUGH ANY ENTITY IN WHICH IT HAS AN INTEREST, IN THE BUSINESS AND ANY OTHER
BUSINESS OR ACTIVITY THAT NOW OR HEREAFTER MAY BE NECESSARY, INCIDENTAL, PROPER,
ADVISABLE OR CONVENIENT TO ACCOMPLISH THE FOREGOING PURPOSE AND THAT IS NOT
FORBIDDEN BY THE ACT OR BY APPLICABLE LAW.  THE PARTNERSHIP MAY ALSO PURSUE
OTHER BUSINESS PURPOSES BY EXPANDING ITS BUSINESSES AND ACTIVITIES BEYOND THOSE
DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE; PROVIDED THAT ANY SUCH OTHER
BUSINESS PURPOSES OR EXPANDED BUSINESSES OR ACTIVITIES (1) ARE NOT FORBIDDEN BY
THE ACT OR BY APPLICABLE LAW AND (2) ARE APPROVED BY THE MANAGEMENT COMMITTEE.

(B)           NOTWITHSTANDING THE FOREGOING, UNLESS OTHERWISE APPROVED BY THE
MANAGEMENT COMMITTEE (AND SUCH ACTION IS NOT FORBIDDEN BY THE ACT OR APPLICABLE
LAW), THE PARTNERSHIP WILL NOT ENGAGE IN ANY ACTIVITIES THAT WOULD CAUSE THE
PARTNERSHIP, THE PARTNERS, OR

10

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

 

ANY OF THEIR RESPECTIVE AFFILIATES TO BECOME SUBJECT TO REGULATION AS A
NON-EXEMPT HOLDING COMPANY UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935,
AS AMENDED.

(C)           SUBJECT TO THE TERMS OF THIS AGREEMENT, THE PARTNERSHIP SHALL HAVE
ANY AND ALL POWERS WHICH ARE NECESSARY OR DESIRABLE TO CARRY OUT THE PURPOSES OF
THE PARTNERSHIP, INCLUDING, BUT NOT LIMITED TO, THE POWER TO DO THE FOLLOWING:

(1)           TO HOLD, LEASE, MANAGE, OWN, DEVELOP, DISPOSE OF OR IMPROVE ALL OR
ANY PORTION OF THE ASSETS CONTRIBUTED TO THE PARTNERSHIP UNDER THE CONTRIBUTION
AGREEMENT, THIS AGREEMENT OR OTHERWISE OWNED BY THE PARTNERSHIP;

(2)           TO ESTABLISH, ACQUIRE OR INVEST IN, EITHER SINGULARLY OR WITH
OTHER PARTIES, OTHER ENTITIES;

(3)           TO ACQUIRE, HOLD, LEASE, OWN, DEVELOP OR IMPROVE ALL OR ANY
PORTION OF ANY PROPERTY REQUIRED IN CONNECTION WITH THE BUSINESS OR ANY OTHER
BUSINESS PERMITTED BY THIS AGREEMENT IN WHICH THE PARTNERSHIP MAY BE ENGAGED,
INCLUDING, BUT NOT LIMITED TO, ANY EQUITY INTERESTS OR DEBT INSTRUMENTS IN ANY
ENTITY;

(4)           TO PURCHASE OR OTHERWISE ACQUIRE AN INTEREST IN ALL OR ANY PORTION
OF AN INTEREST IN ANY OTHER ASSETS OR PROPERTIES, WHETHER REAL, PERSONAL, MIXED,
TANGIBLE OR INTANGIBLE;

(5)           TO BORROW MONEY, INCLUDING, BUT NOT LIMITED TO, INCURRING
FINANCING TO ACQUIRE, HOLD, MANAGE OR OPERATE ANY ASSETS OR PROPERTIES OF THE
PARTNERSHIP AND TO RENEW, EXTEND, MODIFY, REARRANGE OR REFINANCE SUCH
PARTNERSHIP BORROWINGS FROM TIME TO TIME;

(6)           TO MORTGAGE, PLEDGE, ASSIGN, ENCUMBER OR GRANT SECURITY INTERESTS
IN PARTNERSHIP ASSETS, REVENUES AND/OR INCOME;

(7)           TO LEASE, SUBLEASE, OR OTHERWISE DISPOSE OF ALL OF THE ASSETS AND
PROPERTIES OF THE PARTNERSHIP, OR ANY PORTION THEREOF OR INTEREST THEREIN;

(8)           TO MAKE ANY INVESTMENT OR EXPENDITURE, TO BORROW MONEY AND TO TAKE
ANY AND ALL OTHER ACTIONS WHICH ARE INCIDENTAL OR REASONABLY RELATED TO ANY OF
THE SPECIFIC PURPOSES RECITED ABOVE; AND

(9)           TO DO ANY AND ALL OTHER THINGS NECESSARY OR DESIRABLE TO CARRY OUT
THE PURPOSE OF THE PARTNERSHIP AND ANY OTHER ACTIVITY CONTEMPLATED BY THIS
AGREEMENT.

SECTION 2.4.  TERM

The Partnership term commenced as of June 20, 1996 and shall continue until
December 31, 2026 unless (i) the Partners unanimously agree to extend the term
of the Partnership for a longer duration or (ii) the Partnership is earlier
dissolved pursuant to the provisions hereof.

11

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

 

ARTICLE 3

PARTNERSHIP CAPITAL

SECTION 3.1.  INITIAL CAPITAL ACCOUNTS AND CONTRIBUTIONS OF THE PARTNERS

(A)           THE TEPPCO PARTIES HAVE PREVIOUSLY CONTRIBUTED (WHETHER THROUGH
ACTUAL CONTRIBUTIONS OR AS A RESULT OF THEIR ACQUISITION OF THEIR PARTNERSHIP
INTERESTS FROM MOC AND GREEN RIVER) TO THE PARTNERSHIP THOSE ASSETS WHICH ARE
CURRENTLY LISTED AS ASSETS OF THE PARTNERSHIP ON THE PARTNERSHIP’S BOOKS AND
RECORDS. THE CAPITAL ACCOUNT OF THE TEPPCO PARTIES ON THE EFFECTIVE DATE SHALL
BE EQUAL TO THE CONTRIBUTION DATE VALUE.

(B)           ENTERPRISE AND THE TEPPCO PARTIES SHALL CONTRIBUTE TO THE
PARTNERSHIP THOSE ASSETS DESCRIBED IN SCHEDULE 3.2.  UPON MAKING SUCH
CONTRIBUTION, OR DUE TO SUCH CONTRIBUTION, AS THE CASE MAY BE, EACH PARTNER HAS
RECEIVED OR SHALL RECEIVE ITS RESPECTIVE PARTNERSHIP INTEREST AND ITS SHARING
RATIO AS SET FORTH IN EXHIBIT A.

SECTION 3.2.  ADDITIONAL CAPITAL CONTRIBUTIONS OF THE PARTNERS

(A)           EXCEPT AS SET FORTH IN SECTION 3.2(B) BELOW, NO PARTNER SHALL BE
REQUIRED TO MAKE ADDITIONAL CAPITAL CONTRIBUTIONS TO THE PARTNERSHIP, NOR SHALL
ANY PARTNER BE OBLIGATED TO SATISFY ANY DEFICIT IN ITS CAPITAL ACCOUNT AND NO
PARTNER SHALL BE PERMITTED TO MAKE AN ADDITIONAL CAPITAL CONTRIBUTION WITHOUT
THE APPROVAL OF THE OTHER PARTNERS.  EXCEPT AS PROVIDED IN SECTION 3.1 OR THIS
SECTION 3.2, NO PARTNER SHALL BE REQUIRED TO MAKE CAPITAL CONTRIBUTIONS TO THE
PARTNERSHIP EXCEPT AS REQUIRED BY LAW OR AS OTHERWISE PROVIDED IN THIS
AGREEMENT.  NO PARTNER SHALL EVER BE REQUIRED TO CONTRIBUTE ANY AMOUNTS TO THE
PARTNERSHIP FOR THE BENEFIT OF ANY CREDITOR OR OTHER THIRD PARTY.

(B)           NOTWITHSTANDING ANY OTHER PROVISION HEREOF, THE PARTNERS SHALL
MAKE THE RESPECTIVE ADDITIONAL CAPITAL CONTRIBUTIONS IN SUCH AMOUNTS AND AT SUCH
TIMES AS DESCRIBED IN SCHEDULE 3.2.

SECTION 3.3.  PARTNERSHIP CAPITAL

(A)           EXCEPT TO THE EXTENT THAT INTEREST INCOME TO THE PARTNERSHIP IS
ALLOCATED TO A PARTNER, NO PARTNER SHALL BE ENTITLED TO INTEREST ON ANY CAPITAL
CONTRIBUTION (OTHER THAN INTEREST, IF APPLICABLE, CONTEMPLATED BY SUBPARAGRAPH
(B) IN THE DEFINITION OF QUALIFIED COSTS) TO THE PARTNERSHIP OR ANY CAPITAL
ACCOUNT BALANCE.

(B)           NO PARTNER SHALL HAVE THE RIGHT TO WITHDRAW ALL OR ANY PART OF ITS
CAPITAL CONTRIBUTION OR TO RECEIVE ANY RETURN ON ANY PORTION OF ITS CAPITAL
CONTRIBUTION, EXCEPT AS MAY BE OTHERWISE SPECIFICALLY PROVIDED IN THIS
AGREEMENT.

(C)           OTHER THAN IN A LIQUIDATION AS CONTEMPLATED BY ARTICLE 8, UNDER
CIRCUMSTANCES INVOLVING A RETURN OF ANY CAPITAL CONTRIBUTION, NO PARTNER SHALL
HAVE THE RIGHT TO RECEIVE PROPERTY OTHER THAN CASH.

12

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

 

SECTION 3.4.  LIABILITY OF PARTNERS

(A)           NO PARTNER SHALL BE LIABLE FOR THE DEBTS, LIABILITIES, CONTRACTS
OR ANY OTHER OBLIGATIONS OF THE PARTNERSHIP, EXCEPT TO THE EXTENT EXPRESSLY
PROVIDED HEREIN OR IN THE ACT.  NO PARTNER SHALL BE LIABLE FOR THE DEBTS OR
LIABILITIES OF ANY OTHER PARTNER EXCEPT AS PROVIDED IN THE ACT.

(B)           NO PARTNER SHALL BE REQUIRED TO LOAN OR CONTRIBUTE TO THE
PARTNERSHIP ANY FUNDS OTHER THAN AS EXPRESSLY REQUIRED IN THIS AGREEMENT.

(C)           NO PARTNER SHALL BE LIABLE FOR THE RETURN OF ALL OR ANY PORTION OF
THE CAPITAL CONTRIBUTIONS OF ANY OTHER PARTNER.

SECTION 3.5.  LOANS BY PARTNERS OR AFFILIATES

Subject to obtaining any approvals required under this Agreement for the
Partnership to borrow funds, any Partner or its Affiliate may (but shall not be
obligated to) at any time, upon obtaining the consent of the Management
Committee, loan money to the Partnership or guarantee a loan of funds to the
Partnership to finance Partnership operations, to finance or refinance
Partnership property, to pay the debts and obligations of the Partnership, or
for any other Partnership purpose.  If any Partner or its Affiliate lends funds
or guarantees a loan of funds to the Partnership, such Partner or Affiliate
shall be entitled to receive interest on such loan, or a fee associated with any
such loan or guaranty, at an interest rate or fee to be agreed upon by such
Partner or Affiliate and the Management Committee.  Each Partner acknowledges
and agrees that any loan from any Partner to the Partnership shall not be a
Capital Contribution and shall not result in any change in the Capital Accounts
or the Sharing Ratios of the Partners.

SECTION 3.6.  CAPITAL ACCOUNTS

(A)           A CAPITAL ACCOUNT SHALL BE ESTABLISHED AND MAINTAINED FOR EACH
PARTNER.  THE CAPITAL ACCOUNT OF THE TEPPCO PARTIES ON THE EFFECTIVE DATE WILL
BE EQUAL TO THE CONTRIBUTION DATE VALUE.

(B)           A PARTNER’S CAPITAL ACCOUNT SHALL BE INCREASED BY (I) THE AMOUNT
OF CASH AND THE INITIAL GROSS ASSET VALUE OF ANY PROPERTY CONTRIBUTED BY SUCH
PARTNER TO THE PARTNERSHIP INCLUDING THE CAPITAL CONTRIBUTIONS FUNDED PURSUANT
TO SCHEDULE 3.2, (II) SUCH PARTNER’S ALLOCABLE SHARE OF PROFITS, INCOME AND GAIN
AND (III) THE AMOUNT OF ANY PARTNERSHIP LIABILITIES THAT ARE EXPRESSLY ASSUMED
BY SUCH PARTNER OR THAT ARE SOLELY SECURED BY ANY PARTNERSHIP PROPERTY
DISTRIBUTED TO SUCH PARTNER.

(C)           A PARTNER’S CAPITAL ACCOUNT SHALL BE DECREASED BY (I) THE AMOUNT
OF CASH AND THE GROSS ASSET VALUE OF ANY PARTNERSHIP PROPERTY DISTRIBUTED TO
SUCH PARTNER PURSUANT TO ANY PROVISION OF THIS AGREEMENT, (II) SUCH PARTNER’S
ALLOCABLE SHARE OF LOSSES, DEDUCTIONS AND OTHER LOSSES AND (III) THE AMOUNT OF
ANY LIABILITIES OF SUCH PARTNER THAT ARE EXPRESSLY ASSUMED BY THE PARTNERSHIP OR
THAT ARE SOLELY SECURED BY ANY PROPERTY CONTRIBUTED BY SUCH PARTNER TO THE
PARTNERSHIP.

13

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

 

(D)           UPON THE OCCURRENCE OF CERTAIN EVENTS (AS DESCRIBED IN REGULATIONS
SECTIONS 1.704-1(B)(2)(IV)(F), 1.704-1(B)(4) AND 1.704-2), THE MANAGEMENT
COMMITTEE MAY AGREE TO INCREASE OR DECREASE THE CAPITAL ACCOUNTS OF THE PARTNERS
TO REFLECT A REVALUATION OF PARTNERSHIP PROPERTY ON THE PARTNERSHIP’S BOOKS.

(E)           THE CAPITAL ACCOUNT OF EACH PARTNER SHALL BE DETERMINED AFTER
GIVING EFFECT TO ALL TRANSACTIONS WHICH HAVE BEEN EFFECTED PRIOR TO THE TIME
WHEN SUCH DETERMINATION IS MADE GIVING RISE TO THE ALLOCATION OF PROFITS AND
LOSSES AND TO ALL CONTRIBUTIONS AND DISTRIBUTIONS THERETOFORE MADE.  ANY PERSON
WHO ACQUIRES A PARTNERSHIP INTEREST DIRECTLY FROM A PARTNER, OR WHOSE
PARTNERSHIP INTEREST SHALL BE INCREASED BY MEANS OF A DISPOSITION TO IT OF ALL
OR PART OF THE INTEREST OF ANOTHER PARTNER, SHALL HAVE A CAPITAL ACCOUNT WHICH
INCLUDES THE CAPITAL ACCOUNT BALANCE OF THE PARTNERSHIP INTEREST SO ACQUIRED OR
DISPOSED OF.

(F)            ANY FEES, SALARY OR SIMILAR COMPENSATION PAYABLE TO A PARTNER
PURSUANT TO THIS AGREEMENT SHALL BE DEEMED A GUARANTEED PAYMENT FOR FEDERAL
INCOME TAX PURPOSES AND NOT A DISTRIBUTION TO SUCH PARTNER FOR SUCH PURPOSES. 
SUCH PAYMENTS TO A PARTNER SHALL NOT REDUCE THE CAPITAL ACCOUNT OF SUCH PARTNER,
EXCEPT TO THE EXTENT OF ITS DISTRIBUTIVE SHARE OF ANY LOSSES OR OTHER DOWNWARD
CAPITAL ADJUSTMENT RESULTING FROM SUCH PAYMENT.

(G)           FROM TIME TO TIME THE MANAGEMENT COMMITTEE MAY MAKE SUCH
MODIFICATIONS TO THE MANNER IN WHICH THE CAPITAL ACCOUNTS ARE COMPUTED TO COMPLY
WITH REGULATIONS SECTIONS 1.704-1(B) AND 1.704-2 PROVIDED THAT SUCH MODIFICATION
IS NOT LIKELY TO HAVE A MATERIAL EFFECT ON THE AMOUNTS DISTRIBUTABLE TO ANY
PARTNER PURSUANT TO THIS AGREEMENT.

(H)           THE FOREGOING PROVISIONS AND THE OTHER PROVISIONS OF THIS
AGREEMENT RELATING TO THE MAINTENANCE OF CAPITAL ACCOUNTS ARE INTENDED TO COMPLY
WITH REGULATIONS SECTIONS 1.704-1(B) AND 1.704-2, AND SHALL BE INTERPRETED AND
APPLIED IN A MANNER CONSISTENT WITH SUCH REGULATIONS.

(I)            EXCEPT AS OTHERWISE PROVIDED HEREIN OR AS REQUIRED BY THE CODE OR
REGULATIONS, ALL ITEMS OF INCOME, GAIN, LOSS, DEDUCTION, CREDIT, AND ANY OTHER
ITEMS OF THE PARTNERSHIP SHALL BE ALLOCATED AMONG THE PARTNERS FOR FEDERAL AND
STATE INCOME TAX PURPOSES AS THEY SHARE THE CORRESPONDING CAPITAL ACCOUNT ITEMS
PURSUANT TO THIS SECTION 3.6.

(J)            WITH RESPECT TO ANY PROPERTY CONTRIBUTED TO THE PARTNERSHIP BY
ANY PARTNER THE VALUE OF WHICH DIFFERS FROM THE ADJUSTED BASIS OF THE PROPERTY
FOR FEDERAL INCOME TAX PURPOSES, ALL ITEMS OF INCOME, GAIN, LOSS, DEDUCTION,
CREDIT OR ANY OTHER TAX ITEMS, AS COMPUTED FOR FEDERAL INCOME TAX PURPOSES,
SHALL BE ALLOCATED AMONG THE PARTNERS SO AS TO TAKE ACCOUNT OF SUCH DIFFERENCE
IN ACCORDANCE WITH THE TERMS HEREOF.

SECTION 3.7.  SHARING RATIOS

The Sharing Ratio (or the calculation thereof) of each Partner is set forth on
Exhibit A, attached hereto and hereby made a part hereof.  Except as otherwise
provided in this Agreement and on Exhibit A, the Sharing Ratios may only be
adjusted with the consent of the Management Committee and the Management
Committee shall have the full authority to amend Exhibit A to

14

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

 

reflect any such adjustments to the Sharing Ratios; provided that no adjustments
to the Sharing Ratios shall be made prior to the Initial Commencement Date. 
Enterprise shall begin receiving distributions from the Partnership based on its
Sharing Ratio effective on the Initial Commencement Date in accordance with
Exhibit A.  Thereafter the Sharing Ratios shall be subject to any adjustments of
the Partnership Interests as set forth in this Agreement and on Exhibit A.

SECTION 3.8.  NO RIGHT TO PRIORITY OF RETURN OF CAPITAL

No Partner shall have any priority over any other Partner as to the return of
its contributions to capital or as to compensation by way of income.

ARTICLE 4

RIGHTS, POWERS AND DUTIES OF THE PARTNERS, THE MANAGEMENT
COMMITTEE, THE PRESIDENT AND THE OTHER OFFICERS

SECTION 4.1.  MANAGEMENT AND CONTROL OF THE PARTNERSHIP

(A)           THE POWERS OF THE PARTNERSHIP SHALL BE EXERCISED BY OR UNDER THE
AUTHORITY OF, AND THE BUSINESS AND AFFAIRS OF THE PARTNERSHIP SHALL BE MANAGED
UNDER THE DIRECTION OF, ENTERPRISE AND THE TEPPCO PARTIES; PROVIDED THAT THE
PARTNERS MAY DELEGATE ALL OR ANY PORTION OF THEIR RIGHTS, POWERS AND OBLIGATIONS
TO THE PRESIDENT AS PROVIDED IN SECTION 4.2.  ANY PARTNER SHALL BE ENTITLED TO
BRING ADVISORS OR OTHER PERSONS AS THEY DEEM APPROPRIATE TO ANY MEETING OF THE
PARTNERS.

(B)           THE PARTNERS AGREE TO ACT THROUGH A MANAGEMENT COMMITTEE COMPRISED
OF PRINCIPAL REPRESENTATIVES (THE “MANAGEMENT COMMITTEE REPRESENTATIVES”)
APPOINTED BY EACH OF THE PARTNERS.  THE MANAGEMENT COMMITTEE WILL CONSIST OF
FOUR (4) MANAGEMENT COMMITTEE REPRESENTATIVES AND WILL PROVIDE MANAGEMENT
OVERSIGHT AND EXECUTIVE LEVEL SUPERVISION FOR ALL FINANCIAL, COMMERCIAL AND
OPERATING FUNCTIONS OF THE PARTNERSHIP.  ENTERPRISE SHALL HAVE THE RIGHT TO
APPOINT TWO MANAGEMENT COMMITTEE REPRESENTATIVES AND THE TEPPCO PARTIES SHALL
HAVE THE RIGHT TO COLLECTIVELY APPOINT TWO MANAGEMENT COMMITTEE
REPRESENTATIVES.  A MANAGEMENT COMMITTEE REPRESENTATIVE APPOINTED BY A PARTNER
IS NOT REQUIRED TO BE AN EMPLOYEE OF THE APPOINTING PARTNER OR ANY OF ITS
AFFILIATES AND SHALL BE DESIGNATED BY NOTICE TO THE OTHER PARTNER.  EACH
MANAGEMENT COMMITTEE REPRESENTATIVE SHALL SERVE UNTIL HIS SUCCESSOR IS
DESIGNATED BY THE PARTNER THAT APPOINTED SUCH MANAGEMENT COMMITTEE
REPRESENTATIVE.  EACH MANAGEMENT COMMITTEE REPRESENTATIVE SHALL HAVE ONE VOTE. 
ANY MANAGEMENT COMMITTEE REPRESENTATIVE MAY BE REMOVED AT ANY TIME BY THE
PARTNER APPOINTING SUCH MANAGEMENT COMMITTEE REPRESENTATIVE AND SHALL BE
REPLACED BY SUCH PARTNER AT SUCH TIME AS DETERMINED BY SUCH APPOINTING PARTNER. 
THE MANAGEMENT COMMITTEE REPRESENTATIVES SHALL RECEIVE NO COMPENSATION FROM THE
PARTNERSHIP FOR THEIR SERVICE ON THE MANAGEMENT COMMITTEE.  EACH PARTNER SHALL
BE RESPONSIBLE FOR ALL COSTS ASSOCIATED WITH ITS REPRESENTATIVES’ PARTICIPATION
ON THE MANAGEMENT COMMITTEE.  AS OF THE EFFECTIVE DATE, THE MANAGEMENT COMMITTEE
WILL CONSIST OF (I) A.J. TEAGUE AND ALLEN C. CAPPS EACH DESIGNATED BY ENTERPRISE
AND (II) WILLIAM G. MANIAS AND JOHN N.

15

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

 

GOODPASTURE EACH DESIGNATED BY THE TEPPCO PARTIES.  THE MANAGEMENT COMMITTEE MAY
FORM ADDITIONAL COMMITTEES AS THE PARTNERS OR THE MANAGEMENT COMMITTEE MAY
DESIRE FROM TIME TO TIME.

(C)           EACH MANAGEMENT COMMITTEE REPRESENTATIVE SHALL VOTE, AND SHALL
TAKE ALL OTHER NECESSARY OR DESIRABLE ACTIONS WITHIN SUCH MANAGEMENT COMMITTEE
REPRESENTATIVE’S CONTROL (INCLUDING, WITHOUT LIMITATION, ATTENDANCE AT MEETINGS
IN PERSON OR BY PROXY AND FOR PURPOSES OF THE EXECUTION OF WRITTEN CONSENTS IN
LIEU OF MEETINGS), TO ENSURE COMPLIANCE WITH THIS SECTION 4.1.

(D)           UNLESS OTHERWISE EXPRESSLY PROVIDED IN A WRITTEN NOTICE ISSUED BY
THE SECRETARY OF THE PARTNERSHIP, AN ANNUAL MEETING OF THE MANAGEMENT COMMITTEE
FOR THE TRANSACTION OF SUCH BUSINESS AS MAY PROPERLY COME BEFORE SUCH MEETING
SHALL BE HELD AT THE PRINCIPAL OFFICE OF THE PARTNERSHIP AT 9:00 A.M. ON THE
SECOND TUESDAY IN THE MONTH OF AUGUST.  REGULARLY SCHEDULED, PERIODIC MEETINGS
OF THE MANAGEMENT COMMITTEE MAY BE HELD AT SUCH TIMES AND PLACES AS SHALL FROM
TIME TO TIME BE DETERMINED BY RESOLUTION OF THE MANAGEMENT COMMITTEE AND
COMMUNICATED TO ALL MANAGEMENT COMMITTEE REPRESENTATIVES OR THEIR
REPRESENTATIVES.  EACH MANAGEMENT COMMITTEE REPRESENTATIVE SHALL INFORM THE
OTHER MANAGEMENT COMMITTEE REPRESENTATIVES OF ANY BUSINESS MATTERS THAT IT
INTENDS TO RAISE AT ANY REGULAR MEETING OF THE MANAGEMENT COMMITTEE WITHIN A
REASONABLE TIME PRIOR TO SUCH MEETING.  THE BUSINESS MATTERS TO BE ACTED UPON AT
ANY SUCH MEETING SHALL BE LIMITED TO THE MATTERS DISCLOSED BY A MANAGEMENT
COMMITTEE REPRESENTATIVE OR ITS REPRESENTATIVE(S) PRIOR TO SUCH MEETING.

(E)           ANY MANAGEMENT COMMITTEE REPRESENTATIVE SHALL HAVE THE RIGHT TO
CALL A SPECIAL MEETING OF THE MANAGEMENT COMMITTEE UPON AT LEAST 24 HOURS
WRITTEN NOTICE.  EACH NOTICE OF A MEETING SHALL STATE THE TIME AND PLACE OF THE
MEETING, THE AGENDA AND ANY MATTERS WHICH ARE BEING SUBMITTED FOR APPROVAL.  THE
BUSINESS MATTERS TO BE ACTED UPON AT ANY SUCH MEETING SHALL BE LIMITED TO THE
MATTERS SET FORTH IN THE NOTICE DELIVERED WITH RESPECT TO SUCH MEETING.

(F)            ALL MEETINGS OF THE MANAGEMENT COMMITTEE OR OTHER COMMITTEES OF
THE PARTNERSHIP SHALL BE PRESIDED OVER BY A CHAIRMAN OF THE MEETING, WHO SHALL
BE A MANAGEMENT COMMITTEE REPRESENTATIVE AND SHALL BE INITIALLY DESIGNATED BY
ENTERPRISE; PROVIDED THAT, THE CHAIRMAN APPOINTED BY ENTERPRISE SHALL SERVE AS
CHAIRMAN OF THE MANAGEMENT COMMITTEE FOR A TERM OF ONE YEAR AND UPON THE ONE
YEAR ANNIVERSARY OF SUCH CHAIRMAN’S APPOINTMENT, TMC SHALL HAVE THE RIGHT TO
APPOINT THE CHAIRMAN FOR THE NEXT ONE YEAR PERIOD WITH SUCH RIGHT OF APPOINTMENT
ALTERNATING BETWEEN TMC AND ENTERPRISE SO THAT UPON EACH ONE YEAR ANNIVERSARY OF
THE THEN SERVING CHAIRMAN, THE PARTNER WHO WAS NOT ENTITLED TO APPOINT THE
CHAIRMAN FOR THE PREVIOUS YEAR WILL HAVE THE RIGHT TO APPOINT THE CHAIRMAN FOR
THE NEXT YEAR.  THE CHAIRMAN OF ANY MEETING SHALL DETERMINE THE ORDER OF
BUSINESS AND THE PROCEDURE AT THE MEETING, INCLUDING REGULATION OF THE MANNER OF
VOTING AND THE CONDUCT OF DISCUSSION.

(G)           UNLESS OTHERWISE RESTRICTED BY APPLICABLE LAW OR THIS AGREEMENT,
THE MANAGEMENT COMMITTEE OR OTHER COMMITTEES MAY HOLD A MEETING BY MEANS OF
CONFERENCE TELEPHONE OR OTHER COMMUNICATIONS EQUIPMENT BY MEANS OF WHICH ALL
PERSONS PARTICIPATING IN THE

16

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

 

MEETING CAN EFFECTIVELY COMMUNICATE WITH EACH OTHER.  SUCH PARTICIPATION IN A
MEETING SHALL CONSTITUTE PRESENCE IN PERSON AT THE MEETING, EXCEPT WHERE A
PERSON PARTICIPATES IN THE MEETING FOR THE EXPRESS PURPOSE OF OBJECTING TO THE
TRANSACTION OF ANY BUSINESS ON THE GROUND THAT THE MEETING IS NOT LAWFULLY
CALLED OR CONVENED.

(H)           MANAGEMENT COMMITTEE REPRESENTATIVES MAY VOTE EITHER IN PERSON OR
BY PROXY EXECUTED IN WRITING.  A PHOTOGRAPHIC, PHOTOSTATIC, FACSIMILE OR SIMILAR
REPRODUCTION OF A WRITING EXECUTED BY THE MANAGEMENT COMMITTEE REPRESENTATIVE
SHALL BE TREATED AS AN EXECUTION IN WRITING FOR PURPOSES OF THIS SECTION
4.1(H).  PROXIES FOR USE AT ANY MEETING OF THE MANAGEMENT COMMITTEE OR OTHER
COMMITTEE OF THE PARTNERSHIP SHALL BE FILED WITH THE PARTNERSHIP BEFORE OR AT
THE TIME OF THE MEETING.  ALL PROXIES, WRITTEN CONSENTS AND BALLOTS SHALL BE
RECEIVED AND TAKEN CHARGE OF AND CANVASSED BY AN INSPECTOR OR INSPECTORS
APPOINTED BY THE PRESIDENT WHO SHALL DECIDE ALL QUESTIONS TOUCHING UPON VOTING
MATTERS.

(I)            EXCEPT AS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY ACTION
REQUIRED OR PERMITTED TO BE TAKEN AT ANY MEETING OF THE MANAGEMENT COMMITTEE OR
OTHER COMMITTEE OF THE MANAGEMENT COMMITTEE MAY BE TAKEN WITHOUT A MEETING AND
WITHOUT A VOTE, IF A CONSENT OR CONSENTS IN WRITING, SETTING FORTH THE ACTION SO
TAKEN, SHALL BE SIGNED BY THE HOLDER OR HOLDERS OR REPRESENTATIVES OF NOT LESS
THAN THE MINIMUM PERCENTAGE OF VOTES THAT WOULD BE NECESSARY TO TAKE SUCH ACTION
AT A MEETING AT WHICH THE MANAGEMENT COMMITTEE REPRESENTATIVES ENTITLED TO VOTE
ON THE ACTION WERE PRESENT AND VOTED; PROVIDED, HOWEVER, THAT NO SUCH WRITTEN
CONSENT SHALL BE EFFECTIVE UNLESS EACH SUCH MANAGEMENT COMMITTEE REPRESENTATIVE
ENTITLED TO VOTE ON SUCH ACTION HAS BEEN PROVIDED WITH AT LEAST THREE (3)
BUSINESS DAYS PRIOR WRITTEN NOTICE OF SUCH CONSENT TO BE SOUGHT OR HAS WAIVED
THE REQUIREMENT OF SUCH NOTICE.  TO THE EXTENT REQUIRED BY APPLICABLE LAW, EVERY
WRITTEN CONSENT SHALL BEAR THE DATE OF SIGNATURE OF EACH MANAGEMENT COMMITTEE
REPRESENTATIVE WHO SIGNS THE CONSENT.  TO THE EXTENT REQUIRED BY APPLICABLE LAW,
NO WRITTEN CONSENT SHALL BE EFFECTIVE TO TAKE THE ACTION THAT IS THE SUBJECT TO
SUCH CONSENT UNLESS, WITHIN SIXTY (60) DAYS AFTER THE DATE OF THE EARLIEST DATED
CONSENT DELIVERED TO THE PARTNERSHIP IN THE MANNER REQUIRED BY THIS SECTION 4.1,
A CONSENT OR CONSENTS SIGNED BY THE HOLDER OR HOLDERS OF NOT LESS THAN THE
MINIMUM PERCENTAGE OF VOTES THAT WOULD BE NECESSARY TO TAKE THE ACTION THAT IS
THE SUBJECT OF THE CONSENT ARE DELIVERED TO THE PARTNERSHIP BY DELIVERY TO ITS
REGISTERED OFFICE OR ITS PRINCIPAL PLACE OF BUSINESS.  A PHOTOGRAPHIC,
PHOTOSTATIC, FACSIMILE OR SIMILAR REPRODUCTION OF A WRITING SIGNED BY A
MANAGEMENT COMMITTEE REPRESENTATIVE SHALL BE REGARDED AS SIGNED BY THE
MANAGEMENT COMMITTEE REPRESENTATIVE FOR PURPOSES OF THIS SECTION 4.1.  PROMPT
WRITTEN NOTICE OF THE TAKING OF ANY ACTION BY THE MANAGEMENT COMMITTEE OR
COMMITTEES OF THE MANAGEMENT COMMITTEE WITHOUT A MEETING BY LESS THAN UNANIMOUS
WRITTEN CONSENT SHALL BE GIVEN TO THOSE MANAGEMENT COMMITTEE REPRESENTATIVES WHO
DID NOT CONSENT IN WRITING TO THE ACTION.

(J)            A QUORUM SHALL BE PRESENT AT A MEETING OF THE MANAGEMENT
COMMITTEE OR OTHER COMMITTEE IF THE HOLDERS OF AT LEAST A MAJORITY OF ALL
MANAGEMENT COMMITTEE REPRESENTATIVES ARE REPRESENTED AT THE MEETING IN PERSON OR
BY PROXY.  THE VOTING INTEREST OF ANY MANAGEMENT COMMITTEE REPRESENTATIVE
FAILING OR DECLINING TO VOTE WITHIN THE TIME ALLOWED ON ANY MATTER SHALL BE
COUNTED AGAINST THE PROPOSAL.

17

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

 

(K)           EXCEPT AS OTHERWISE PROVIDED FOR IN THIS AGREEMENT, ACTION ON ANY
MATTER PROVIDED FOR IN THIS AGREEMENT WHERE THE APPROVAL OF THE MANAGEMENT
COMMITTEE IS REQUIRED OR CONTEMPLATED, SHALL REQUIRE THE AFFIRMATIVE VOTE OF AT
LEAST A MAJORITY OF THE MANAGEMENT COMMITTEE REPRESENTATIVES ENTITLED TO VOTE. 
ANY UNRESOLVED DIFFERENCES (I.E. MATTERS FOR WHICH A MAJORITY OF THE MANAGEMENT
COMMITTEE REPRESENTATIVES DO NOT AGREE TO APPROVE OR REJECT) MAY BE SUBMITTED BY
ANY PARTNER TO THE DISPUTE RESOLUTION PROCEDURE SET FORTH ON SCHEDULE 10.23 AND
UPON RESOLUTION OF SUCH MATTER IN ACCORDANCE WITH THE PROVISIONS SET FORTH ON
SCHEDULE 10.23, SUCH MATTER SHALL BE DEEMED TO HAVE BEEN APPROVED BY THE
MANAGEMENT COMMITTEE.

(L)            THE MANAGEMENT COMMITTEE WILL REVIEW, DETERMINE AND APPROVE THE
AMOUNT OF ALL QUALIFIED COSTS INCURRED IN CONNECTION WITH THE JONAH EXPANSION IN
ACCORDANCE WITH THE TERMS OF THE DEFINITION OF QUALIFIED COSTS IN ARTICLE I OF
THIS AGREEMENT.  SUCH REVIEW, DETERMINATION AND APPROVAL MAY BE MADE EITHER
PRIOR TO OR AFTER THE INCURRENCE OF SUCH QUALIFIED COSTS BUT IN ANY EVENT, THE
MANAGEMENT COMMITTEE SHALL (I) AS OF THE PHASE I COMMENCEMENT DATE, MAKE SUCH
DETERMINATION AS OF THE PHASE I COMMENCEMENT DATE AND (II) AFTER THE PHASE I
COMMENCEMENT DATE AND PRIOR TO THE PHASE II COMMENCEMENT DATE, MAKE SUCH
DETERMINATION AS OF THE FIRST DAY OF EACH SUCH MONTH.

SECTION 4.2.  DELEGATION TO PRESIDENT

To the fullest extent permitted by Applicable Law, except as otherwise provided
in Section 4.5 and Section 4.6, the Management Committee hereby expressly
delegates to the President the full authority of a Senior Vice President as set
forth in the Management Authorization Policy attached hereto as Schedule 4.2 and
applied in the same manner as if the Partnership were considered to be a
subsidiary of Enterprise Products GP, LLC, Enterprise Products Partners L.P. or
Enterprise Products Operating L.P. (collectively, the “EP Parties”), as the same
may be amended from time to time by the EP Parties, to manage and control the
affairs of the Partnership and to make all decisions affecting the Business, and
such other duties as the Management Committee may from time to time establish
which may be a reduction of or an addition to those duties enumerated on
Schedule 4.2.  Bill Ordemann is hereby appointed president (“President”) of the
Partnership.  Enterprise shall have the right to remove and/or replace the
President and any other officers in its sole discretion, subject to the
rejection rights of TMC set forth in Section 4.3(c).

SECTION 4.3.  OTHER OFFICERS

(A)           NUMBER.  OTHER THAN THE PRESIDENT, THE OFFICERS OF THE PARTNERSHIP
SHALL CONSIST OF ONE OR MORE VICE PRESIDENTS, THE SECRETARY, THE TREASURER, AND
SUCH OTHER OFFICERS AND ASSISTANT OFFICERS AND AGENTS AS MAY BE DEEMED NECESSARY
AND ELECTED OR APPOINTED BY THE MANAGEMENT COMMITTEE, OR CHOSEN IN SUCH OTHER
MANNER AS MAY BE PRESCRIBED BY THIS AGREEMENT, AT SUCH TIME AND IN SUCH MANNER
AND FOR SUCH TERMS AS THE MANAGEMENT COMMITTEE MAY PRESCRIBE (THE “OFFICERS”). 
ANY TWO OR MORE OFFICES MAY BE HELD BY THE SAME PERSON.  PERSONS OTHER THAN
MANAGEMENT COMMITTEE MEMBERS (UNLESS OTHERWISE AGREED BY ALL THE PARTNERS) MAY
SERVE AS OFFICERS.

18

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

 

(B)           GENERAL DUTIES.  ALL OFFICERS AND AGENTS OF THE PARTNERSHIP, AS
BETWEEN THEMSELVES AND THE PARTNERSHIP, SHALL HAVE SUCH AUTHORITY, PERFORM SUCH
DUTIES AND MANAGE THE PARTNERSHIP AS MAY BE PROVIDED IN THIS AGREEMENT OR AS MAY
BE DETERMINED BY THE MANAGEMENT COMMITTEE NOT INCONSISTENT WITH THE TERMS OF
THIS AGREEMENT.

(C)           ELECTION, TERM OF OFFICE AND QUALIFICATIONS.  THE OFFICERS SHALL
BE CHOSEN BY THE MEMBERS OF THE MANAGEMENT COMMITTEE APPOINTED BY ENTERPRISE;
PROVIDED THAT, TMC SHALL HAVE THE RIGHT TO REJECT SUCH OFFICER’S APPOINTMENT
WITHIN TWO BUSINESS DAYS OF SUCH APPOINTMENT, IN WHICH CASE ENTERPRISE SHALL
APPOINT ANOTHER OFFICER TO SO SERVE, SUBJECT AGAIN TO TMC’S RIGHT TO CONTINUE TO
REJECT SUCH APPOINTMENT WITHIN TWO BUSINESS DAYS OF SUCH APPOINTMENT.  EACH
OFFICER SHALL HOLD OFFICE UNTIL A SUCCESSOR IS CHOSEN AND QUALIFIED OR UNTIL THE
DEATH, RESIGNATION, OR REMOVAL OF SUCH OFFICER.  DESIGNATION OF AN OFFICER AS
SUCH SHALL NOT OF ITSELF CREATE ANY CONTRACTUAL RIGHTS BETWEEN THE PARTNERSHIP
AND SUCH OFFICER.

(D)           REMOVAL.  ANY OFFICER OR AGENT MAY BE REMOVED (WITH OR WITHOUT
CAUSE) BY THE MANAGEMENT COMMITTEE, BUT SUCH REMOVAL SHALL BE WITHOUT PREJUDICE
TO THE CONTRACT RIGHTS, IF ANY, OF THE PERSON SO REMOVED.

(E)           RESIGNATION.  ANY OFFICER MAY RESIGN AT ANY TIME BY GIVING WRITTEN
NOTICE TO ANY MANAGEMENT COMMITTEE REPRESENTATIVE, THE PRESIDENT OR THE
SECRETARY.  SUCH RESIGNATION SHALL TAKE EFFECT AT THE TIME SPECIFIED IN THE
NOTICE, AND, UNLESS OTHERWISE SPECIFIED IN THE NOTICE, THE ACCEPTANCE OF SUCH
RESIGNATION SHALL NOT BE NECESSARY TO MAKE IT EFFECTIVE.  SUCH RESIGNATION SHALL
BE WITHOUT PREJUDICE TO THE CONTRACT RIGHTS, IF ANY, OF THE PARTNERSHIP.

(F)            VACANCIES.  ANY VACANCY IN ANY OFFICE BECAUSE OF DEATH,
RESIGNATION, REMOVAL OR ANY OTHER CAUSE SHALL BE FILLED FOR THE UNEXPIRED
PORTION OF THE TERM IN THE MANNER PRESCRIBED IN THIS AGREEMENT FOR ELECTION OR
APPOINTMENT TO SUCH OFFICE.

(G)           THE VICE PRESIDENTS.  EACH VICE PRESIDENT SHALL HAVE SUCH POWERS
AND PERFORM SUCH DUTIES AS THE MANAGEMENT COMMITTEE MAY FROM TIME TO TIME
PRESCRIBE OR AS THE PRESIDENT (SUBJECT TO SUCH AUTHORITY LIMITS AS THE
MANAGEMENT COMMITTEE MAY FROM TIME TO TIME PRESCRIBE) MAY FROM TIME TO TIME
DELEGATE TO HIM OR HER.  AT THE REQUEST OF THE PRESIDENT, ANY VICE PRESIDENT MAY
TEMPORARILY ACT IN PLACE OF THE PRESIDENT.  IN THE CASE OF THE DEATH, ABSENCE,
OR INABILITY TO ACT OF THE PRESIDENT, THE MANAGEMENT COMMITTEE MAY DESIGNATE ANY
VICE PRESIDENT TO PERFORM THE DUTIES OF THE PRESIDENT IN ACCORDANCE WITH THE
TERMS OF THIS AGREEMENT.

(H)           THE SECRETARY.  THE SECRETARY SHALL KEEP OR CAUSE TO BE KEPT IN
BOOKS PROVIDED FOR THAT PURPOSE, MINUTES OF THE MEETINGS OF THE PARTNERS; SHALL
SEE THAT ALL NOTICES ARE DULY GIVEN IN ACCORDANCE WITH THE PROVISIONS OF THIS
AGREEMENT AND AS REQUIRED BY LAW; SHALL BE CUSTODIAN OF THE RECORDS AND, IN
GENERAL, SHALL PERFORM ALL DUTIES INCIDENT TO THE OFFICE OF THE SECRETARY AND
SUCH OTHER DUTIES AS MAY FROM TIME TO TIME BE ASSIGNED BY THE MANAGEMENT
COMMITTEE OR BY THE PRESIDENT.

(I)            ASSISTANT SECRETARY.  AT THE REQUEST OF THE SECRETARY OR IN THE
SECRETARY’S ABSENCE OR INABILITY TO ACT, THE ASSISTANT SECRETARY, IF ANY, SHALL
PERFORM PART OR ALL OF THE SECRETARY’S DUTIES.

19

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

 

(J)            THE TREASURER.  THE TREASURER SHALL BE THE PRINCIPAL FINANCIAL
OFFICER OF THE PARTNERSHIP; SHALL HAVE CHARGE AND CUSTODY OF AND BE RESPONSIBLE
FOR ALL FUNDS OF THE PARTNERSHIP AND DEPOSIT ALL SUCH FUNDS IN THE NAME OF THE
PARTNERSHIP IN SUCH BANKS, TRUST COMPANIES OR OTHER DEPOSITORIES AS SHALL BE
SELECTED BY THE MANAGEMENT COMMITTEE; SHALL RECEIVE AND GIVE RECEIPTS FOR MONEYS
DUE AND PAYABLE TO THE PARTNERSHIP FROM ANY SOURCE; AND, IN GENERAL, SHALL
PERFORM ALL THE DUTIES INCIDENT TO THE OFFICE OF TREASURER AND SUCH OTHER DUTIES
AS FROM TIME TO TIME MAY BE ASSIGNED BY THE MANAGEMENT COMMITTEE OR BY THE
PRESIDENT.  THE TREASURER SHALL RENDER TO THE PRESIDENT AND THE MANAGEMENT
COMMITTEE, WHENEVER THE SAME SHALL BE REQUIRED, AN ACCOUNT OF ALL TRANSACTIONS
ACCOMPLISHED AS TREASURER AND OF THE FINANCIAL CONDITION OF THE PARTNERSHIP.

(K)           ASSISTANT TREASURER.  AT THE REQUEST OF THE TREASURER OR IN THE
TREASURER’S ABSENCE OR INABILITY TO ACT, THE ASSISTANT TREASURER, IF ANY, SHALL
PERFORM PART OR ALL OF THE TREASURER’S DUTIES.

(L)            DEVOTION OF TIME.  EACH OFFICER SHALL DEVOTE SUCH TIME, EFFORT,
AND SKILL TO THE PARTNERSHIP’S BUSINESS AFFAIRS AS HE OR SHE DEEMS NECESSARY AND
PROPER FOR THE PARTNERSHIP’S WELFARE AND SUCCESS.

SECTION 4.4.  AUTHORITY OF THE PARTNERS, THE MANAGEMENT COMMITTEE
REPRESENTATIVES OR THE PRESIDENT AS TO THIRD PERSONS

Any Person dealing with the Partnership, a Partner, a Management Committee
Representative or the President may rely upon a certificate signed by the
Secretary or Assistant Secretary, thereunto duly authorized, concerning:

(A)           THE IDENTITY OF THE PRESIDENT, VICE PRESIDENT, SECRETARY,
MANAGEMENT COMMITTEE REPRESENTATIVE OR ANY PARTNER;

(B)           THE EXISTENCE OR NONEXISTENCE OF ANY FACT OR FACTS THAT CONSTITUTE
CONDITIONS PRECEDENT TO ACTS BY A MANAGEMENT COMMITTEE REPRESENTATIVE, THE
PRESIDENT OR ANY OFFICER OF THE PARTNERSHIP WHO HAS BEEN DELEGATED AUTHORITY TO
ACT ON BEHALF OF THE PARTNERSHIP, OR IN ANY OTHER MANNER GERMANE TO THE AFFAIRS
OF THE PARTNERSHIP;

(C)           THE PERSON OR PERSONS WHO ARE AUTHORIZED TO EXECUTE AND DELIVER
ANY INSTRUMENT OR DOCUMENT OF THE PARTNERSHIP; OR

(D)           ANY ACT OR FAILURE TO ACT BY THE PARTNERSHIP OR CONCERNING ANY
OTHER MATTER WHATSOEVER INVOLVING THE PARTNERSHIP, A MANAGEMENT COMMITTEE
REPRESENTATIVE OR ANY PARTNER AS IT REGARDS THE BUSINESS OR ANY OTHER BUSINESS
PERMITTED BY THIS AGREEMENT IN WHICH THE PARTNERSHIP MAY BE ENGAGED.

20

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

SECTION 4.5.  ACTIONS REQUIRING CONSENT OF THE MANAGEMENT COMMITTEE

The President shall not have the authority to take any action except as provided
in Section 4.2 or as otherwise approved by the Management Committee.

SECTION 4.6.  RESTRICTIONS ON THE AUTHORITY OF THE MANAGEMENT COMMITTEE

Notwithstanding anything to the contrary contained in this Agreement, without
the consent of each Partner, neither the Management Committee nor the President
shall have the power or authority:

(A)           TO LEASE OR DISPOSE OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF
THE PARTNERSHIP;

(B)           TO DISSOLVE AND WIND UP THE PARTNERSHIP;

(C)           UNLESS OTHERWISE PROVIDED IN THIS AGREEMENT, TO AMEND THIS
AGREEMENT;

(D)           TO MERGE, CONVERT, OR CONSOLIDATE THE PARTNERSHIP WITH OR INTO ANY
ENTITY;

(E)           TO ADMIT ONE OR MORE ADDITIONAL OR SUBSTITUTED PARTNERS OR TO
ISSUE ADDITIONAL PARTNERSHIP INTERESTS, EXCEPT AS MAY OTHERWISE BE PERMITTED IN
ARTICLE 6;

(F)            TO FILE A VOLUNTARY PETITION IN BANKRUPTCY ON BEHALF OF THE
PARTNERSHIP;

(G)           TO POSSESS PARTNERSHIP PROPERTY, OR ASSIGN, PLEDGE OR HYPOTHECATE
ITS RIGHTS IN SPECIFIC PARTNERSHIP ASSETS OTHER THAN FOR A PARTNERSHIP PURPOSE;

(H)           TO MAKE ANY TAX ELECTION FOR THE PARTNERSHIP;

(I)            TO SUSTAIN OR ENTER INTO ANY CONTRACT OR AGREEMENT THAT WOULD
BIND ANY AFFILIATE (OTHER THAN THE PARTNERSHIP) OF ANY PARTNER;

(J)            TO ASSIGN ANY OF THE PROPERTY OF THE PARTNERSHIP IN TRUST FOR THE
BENEFIT OF CREDITORS, OR TO MAKE OR FILE OR ACQUIESCE IN THE MAKING OR FILING BY
ANY OTHER PERSON, OF A PETITION OR OTHER ACTION REQUESTING THE REORGANIZATION OR
LIQUIDATION OF THE PARTNERSHIP; OR

(K)           TO ACT ON ANY OTHER MATTER THAT IS SUBJECT TO THE AGREEMENT,
CONSENT OR APPROVAL OF THE PARTNERS HEREUNDER.

If the Partners are unable to agree as to any of the items set forth in this
Section 4.6, the matter may be submitted to the Dispute Resolution Procedure set
forth on Schedule 10.23 and upon resolution of such matter in accordance with
the provisions set forth on Schedule 10.23, such matter shall be deemed to have
been approved by all of the Partners.

21

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

 

SECTION 4.7.  TRANSACTIONS OR DISPUTES WITH RELATED PARTIES

Upon approval of the Management Committee, the Partnership may agree, contract,
or arrange with any Partner or any Affiliates of any Partner in the name and on
behalf of the Partnership, for the performance of services for the Partnership,
and the payment of compensation therefor, in carrying out the Business as if
such Partner or Affiliate were an independent contractor.

SECTION 4.8.  COMPENSATION OF THE MANAGEMENT COMMITTEE REPRESENTATIVES, OFFICERS
AND PARTNERS; REIMBURSEMENT OF EXPENSES

The management, administrative and operating functions of the Partnership will
be performed by employees of EPCO, Inc. pursuant to the administrative services
agreement to which TEPPCO Partners, L.P. and TEPPCO GP, Inc. are parties, which
was effective on February 24, 2005.  The Partnership will reimburse EPCO, Inc.
in accordance with such agreement for the allocated costs of its employees who
perform operating, management and other administrative functions for the
Partnership, including those of any Management Committee Representative, Officer
or Partner.

SECTION 4.9.  INDEMNIFICATION AND EXCULPATION OF THE PARTNERS, MANAGEMENT
COMMITTEE REPRESENTATIVES, OFFICERS AND EMPLOYEES

(A)           NO PARTNER, MANAGEMENT COMMITTEE REPRESENTATIVE, OFFICER OR
EMPLOYEE OF THE PARTNERSHIP OR ANY AUTHORIZED REPRESENTATIVE OF A PARTNER OR
MANAGEMENT COMMITTEE REPRESENTATIVE (COLLECTIVELY “INDEMNIFIED PERSONS” OR
SINGULARLY “INDEMNIFIED PERSON”) SHALL HAVE ANY LIABILITY TO THE PARTNERSHIP OR
THE PARTNERS FOR ANY LOSS SUSTAINED OR LIABILITIES INCURRED AS A RESULT OF ANY
ACT OR OMISSION OF SUCH INDEMNIFIED PERSON IF (1) THE INDEMNIFIED PERSON ACTED
IN GOOD FAITH IN A MANNER HE, SHE OR IT REASONABLY BELIEVED TO BE IN, OR NOT
OPPOSED TO, THE BEST INTERESTS OF THE PARTNERSHIP, AND (2) THE CONDUCT OF THE
INDEMNIFIED PERSON DID NOT CONSTITUTE ACTUAL FRAUD, GROSS NEGLIGENCE, BAD FAITH
OR WILLFUL MISCONDUCT.

(B)           THE PARTNERSHIP SHALL INDEMNIFY AN INDEMNIFIED PERSON FROM AND
AGAINST ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES, JOINT OR SEVERAL,
EXPENSES (INCLUDING REASONABLE LEGAL FEES AND EXPENSES), JUDGMENTS, FINES,
SETTLEMENTS, AND OTHER AMOUNTS ARISING FROM ANY AND ALL CLAIMS, DEMANDS,
ACTIONS, SUITS OR PROCEEDINGS, CIVIL, CRIMINAL, ADMINISTRATIVE OR INVESTIGATIVE,
THAT RELATE TO THE OPERATIONS OF THE PARTNERSHIP AS SET FORTH IN THIS AGREEMENT
IN WHICH AN INDEMNIFIED PERSON MAY BE INVOLVED, OR IS THREATENED TO BE INVOLVED,
AS A PARTY OR OTHERWISE, REGARDLESS OF WHETHER ARISING FROM ANY ACT OR OMISSION
WHICH CONSTITUTED THE SOLE, PARTIAL OR CONCURRENT NEGLIGENCE (WHETHER ACTIVE OR
PASSIVE) OF THE INDEMNIFIED PERSON, IF (1) THE INDEMNIFIED PERSON ACTED IN GOOD
FAITH IN A MANNER HE, SHE OR IT REASONABLY BELIEVED TO BE IN, OR NOT OPPOSED TO,
THE BEST INTERESTS OF THE PARTNERSHIP AND (2) THE CONDUCT OF THE INDEMNIFIED
PERSON DID NOT CONSTITUTE ACTUAL FRAUD, GROSS NEGLIGENCE, BAD FAITH OR WILLFUL
MISCONDUCT.  THE TERMINATION OF ANY PROCEEDING BY JUDGMENT, ORDER OR SETTLEMENT
DOES NOT CREATE A PRESUMPTION THAT THE INDEMNIFIED PERSON DID NOT MEET THE
REQUISITE STANDARD OF CONDUCT SET FORTH IN THIS SECTION 4.9(B).  ANY

22

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

 

INDEMNIFICATION PURSUANT TO THIS SECTION 4.9 SHALL BE MADE ONLY OUT OF THE
ASSETS OF THE PARTNERSHIP, INCLUDING INSURANCE PROCEEDS, IF ANY.

(C)           PROMPTLY AFTER RECEIPT BY AN INDEMNIFIED PERSON OF NOTICE OF ANY
PENDING OR THREATENED ACTION MADE OR INSTITUTED AGAINST SUCH INDEMNIFIED PERSON
BY A PERSON OTHER THAN ANOTHER INDEMNIFIED PERSON (A “THIRD PARTY ACTION”), SUCH
INDEMNIFIED PERSON SHALL, IF A CLAIM IN RESPECT THEREOF IS TO BE MADE BY SUCH
INDEMNIFIED PERSON AGAINST THE PARTNERSHIP, GIVE NOTICE THEREOF TO THE
PARTNERSHIP AND EACH PARTNER.  THE PARTNERSHIP, AT ITS OWN EXPENSE, MAY ELECT TO
ASSUME THE DEFENSE OF ANY SUCH THIRD PARTY ACTION THROUGH ITS OWN COUNSEL ON
BEHALF OF THE INDEMNIFIED PERSON (WITH FULL RIGHT OF SUBROGATION TO THE
INDEMNIFIED PERSON’S RIGHTS AND DEFENSES).  THE INDEMNIFIED PERSON MAY EMPLOY
SEPARATE COUNSEL IN ANY SUCH THIRD PARTY ACTION AND PARTICIPATE IN THE DEFENSE
THEREOF, BUT THE FEES AND EXPENSES OF SUCH COUNSEL SHALL BE AT THE EXPENSE OF
THE INDEMNIFIED PERSON UNLESS THE INDEMNIFIED PERSON SHALL HAVE BEEN ADVISED BY
ITS COUNSEL THAT THERE MAY BE ONE OR MORE LEGAL DEFENSES AVAILABLE TO IT WHICH
ARE DIFFERENT FROM OR ADDITIONAL TO THOSE AVAILABLE TO THE PARTNERSHIP.  IN SUCH
CASE THE PARTNERSHIP SHALL NOT HAVE THE RIGHT TO ASSUME THE DEFENSE OF SUCH
THIRD PARTY ACTION ON BEHALF OF THE INDEMNIFIED PERSON, IT BEING UNDERSTOOD,
HOWEVER, THAT THE PARTNERSHIP SHALL NOT, IN CONNECTION WITH ANY ONE ACTION OR
SEPARATE BUT SUBSTANTIALLY SIMILAR OR RELATED ACTIONS IN THE SAME JURISDICTION
ARISING OUT OF THE SAME GENERAL ALLEGATIONS OR CIRCUMSTANCES, BE LIABLE FOR THE
REASONABLE FEES AND EXPENSES OF MORE THAN ONE SEPARATE FIRM OF ATTORNEYS (IN
ADDITION TO ANY LOCAL COUNSEL) FOR THE INDEMNIFIED PERSON, AND SUCH FIRM SHALL
BE DESIGNATED IN WRITING BY THE INDEMNIFIED PERSON.  ALL FEES AND EXPENSES FOR
ANY SUCH SEPARATE COUNSEL SHALL BE PAID PERIODICALLY AS INCURRED.  THE
PARTNERSHIP SHALL NOT BE LIABLE FOR ANY SETTLEMENT OF ANY SUCH THIRD PARTY
ACTION EFFECTED WITHOUT ITS CONSENT UNLESS THE PARTNERSHIP SHALL ELECT IN
WRITING NOT TO ASSUME THE DEFENSE THEREOF OR FAILS TO PROSECUTE DILIGENTLY SUCH
DEFENSE AND FAILS AFTER WRITTEN NOTICE FROM THE INDEMNIFIED PERSON TO PROMPTLY
REMEDY THE SAME, IN WHICH CASE, THE INDEMNIFIED PERSON WITHOUT WAIVING ANY
RIGHTS TO INDEMNIFICATION HEREUNDER MAY DEFEND SUCH THIRD PARTY ACTION AND ENTER
INTO ANY GOOD FAITH SETTLEMENT THEREOF WITHOUT THE PRIOR WRITTEN CONSENT OF THE
PARTNERSHIP.  THE PARTNERSHIP SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF
THE INDEMNIFIED PERSON, EFFECT ANY SETTLEMENT OF ANY SUCH THIRD PARTY ACTION
UNLESS SUCH SETTLEMENT INCLUDES AN UNCONDITIONAL RELEASE OF THE INDEMNIFIED
PERSON FROM ALL CLAIMS AND LIABILITIES THAT ARE THE SUBJECT OF SUCH THIRD PARTY
ACTION.  THE PARTNERS AGREE TO COOPERATE IN ANY DEFENSE OR SETTLEMENT OF ANY
SUCH THIRD PARTY ACTION AND TO GIVE EACH OTHER REASONABLE ACCESS TO ALL
INFORMATION RELEVANT THERETO.  THE PARTNERS WILL SIMILARLY COOPERATE IN THE
PROSECUTION OF ANY CLAIM OR LAWSUIT AGAINST ANY THIRD PARTY.  IF, AFTER THE
PARTNERSHIP ELECTS TO ASSUME THE DEFENSE OF A THIRD PARTY ACTION, IT IS
DETERMINED PURSUANT TO THE DISPUTE RESOLUTION PROCEDURES DESCRIBED IN SECTION
10.23 AND SCHEDULE 10.23 OR OTHERWISE DETERMINED IN A RELATED BINDING LEGAL
PROCEEDING THAT THE INDEMNIFIED PERSON IS NOT ENTITLED TO INDEMNIFICATION WITH
RESPECT THERETO, THE PARTNERSHIP SHALL DISCONTINUE THE DEFENSE THEREOF, AND IF
ANY FEES OR EXPENSES FOR SEPARATE COUNSEL TO REPRESENT THE INDEMNIFIED PERSON
WERE PAID BY THE PARTNERSHIP, THE INDEMNIFIED PERSON SHALL PROMPTLY REIMBURSE
THE PARTNERSHIP FOR THE FULL AMOUNT THEREOF.

(D)           THE INDEMNIFICATION PROVIDED BY THIS SECTION 4.9 SHALL BE IN
ADDITION TO ANY OTHER RIGHTS TO WHICH THE INDEMNIFIED PERSONS MAY BE ENTITLED
UNDER ANY AGREEMENT, AS A MATTER OF LAW OR OTHERWISE.

23

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

 

(E)           THE PARTNERSHIP MAY PURCHASE AND MAINTAIN INSURANCE ON BEHALF OF
THE INDEMNIFIED PERSONS AND THE EMPLOYEES, AS THE MANAGEMENT COMMITTEE SHALL
DETERMINE, AGAINST ANY LIABILITY THAT MAY BE ASSERTED AGAINST OR EXPENSES THAT
MAY BE INCURRED BY THE INDEMNIFIED PERSONS OR THE EMPLOYEES IN CONNECTION WITH
THE PARTNERSHIP’S ACTIVITIES, REGARDLESS OF WHETHER THE PARTNERSHIP WOULD HAVE
THE POWER TO INDEMNIFY THE INDEMNIFIED PERSONS OR EMPLOYEES AGAINST SUCH
LIABILITY UNDER THE PROVISIONS OF THIS AGREEMENT.

(F)            IN NO EVENT MAY THE INDEMNIFIED PERSONS OR THE EMPLOYEES OF THE
PARTNERSHIP SUBJECT THE PARTNERS TO PERSONAL LIABILITY BY REASON OF THE
INDEMNIFICATION PROVISIONS SET FORTH IN THIS AGREEMENT EXCEPT AS MAY BE REQUIRED
UNDER THE ACT.

(G)           THE INDEMNIFIED PERSONS SHALL NOT BE DENIED INDEMNIFICATION IN
WHOLE OR IN PART UNDER THIS SECTION 4.9 BECAUSE AN INDEMNIFIED PERSON HAD AN
INTEREST IN THE TRANSACTION WITH RESPECT TO WHICH THE INDEMNIFICATION APPLIES IF
THE TRANSACTION WAS OTHERWISE PERMITTED BY THE TERMS OF THIS AGREEMENT.

(H)           THE PROVISIONS OF THIS SECTION 4.9 ARE FOR THE BENEFIT OF THE
INDEMNIFIED PERSONS AND THEIR RESPECTIVE PERMITTED SUCCESSORS AND ASSIGNS, AND
SHALL NOT BE DEEMED TO CREATE ANY RIGHTS FOR THE BENEFIT OF ANY OTHER PERSONS.

SECTION 4.10.  COMPETITION.

Each Partner, in its individual capacity or otherwise, and its respective
principals and Affiliates, shall be free to engage and conduct or participate in
any business or activity whatsoever, including, without limitation, the
Business, without any accountability or obligation whatsoever to the Partnership
or to any other Partner and each Partner waives any right or Claim it may have
against any Partner with respect to any competing business or activity or the
income or profits therefrom.

SECTION 4.11.  LIABILITY OF THE MANAGEMENT COMMITTEE REPRESENTATIVES AND
PARTNERS

It is the intent of this Section 4.11 to restrict the Liability and fiduciary
duties of the Partners to the maximum extent permitted under Applicable Law. 
Neither the Partnership nor any Partner shall have any Claim against any
Management Committee Representative or Partner by reason of any act or omission
of such Management Committee Representative or Partner, provided that such act
or omission was performed by the Management Committee Representative or Partner
in the belief that the Management Committee Representative or Partner was acting
within the scope of its authority under this Agreement and that such act or
omission did not involve the Management Committee Representative’s or Partner’s
bad faith, gross negligence, willful misconduct or fraud, REGARDLESS OF WHETHER
SUCH ACT OR OMISSION CONSTITUTED THE SOLE, PARTIAL OR CONCURRENT NEGLIGENCE
(WHETHER ACTIVE OR PASSIVE) OF THE MANAGEMENT COMMITTEE REPRESENTATIVE OR
PARTNER.  Notwithstanding the above, a Management Committee Representative or
Partner shall have no Liability hereunder for failing to act if such act
required the consent of some or all of the Management Committee Representatives
or Partners and the required consent to such action was not granted.  Any
amendment, modification or repeal of this

24

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

 

Section 4.11 or any provision in this Section 4.11 shall be prospective only and
shall not in any way affect the limitations on the Management Committee
Representative’s or Partner’s Liability to the Partnership and the Partners
under this Section 4.11 as in effect immediately prior to such amendment,
modification or repeal with respect to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when Claims
relating to such matters may arise or be asserted.  In furtherance of this
limitation of fiduciary duties of the Management Committee Representatives and
Partners, but not by way of limitation, the following provisions shall apply:

(A)           IT WILL NOT CONSTITUTE A BREACH OF FIDUCIARY OR OTHER DUTY FOR A
MANAGEMENT COMMITTEE REPRESENTATIVE, A PARTNER OR ANY OF ITS RESPECTIVE
AFFILIATES TO ENGAGE IN ANY BUSINESS ACTIVITY, INCLUDING, WITHOUT LIMITATION,
ACTIVITIES OF THE TYPE CONDUCTED BY THE PARTNERSHIP, EVEN IF IN DIRECT
COMPETITION WITH THE PARTNERSHIP;

(B)           IT WILL NOT CONSTITUTE A BREACH OF FIDUCIARY OR OTHER DUTY FOR THE
MANAGEMENT COMMITTEE REPRESENTATIVES OR PARTNERS TO RESOLVE ANY CONFLICTS OF
INTEREST IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT OR AN AGREEMENT WITH THE
OTHER MANAGEMENT COMMITTEE REPRESENTATIVES OR PARTNERS;

(C)           IT WILL NOT CONSTITUTE A BREACH OF FIDUCIARY OR OTHER DUTY FOR THE
MANAGEMENT COMMITTEE REPRESENTATIVES OR PARTNERS TO ENGAGE ATTORNEYS,
ACCOUNTANTS AND OTHER ADVISORS ON BEHALF OF THE PARTNERSHIP EVEN THOUGH SUCH
PERSONS MAY ALSO BE RETAINED FROM TIME TO TIME BY A MANAGEMENT COMMITTEE
REPRESENTATIVE OR PARTNER OR ANY OF A MANAGEMENT COMMITTEE REPRESENTATIVE’S OR
PARTNER’S OFFICERS, DIRECTORS, SHAREHOLDERS, MEMBERS OR PARTNERS, AND SUCH
PERSONS MAY BE ENGAGED WITH RESPECT TO ANY MATTER IN WHICH THE INTEREST OF THE
PARTNERSHIP AND A MANAGEMENT COMMITTEE REPRESENTATIVE OR PARTNER MAY DIFFER, OR
MAY BE ENGAGED BY BOTH THE PARTNERSHIP AND A MANAGEMENT COMMITTEE REPRESENTATIVE
OR PARTNER WITH RESPECT TO ANY OTHER MATTER.  NEITHER THE MANAGEMENT COMMITTEE
REPRESENTATIVES NOR THE PARTNERS SHALL BE RESPONSIBLE FOR ANY MISCONDUCT OR
NEGLIGENCE ON THE PART OF ANY SUCH ATTORNEY, ACCOUNTANT OR OTHER ADVISORS; AND

(D)           SUBJECT TO THE RESTRICTIONS IN SECTION 4.12, IT WILL NOT
CONSTITUTE A BREACH OF FIDUCIARY OR OTHER DUTY FOR A MANAGEMENT COMMITTEE
REPRESENTATIVE OR PARTNER TO CONTRACT OR ENTER INTO ANY AGREEMENT OR ARRANGEMENT
WITH THE PARTNERSHIP WITH RESPECT TO ANY PARTNERSHIP PROPERTY OR ANY ASPECT OF
THE OPERATIONS OF THE PARTNERSHIP.

SECTION 4.12.  TRANSACTIONS WITH RELATED PARTIES

(A)           A PARTNER (WITH THE CONSENT OF THE MANAGEMENT COMMITTEE) MAY
AGREE, CONTRACT OR ARRANGE WITH ANY OF ITS AFFILIATES (INCLUDING ANY PARTNER),
OR ANY AFFILIATE OF ANY PARTNER, IN THE NAME AND ON BEHALF OF THE PARTNERSHIP,
FOR THE PURCHASE OF PRODUCTS OR SERVICES FOR THE PARTNERSHIP, AND THE PAYMENT
THEREFOR, IN CARRYING OUT THE BUSINESS AS IF SUCH PARTIES WERE INDEPENDENT
CONTRACTORS.

25

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

 

(B)           ANY CONTRACT OR AGREEMENT BETWEEN THE PARTNERSHIP AND A PARTNER OR
ITS AFFILIATES SHALL REQUIRE THE PRIOR WRITTEN CONSENT OF THE MANAGEMENT
COMMITTEE WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD.

Section 4.13.        Operating Matters

The Partners acknowledge that an Affiliate of Enterprise has heretofore assumed
the day-to-day responsibility for the operation and commercial management of the
Jonah Gas Gathering System and it is the intent of the Partners that such
Affiliate will continue such responsibility in accordance with past practice
until such time as a mutually agreeable Operating Agreement can be entered into
between the Partnership and such Affiliate (any such agreement, the “Operating
Agreement”).  The Partners agree to use good faith in negotiating the terms of
such an Operating Agreement but to the extent that such Affiliate and the
Partnership are unable to agree on such terms, such Affiliate and its Affiliates
(including Enterprise) will have no obligation to continue assuming the
day-to-day responsibility for the operation and commercial management of the
Jonah Gas Gathering System.

ARTICLE 5

DISTRIBUTIONS AND ALLOCATIONS; TAX MATTERS

SECTION 5.1.  ALLOCATION OF PROFIT AND LOSS

(A)           ALLOCATION OF PROFITS. AFTER FIRST GIVING EFFECT TO THE REGULATORY
ALLOCATIONS SET FORTH IN SECTION 5.2(D)(1), AND THE SPECIAL ALLOCATIONS IN
SECTION 5.2(D)(2), PROFITS FOR EACH FISCAL YEAR OF THE PARTNERSHIP SHALL BE
ALLOCATED TO THE PARTNERS IN PROPORTION TO THEIR RESPECTIVE SHARING RATIOS AS
REFLECTED ON EXHIBIT A.

(B)           ALLOCATION OF LOSSES. AFTER FIRST GIVING EFFECT TO THE REGULATORY
ALLOCATIONS SET FORTH IN SECTION 5.2(D)(1), AND THE SPECIAL ALLOCATIONS IN
SECTION 5.2(D)(2), LOSSES FOR EACH FISCAL YEAR OF THE PARTNERSHIP SHALL BE
ALLOCATED TO THE PARTNERS IN PROPORTION TO THEIR RESPECTIVE SHARING RATIOS AS
REFLECTED ON EXHIBIT A.

SECTION 5.2.  TAX PROVISIONS

(A)           STATUS OF PARTNERSHIP.  THE PARTNERS INTEND THAT, PURSUANT TO THE
PROVISIONS OF SUBCHAPTER K OF CHAPTER 1 OF SUBTITLE A OF THE CODE, THE
PARTNERSHIP WILL BE TREATED AS A PARTNERSHIP FOR FEDERAL, STATE, AND LOCAL
INCOME TAX PURPOSES, AND EACH PARTNER AGREES NOT TO ELECT TO BE EXCLUDED FROM
THE APPLICATION OF ALL OR ANY PART OF SUBCHAPTER K OF THE CODE OR ANY
CORRESPONDING PROVISIONS OF STATE OR LOCAL LAW.

(B)           TAX RETURNS, PROCEEDINGS AND ELECTIONS.  TAX RETURNS, PROCEEDINGS
AND ELECTIONS SHALL BE GOVERNED BY THE PROVISIONS OF SCHEDULE 5.2 ATTACHED.  THE
PROVISIONS OF SCHEDULE 5.2 MAY BE AMENDED FROM TIME TO TIME BY VOTE OF THE
PARTNERS AS PROVIDED IN SECTION 4.6(H).

26

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

 

(C)           AGREED GROSS ASSET VALUE OF PARTNERSHIP ASSETS AT EFFECTIVE DATE. 
THE PARTNERS, HEREBY AGREE THAT THE GROSS ASSET VALUE OF THE ASSETS OF THE
PARTNERSHIP EFFECTIVE IMMEDIATELY BEFORE THE ADMISSION OF ENTERPRISE AS A
PARTNER IS EQUAL TO $657.1 MILLION, WHICH AMOUNT REPRESENTS THE SUM OF THE
AGREED BASE AMOUNT OF $641.9 MILLION, THE 2006 WELL CONNECT CAPITAL OF $4.1
MILLION AND THE PHASE IV CAPITAL CONTRIBUTION OF $11.1 MILLION (THE
“CONTRIBUTION DATE VALUE”).  FOR THE AVOIDANCE OF DOUBT, THE JONAH GAS MARKETING
CONTRIBUTION AND THE INTERCOMPANY DEBT CONTRIBUTION ARE INCLUDED IN THE AGREED
BASE AMOUNT OF $641.9 MILLION.

(D)           REGULATORY ALLOCATIONS.  THE FOLLOWING REGULATORY ALLOCATIONS
SHALL BE MADE FOR THE PURPOSE OF COMPLYING WITH CODE SECTION 704(B) AND THE
REGULATIONS THEREUNDER IN THE FOLLOWING ORDER:

(1)           (A)          Minimum Gain Chargeback.  Except as otherwise
provided in Regulations Section 1.704-2(f), and notwithstanding any other
provision of this Section 5.2, if there is a net decrease in Partnership Minimum
Gain during any Partnership Fiscal Year, each Partner shall be specially
allocated items of Partnership income and gain for such year (and, if necessary
subsequent years) equal to such Partner’s share of the net decrease in
Partnership Minimum Gain, determined in accordance with Regulations Section
1.704-2(g); provided that a Partner shall not be subject to this Section
5.2(d)(1)(A) to the extent that an exception is provided by Regulations Sections
1.704-2(f)(2), (3) and (4), and any Revenue Rulings issued pursuant to those
Regulations.  Any Partnership Minimum Gain allocated pursuant to this Section
5.2(d)(1)(A) shall consist of first, gains recognized from the Disposition of
Partnership property subject to one or more Partnership Nonrecourse Liabilities,
and second, if necessary, a pro rata portion of the Partnership’s other items of
income or gain for such Fiscal Year. This Section 5.2(d)(1)(A) is intended to
comply with the minimum gain chargeback requirement in Regulations Section
1.704-2(f) and shall be interpreted consistently therewith.  The Capital
Accounts of the Partners may be restated pursuant to Regulations Section
1.704-1(b)(2)(iv)(f) in connection with a termination of the Partnership under
Code Section 708(b)(1)(B).

(B)           Partner Nonrecourse Debt Minimum Gain Chargeback.  Except as
otherwise provided in Regulations Section 1.704-2(i)(4), and notwithstanding any
other provision of this Section 5.2 except Section 5.2(d)(1)(A), if there is a
net decrease in Partner Nonrecourse Debt Minimum Gain attributable to a Partner
Nonrecourse Debt during any Partnership Fiscal Year, each Partner who has a
share of the Partner Nonrecourse Debt Minimum Gain attributable to such Partner
Nonrecourse Debt (determined in accordance with Regulations Section
1.704-2(i)(5)) as of the beginning of the Fiscal Year shall be specially
allocated items of Partnership income and gain for such year (and, if necessary,
subsequent years) equal to such Partner’s share of the net decrease in Partner
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse Debt
determined in accordance with Regulations Section 1.704-2(i).  A Partner’s share
of the net decrease in Partner Nonrecourse Debt Minimum Gain shall be determined
in accordance with Regulations Section 1.704-2(i)(5); provided that a Partner
shall not be subject to this Section 5.2(d)(1)(B) to the extent that an
exception is provided by Regulations Section 1.704-2(i)(4) and any Revenue
Rulings issued thereunder. Any Partner Nonrecourse Debt Minimum Gain allocated
pursuant to this Section 5.2(d)(1)(B) shall consist of first, gains recognized
from the Disposition of Partnership property subject to the Partner Nonrecourse
Debt, and second, if necessary, a pro rata portion of the Partnership’s other
items of income or gain for that year.  This Section 5.2(d)(1)(B)

27

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

is intended to comply with the minimum gain chargeback requirement in
Regulations Section 1.704-2(i)(4) and shall be interpreted consistently
therewith.

(C)           Nonrecourse Deductions.  Nonrecourse Deductions for any Fiscal
Year or other period shall be allocated to the Partners in proportion to their
respective Sharing Ratios.

(D)          Partner Nonrecourse Deductions.  Any Partner Nonrecourse Deductions
for any Fiscal Year shall be specially allocated to the Partner who bears the
economic risk of loss with respect to the Partner Nonrecourse Debt to which such
Partner Nonrecourse Deductions are attributable in accordance with Regulations
Section 1.704-2(h).

(E)           Section 754 Adjustment.  To the extent an adjustment to the
adjusted tax basis of any Partnership property pursuant to Code Section 734(b)
or Code Section 743(b) is required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) and such gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such section of the
Regulations.

(2)           Special Allocations.

(A)          Allocation of Inherent Gain.  If during the term of the
Partnership, the Capital Accounts of the Partners are not restated pursuant to
Regulations Section 1.704-1(b)(2)(iv)(f), then except as required by the
Regulatory Allocations, gain on Disposition of the Partnership’s assets as of
the date of this Agreement and their adjusted tax basis as of such date shall be
allocated to the Partners in proportion to their Sharing Ratios.

(B)           Curative and Remedial Allocations.  The allocations set forth in
Section 5.2(d)(1)(A) — (E) hereof (the “Regulatory Allocations”) are intended to
comply with certain requirements of Regulations Section 1.704-1(b).  It is the
intent of the Partners that to the extent possible, all Regulatory Allocations
shall be offset either with other Regulatory Allocations or with special
allocations of other items of Partnership income, gain, loss, and deduction
pursuant to this Section 5.2(d)(2)(B).  Therefore, notwithstanding any other
provision of this Section 5.2 (other than the Regulatory Allocations), the
Partners hereby authorize offsetting special allocations of income, gain, loss,
or deductions either through curative or remedial allocations, as appropriate,
so that, after such offsetting allocations are made, each Partner’s Capital
Account balance is, to the extent possible, equal to the Capital Account balance
such Partner would have had if the Regulatory Allocations had not occurred.

28

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

(C)           Deduction or Loss Attributable to Capital Contributions.  Except
as required by the Regulatory Allocations, all items of deduction or loss
attributable to a Partner’s Capital Contribution to the Partnership shall be
allocated to the contributing Partner in accordance with each Partner’s Sharing
Ratio.

(3)           Other Allocation Rules.

(A)          The provisions of this Section 5.2 are intended to comply with Code
Section 704 and the Regulations thereunder.

(B)           For purposes of determining the Profits, Losses, or any other
items allocable to any period, Profits, Losses, and any such other items shall
be determined on a daily, monthly, or other basis, as determined by the
Management Committee using any permissible methods under Code Section 706 and
the Regulations thereunder.

(C)           Except as otherwise provided in this Agreement, all items of
Partnership income, gain, loss, deduction, and any other allocations not
otherwise provided for shall be divided among the Partners in the same
proportions as they share Profits or Losses, as the case may be, for the Fiscal
Year.

(D)          If any Partnership Interest is Disposed of during any accounting
period, Profits, Losses, each item thereof and all other items attributable to
the Disposed Partnership Interest for such period shall be divided and allocated
between the transferor and the transferee by taking into account their varying
interests during the period in accordance with Code Section 706(d), using any
conventions permitted by law and selected by the Management Committee.  All
distributions on or before the date of such Disposition shall be made to the
transferor and all distributions thereafter shall be made to the transferee.

(E)           For purposes of Regulations Section 1.752-3(1)(3), the Partners
agree that nonrecourse liabilities of the Partnership in excess of the sum of
(A) the amount of Partnership Minimum Gain, and (B) the total amount of built-in
gain (as described in Regulation Section 1.752-3(a)(2)), shall be allocated
among the Partners in accordance with their respective Sharing Ratios.

(F)           Code Section 704(c).  In accordance with Code Section 704(c) and
the Regulations thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Partnership shall, solely for tax
purposes, be allocated among the Partners so as to take into account any
variation between the adjusted basis of such property to the Partnership for
federal income tax purposes and its initial Gross Asset Value (computed in
accordance with the definition of Gross Asset Value) including, but not limited
to, special allocations to a contributing Partner that are required under Code
Section 704(c) to be made upon distribution of such property to any of the
non-contributing Partners.  In the event the Gross Asset Value of any
Partnership property is adjusted pursuant to subparagraph (ii) of the definition
of Gross Asset Value, subsequent allocations of income, gain, loss and deduction
with respect to such asset shall take account of any variation between the
adjusted basis of such asset for federal income tax purposes and its Gross Asset
Value in the same manner as under Code Section 704(c) and the Regulations
thereunder.  Any elections or other decisions relating to such

29

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

 

allocations shall be made by the Management Committee in any manner that
reasonably reflects the purpose and intention of the Agreement; provided,
however, the Partnership shall select the remedial method of allocation provided
under Regulations Section 1.704-3(d).  Allocations pursuant to this Section
5.2(d)(3)(F) are solely for purposes of federal, state and local taxes and shall
not affect, or in any way be taken into account in computing any Partner’s book
Capital Account or share of Profits, Losses, other items, or distributions
pursuant to any provision of this Agreement.  It is also the intent of the
Partners that the foregoing special allocation provided in this Section
5.2(d)(3)(F) shall be prospective and shall not affect allocations on assets
contributed prior to the adoption of the amendment to this Section 5.2(d)(3)(F).

(E)           ALLOCATION OF PROFITS AND LOSSES FOR TAX PURPOSES.  PROFIT AND
LOSS SHALL BE ALLOCATED FOR FEDERAL INCOME TAX PURPOSES IN A MANNER CONSISTENT
WITH THE ALLOCATIONS OF PROFITS AND LOSSES UNDER SECTION 5.1, EXCEPT AS REQUIRED
TO COMPLY WITH THE CURATIVE AND REMEDIAL ALLOCATIONS CONTAINED IN THIS
SECTION 5.2, PARTICULARLY ALLOCATIONS UNDER CODE SECTION 704(C) AND CODE SECTION
734(B) OR CODE SECTION 743(B).

(F)            WHOLLY-OWNED LIMITED LIABILITY COMPANIES. UPON THE EFFECTIVE DATE
AND IN THE FUTURE, THE PARTNERSHIP MAY OWN WHOLLY OWNED LIMITED LIABILITY
COMPANIES (“LLCS”) TO HOLD CERTAIN ASSETS ON BEHALF OF THE PARTNERSHIP.  THE
PARTNERS RECOGNIZE THAT UNDER REGULATIONS SECTION 301.7701-2(C)(2)(I), ANY SUCH
LLC WILL BE DISREGARDED AS AN ENTITY SEPARATE FROM THE PARTNERSHIP AND AGREE
THAT THE TAX PROVISIONS SET FORTH IN THIS ARTICLE 5 WILL APPLY TO ANY SUCH LLCS
THAT MAY BE FORMED.  TO THE EXTENT ANY PARTNERSHIP ASSETS ARE CONTRIBUTED TO A
WHOLLY-OWNED LLC, SUCH ASSETS WILL CONTINUE TO BE CLASSIFIED AND TREATED FOR TAX
PURPOSES AS THOUGH THEY CONTINUED TO BE OWNED BY THE PARTNERSHIP.

SECTION 5.3.  REGULAR DISTRIBUTIONS

(A)           REGULAR DISTRIBUTIONS.  SUBJECT TO THE PROVISIONS OF SECTION 8.2,
THE PARTNERSHIP WILL DISTRIBUTE WITHIN 20 DAYS FOLLOWING THE END OF EACH MONTH,
ITS AVAILABLE CASH TO THE PARTNERS WHO WERE HOLDERS OF RECORD AS OF THE RECORD
DATE FOR SUCH DISTRIBUTION IN ACCORDANCE WITH THEIR RESPECTIVE SHARING RATIOS
DETERMINED AT THE TIME OF SUCH DISTRIBUTION.

(B)           AVAILABLE CASH.  “AVAILABLE CASH” MEANS THE UNRESTRICTED CASH AND
CASH EQUIVALENTS OF THE PARTNERSHIP NET OF SUCH SUM OR SUMS AS THE MANAGEMENT
COMMITTEE FROM TIME TO TIME DETERMINES PROPER AS A CASH RESERVE OR RESERVES TO
MEET WORKING CAPITAL, OTHER OBLIGATIONS AND CONTINGENCIES, FOR REPAIRING OR
MAINTAINING ANY PROPERTY OF THE PARTNERSHIP, OR FOR SUCH OTHER PURPOSE AS THE
MANAGEMENT COMMITTEE DETERMINES TO BE APPROPRIATE; AND THE MANAGEMENT COMMITTEE
MAY MODIFY OR ABOLISH ANY SUCH CASH RESERVE IN THE MANNER IN WHICH IT WAS
CREATED.

(C)           DISTRIBUTION OF CAPITAL CONTRIBUTIONS.  DISTRIBUTIONS UNDER THIS
SECTION 5.3 ARE INTENDED TO CONSTITUTE OPERATING CASH FLOW DISTRIBUTIONS
PURSUANT TO REGULATIONS SECTION 1.707-4(B) OR OTHERWISE NOT CONSTITUTE AMOUNTS
WHICH WOULD GIVE RISE TO A DISGUISED SALE WITHIN THE MEANING OF THE CODE.  THE
MANAGEMENT COMMITTEE WILL SPECIFICALLY IDENTIFY AND NOTIFY THE PARTNERS OF ANY
DISTRIBUTIONS WHICH DO NOT QUALIFY FOR ONE OR MORE EXCEPTIONS TO THE DISGUISED
SALE RULES OF THE CODE.  IT IS THE INTENTION OF THE PARTNERS AND THE PARTNERSHIP
TO UTILIZE

30

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

ALL CAPITAL CONTRIBUTIONS FUNDED PURSUANT TO SCHEDULE 3.2 TO CONSTRUCT, IMPROVE
AND ACQUIRE PROPERTY AND ASSETS OF THE PARTNERSHIP.

ARTICLE 6

TRANSFERABILITY OF PARTNER’S PARTNERSHIP INTEREST AND OTHER RESTRICTIONS

SECTION 6.1.  TRANSFERS TO AFFILIATES

(A)           SUBJECT TO SECTION 6.1(B), A PARTNER MAY, AT ANY TIME UPON WRITTEN
NOTICE TO THE PARTNERSHIP AND ALL OTHER PARTNERS, DISPOSE OF ALL OR ANY PART OF
ITS PARTNERSHIP INTEREST TO ANY AFFILIATE OR AFFILIATES.  AFTER COMPLYING WITH
THE REQUIREMENTS OF SECTION 6.4 AND SUBJECT TO THE RESTRICTIONS IN SECTION 6.5,
ANY AFFILIATE TRANSFEREE SHALL AUTOMATICALLY BECOME A SUBSTITUTED PARTNER IN
ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT WITHOUT ANY REQUIREMENT OF AN
AFFIRMATIVE VOTE BY THE OTHER PARTNERS.  IN ADDITION TO THE REQUIREMENTS SET
FORTH IN SECTION 6.4, A DISPOSITION TO AN AFFILIATE SHALL BE FURTHER CONDITIONED
UPON THE TRANSFEROR REMAINING RESPONSIBLE, AS A GUARANTOR, FOR COMPLIANCE BY THE
TRANSFEREE WITH THE REQUIREMENTS OF THIS AGREEMENT UNLESS THE TRANSFEROR SUBMITS
A DISPOSITION NOTICE WITH RESPECT TO SUCH AFFILIATE DISPOSITION AS DESCRIBED IN
SECTION 6.1(C) AND RECEIVES THE CONSENT OF THE OTHER PARTNERS PURSUANT TO
SECTION 6.1(C).

(B)           NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, A
PARTNER MAY, UPON WRITTEN NOTICE TO THE OTHER PARTNERS, AT ANY TIME DISPOSE OF
ALL OR PART OF ITS PARTNERSHIP INTEREST TO DAN L. DUNCAN, HIS SPOUSE OR ANY OF
HIS DESCENDANTS (OR ANY TRUST FOR THE BENEFIT OF DAN L. DUNCAN, HIS SPOUSE OR
ANY OF HIS DESCENDANTS) IN WHICH EVENT SUCH TRANSFEREE SHALL BECOME A
SUBSTITUTED PARTNER IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT WITHOUT
ANY REQUIREMENT OF AN AFFIRMATIVE VOTE OR OTHER ACTION BY THE OTHER PARTNERS.

(C)           IN REQUESTING A CONSENT TO A DISPOSITION OF ALL OR A PART OF A
PARTNER’S PARTNERSHIP INTEREST PURSUANT TO SECTION 6.1(A), SUCH DISPOSING
PARTNER SHALL GIVE WRITTEN NOTICE (THE “DISPOSITION NOTICE”) TO EACH OTHER
PARTNER NOT LESS THAN THIRTY (30) DAYS PRIOR TO THE EFFECTIVE DATE OF SUCH
DISPOSITION, STATING THE INTEREST TO BE SOLD OR TRANSFERRED, WHO THE INTEREST
WILL BE SOLD OR TRANSFERRED TO (THE “PROPOSED TRANSFEREE”) AND SHALL INCLUDE
WITH SUCH NOTICE INFORMATION SUFFICIENT TO DEMONSTRATE TO THE OTHER PARTNERS
THAT THE PROPOSED TRANSFEREE HAS ADEQUATE FINANCIAL CAPABILITY TO FULFILL THE
OBLIGATIONS OF A PARTNER HEREUNDER AS SET FORTH IN SCHEDULE 6.1 (FINANCIAL
RESPONSIBILITY REQUIREMENTS), WHICH SUCH PROPOSED TRANSFEREE WILL ASSUME IN THE
EVENT OF SUCH DISPOSITION. THE OTHER NON-DISPOSING PARTNERS SHALL HAVE A PERIOD
OF TWENTY (20) DAYS FROM ITS OR THEIR RECEIPT OF THE DISPOSITION NOTICE TO
EVALUATE THE FINANCIAL CAPABILITIES OF THE PROPOSED TRANSFEREE. WITHIN SUCH
TWENTY (20) DAY PERIOD, EACH OF THE OTHER PARTNERS SHALL DELIVER TO ALL OTHER
PARTNERS ITS REASONABLE AND GOOD FAITH OPINION AS TO WHETHER THE ADEQUATE
FINANCIAL CAPABILITY OF THE PROPOSED TRANSFEREE HAS BEEN DEMONSTRATED.  IF ANY
PARTNER FAILS TO DELIVER SUCH AN OPINION, IT SHALL BE DEEMED TO HAVE DETERMINED
THAT THE ADEQUATE FINANCIAL CAPABILITY OF THE PROPOSED TRANSFEREE HAS BEEN
DEMONSTRATED.  DURING SUCH TWENTY (20) DAY CONSIDERATION PERIOD, ANY PARTNER MAY
REQUEST OF THE TRANSFERRING PARTNER, AND THE TRANSFERRING

31

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

 

PARTNER SHALL PROVIDE, SUCH SUPPLEMENTAL INFORMATION CONCERNING THE PROPOSED
TRANSFEREE AS MAY BE REASONABLY NECESSARY FOR THE REQUESTING PARTNER TO MAKE
SUCH EVALUATION.

SECTION 6.2.  TRANSFERS TO PARTIES OTHER THAN AFFILIATES

(A)           EXCEPT WITH RESPECT TO AN AFFILIATE DISPOSITION PERMITTED UNDER
SECTION 6.1(A) OR A DISPOSITION PERMITTED UNDER SECTION 6.1(B), ANY PARTNER
DESIRING TO DISPOSE OF ALL OR ANY PART OF ITS PARTNERSHIP INTEREST (A
“TRANSFERRING PARTNER”) TO A READY, WILLING AND ABLE TRANSFEREE (“PROPOSED
TRANSFEREE”) (OR DISPOSING OF ALL OR ANY PORTION OF SUCH INTEREST BY OPERATION
OF LAW OR OTHERWISE) MUST FIRST OFFER TO DISPOSE THE PORTION OF SUCH INTEREST
THAT IT DESIRES TO DISPOSE (COLLECTIVELY, THE “SUBJECT INTEREST”) TO THE OTHER
PARTNERS (THE “NON-TRANSFERRING PARTNERS”) AS A GROUP BASED UPON THE SAME TERMS
AND CONDITIONS (WITH RESPECT TO REPRESENTATIONS, WARRANTIES AND INDEMNITIES) AS
THOSE UNDER WHICH, AND FOR THE SAME VALUE THAT, THE TRANSFERRING PARTNER DESIRES
TO DISPOSE THE SUBJECT INTEREST TO SUCH PROPOSED TRANSFEREE.  SUCH OFFER WILL BE
MADE BY A GOOD FAITH WRITTEN OFFER (THE “OFFER NOTICE”) TO TRANSFER ALL OF THE
SUBJECT INTEREST AND MUST CONTAIN A COMPLETE DESCRIPTION OF THE TRANSACTION,
INCLUDING ANY OTHER TRANSACTIONS ON WHICH SUCH TRANSACTION IS CONTINGENT (THE
“PROPOSED TRANSACTION”), IN WHICH THE TRANSFERRING PARTNER PROPOSES TO DISPOSE
THE SUBJECT INTEREST, INCLUDING THE NAME OF THE PROPOSED TRANSFEREE (INCLUDING,
IF APPLICABLE, THE NAME OF THE PERSON ULTIMATELY CONTROLLING SUCH TRANSFEREE),
THE KNOWN OR ANTICIPATED CLOSING DATE OF THE PROPOSED TRANSACTION, THE
CONSIDERATION SPECIFIED FOR THE SUBJECT INTEREST, AND ANY OTHER MATERIAL TERMS
AND CONDITIONS OF THE PROPOSED TRANSACTION (INCLUDING THE TERMS OF ANY OTHER
TRANSACTIONS CONTINGENT ON SUCH TRANSACTION).  EACH NON-TRANSFERRING PARTNER
WILL HAVE 30 DAYS (AS EXTENDED PURSUANT TO SECTIONS 6.2(D) AND (E), THE “OPTION
PERIOD”) AFTER ITS RECEIPT OF THE OFFER NOTICE WITHIN WHICH TO ELECT TO ACQUIRE
ALL OF SUCH SUBJECT INTEREST UPON THE TERMS AND CONDITIONS CONTAINED IN THE
OFFER NOTICE OR DETERMINED IN ACCORDANCE WITH SECTIONS 6.2(D) AND (E).  IF,
WITHIN THE OPTION PERIOD, ONE OR MORE NON-TRANSFERRING PARTNERS ELECTS TO
ACQUIRE SUCH SUBJECT INTEREST, THEN (1) SUCH NON-TRANSFERRING PARTNER(S) WILL
EACH DELIVER ITS OWN SEPARATE WRITTEN NOTICE TO THE TRANSFERRING PARTNER AND TO
THE OTHER NON-TRANSFERRING PARTNER(S) DURING SUCH PERIOD THAT EXPRESSES SUCH
DESIRE TO PURCHASE THE SUBJECT INTEREST (EACH, AN “ACCEPTANCE NOTICE”) AND (2)
SUCH NON-TRANSFERRING PARTNER(S) AND THE TRANSFERRING PARTNER WILL USE GOOD
FAITH COMMERCIALLY REASONABLE EFFORTS TO CLOSE SUCH TRANSACTION NO LATER THAN
THE LATER TO OCCUR OF (X) THE KNOWN OR ANTICIPATED CLOSING DATE SET FORTH IN THE
OFFER NOTICE OR (Y) 60 DAYS AFTER THE LAST DAY OF THE OPTION PERIOD.  IF THE
NON-TRANSFERRING PARTNERS AND THE TRANSFERRING PARTNER EACH USED GOOD FAITH,
COMMERCIALLY REASONABLE EFFORTS TO PROMPTLY CLOSE SUCH TRANSACTION, BUT THEY DO
NOT CLOSE SUCH TRANSACTION WITHIN 90 DAYS AFTER THE LAST DAY OF THE OPTION
PERIOD, THE TRANSFERRING PARTNER MAY PROCEED WITH THE CLOSING OF THE PROPOSED
TRANSACTION.

(B)           IF ANY NON-TRANSFERRING PARTNER DOES NOT ELECT TO ACQUIRE ITS
PROPORTIONATE SHARE OF THE SUBJECT INTEREST, EACH OF THE REMAINING
NON-TRANSFERRING PARTNERS WILL HAVE THE RIGHT TO ACQUIRE, UNDER THE TERMS AND
CONDITIONS SET FORTH IN THIS SECTION, A PROPORTIONATE PORTION OF THE REMAINING
SUBJECT INTEREST BASED ON THE RELATION OF ITS PARTNERSHIP INTEREST TO THE
PARTNERSHIP INTERESTS OF ALL NON-TRANSFERRING PARTNERS DESIRING TO ACQUIRE A
PORTION OF SUCH SHARE OF THE SUBJECT INTEREST.  THE RIGHT HEREIN CREATED IN
FAVOR OF THE NON-TRANSFERRING PARTNERS AS A GROUP IS AN OPTION TO ACQUIRE ALL,
OR NONE, OF THE SUBJECT INTEREST OFFERED FOR SALE BY THE TRANSFERRING

32

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

 

PARTNER.  IF ALL THE NON-TRANSFERRING PARTNERS ELECT TO PURCHASE THE SUBJECT
INTEREST, UNLESS OTHERWISE AGREED, EACH SUCH NON-TRANSFERRING PARTNER WILL
PURCHASE A PRO-RATA PORTION OF THE SUBJECT INTEREST BASED ON ITS RESPECTIVE
PARTNERSHIP INTEREST. IF THE NON-TRANSFERRING PARTNERS AS A GROUP DECLINE TO
ACQUIRE ALL OF THE SUBJECT INTEREST OF THE TRANSFERRING PARTNER IN ACCORDANCE
WITH THIS SECTION OR IF THE OPTION PERIOD HAS EXPIRED WITHOUT DELIVERY BY ANY
NON-TRANSFERRING PARTNER OF AN ACCEPTANCE NOTICE, THE TRANSFERRING PARTNER MAY
DISPOSE SUCH SUBJECT INTEREST TO THE PROPOSED TRANSFEREE NAMED IN THE OFFER
NOTICE DELIVERED TO THE NON-TRANSFERRING PARTNERS UPON THE TERMS DESCRIBED IN
SUCH OFFER NOTICE. IF SUCH DISPOSITION DOES NOT OCCUR SUBSTANTIALLY IN
ACCORDANCE WITH THE TERMS OF SUCH OFFER NOTICE, SUCH DISPOSITION WILL HAVE BEEN
IN VIOLATION OF THIS SECTION BE NULL AND VOID AB INITIO AND THE TRANSFERRING
PARTNER AND THE SUBJECT INTEREST WILL AGAIN BE SUBJECT TO THE PROVISIONS OF THIS
SECTION.

(C)           UPON CONSUMMATION OF ANY DISPOSITION MADE IN ACCORDANCE WITH THIS
SECTION 6.2 (WHETHER TO A PARTNER OR ANY OTHER PERSON), SUCH TRANSFEREE AND ITS
PARTNERSHIP INTEREST WILL AUTOMATICALLY BECOME A PARTY TO AND BE BOUND BY THIS
AGREEMENT AND WILL THEREAFTER HAVE ALL OF THE RIGHTS OF A PARTNER AND THE
OBLIGATIONS OF A PARTNER HEREUNDER; PROVIDED, HOWEVER, THAT NOTWITHSTANDING THE
FOREGOING, ALL DISPOSITIONS PURSUANT TO THIS SECTION MUST ALSO COMPLY WITH AND
BE GOVERNED BY THE OTHER PROVISIONS OF THIS AGREEMENT, INCLUDING ANY
RESTRICTIONS ON DISPOSITIONS HEREIN AND ON ANY TRANSFEREE BECOMING A SUBSTITUTED
PARTNER, FOR SUCH TRANSFEREE TO HAVE ALL OF THE RIGHTS OF A PARTNER HEREUNDER.

(D)           IF (I) THE PROPOSED TRANSACTION (AND ANY OTHER TRANSACTION THAT IS
CONTINGENT UPON THE PROPOSED TRANSACTION, AND ANY OTHER TRANSACTION ON WHICH THE
PROPOSED TRANSACTION IS CONTINGENT) CONTEMPLATES THE TRANSFER OF ANY ASSET,
PROPERTY, INTEREST OR RIGHT IN ADDITION TO THE SUBJECT INTEREST TO THE PROPOSED
TRANSFEREE OR ITS AFFILIATE OR (II) ANY PORTION OF THE CONSIDERATION SET FORTH
IN THE OFFER NOTICE IS TO BE PAID IN A FORM OTHER THAN CASH OR CASH EQUIVALENTS
(INCLUDING REAL OR PERSONAL PROPERTY, PROMISSORY NOTES, SECURITIES, CONTRACTUAL
BENEFITS, ASSUMPTION OF LIABILITIES OR ANYTHING ELSE OF VALUE), THEN THE
TRANSFERRING PARTNER MUST INCLUDE IN ITS OFFER NOTICE ITS GOOD FAITH
DETERMINATION OF THE FAIR MARKET VALUE OF THE SUBJECT INTEREST, WHICH WILL BE
THE CONSIDERATION FOR WHICH THE SUBJECT INTEREST IS OFFERED TO THE
NON-TRANSFERRING PARTNERS.  IF ANY OF THE NON-TRANSFERRING PARTNERS DISAGREES
WITH SUCH DETERMINATION, THEY WILL NOTIFY THE TRANSFERRING PARTNER OF SUCH
DISAGREEMENT WITHIN 20 BUSINESS DAYS OF RECEIVING THE OFFER NOTICE.  IF SUCH
DISAGREEMENT IS NOT RESOLVED WITHIN 20 BUSINESS DAYS AFTER SUCH NOTICE TO THE
TRANSFERRING PARTNER, ANY PARTNER MAY CAUSE SUCH DISAGREEMENT TO BE RESOLVED BY
DELIVERING A VALUE DISAGREEMENT NOTICE TO THE TRANSFERRING PARTNER AND THE OTHER
PARTNERS. IF MORE THAN ONE PARTNER DELIVERS A VALUE DISAGREEMENT NOTICE, ALL
SUCH NOTICES SHALL BE AGGREGATED INTO ONE.  THE VALUE DISAGREEMENT NOTICE MUST
INCLUDE THE NAMES OF THREE APPRAISERS (EACH OF WHICH MUST BE INDEPENDENT FROM
THE PARTNERSHIP, THE PARTNERS AND THEIR RESPECTIVE AFFILIATES) PROPOSED BY THE
DELIVERING PARTNER. IF MORE THAN ONE PARTNER DELIVERS A VALUE DISAGREEMENT
NOTICE, SUCH PARTNERS MUST TOGETHER IDENTIFY THREE APPRAISERS.  THE TRANSFERRING
PARTNER MUST, WITHIN TEN DAYS AFTER RECEIPT OF THE VALUE DISAGREEMENT NOTICE,
CHOOSE ONE OF THE APPRAISERS LISTED ON THE VALUE DISAGREEMENT NOTICE TO
DETERMINE THE APPRAISED VALUE. SUBJECT TO THE PROVISIONS OF SECTION 6.2(E), THE
PARTNERS DELIVERING THE VALUE DISAGREEMENT NOTICE(S) AND THE TRANSFERRING
PARTNER WILL SHARE ON AN EQUAL BASIS THE COSTS OF THE DESIGNATED APPRAISER.  THE
TRANSFERRING PARTNER AND EACH APPLICABLE NON-TRANSFERRING PARTNER

33

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

 

WILL PROMPTLY PROVIDE SUCH APPRAISER WITH ALL INFORMATION NECESSARY OR
APPROPRIATE TO DETERMINE THE APPRAISED VALUE, AND SUCH APPRAISER SHALL DETERMINE
THE APPRAISED VALUE WITHIN 30 DAYS AFTER RECEIPT OF ALL SUCH INFORMATION. IF A
VALUE DISAGREEMENT NOTICE IS DELIVERED, THE OPTION PERIOD WILL BE EXTENDED UNTIL
THE DATE THAT IS FIVE BUSINESS DAYS AFTER THE DISAGREEMENT DESCRIBED IN SUCH
VALUE DISAGREEMENT NOTICE IS RESOLVED.  THE CONSIDERATION TO BE PAID BY THE
APPLICABLE NON-TRANSFERRING PARTNERS FOR THE SUBJECT INTEREST THEN WILL BE A
CASH AMOUNT EQUAL TO THE APPRAISED VALUE OF THE SUBJECT INTEREST, AS DETERMINED
BY THE APPRAISER.

(E)           ANY TRANSFERRING PARTNER MAY WITHDRAW ITS OFFER ALTOGETHER
(INCLUDING TO THE ORIGINAL OFFEROR) IF THE APPRAISED VALUE IS LESS THAN 90% OF
THE FAIR MARKET VALUE STATED IN THE OFFER NOTICE, PROVIDED THAT IN SUCH CASE THE
TRANSFERRING PARTNER WILL BE SOLELY RESPONSIBLE FOR THE COSTS OF THE DESIGNATED
APPRAISER.  ABSENT FRAUD OR MANIFEST ERROR, THE APPRAISED VALUE DETERMINATION
WILL BE FINAL AND BINDING AND NOT SUBJECT TO FURTHER APPEAL.

SECTION 6.3.  CHANGES IN CONTROL

A change in control of an Enterprise Parent Entity or any TEPPCO Parent Entity,
or the merger or sale thereof of such an Enterprise Parent Entity or any TEPPCO
Parent Entity to a previously unrelated Third Party, shall not be considered a
Disposition of the Partnership Interest by the affected Partner and the other
Partner’s rights under this Article 6 shall not be considered to be activated or
applicable.

SECTION 6.4.  GENERAL CONDITIONS OF TRANSFERS

Every Disposition of all or any part of a Partner’s Partnership Interest under
any provision of this Agreement shall be conditioned upon it being effective
only when (i) the party receiving such Partnership Interest agrees in writing to
be bound by this Agreement and to assume all obligations, Liabilities and duties
with respect to that Partnership Interest to which the prior holder was bound
and that the Disposition shall not cause or create any right on the part of any
Person to cause a winding up or dissolution of the Partnership that is
inconsistent with the provisions of this Agreement and (ii) a true copy of the
document or instrument evidencing the Disposition of all or any part of such
Partner’s Partnership Interest, certified as such by a duly authorized
representative of the Disposing Partner, is furnished to the Partnership (a copy
of which will be furnished to each Partner upon written request).

SECTION 6.5.  LIMITATION ON DISPOSITIONS TO AVOID TERMINATION

Notwithstanding anything in this Agreement to the contrary, a Partner’s right to
Dispose of all or a part of its Partnership Interest shall not be allowed if (i)
when aggregated with the total of all other Dispositions of Partnership
Interests within the preceding twelve (12) months, said Disposition results in
the Partnership being considered to have terminated within the meaning of Code
Section 708(b)(1)(B), (ii) would otherwise cause the Partnership to lose its
status as a partnership for federal income tax purposes; or (ii) would violate
any federal securities laws or any applicable state securities laws (including
suitability standards).  Any Partner Disposing of

34

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

 

all or any portion of its Partnership Interest shall promptly notify the Tax
Matters Partner of such Disposition.

ARTICLE 7

BOOKS AND RECORDS; ACCOUNTING; REPORTING; TAX ELECTIONS; ETC.

SECTION 7.1.  BOOKS AND RECORDS

The books and records of the Partnership shall be maintained by the Partnership
at the principal office of the Partnership and shall be available for
examination at such office by any Partner or its duly authorized representatives
during regular business hours.  Any Partner, at its own expense, may cause an
audit of the books and records of the Partnership during regular business hours
and shall furnish a written report thereof to the other Partners.

SECTION 7.2.  ACCOUNTING BASIS FOR TAX REPORTING PURPOSES; FISCAL YEAR

The books and records of the Partnership shall be kept on the accrual method of
reporting for tax and financial reporting purposes.  The Fiscal Year of the
Partnership shall be the calendar year.

SECTION 7.3.  ACCOUNTS

The Officers of the Partnership shall establish and maintain one or more
separate bank and investment accounts and arrangements for Partnership funds in
the Partnership’s name with financial institutions and firms that Officers of
the Partnership may determine.  The Partnership may not commingle the
Partnership’s funds with the funds of any other Person.  All such accounts shall
be and remain the property of the Partnership and all funds shall be received,
held and disbursed for the purposes specified in this Agreement.  The Officers
of the Partnership may invest the Partnership funds only in (i) readily
marketable securities issued by the United States or any agency or
instrumentality thereof and backed by the full faith and credit of the United
States maturing within three months or less from the date of acquisition,
(ii) readily marketable securities issued by any state or municipality within
the United States of America or any political subdivision, agency or
instrumentality thereof, maturing within three months or less from the date of
acquisition and rated “A” or better by any recognized rating agency,
(iii) readily marketable commercial paper rated “Prime-1” by Moody’s or “A-1” by
Standard and Poor’s (or comparably rated by such organizations or any successors
thereto if the rating system is changed or there are such successors) and
maturing in not more than three months after the date of acquisition or
(iv) certificates of deposit or time deposits issued by any incorporated bank
organized and doing business under the Laws of the United States of America
which is rated at least “A” or “A2” by Standard and Poor’s or Moody’s, and which
matures within three (3) months or less from the date of acquisition.

35

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

Section 7.4.  Reports

(A)           THE MANAGEMENT COMMITTEE SHALL CAUSE THE PARTNERSHIP TO HAVE AN
ANNUAL AUDIT, WITH SUCH AUDITOR’S REPORT WITH RESPECT TO A FISCAL YEAR TO BE
DELIVERED BY MAY 1 OF THE FOLLOWING FISCAL YEAR.

(B)           WITHIN TEN (10) CALENDAR DAYS AFTER THE END OF EACH FISCAL
QUARTER, THE MANAGEMENT COMMITTEE SHALL CAUSE THE PARTNERSHIP TO SEND TO EACH
PARTNER AN ESTIMATE OF SUCH PARTNER’S SHARE OF PARTNERSHIP INCOME TO DATE FOR
SUCH FISCAL YEAR AND AN ESTIMATE OF SUCH PARTNER’S SHARE OF PARTNERSHIP PROFITS
OR LOSSES FOR ALL OF SUCH FISCAL YEAR.

(C)           WITHIN THIRTY (30) CALENDAR DAYS AFTER THE END OF EACH FISCAL
MONTH, THE MANAGEMENT COMMITTEE SHALL CAUSE THE PARTNERSHIP TO SEND TO EACH
PARTNER A COPY OF AN UNAUDITED BALANCE SHEET AS OF THE LAST DAY OF SUCH MONTH
AND RELATED STATEMENT OF INCOME AND CASH FLOWS FOR THE ONE MONTH AND FISCAL YEAR
TO DATE PERIODS THEN ENDED.

(D)           THE PRESIDENT, OR SUCH OFFICER DESIGNATED BY THE PRESIDENT, SHALL
PREPARE AND DELIVER TO THE PARTNERS SUCH OTHER FINANCIAL STATEMENTS AND REPORTS
OF THE PARTNERSHIP AS THE MANAGEMENT COMMITTEE DEEMS APPROPRIATE FROM TIME TO
TIME.

(E)           ANY FINANCIAL STATEMENTS AND REPORTS PREPARED AND DISTRIBUTED TO
THE PARTNERS SHALL BE PREPARED IN ACCORDANCE WITH GAAP.

SECTION 7.5.  VALUATION OF CONTRIBUTIONS FOR FINANCIAL PURPOSES

For financial purposes, the value of the Capital Contributions described on
Exhibit A and the Contribution Date Value are valued as of the Effective Date.

ARTICLE 8

DISSOLUTION, LIQUIDATION AND TERMINATION OF THE PARTNERSHIP

SECTION 8.1.  EVENTS CAUSING DISSOLUTION

(A)           THE PARTNERSHIP SHALL BE DISSOLVED UPON THE FIRST OF THE FOLLOWING
TO OCCUR:

(1)           THE ENTRY OF A FINAL JUDGMENT, ORDER OR DECREE OF A COURT OF
COMPETENT JURISDICTION ADJUDICATING THE PARTNERSHIP TO BE BANKRUPT, AND THE
EXPIRATION WITHOUT APPEAL OF THE PERIOD, IF ANY, ALLOWED BY APPLICABLE LAW IN
WHICH TO APPEAL THEREFROM;

(2)           THE DISSOLUTION OR BANKRUPTCY OF A PARTNER OR ANY OTHER WITHDRAWAL
EVENT OF A PARTNER;

(3)           THE CONDEMNATION OR OTHER DISPOSITION OF ALL OR SUBSTANTIALLY ALL
OF THE ASSETS OF THE PARTNERSHIP;

36

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

 

(4)           THE ELECTION TO DISSOLVE THE PARTNERSHIP BY EACH OF THE PARTNERS;
OR

(5)           THE ENTRY OF A DECREE OF JUDICIAL DISSOLUTION UNDER THE ACT.

(B)           DISSOLUTION OF THE PARTNERSHIP SHALL BE EFFECTIVE AS OF THE DAY ON
WHICH THE EVENT OCCURS GIVING RISE TO THE DISSOLUTION, BUT THE PARTNERSHIP SHALL
NOT TERMINATE UNTIL THERE HAS BEEN A WINDING UP OF THE BUSINESS AND AFFAIRS, AND
THE ASSETS OF THE PARTNERSHIP HAVE BEEN DISTRIBUTED AS PROVIDED IN SECTION 8.2.

(C)           NOTWITHSTANDING ANYTHING IN SECTION 8.1(A) TO THE CONTRARY, IF A
DISSOLUTION OF THE PARTNERSHIP WOULD OTHERWISE OCCUR DUE TO THE OCCURRENCE OF AN
EVENT OF DISSOLUTION UNDER SECTION 8.1(A)(1) OR (A)(2), THE PARTNERSHIP MAY BE
RECONSTITUTED IF THERE REMAINS AT LEAST TWO (2) PARTNERS AND SUCH REMAINING
PARTNERS ELECT TO CONTINUE THE BUSINESS OF THE PARTNERSHIP.

(D)           UPON DISSOLUTION OF THE PARTNERSHIP UPON AN EVENT OCCURRING TO A
PARTNER DESCRIBED IN SECTION 8.1(A)(2) (THE “WITHDRAWING PARTNER”), THEN WITHIN
THIRTY (30) DAYS AFTER THE PARTNERSHIP DELIVERS NOTICE OF SUCH EVENT TO THE
PARTNERS, AT LEAST FIFTY PERCENT (50%) OF SUCH OTHER PARTNERS (BY SHARING RATIO
AND EXCLUDING THE SHARING RATIO OF THE WITHDRAWING PARTNER) MAY ELECT TO
RECONSTITUTE THE PARTNERSHIP AND CONTINUE THE BUSINESS OF THE PARTNERSHIP ON THE
SAME TERMS AND CONDITIONS SET FORTH IN THIS AGREEMENT BY FORMING A NEW
PARTNERSHIP ON TERMS IDENTICAL TO THOSE SET FORTH IN THIS AGREEMENT AND, AS
NECESSARY, ADMITTING AN ADDITIONAL PARTNER CHOSEN BY SUCH OTHER PARTNERS.  SUCH
OTHER PARTNERS SHALL BE DEEMED TO HAVE VOTED FOR AND CONSENTED TO SUCH
RECONSTITUTION UNLESS A WRITTEN STATEMENT OBJECTING TO THE RECONSTITUTION SHALL
HAVE BEEN RECEIVED BY THE PARTNERSHIP WITHIN THIRTY (30) DAYS AFTER NOTICE OF
DISSOLUTION WAS MADE TO SUCH PARTNER.  UPON ANY SUCH ELECTION TO RECONSTITUTE BY
AT LEAST FIFTY PERCENT (50%) OF SUCH OTHER PARTNERS (DETERMINED BY THE SHARING
RATIOS OF THE PARTNERS AND EXCLUDING THE SHARING RATIO OF THE WITHDRAWING
PARTNER), ALL PARTNERS, THE WITHDRAWING PARTNER, AND SUCCESSORS SHALL BE BOUND
THEREBY AND SHALL BE DEEMED TO HAVE APPROVED THEREOF.  UNLESS SUCH AN ELECTION
TO RECONSTITUTE IS MADE WITHIN THE APPLICABLE TIME PERIOD AS SET FORTH ABOVE,
THE PARTNERSHIP SHALL CONDUCT ONLY ACTIVITIES NECESSARY TO WIND UP ITS AFFAIRS. 
IF SUCH AN ELECTION IS SO MADE, THEN:

(1)             THE RECONSTITUTED PARTNERSHIP SHALL CONTINUE UNTIL DISSOLVED IN
ACCORDANCE WITH SECTION 8.2;

(2)             THE INTEREST OF THE WITHDRAWING PARTNER SHALL BE TREATED
THENCEFORTH AS THE INTEREST OF A TRANSFEREE THAT HAS NOT BEEN ADMITTED AS A
SUBSTITUTE PARTNER HEREUNDER; AND

(3)             ALL NECESSARY STEPS SHALL BE TAKEN TO CANCEL THIS AGREEMENT AND
TO ENTER INTO AND, AS NECESSARY, TO FILE NEW ORGANIZATIONAL DOCUMENTS; PROVIDED
THAT THE RIGHT TO RECONSTITUTE AND TO CONTINUE THE BUSINESS OF THE PARTNERSHIP
SHALL NOT EXIST AND MAY NOT BE EXERCISED UNLESS THE PARTNERSHIP HAS RECEIVED AN
OPINION OF COUNSEL THAT THE PARTNERSHIP WOULD NOT BECOME TAXABLE AS A
CORPORATION OR OTHERWISE BE TAXED AS AN ASSOCIATION FOR FEDERAL INCOME TAX
PURPOSES UPON THE EXERCISE OF SUCH RIGHT TO CONTINUE.

37

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

 

SECTION 8.2.  LIQUIDATION AND TERMINATION.

Subject to Section 8.1, upon dissolution of the Partnership, a representative of
the Partnership selected by all of the Partners (not including any Partner in
breach of any provision of this Agreement at the time of dissolution) shall act
as a liquidator or may appoint one or more Partners as liquidator
(“Liquidator”).  The Liquidator shall proceed diligently to wind up the affairs
of the Partnership and make final distributions as provided herein and in the
Act.  The costs of liquidation shall be borne as a Partnership expense.  Until
final distribution, the Liquidator shall continue to operate the facilities
owned by the Partnership with all of the power and authority of the Partners for
a reasonable period of time to allow for the sale of all or a part of the assets
of the Partnership.  The steps to be accomplished by the Liquidator are as
follows:

(A)           AS PROMPTLY AS POSSIBLE AFTER DISSOLUTION AND AGAIN AFTER FINAL
LIQUIDATION, THE LIQUIDATOR SHALL CAUSE A PROPER ACCOUNTING TO BE MADE OF THE
PARTNERSHIP’S ASSETS, LIABILITIES, AND OPERATIONS THROUGH THE LAST DAY OF THE
CALENDAR MONTH IN WHICH THE DISSOLUTION OCCURS OR THE FINAL LIQUIDATION IS
COMPLETED, AS APPLICABLE;

(B)           THE LIQUIDATOR SHALL CAUSE ANY NOTICES REQUIRED BY APPLICABLE LAW
TO BE MAILED TO EACH KNOWN CREDITOR OF AND CLAIMANT AGAINST THE PARTNERSHIP IN
THE MANNER DESCRIBED BY SUCH APPLICABLE LAW;

(C)           SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT AND THE ACT,
THE LIQUIDATOR SHALL DISTRIBUTE THE ASSETS OF THE PARTNERSHIP IN THE FOLLOWING
ORDER:

(1)           THE LIQUIDATOR SHALL PAY, SATISFY OR DISCHARGE FROM PARTNERSHIP
FUNDS ALL OF THE LIABILITIES OF THE PARTNERSHIP, INCLUDING, WITHOUT LIMITATION,
ALL EXPENSES INCURRED IN LIQUIDATION OR OTHERWISE MAKE ADEQUATE PROVISION FOR
PAYMENT AND DISCHARGE THEREOF (INCLUDING, WITHOUT LIMITATION, THE ESTABLISHMENT
OF A CASH ESCROW FUND FOR CONTINGENT LIABILITIES IN SUCH AMOUNT AND FOR SUCH
TERM AS THE LIQUIDATOR MAY REASONABLY DETERMINE).  THE LIABILITIES OF THE
PARTNERSHIP SHALL INCLUDE ANY LIABILITIES OWING TO A PARTNER UNDER ANY CONTRACTS
ENTERED INTO BETWEEN THE PARTNERSHIP AND SUCH PARTNER; AND

(2)           ALL REMAINING ASSETS OF THE PARTNERSHIP SHALL BE DISTRIBUTED TO
THE PARTNERS AS FOLLOWS:

(A)          the Liquidator may sell any or all Partnership assets, including to
one or more of the Partners (other than any Partner in breach of any provision
of this Agreement at the time of dissolution), and any resulting gain or loss
from each sale shall be computed and allocated to the Capital Accounts of the
Partners;

(B)           with respect to all Partnership assets that have not been sold,
the fair market value of those assets (as determined by the Liquidator using any
method of valuation as it, using its best judgment, deems reasonable) shall be
determined and the Capital Accounts of the Partners shall be adjusted to reflect
the manner in which the unrealized Profits, Losses, income, gain, loss, and
deduction inherent in assets that have not been reflected in the Capital
Accounts previously would be allocated among the Partners if there were a
taxable

38

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

 

Disposition of those assets for the fair market value of those assets on the
date of distribution; and

(C)           Partnership assets shall be distributed among the Partners ratably
in proportion to each Partner’s positive Capital Account balances, as determined
after taking into account all Capital Account adjustments for the taxable year
of the Partnership during which the liquidation of the Partnership occurs (other
than those made by reason of this clause (2)); and in each case, those
distributions shall be made by the end of the taxable year of the Partnership
during which the liquidation of the Partnership occurs (or, if later, ninety
(90) days after the date of the liquidation).

(D)          All distributions in kind to the Partners shall be made subject to
the Liability of each Partner for Liabilities theretofore incurred under the
terms of this Agreement or for which the Partnership has committed prior to the
date of dissolution.  The distribution of cash and/or other assets of the
Partnership to a Partner in accordance with the provisions of this Section 8.2
constitutes a complete return to the Partner of its Capital Contributions and a
complete distribution to the Partner of its Partnership Interest.  To the extent
that a Partner returns funds to the Partnership, it has no Claim against any
other Partner for those funds.

SECTION 8.3.  PROVISION FOR CONTINGENT CLAIMS

(A)           THE LIQUIDATOR SHALL MAKE A REASONABLE PROVISION TO PAY ALL
LIABILITIES ACTUALLY KNOWN TO THE PARTNERSHIP BUT FOR WHICH THE IDENTITY OF THE
CLAIMANT IS UNKNOWN; AND

(B)           IF THERE ARE INSUFFICIENT ASSETS TO BOTH PAY THE CREDITORS
PURSUANT TO SECTION 8.2 AND TO ESTABLISH THE PROVISION CONTEMPLATED BY SECTION
8.3(A), THE LIABILITIES SHALL BE PAID AS PROVIDED FOR IN ACCORDANCE TO THEIR
PRIORITY, AND, AMONG LIABILITIES OF EQUAL PRIORITY, RATABLY TO THE EXTENT OF
ASSETS THEREFOR.

SECTION 8.4.  PARTNER’S PURCHASE OF PROPERTY

In connection with the winding up of the Partnership, any Partner or its
Affiliate may bid in any open bidding process held by the Liquidator and, if its
bid is determined to be the best, it may purchase any assets of the Partnership
upon dissolution.  The Liquidator shall notify each Partner in writing of any
Third Party offers it receives to purchase any Partnership assets.  Each Partner
shall have the preferential right to purchase any Partnership assets for the
same price and on the same terms and conditions offered in writing by any Third
Party.  The rights available to the Partners as set forth in this Section 8.4
shall be exercised by written election delivered to the Liquidator within thirty
(30) Business Days after such Partner has received notice of the Third Party
offer and the failure to respond to a notice of a Third Party offer shall be
deemed a waiver of the rights under this Section.  If more than one Partner
submits a bid, the Liquidator shall notify each Partner who submitted a bid of
such fact and each such Partner shall be given the opportunity to submit a
second bid on such Partnership assets which must be higher than the amount bid
by the Third Party.  The Partner who submits the highest second bid shall have
the right to purchase the assets.  Any Partner entitled to purchase an asset may
elect to have part or

39

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

 

all of such asset distributed to the Partner in kind to the extent of its
Capital Account balance and/or in exchange for the assumption of Liabilities of
the Partnership.

ARTICLE 9

POWER OF ATTORNEY

SECTION 9.1.  APPOINTMENT OF THE PRESIDENT AS ATTORNEY-IN-FACT

(A)           EACH PARTNER, BY THE EXECUTION OF THIS AGREEMENT, IRREVOCABLY
CONSTITUTES AND APPOINTS THE PRESIDENT AS ITS TRUE AND LAWFUL AGENT AND
ATTORNEY-IN-FACT WITH FULL POWER AND AUTHORITY IN ITS NAME, PLACE AND STEAD TO
EXECUTE, ACKNOWLEDGE, DELIVER, SWEAR TO, FILE AND RECORD AT THE APPROPRIATE
PUBLIC OFFICES SUCH DOCUMENTS, INSTRUMENTS AND CONVEYANCES THAT MAY BE NECESSARY
OR APPROPRIATE TO CARRY OUT THE PROVISIONS OR PURPOSES OF THIS AGREEMENT,
INCLUDING WITHOUT LIMITATION:

(1)           ALL CERTIFICATES AND OTHER INSTRUMENTS, INCLUDING, BUT NOT LIMITED
TO, COUNTERPARTS OF THIS AGREEMENT, AND ANY AMENDMENT THEREOF THAT THE
MANAGEMENT COMMITTEE DEEMS APPROPRIATE TO QUALIFY OR CONTINUE THE PARTNERSHIP AS
A PARTNERSHIP, IN THE JURISDICTIONS IN WHICH THE PARTNERSHIP MAY CONDUCT THE
BUSINESS;

(2)           ANY AMENDMENT, SUPPLEMENT OR RESTATEMENT OF THIS AGREEMENT
APPROVED BY THE PARTNERS IN ACCORDANCE WITH SECTION 10.12;

(3)           ANY AMENDMENT TO THIS AGREEMENT TO REFLECT THE WITHDRAWAL,
ADDITION OR SUBSTITUTION OF A PARTNER PURSUANT TO THIS AGREEMENT;

(4)           ALL INSTRUMENTS THAT THE MANAGEMENT COMMITTEE DEEMS APPROPRIATE TO
REFLECT A CHANGE OR MODIFICATION OF THE PARTNERSHIP IN ACCORDANCE WITH THE TERMS
OF THIS AGREEMENT; AND

(5)           ALL CONVEYANCES AND OTHER INSTRUMENTS THAT THE MANAGEMENT
COMMITTEE DEEMS APPROPRIATE TO REFLECT THE DISSOLUTION AND TERMINATION OF THE
PARTNERSHIP.

(B)           THE APPOINTMENT OF THE PRESIDENT BY EACH PARTNER AS AN AGENT AND
ATTORNEY-IN-FACT SHALL BE DEEMED IRREVOCABLE AND TO BE A POWER COUPLED WITH AN
INTEREST AND SHALL SURVIVE THE LEGAL INCAPACITY OF ANY PERSON HEREBY GIVING SUCH
POWER AND THE DISPOSITION OF ALL OR ANY PART OF THE PARTNERSHIP INTEREST OF SUCH
PERSON; PROVIDED, HOWEVER, THAT IN THE EVENT OF THE DISPOSITION BY A PARTNER OF
ALL ITS PARTNERSHIP INTEREST, THE FOREGOING POWER OF ATTORNEY SHALL SURVIVE SUCH
DISPOSITION ONLY UNTIL SUCH TIME AS THE TRANSFEREE SHALL HAVE BEEN ADMITTED TO
THE PARTNERSHIP AS A PARTNER, AND ALL REQUIRED DOCUMENTS AND INSTRUMENTS SHALL
HAVE BEEN DULY EXECUTED, FILED AND RECORDED TO EFFECT SUCH SUBSTITUTION.

(C)           THE PARTNERS HEREBY EXPRESSLY CONSENT TO THE DELEGATION OF ANY
AUTHORITY OR POWER OF THE PARTNERS TO THE PRESIDENT AND HEREBY CONSENT TO THE
POWER AND AUTHORITY GRANTED

40

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

 

TO THE PRESIDENT TO ACT FOR AND BIND THE PARTNERSHIP AS PROVIDED IN THIS
AGREEMENT AND AS APPROVED BY THE MANAGEMENT COMMITTEE.

ARTICLE 10

MISCELLANEOUS PROVISIONS

SECTION 10.1.  ADDRESS FOR NOTICES

All notices, demands, consents and reports provided for in this Agreement shall
be in writing and shall be given to the parties at the addresses set forth on
Exhibit A or at such other addresses as the Partner may hereafter specify in
writing.  Such notices may be delivered by email, hand or by telex or facsimile
or may be mailed, postage prepaid, by certified or registered mail, by a deposit
in a depository for the receipt of mail regu­larly maintained by the United
States Postal Service.  All notices which are hand delivered or delivered by
telex, telegram or telecopy shall be deemed given on the date of delivery. 
Except as otherwise provided herein, all notices which are mailed in the manner
provided above shall be deemed given upon receipt.

SECTION 10.2.  ADDITIONAL DOCUMENTS AND ACTS

In connection with this Agreement, as well as all transactions contemplated by
this Agreement, the Partners agree to execute such additional documents and
papers, and to perform and do such additional acts as may be necessary and
proper to effectuate and carry out all of the provisions of this Agreement.

SECTION 10.3.  ASSUMED NAME

The Partners or any authorized Officer of the Partnership shall execute and file
all assumed name certificates necessary or appropriate to conduct the Business
as required by Applicable Law.

SECTION 10.4.  QUALIFICATION IN FOREIGN JURISDICTIONS

The Partners or any authorized Officer of the Partnership shall take such steps
as are necessary or desirable to allow the Partnership to conduct business in
any jurisdiction in which the Partnership conducts the Business.

SECTION 10.5.  APPLICATION OF WYOMING LAW

This Agreement, the application or interpretation hereof and the rights of the
Partners shall be governed exclusively by and construed in accordance with the
laws of the State of Wyoming, without giving effect to conflict of law
principles.  With respect to all matters not expressly provided for in this
Agreement, the Act and other applicable partnership laws of the State of Wyoming
shall apply and control.  In the event that any provision in this Agreement
conflicts with the Act, such provision in this Agreement shall control and
govern to the extent permitted by Applicable Law.

41

 

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

 

SECTION 10.6.  NO ACTION FOR PARTITION

No Partner shall have any right to maintain any action for partition with
respect to the property of the Partnership.

SECTION 10.7.  CREDITORS NOT BENEFITED

Nothing in this Agreement is intended to nor shall it benefit any creditor of
the Partnership.  No creditor of the Partnership will be entitled to require any
Partner to solicit or accept any loan or Additional Capital Contribution for the
Partnership or to enforce any right which the Partnership or any Partner may
have against a Partner, whether arising under this Agreement or otherwise except
as required by the Act or Applicable Law.

SECTION 10.8.  BENEFITS OF AGREEMENT RESTRICTED TO PARTNERS

Except as otherwise provided in this Agreement, nothing in this Agreement,
expressed or implied, shall give or be construed to give any Person, other than
the Partners hereto and their permitted successors and assigns, any legal or
equitable right, remedy or Claim under or in respect to this Agreement or under
any covenant, condition or provision contained herein; and all such covenants,
conditions and provisions shall be for the sole benefit of the Partners.

SECTION 10.9.  HEADINGS AND SECTIONS

The headings in this Agreement are inserted for convenience only and are in no
way intended to describe, interpret, define, or limit the scope, extent or
intent of this Agreement or any provision hereof.  Unless the context requires
otherwise, all references in this Agreement to Sections or Articles shall be
deemed to mean and refer to Sections or Articles of this Agreement.

SECTION 10.10.  RESERVATION OF RIGHTS

Except as otherwise provided herein, each Partner reserves to itself all rights,
set-offs, counterclaims, and other remedies and/or defenses which such Partner
is or may be entitled to arising from or out of this Agreement or as otherwise
provided by Applicable Law.

SECTION 10.11.  PRINCIPLES OF CONSTRUCTION AND INTERPRETATION

In construing this Agreement, the following principles shall be followed:

(A)           NO CONSIDERATION SHALL BE GIVEN TO THE FACT OR PRESUMPTION THAT
ONE PARTNER HAD A GREATER OR LESSER HAND IN DRAFTING THIS AGREEMENT;

(B)           EXAMPLES SHALL NOT BE CONSTRUED TO LIMIT, EXPRESSLY OR BY
IMPLICATION, THE MATTER THEY ILLUSTRATE;

(C)           THE WORD “INCLUDES” AND ITS SYNTACTICAL VARIANTS MEAN “INCLUDES,
BUT IS NOT LIMITED TO” AND CORRESPONDING SYNTACTICAL VARIANT EXPRESSIONS; AND

42

 

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

 

(D)           THE PLURAL SHALL BE DEEMED TO INCLUDE THE SINGULAR AND VICE VERSA,
AS APPLICABLE.

SECTION 10.12.  AMENDMENT OF AGREEMENT

Except as otherwise expressly set forth in this Agreement, this Agreement may be
amended, supplemented or restated only by a written agreement executed by each
of the Partners.

SECTION 10.13.  ACKNOWLEDGMENT

EACH OF THE PARTIES HERETO SPECIFICALLY ACKNOWLEDGES AND AGREES THAT IT HAS A
DUTY TO READ THIS AGREEMENT AND THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF
THE TERMS HEREOF, AND THAT IT HAS IN FACT READ THIS AGREEMENT AND IS FULLY
INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS
OF THIS AGREEMENT.  EACH PARTY HERETO FURTHER AGREES THAT IT WILL NOT CONTEST
THE VALIDITY OR ENFORCEABILITY OF ANY SUCH PROVISIONS OF THIS AGREEMENT ON THE
BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISIONS OR THAT SUCH
PROVISIONS ARE NOT “CONSPICUOUS”.

SECTION 10.14.  GENDER

Where the context so indicates, the masculine shall include the feminine and
neuter and the neuter shall include the masculine and feminine.

SECTION 10.15.  BINDING EFFECT

Except as herein otherwise provided to the contrary, this Agreement shall be
binding upon and inure to the benefit of the Partners, their legal
representatives, and permitted successors and assigns.

SECTION 10.16.  SEVERABILITY

If any provision of this Agreement is held to be illegal, invalid, or
unenforceable and such invalidity or unenforceability has or would have a
material and substantial negative impact on the rights, duties or obligations of
any party, then the parties shall meet to determine if such negative impact can
be eliminated or mitigated.  If such negative impact can not be eliminated or
mitigated to the satisfaction of the party affected thereby, that party shall
have the right to terminate this Agreement.  If any provision of this Agreement
is held to be illegal, invalid, or unenforceable and such invalidity or
unenforceability does not have a material and substantial negative impact on the
rights, duties or obligations of either party, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part of this
Agreement, and (iii) the remaining provisions of this Agreement will remain in
full force and effect and will not be affected by the illegal, invalid, or

43

 

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

 

unenforceable provision or by its severance from this Agreement.  Furthermore,
in lieu of such illegal, invalid, or unenforceable provision, there will be
added automatically as a part of this Agreement a provision as similar in terms
to such illegal, invalid, or unenforceable provision as may be possible and as
may be legal, valid, and enforceable.  Such illegality, invalidity or
unenforceability shall not affect the validity or enforceability in that
jurisdiction of any other provision of this Agreement nor the validity or
enforceability in other jurisdictions of that or any other provision of this
Agreement.

SECTION 10.17.  NO WAIVER

No waiver, express or implied, by any Partner of any breach or default by any
other Partner in the performance by the other Partner of its obligations
hereunder shall be deemed or construed to be a waiver of any other breach or
default under this Agreement.  Failure on the part of any Partner to complain of
any act or omission of any other Partner, or to declare such other Partner in
default irrespective of how long such failure continues, shall not constitute a
waiver hereunder.  No notice to or demand on a defaulting Partner shall entitle
such defaulting Partner to any other or further notice or demand in similar or
other circumstances.

SECTION 10.18.  EXHIBITS AND SCHEDULES

All exhibits and schedules or descriptions referred to in this Agreement are
expressly incorporated herein by reference as if set forth in full, whether or
not attached hereto.  In the event of any conflict between the terms and
conditions of this Agreement and the terms and conditions of any exhibit,
schedule or other documents referenced herein, the terms and conditions of this
Agreement shall govern and control.

SECTION 10.19.  PRIOR AGREEMENT IS SUPERSEDED; ENTIRE AGREEMENT

This Agreement, including all exhibits, schedules and descriptions incorporated
herein and the Contribution Agreement, constitutes and contains the full and
final agreement of the Partners hereto relating to the matters described herein,
and unless otherwise specified herein, this Agreement supersedes and replaces
any and all prior agreements or understandings (whether written or oral and
including that certain letter of intent between Enterprise Products and TEPPCO
Partners, dated February 13, 2006) between or among the Partners regarding the
subject matter hereof and supersedes and replaces in its entirety the Original
Agreement.  It is the express intention of the Partners that this Agreement and
the Contribution Agreement shall be the sole source of agreement of the parties
with respect to the Partnership and, except to the extent a provision of this
Agreement expressly incorporates federal income tax rules by reference to a
section of the Code or Regulations or is expressly prohibited or ineffective
under the Act, this Agreement shall govern, even when inconsistent with, or
different than, the provisions of the Act or any other law or rule.  The
Partners hereby agree that each Partner shall be entitled to rely on the
provisions of this Agreement and no Partner shall be liable to the Partnership
or to any Partner for any action or refusal to act taken in good faith reliance
on the terms of this Agreement.  The Partners and the Partnership hereby agree
that the duties and obligations imposed on the Partners of the Partnership as
such shall be those set forth in this Agreement,

44

 

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

 

which is intended to govern the relationship among the Partnership and the
Partners, notwithstanding any provision of the Act or common law to the
contrary.

SECTION 10.20.  ADDITIONAL REMEDIES

Unless the context requires otherwise, the rights and remedies of the Partners
hereunder shall not be mutually exclusive so that the exercise of one or more of
the provisions hereof shall not preclude the exercise of any other provision
hereof.

SECTION 10.21.  COUNTERPARTS

This Agreement may be executed in counterparts, each of which shall be deemed to
be an original and shall be binding upon the Partner who executed the same, but
all of such counterparts shall constitute one and the same agreement.

SECTION 10.22.  APPROVALS

Except where otherwise indicated, all approval, consent and other similar rights
of the Partners pursuant to this Agreement may be exercised by such Partners,
and such approvals and consents may be granted or denied by such Partners, in
their sole and absolute discretion.

SECTION 10.23.  DISPUTE RESOLUTION

Any dispute, controversy or Claim (whether sounding in contract, tort or
otherwise) arising out of or relating to this Agreement, including, without
limitation, the interpretation, validity, termination or breach thereof, will be
resolved in accordance with the dispute resolution procedures set forth in
Schedule 10.23 attached hereto and made a part hereof.  The Partners covenant
that they shall not resort to court remedies prior to attempting to resolve such
disputes in accordance with the dispute resolution procedures set forth in
Schedule 10.23, or for preliminary relief in aid thereof.  A Partner that fails
to comply with the terms and conditions set forth in Schedule 10.23 or this
Section 10.23 shall pay all the legal costs incurred by the other Partners in
connection with the enforcement thereof. 

SECTION 10.24.  CONFIDENTIALITY

Each of the Partners will maintain in confidence, and use reasonable efforts to
cause its employees, officers, directors, Affiliates, lenders, representatives
and agents to maintain in confidence, any written, oral or other information
obtained in confidence from the Partnership or another Partner in connection
with this Agreement or the transactions contemplated hereby unless such
information is already known to such Partner, is obtained from a person not
otherwise bound by a duty of confidentiality or unless such information becomes
publicly available through no breach of this Agreement by such Partner, unless
the use of such information is necessary or appropriate in making any filing or
obtaining any consent or approval required for the consummation of the
transactions contemplated hereby, or unless the furnishing or use of such
information is required by any legal proceeding, rule, regulation or Applicable

45

 

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

 

Law, provided that prior to furnishing or using such information in connection
with any legal proceeding, rule, regulation or Applicable Law, the disclosing
Partner shall give the non-disclosing Partner prompt written notice in advance
of the required disclosure so that an appropriate protective order may be sought
by the non-disclosing Partner, if appropriate. The Partners will consult with
each other concerning the means by which the Partners’ respective employees,
customers and suppliers and others having dealings with the Partners will be
informed of the transactions contemplated hereby.  This Section 10.24 shall not
affect any other confidentiality agreement among the Partners or their
respective Affiliates and such agreements shall expire or terminate pursuant to
the terms of such agreements.

[Signature page follows]

46

 

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

 

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

PARTNERS:

 

 

 

 

 

TEPPCO GP, INC.

 

 

 

 

 

 

 

 

 

By:

 

 

/s/ Jerry E. Thompson

 

Name:

 

Jerry E. Thompson

 

Title:

 

President and CEO

 

 

 

 

 

 

 

 

 

TEPPCO MIDSTREAM COMPANIES, L.P.,

 

by TEPPCO GP, Inc., its general partner

 

 

 

 

 

By:

 

 

/s/ Jerry E. Thompson

 

Name:

 

Jerry E. Thompson

 

Title:

 

President and CEO

 

 

 

 

 

 

 

 

 

ENTERPRISE GAS PROCESSING, LLC

 

 

 

By:

 

 

/s/ Jim Teague

 

Name:

 

Jim Teague

 

Title:

 

Executive Vice President

 

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

 

EXHIBIT A

TO THE

AMENDED AND RESTATED

AGREEMENT OF PARTNERSHIP

OF

JONAH GAS GATHERING COMPANY

NAMES, ADDRESSES, CAPITAL CONTRIBUTIONS AND

SHARING RATIOS OF THE PARTNERS

Names and Addresses of the Partners:

TEPPCO GP, Inc. (“TGP”)

1100 Louisiana

Suite 1300

Houston, Texas 77002

Attn: Patricia Totten

Fax: (713) 381-3957

Email:  patotten@teppco.com

TEPPCO Midstream Companies, L.P. (“TMC” and collectively with TGP, the “TEPPCO
Parties”)

1100 Louisiana

Suite 1300

Houston, Texas 77002

Attn: Patricia Totten

Fax: (713) 381-3957

Email: patotten@teppco.com

Enterprise Gas Processing, LLC (“Enterprise”)
1100 Louisiana
Suite 1800
Houston, Texas 77002

Attn: Stephanie Hildebrandt

Fax: (713) 381-6570

Email: shildebrandt@eprod.com

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

 

Capital Contributions and Sharing Ratios of the Partners as of the Effective
Date:

 

 

Capital Contributions

 

Sharing Ratio

 

 

 

 

 

 

 

TEPPCO Parties

 

(A)

 

100

%

 

 

 

 

 

 

Enterprise

 

(B)

 

0

%

 

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

(A)          THE CAPITAL CONTRIBUTIONS OF THE TEPPCO PARTIES AS OF THE EFFECTIVE
DATE SHALL EQUAL THE SUM OF (I) $657.1 MILLION (WHICH AMOUNT REPRESENTS THE
AGREED CAPITAL CONTRIBUTIONS MADE BY THE TEPPCO PARTIES PRIOR TO THE EFFECTIVE
DATE OTHER THAN WITH RESPECT TO THE JONAH EXPANSION AND INCLUDES THE AGREED BASE
AMOUNT, THE 2006 WELL CONNECT CAPITAL, THE PHASE IV CAPITAL CONTRIBUTION, THE
JONAH GAS MARKETING CONTRIBUTION AND THE INTERCOMPANY DEBT CONTRIBUTION) (THE
“INITIAL TEPPCO AGREED AMOUNT”) AND (II) 50% OF THE TOTAL AMOUNT OF QUALIFIED
COSTS PAID (OR IN THE CASE OF THE ENTERPRISE COST OF CAPITAL (DEFINED IN
SCHEDULE 3.2), WHICH HAVE BEEN INCURRED) BY OR ON BEHALF OF ENTERPRISE AS OF THE
EFFECTIVE DATE WHICH HAVE BEEN REIMBURSED (OR ARE REIMBURSABLE) TO ENTERPRISE
PURSUANT TO SCHEDULE 3.2.

THE TERM “AGREED BASE AMOUNT” MEANS $641.9 MILLION, REPRESENTING AMOUNTS
EXPENDED BY THE TEPPCO PARTIES PRIOR TO APRIL 1, 2006 RELATING TO VARIOUS
CAPITAL PROJECTS RELATED TO THE JONAH GAS GATHERING SYSTEM AND WHICH AMOUNT WAS
BASED ON THE MARCH 31, 2006 BALANCE SHEET OF THE PARTNERSHIP.

THE TERM “INTERCOMPANY DEBT CONTRIBUTION” MEANS THE CONVERSION INTO CAPITAL OF
ANY AMOUNTS PAYABLE BY THE PARTNERSHIP TO TMC, TGP AND ANY OF THEIR AFFILIATES
IMMEDIATELY PRIOR TO THE EFFECTIVE DATE HEREOF SO THAT AS OF THE EFFECTIVE DATE
THE PARTNERSHIP DOES NOT HAVE ANY AMOUNTS WHICH ARE PAYABLE TO TMC, TGP OR ANY
OF THEIR AFFILIATES.

THE TERM “JONAH GAS MARKETING CONTRIBUTION” MEANS THE CONTRIBUTION OF JONAH GAS
MARKETING, LLC TO THE PARTNERSHIP BY TMC WHICH IS OCCURRING SIMULTANEOUSLY WITH
THE EXECUTION OF THIS AGREEMENT AND WILL BE DEEMED TO HAVE OCCURRED IMMEDIATELY
PRIOR TO THE EFFECTIVE DATE FOR PURPOSES OF THIS AGREEMENT.

THE TERM “PHASE IV CAPITAL CONTRIBUTION” MEANS $11.1, WHICH AMOUNT REPRESENTS
THE AMOUNTS PAID PRIOR BY THE TEPPCO PARTIES PRIOR TO THE EFFECTIVE DATE AND
WHICH RELATE TO THE COMPLETION OF THE PHASE IV EXPANSION AND WHICH AMOUNTS ARE
NOT ALREADY INCLUDED IN THE AGREED BASE AMOUNT.

THE TERM “2006 WELL CONNECT CAPITAL” MEANS $4.1 MILLION, WHICH AMOUNT REPRESENTS
THE AMOUNT THAT WAS BOTH INCURRED AND PAID IN 2006 PRIOR TO JUNE 30, 2006 BY THE
TEPPCO PARTIES AND WHICH RELATE TO WELL CONNECTS USED TO CONNECT ADDITIONAL
WELLS TO THE JONAH GAS GATHERING SYSTEM (BUT WHICH EXCLUDES $3.3 MILLION OF SUCH
WELL CONNECT COSTS WHICH ARE INCLUDED IN THE AGREED BASE AMOUNT OF $641.9
MILLION).

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

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

(B)           The Capital Contributions of Enterprise as of the Effective Date
shall equal the sum of the total amount of Qualified Costs paid (or in the case
of the Enterprise Cost of Capital, which have been incurred) by or on behalf of
Enterprise which are not reimbursable to Enterprise pursuant to Schedule 3.2.

Capital Contributions and Sharing Ratios of the Partners as of first day of each
month after the Effective Date until the Initial Commencement Date:

 

 

Capital Contributions

 

Sharing Ratio

 

 

 

 

 

 

 

TEPPCO Parties

 

(C)

 

100

%

 

 

 

 

 

 

Enterprise

 

(D)

 

0

%

 

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

(C)           The Capital Contributions of the TEPPCO Parties as of the first
day of each month after the Effective Date until the Initial Commencement Date
shall equal the sum of (i) the Initial TEPPCO Agreed Amount and (ii) 50% of the
total amount of Qualified Costs paid (or in the case of the Enterprise Cost of
Capital, which have been incurred) by or on behalf of Enterprise as of each such
measurement date which have been reimbursed (or are reimbursable) to Enterprise
pursuant to Schedule 3.2.

(D)          The Capital Contributions of Enterprise as of the first day of each
month after the Effective Date until the Initial Commencement Date shall equal
the sum of (i) the total amount of Qualified Costs paid (or in the case of the
Enterprise Cost of Capital, which have been incurred) by or on behalf of
Enterprise as of each such measurement date which are not reimbursable to
Enterprise pursuant to Schedule 3.2.

Capital Contributions and Sharing Ratios of the Partners as of the Initial
Commencement Date and as of the first day of each month until the Phase I
Commencement Date:

 

 

Capital Contributions

 

Sharing Ratio

 

 

 

 

 

 

 

TEPPCO Parties

 

(E)

 

(G)

 

 

 

 

 

 

 

Enterprise

 

(F)

 

(H)

 

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

(E)           The Capital Contributions of the TEPPCO Parties as of the Initial
Commencement Date and as of the first day of each month until the Phase I
Commencement Date shall equal the sum of

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

(i) the Initial TEPPCO Agreed Amount and (ii) 50% of the total amount of
Qualified Costs paid (or in the case of the Enterprise Cost of Capital, which
have been incurred) by or on behalf of Enterprise as of each such measurement
date which have been reimbursed (or are reimbursable) to Enterprise pursuant to
Schedule 3.2.

(F)           The Capital Contributions of Enterprise as of the Initial
Commencement Date and as of the first day of each month until the Phase I
Commencement Date shall equal the sum of the total amount of Qualified Costs
paid (or in the case of the Enterprise Cost of Capital, which have been
incurred) by or on behalf of Enterprise as of each such measurement date which
are not reimbursable to Enterprise pursuant to Schedule 3.2.

(G)           The Sharing Ratio of the TEPPCO Parties as of the Initial
Commencement Date and as of the first day of each month until the Phase I
Commencement Date shall be equal to one minus the Enterprise Sharing Ratio
determined in accordance with (H) below, such that the TEPPCO Parties shall be
entitled to receive 50% of all Incremental Cash Flow and (ii) 100% of (a) Total
Cash Flow minus (b) the Incremental Cash Flow, in each case which occurs after
the Initial Commencement Date until the Phase I Commencement Date.  The term
“Incremental Cash Flow” means the incremental cash flow of the Partnership which
is generated by the incremental revenue attributable to those portions of the
pipeline portion of the Jonah Expansion which have been placed in service as of
the applicable measurement date and prior to the Phase I Commencement Date, all
as determined by the Management Committee.  The term “Total Cash Flow” shall
mean the cash flow of the Partnership which is generated by revenue other than
the incremental revenue attributable to those portions of the pipeline portions
of the Jonah Expansion which have been placed in service as of the applicable
measurement date and prior to the Phase I Commencement Date, all as determined
by the Management Committee.

(H)          The Sharing Ratio of Enterprise as of the Initial Commencement Date
and as of the first day of each month until the Phase I Commencement Date shall
equal (i) 50% of the Incremental Cash Flow divided by (ii) the Total Cash Flow,
such that Enterprise shall be entitled to receive 50% of the Incremental Cash
Flow which occurs after the Initial Commencement Date until the Phase I
Commencement Date.

Capital Contributions and Sharing Ratios of the Partners as of the Phase I
Commencement Date and as of the first day of each month until the earlier of the
Phase II Commencement Date and the Cost Sharing Date (defined in Schedule 3.2):

 

 

Capital Contributions

 

Sharing Ratio

 

 

 

 

 

 

 

TEPPCO Parties

 

(I)

 

(K)

 

 

 

 

 

 

 

Enterprise

 

(J)

 

(L)

 

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

(I)            The Capital Contributions of the TEPPCO Parties as of the Phase I
Commencement Date

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

 

and as of the first day of each month until the earlier of the Phase II
Commencement Date and the Cost Sharing Date shall equal the sum of (i) the
Initial TEPPCO Agreed Amount and (ii) 50% of the total amount of Qualified Costs
paid (or in the case of the Enterprise Cost of Capital, which have been
incurred) by or on behalf of Enterprise as of such measurement date which have
been reimbursed (or are reimbursable) to Enterprise pursuant to Schedule 3.2.

(J)            The Capital Contributions of Enterprise as of the Phase I
Commencement Date and as of the first day of each month until the earlier of the
Phase II Commencement Date and the Cost Sharing Date shall equal the sum of the
total amount of Qualified Costs paid (or in the case of the Enterprise Cost of
Capital, which have been incurred) by or on behalf of Enterprise as of such
measurement date which are not reimbursable to Enterprise pursuant to Schedule
3.2.

(K)          The Sharing Ratio of the TEPPCO Parties as of the Phase I
Commencement Date and as of the first day of each month until the earlier of the
Phase II Commencement Date and the Cost Sharing Date shall equal one minus the
Enterprise Sharing Ratio as determined in accordance with (L) below as of each
such applicable date.

(L)           The Sharing Ratio of Enterprise as of the Phase I Commencement
Date and as of the first day of each month until the earlier of the Phase II
Commencement Date and the Cost Sharing Date shall equal (i) the total amount of
Qualified Costs paid (or in the case of the Enterprise Cost of Capital, which
are incurred) by Enterprise as of the applicable measurement date which are not
reimbursable to Enterprise pursuant to Schedule 3.2 divided by (ii) the sum of
(a) the Initial TEPPCO Agreed Amount and (b) the total amount of Qualified Costs
paid (or in the case of the Enterprise Cost of Capital, which have been
incurred), as of each such applicable measurement date.

Capital Contributions and Sharing Ratios of the Partners as of the earlier of
the Phase II Commencement Date and the Cost Sharing Date (defined in Schedule
3.2) and thereafter until any Capital Contribution is made to the Partnership
other than in accordance with such Sharing Ratio:

 

 

Capital Contributions

 

Sharing Ratio

 

 

 

 

 

 

 

TEPPCO Parties

 

(M)

 

(O)

 

 

 

 

 

 

 

Enterprise

 

(N)

 

(P)

 

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

(M)         The Capital Contributions of the TEPPCO Parties as of the earlier of
the Phase II Commencement Date and the Cost Sharing Date shall be calculated as
of such date and shall equal the sum of (i) the Initial TEPPCO Agreed Amount and
(ii) 50% of the total amount of Qualified Costs paid (or in the case of the
Enterprise Cost of Capital Contribution, which have been incurred) by or on
behalf of Enterprise as of such measurement date which have been

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

 

reimbursed (or are reimbursable) to Enterprise pursuant to Schedule 3.2.

(N)          The Capital Contributions of Enterprise effective upon the earlier
of the Phase II Commencement Date and the Cost Sharing Date shall be calculated
as of the such date and shall equal the total amount of Qualified Costs paid (or
in the case of the Enterprise Cost of Capital, which have been incurred) by or
on behalf of Enterprise through such date and which are not reimbursable to
Enterprise pursuant to Schedule 3.2.

(O)          In the event that the Cost Sharing Date occurs prior to the Phase
II Commencement Date, the Sharing Ratio of the TEPPCO Parties (the “TEPPCO
Percentage”) shall equal one minus the Enterprise Percentage (defined below). 
In the event the Cost Sharing Date does not occur prior to the Phase II
Commencement Date, the Sharing Ratio of the TEPPCO Parties shall equal one minus
the Enterprise Phase II Percentage (defined below).

(P)           In the event that the Cost Sharing Date occurs prior to the Phase
II Commencement Date, the Sharing Ratio of Enterprise as of the Cost Sharing
Date (the “Enterprise Percentage”) shall equal (x) $207.6 million divided by (y)
the sum of (i) the Initial TEPPCO Agreed Amount and (ii) $415.2 million.  In the
event the Cost Sharing Date does not occur prior to the Phase II Commencement
Date, the Sharing Ratio of Enterprise (the “Enterprise Phase II Percentage”)
shall equal (x) the total amount of Qualified Costs paid (or in the case of the
Enterprise Cost of Capital, which have been incurred) by Enterprise which are
not reimbursable to Enterprise pursuant to Schedule 3.2 divided by (y) the JV
Total Capital Investment.  The term “JV Total Capital Investment” as of the
applicable date shall mean the sum of (i) the Initial TEPPCO Agreed Amount and
(ii) the total amount of Qualified Costs paid as of the date of the Phase II
Commencement Date.  Notwithstanding the foregoing, in the event that the Phase
II Commencement Date occurs prior to the Cost Sharing Date and to the extent
Qualified Costs are incurred to complete the Jonah Expansion which are not paid
as of the Phase II Commencement Date, such costs, when they become known shall
be included with retroactive effect (and after giving effect to the applicable
reimbursement provisions of Schedule 3.2) in both the numerator and denominator
of the foregoing as if such Qualified Costs had been paid as of the Phase II
Commencement Date.

Sharing Ratios of the Partners after the Phase II Commencement Date in the event
that any Capital Contributions are made to the Partnership other than in
accordance with the then current Sharing Ratio:

 

Sharing Ratio

 

 

 

 

 

TEPPCO Parties

 

(Q)

 

 

 

 

 

Enterprise

 

(R)

 

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

(Q)          In the event that any Capital Contributions are made to the
Partnership other than in accordance with the then current Sharing Ratio of the
Partners and other than as contemplated by

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

 

the Jonah Expansion reimbursement provisions, the Sharing Ratio of the TEPPCO
Parties will be adjusted to a percentage determined by dividing (i) the sum of
(a) the Initial TEPPCO Agreed Amount and (b) the total Capital Contributions
made from the Effective Date to such date by the TEPPCO Parties by (ii) the sum
(a) $641.9 million (which amount represents the agreed Capital Contributions
made by the TEPPCO Parties prior to the Effective Date other than with respect
to the Jonah Expansion and includes the Agreed Base Amount of $641.9 million,
the 2006 Well Connect Capital, the Phase IV Capital Contribution, the Jonah Gas
Marketing Contribution and the Intercompany Debt Contribution) and (b) all
Capital Contributions made by all of the Partners from the Effective Date to
such date, in each case after taking into account any modification necessary to
fairly and equitably reflect the percentage of participation elected by the
TEPPCO Parties relative to Enterprise.

(R)           In the event that any Capital Contributions are made to the
Partnership other than in accordance with the then current Sharing Ratio of the
Partners and other than as contemplated by the Jonah Expansion reimbursement
provisions, the Sharing Ratio of Enterprise will be adjusted to a percentage
determined by dividing (i) the total Capital Contributions made as of such date
by Enterprise by (ii) the sum (a) the Initial TEPPCO Agreed Amount and (b) all
Capital Contributions made by all of the Partners from the Effective Date to
such date, in each case after taking into account any modification necessary to
fairly and equitably reflect the percentage of participation elected by the
TEPPCO Parties relative to Enterprise.

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

 

SCHEDULE 3.2

TO THE

AMENDED AND RESTATED

AGREEMENT OF PARTNERSHIP

OF

JONAH GAS GATHERING COMPANY

CAPITAL CONTRIBUTIONS

1.             Enterprise agrees to make such Capital Contributions to the
Partnership which are necessary to fund one hundred percent (100%) of the
Qualified Costs payable on or before the Effective Date and the TEPPCO Parties
agree to reimburse Enterprise for fifty percent (50%) of such payable Qualified
Costs in accordance with this Schedule 3.2.  Enterprise agrees to fund (by
Capital Contribution or otherwise) fifty percent (50%) of the Qualified Costs
which are payable on and after the Effective Date and the TEPPCO Parties agree
to fund (by Capital Contribution or otherwise) fifty percent (50%) of the
Qualified Costs which are payable on and after the Effective Date up to the
Contemplated Total Expansion Capital.  The Qualified Costs shall be reimbursed
by the TEPPCO Parties in accordance with the following schedule:

(i)                                     fifty percent (50%) of the Qualified
Costs actually incurred by Enterprise thru the Effective Date (through August
31, 2006 in the case of the Enterprise Cost of Capital), to be paid on September
1, 2006; and

(ii)                                  to the extent that Enterprise makes
Capital Contributions to the Partnership which fund the Qualified Costs that are
subject to reimbursement but have not been so reimbursed (i.e., Qualified Costs
payable prior to the Effective Date, which are reimbursable but which were not
previously reimbursed), the TEPPCO Parties shall reimburse Enterprise for fifty
percent (50%) of such Qualified Costs within thirty (30) days from receipt of
invoice(s) setting forth such Qualified Costs.

Notwithstanding anything in this Schedule 3.2 to the contrary, in the event
there are Excess Expansion Costs, Enterprise agrees to fund the Enterprise
Percentage (defined in Exhibit A) of such Excess Expansion Costs and the TEPPCO
Parties agree to fund the TEPPCO Percentage (defined in Exhibit A) of such
Excess Expansion Costs effective as of the date (the “Cost Sharing Date”) of
each payment in excess of the Contemplated Total Expansion Capital.  For the
avoidance of doubt, (i) amounts funded by Enterprise (or its Affiliates) which
are

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

 

subject to reimbursement by the TEPPCO Parties shall be treated as a Capital
Contribution on behalf of such parties even if such reimbursement payment is
made directly to Enterprise or any of its Affiliates and (ii) amounts funded
directly by Enterprise and the TEPPCO Parties pursuant to this Schedule 3.2
shall be considered Capital Contributions on behalf of such parties. For the
further avoidance of doubt, after the Effective Date, Enterprise and the TEPPCO
Parties shall each directly fund (by Capital Contribution to the Partnership or
otherwise), 50% of the Qualified Costs payable in connection with the Jonah
Expansion up until the total amount of Qualified Costs paid in connection with
the Jonah Expansion exceed the Contemplated Total Expansion Capital at which
time Enterprise will directly fund (by Capital Contribution to the Partnership
or otherwise) the Enterprise Percentage of the Excess Expansion Costs and the
TEPPCO Parties will directly fund (by Capital Contribution to the Partnership or
otherwise) the TEPPCO Percentage of the Excess Expansion Costs.

2.                                       If there is an Additional Expansion,
each of the Partners agree to fund such Additional Expansion in proportion to
their relative Sharing Ratios (or their Final Ownership Interest (defined below)
if such Additional Expansion were to occur prior to the earlier of the Phase II
Commencement Date or the Cost Sharing Date in which event the contribution and
reimbursement provisions set forth below for well connect capital and other
capital projects shall apply in like manner).  It is expressly agreed that any
Partner may decline to fund its proportionate share of such Additional
Expansion, or to participate at less than its proportionate share of such
Additional Expansion.  In such event, such Partner’s Partnership Interest shall
be adjusted in accordance with the applicable provisions of Exhibit A and as may
further be determined by the Management Committee to fairly and equitably
reflect the Additional Capital Contributions made by such Partners.
Notwithstanding the foregoing, with respect to well connects to the Jonah Gas
Gathering System and other non-expansion capital projects which are commenced
after the Effective Date, each of the TEPPCO Parties and Enterprise agree to
fund such well connects and other capital projects in proportion to their Final
Ownership Interest, unless otherwise agreed by the parties, it being further
agreed that the TEPPCO Parties will fund 100% of such costs up until the Phase I
Commencement Date at which time Enterprise will, within 30 days of receipt of an
appropriate invoice therefore which has been approved by the Management
Committee, reimburse the TEPPCO Parties for the percentage of such costs which
equal Enterprise’s Sharing Ratio as of the Phase I Commencement Date and that as
of the earlier of the Phase II Commencement Date and the Cost Sharing Date,
Enterprise will in like manner reimburse TEPPCO for the remainder of
Enterprise’s portion of such costs based on Enterprise’s Final Ownership
Interest.  The term “Final Ownership Interest” shall mean the Sharing Ratio of
the respective parties as of the earlier to occur of the Cost Sharing Date and
the Phase II Commencement Date; provided that if any of the parties make any
Capital Contribution which is not in proportion to their relative ownership
interest other than as contemplated with respect to the Jonah

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

 

Expansion, after the date of such Capital Contribution the cost sharing for such
projects shall be based on the Final Ownership Interest as may be further
adjusted pursuant to the terms of this Agreement.

3.             The TEPPCO Parties shall have a unilateral right to (i) decline
to participate in any required Capital Expenditure associated with any portion
of an EnCana Expansion or (ii) participate in such EnCana Expansion in any
percentage it determines up to the amount of its Sharing Ratio multiplied by
such amounts required to fund such EnCana Expansion; provided that, if an EnCana
Expansion is undertaken prior to the earlier of the Phase II Commencement Date
and the Cost Sharing Date, TEPPCO’s maximum percentage of participation shall be
based on its Final Ownership Interest, as may later be determined.  In the event
the TEPPCO Parties decline to contribute their full amount of any Additional
Capital Contributions with respect to an EnCana Expansion based on their Sharing
Ratios, Enterprise will fund the remainder of such EnCana expansion by making
all necessary Additional Capital Contributions without reimbursement by the
TEPPCO Parties and Enterprise’s Partnership Interest shall be adjusted in
accordance with the applicable provisions of Exhibit A and as may further be
determined by the Management Committee to fairly and equitably reflect the
Additional Capital Contributions made by such Partners.

4.             No Partner shall be required to make any Capital Contribution
(other than the Contributions contemplated by paragraph 1 of this Schedule 3.2
and any other Contribution to which such Partner has agreed in writing or
otherwise consented to) unless such Capital Contribution has been approved by a
majority of the Management Committee Representatives.  If any Partner has the
right to decline to fund its proportionate share of any required Capital
Contribution, such Partner must provide written notice to the other Partners of
its election not to participate within ten (10) Business Days of such Partner’s
receipt of a written statement from the Partnership detailing such Capital
Contribution or such Partner shall be deemed to have waived such right and shall
fund its proportionate share of the required Capital Contribution together with
the other Partners.

5.             For the avoidance of doubt, TMC will contribute all of its
interest in Jonah Gas Marketing, LLC to the Partnership pursuant to the
Contribution Agreement on the Effective Date and prior to the Effective Date the
TEPPCO Parties will cause the conversion of any amounts payable by the
Partnership to the TEPPCO Parties or their Affiliates into Partner’s capital of
the Partnership.  The Jonah Gas Marketing Contribution shall be considered to be
a Capital Contribution of TMC which occurred prior to the Effective Date of this
Agreement for all purposes of this Agreement.

6.             For the avoidance of doubt, the parties calculated the Agreed
Base Amount included in the Sharing Ratio calculations set forth on Exhibit A
based on the March 31, 2006 balance sheet of the Partnership and such amount
includes the

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

 

following:

Current Assets

 

$

32,520,000

 

Property Plant and Equipment (Gross Cost)

 

$

412,266,000

 

Intangible Assets

 

$

222,800,000

 

Other Assets

 

$

6,157,000

 

Current Liabilities

 

$

(31,785,000

)

Total

 

$

641,958,000

 

It is the parties intent that any amounts which were included in the calculation
set forth above shall be paid by the TEPPCO Parties and not by Enterprise or the
Partnership such that at the Effective Date the TEPPCO Parties shall have paid
(or will be responsible for paying) any amounts which may be due and which
relate to the assets included in the above calculation.  In addition, with
respect to the 2006 Well Connect Capital and the Phase IV Capital Contribution,
it is the intent of the parties that the TEPPCO Parties will be responsible for
paying 100% of any such amounts included in the 2006 Well Connect Capital or the
Phase IV Capital Contribution and to the extent that any of such costs were
included in the calculation set forth above, the TEPPCO Parties agree that the
2006 Well Connect Capital and/or the Phase IV Capital Contribution will be
appropriately reduced.  To the extent that there are any other non-expansion
capital project costs which are not included as 2006 Well Connect Costs or as
part of the Phase IV Capital Contribution or as part of the Agreed Base Amount
referred to above and which have not been paid as of the Effective Date, the
parties agree to contribute to such costs in the same manner as if such costs
were non-expansion capital projects which are commenced after the Effective Date
in accordance with paragraph 2 above.

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

 

SCHEDULE 4.2

TO THE

AMENDED AND RESTATED

AGREEMENT OF PARTNERSHIP

OF

JONAH GAS GATHERING COMPANY

MANAGEMENT AUTHORIZATION POLICY

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

 

Enterprise Products GP, LLC

Enterprise Products Partners L.P.

Enterprise Products Operating L.P.

Management Authorization Policy

Effective Date: February 22, 2006

PURPOSE

The purpose of this policy (this “Policy”) is the delegation by the Board of
Directors (the “Board”) of Enterprise Products GP, LLC (“EPGP”) of approval
limits for the various officers (the “Officers”) of EPGP, Enterprise Products
Partners L.P. (“EPPLP”), Enterprise Products Operating L.P. (“EPOLP”) and their
respective subsidiaries (collectively or individually, as the context may
require, “Enterprise”). This Policy is designed to promote the approval process
of expenditures at levels which the Board believes is adequate for the efficient
operation of Enterprise, while ensuring that material or significant
expenditures will continue to be subject to Board approval.

This Policy is not a substitute for good judgment and, when a situation
dictates, action may be required which is contrary to this Policy. In situations
where persons may be subjected to injury or where financial losses are likely to
occur, operational and financial requirements take precedence over
administrative requirements. In these circumstances, the highest-ranking
individual present may make commitments without normal approvals provided the
approvals are subsequently obtained at the earliest possible time.

Other related and more detailed policies and procedures exist, or will exist,
for specific purposes such as marketing, accounting and purchasing materials
which may be obtained by contacting the Vice President - Human Resources. An
example of this is the Financial Commodity Policy of Enterprise that encompasses
risk management, marketing and the use of derivatives. These policies provide
more specific guidance about different business areas and should be used in
conjunction with this Management Authorization Policy.

OFFICER AUTHORITY AND DELEGATION

Officers have the authority under this Policy as, and to the extent, reflected
in the Officer Limits of Authority attached as Exhibit A (the “Officer Authority
Limits”) and may generally delegate to other non-Officer employees of EPCO, Inc.
up to one-half of their Officer Authority Limits. Delegations shall be made in
accordance with reporting levels within the Officer’s functional area and only
for those items for which sub-delegation is allowed. Delegation by Officers to
non-Officers for items such as administrative or operating expenses shall not
exceed Ten Thousand Dollars ($10,000.00); provided, however, this restriction or
prohibition shall not apply to the delegation by Officers to non-Officers of the
approval for payment of administrative or operating expenses, non-AFE PO
requisitions or payments on Service Contracts, leases and rentals. Higher limits
or specific variations in limits of authority must be approved by the Chairman,
the Chief Executive Officer (“CEO”) or the Chief Operating Officer (“COO”). The
Management Authorization Form for Delegation of Authority (the “Authorization
Form”), the current form of which is attached as Exhibit B, shall be used to
document delegation to other personnel.

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

 

The delegating Officer will retain a copy of each Authorization Form. The
original will be sent to the Risk Control Director to ensure the delegation is
within this Policy.  The Risk Control Director will then have the authorization
form prepared for electronic “read only” access by Accounting and Treasury for
matching payment approvals with appropriate levels of authorization. A copy of
each Authorization Form will also be sent by the Delegating Officer to the Legal
Department. If an Officer wishes to change an individual’s authority, such
Officer must prepare and distribute, as set forth above, a new Authorization
Form.

A periodic report showing delegated authorities will be distributed no less
frequently than quarterly by Risk Control to the Delegating Officers to help
ensure documentation presented for payment is properly authorized in accordance
with this Policy.

Upon a change in employment of an individual with authority granted or delegated
under this Policy, the delegating Officer will notify Risk Control to delete or
modify, as appropriate, the employee’s electronic “read-only” authorization form
and will notify the Legal Department of such change. Human Resources will also
notify Risk Control of such changes to further ensure authorizations are
maintained only for the employee’s current position.

If an Officer becomes aware of a problem or potential problem related to
delegated authorities, such Officer should request their personnel and Accounts
Payable to route some or all invoices or requests for payment to the Officer for
review and approval prior to release of payment. Such routing should continue
until the Officer has found and corrected the problem or has reasonably
determined that no problem exists and that the authorization process is working
as intended.

The following is a list of the basic authorization levels and types of
expenditures addressed by this Policy:

AUTHORIZATION LEVELS

1.     Chairman

2.     CEO, COO and Management Directors (and officers who are management
directors)

3.     Executive Vice Presidents

4.     Senior Vice Presidents

5.     Vice President

All other levels are to be delegated.

FUNDS RELEASE PROCESS

Funds for AFEs will not be released until the project is approved. Project
documentation submitted for AFE approval should include a substantial
description, explanation justifying the need for the expenditure and properly
prepared economic support.

2

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

 

EXPENDITURE DEFINITIONS AND RELEVANT INFORMATION

1.              AFEs are typically for capital or large expense items that
include economic analysis and other critical documentation such as material and
labor estimates, project maps and detailed engineering plans used to justify the
decision for the expenditure.  AFEs by nature have multiple signatures for
approval such as the requesting party, their supervisor, etc.  For Bank and
Finance related AFEs, please refer to Item 14 of Exhibit A.

2.              Charges to Approved AFEs: Spending limits on these charges aid
management in monitoring actual costs against the approved AFE amounts budgeted
for the project.

3.              Over Expenditures: As soon as it becomes apparent that a project
will exceed the original AFE, and the variance amount exceeds the lesser of 10%
of the original AFE cost or One Hundred Thousand Dollars ($100,000), a
supplemental AFE is required with the appropriate level(s) of approval.  The
supplemental AFE must be made for not only the anticipated increase over
original project cost, but also include the original cost and any information
pertaining thereto.  Supplemental AFEs for over expenditures estimated to be
less than $10,000 in excess of the original AFE amount can be approved by a
senior vice-president responsible for that respective area such as the Senior
Vice-President of Engineering.

4.              Natural gas, natural gas liquids (“NGLs”), crude oil and refined
products agreements and joint venture agreements: This includes all types of
natural gas, NGL, crude oil and refined products sales, purchase, exchange,
transportation, storage, tolling, processing, fractionation, and compression
agreements (contracts).  These contracts and agreements are normally authorized
and approved in writing by middle to upper level management in the functional
marketing area such as the Vice President-Fractionation, Senior Vice
President-Gas Liquids Marketing and Senior Vice President-Gas Processing.

5.              Payments under natural gas, NGL, crude oil and refined products
contracts: If the payment is the direct result of a specific contract for a
specific transaction, and the contract has been properly approved, additional
approval for release of these funds is not required.  Otherwise, the appropriate
level of management must approve payment.

6.             Service contracts, leases and rental agreements:    Service
contracts, leases and rental agreements can be made at various locations for
many reasons but, in any event, are subject to the prior written approval of the
Legal Department.   For this reason, the authorization and approval levels are
intentionally much more limited for such items than for AFEs or gas contracts.

7.             Non-AFE purchase order requisitions, operating and administrative
expenses and charges to service contracts:  Due to the number of possible
transactions, this classification provides the most restrictive level of
authorization and approval.

8.             Payments for insurance premiums and taxes:  These expenditures
are infrequent by comparison to other expenses and require specific or technical
knowledge as to their appropriateness, and thus should generally not be
delegated.

3

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

 

9.             Sales or disposition of assets:  Sale or disposition of assets
with a sale price and or fair market value equal to or greater than One Hundred
Thousand Dollars ($100,000) also requires the written approval of the CEO, the
COO or the Chief Legal Officer and the Chief Financial Officer (the “CFO”).  Any
agreement for the sale or disposition of assets requires the prior written
approval of the Chief Legal Officer or his delegate.

10.       Guaranties: All guaranties in which Enterprise is the guarantor shall
be approved in writing, as to the amount and term thereof, by the Treasurer, or
his delegate, and as to the form thereof, by the Chief Legal Officer, or his
delegate, and shall be executed only by the CFO, or in the CFO’s absence, the
CEO, the COO, the Treasurer or the Chief Legal Officer.

11.       Confidentiality Agreements, Employment Agreements and Consulting
Agreements: Confidentiality agreements, employment agreements and consulting
agreements shall be approved in writing by the Chief Legal Officer or his
delegate and shall be executed only by the CEO, the COO, the CFO or the Chief
Legal Officer or their respective delegates.

12.       Legal Services; Legal Fees:  Only the Chief Legal Officer or his
delegates are authorized to (i) retain any law firm or attorney for the
providing of legal services to Enterprise and (ii) approve invoices for legal
fees and expenses.

CONTRACT ROUTING

All contracts for the purchase of commodities and other goods or services (other
than those transactions which are in the ordinary course of Enterprise’s
business), Enterprise guarantees, letters of intent and indications of interest
(except confirmations and unchanged standard agreements previously approved by
the Legal Department) shall be approved in writing by the Legal Department and
relevant administrative support (e.g. Treasury, Human Resources, Accounting,
Corporate Risk, Contract Administration, Information Technology, etc.)
management prior to execution. For example, joint venture agreements must be
reviewed and approved by the CFO, the Chief Legal Officer and the Vice
President-Corporate Risk, or their respective delegates, for proper financial,
legal, accounting, tax, and insurance considerations. Another example is service
agreements, which must be reviewed and approved by the Corporate Risk and Legal
Departments prior to execution. For any contract requiring an extension of
credit, the approving Officer must specifically obtain credit approval from the
Credit Department within the Treasury Department.

Appropriate Marketing and Supply personnel must approve all natural gas and NGL
contracts with a term greater than one month or a value greater than One Hundred
Thousand Dollars ($100,000) that could expose Enterprise to fixed price or
option risk on price or volume.

All commodity contracts must be provided to Contract Administration no later
than the day the transaction commitment occurs.

EXPENSE REPORTING

Expense reports (including Cash Advances) must be approved by the employee’s
immediate supervisor who has a MAP form on file or, in the supervisor’s absence,
the next higher level.

4

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

 

Expense reports totaling more than One Thousand Dollars ($1,000) must be
approved by a Vice President or higher.

For non-officers, the One Thousand Dollar limit is considered to be included in
the line item beginning with “Operating Expenses” on the Management
Authorization Form for the Delegation of Authority.  For limits greater than a
thousand dollars, please specify under the line item “Other”.  Details of
employee expense reporting are contained in the Enterprise Human Resources
Policy for Expense Accounts.

INVOICE APPROVAL

Regarding expenditures for operating expenses or capital projects, a duly
authorized member of management must approve all purchase requisitions, purchase
orders (PO’s) and invoices without properly approved purchase orders. Accounting
shall match the purchase requisition, purchase order and invoices with
authorization forms as necessary to determine proper approval, and compare the
receiving report for goods purchased to the vendor invoice before releasing the
invoice for payment. Individuals approving invoices not generated by purchase
orders are responsible for ensuring that the goods or services invoiced have
been properly received by Enterprise and that such goods and services are
required in the course of Enterprise’s business. The individual approving the
invoice should be certain that the charges are correct as billed. If expenditure
requires an AFE, the invoice should not be processed until an AFE is properly
approved.

MAJOR EXPENDITURE MONITORING

The payment of expenditures related to new commercial operating arrangements or
contracts (which expenditures have been approved under an appropriate AFE)
should be reviewed and approved for a period of at least three months from the
beginning of operations or inception of the contract, by the Officer (or by the
manager or director who has been delegated such authority) in the commercial
group responsible for obtaining the business. This will help ensure that
expenditures are being made in accordance with the intent of the arrangement or
contract.

CHARITABLE CONTRIBUTIONS

The Chairman, the CEO, the COO or the management director shall, in addition to
the appropriate dollar level approval, be required to approve contributions
greater than $500 for charitable purposes, such as educational institutions and
other publicly or privately funded special interest support organizations.

FINANCE RELATED TRANSACTIONS

The CFO or his delegate must approve all financial guarantees of obligations for
any investments, financial obligations, long-term contracts including leases,
any non-trade credit transactions and International Swap and Derivative
Agreements (ISDA’s).

APPROVED BY:

 

 

 

The Board of Directors of

 

Enterprise Products GP, LLC

 

5

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

Enterprise Products GP, LLC

Enterprise Products Partners L.P.

Enterprise Products Operating L.P.

Officer Limits of Authority

Exhibit  A

MAXIMUM AUTHORIZATION LEVELS*

TYPES OF EXPENDITURES*

 

Chairman

 

CEO, COO and
Management
Directors (and
officers who are
management
directors)

 

Executive Vice
Presidents

 

Senior Vice
Presidents

 

Vice Presidents

1. AFEs: (a)  (A) Budgeted  (B) Un-budgeted-operated facility  (C) Un-budgeted -
non-operated facility (D) Reimbursable

 

$100MM
$100MM
$100MM
Full

 

$100MM (b)
$50MM (c)
(applicable to
A, B, C and
D)

 

$100M
$50M
$100M
$100M

 

$50M
$25M
$50M
$50M

 

$25M
$12.5M
$25M
$25M

2. Contracts with contingent financial obligations, take or pay or capacity
reservation > 1 year (total dollar obligation, not annual)

 

Full

 

Full

 

Full

 

S1.25MM

 

 

3. Charges to approved AFEs up to the amount of the AFE

 

Full

 

Full

 

Full

 

Full for assigned area

 

Full for assigned area

4. Supplemental AFEs for over-expenditures (a)

 

AFE with
Supplemental
not to exceed
maximum set
forth in Item 1
above

 

AFE with
Supplemental
not to exceed
maximum set
forth in Item 1
above

 

AFE with
Supplemental
not to exceed
maximum set
forth in Item 1
above

 

AFE with
Supplemental
not to exceed
maximum set
forth in Item 1
above

 

-0-

 

 

 

 

 

 

 

 

 

 

 

5. Contracts for sale or purchase of natural gas, NGLs, crude oil or refined
products (d) (e)

 

Full

 

Full

 

Full

 

Commercial
SVP’s
$5MM &< lyr or
$500M

 

Commercial VP’s
$2.5MM&<6 mo. or
$500M

6. Contracts for transportation, exchange, gathering, compression, processing, 
fractionation, or storage (e) (f)

 

Full

 

Full

 

Full

 

Commercial Sr
VP’s 1 year

 

Commercial VP’s 6 mos.

7. Payments on natural gas, NGL, crude oil  and refined products contracts and
contracts  related to financial instruments (g)

 

Full

 

Full

 

Full

 

$5MM

 

Accounting
VP’s$2.5MM

8. Service contracts, leases & rentals - annual amount (h)

 

Full

 

Full

 

Full

 

$200M

 

$100M

9. Non-AFE purchase requisitions, operating & administrative expenses, &
payments on previously authorized service contracts, leases & rentals (i) (j)
(k) (p)

 

$100MM

 

$100MM (b)
$50MM (c)

 

$5MM

 

$100M

 

$50M

10. Sale or Disposition of Assets (l)

 

$100MM

 

$100MM (b)
$50MM (c)

 

$10MM

 

$100M

 

$100M

11. Insurance premiums and bonds (m)

 

Full

 

Full

 

Full

 

Full

 

 

12. Tax payments: (A) Franchise, income, payroll and ad valorem (B) Sales and
use tax payments (C) Production/severance taxes collected as first purchaser
that are a pass t through to the respective state

 

Full
Full
Full

 

Full
Full
Full

 

Full
Full
Full

 

 

 

Controller $1MM
Accounting VPs $1MM
Accounting VPs $1MM

13. Settlement of claims and lawsuits** (in payments or value of claims waived):
(n)

 

Full

 

Full

 

Full

 

$100M

 

$100M

14. Finance and Bank Related Transactions: (o)

 

Full

 

Full

 

Full

 

 

 

 

* Authorizations are subject to notes (a) through (p) that follow **
Sub-delegation not allowed

 

 

 

 

 

 

 

 

 

 

 

6

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

 

NOTES TO AUTHORIZATION LEVELS

(a)        Must comply with the Funds Release Process as described in the
Management Authorization Policy.   It is understood that Officers may only
approve AFEs relating to their assigned area of responsibility.  In order for
AFEs to be approved by Officers other than the Chairman, the CEO, or the COO,
the AFE should be approved with joint concurrence of Officers in Operations,
Business Management, Engineering, and Finance.  Supplemental AFEs for over
expenditures estimated to be less than $10,000 in excess of the original AFE
amount can be approved by a senior vice-president for that respective area such
as the Senior Vice-President of Engineering. 

(b)    Requires the approval of any two (2) of the Chairman, the CEO, the COO
and/or management directors (and officers who are management directors) with the
approval of an officer in Finance.

(c)    The Chairman, the CEO, the COO or any management director (or any officer
who is a management director), individually, can approve with the approval of an
officer in Finance.

(d)        The authorization amount is the total to be expended during the term
of the contract.

(e)        All contract approvals are subject to the Contract Routing
requirements stated in the Management Authorization Policy.

(f)         Exception - Any authorized personnel in this category may approve or
delegate approval for contracts other than storage with volumes of 500 Bbls per
day, 25 MMcf per day or less regardless of the term of the contract. [See note
(e)]

(g)        Payments to Shell and Shell affiliates may be approved by Accounting
Vice Presidents up to a maximum of $30MM. Payments over $30MM must be approved
by an Accounting Senior Vice President or higher.

(h)        The Chief Legal Officer or his delegate must approve all Enterprise
legal fees.   All lease terms must be reviewed and approved by the CFO or his
delegate prior to signing any lease.  All leases requiring monthly payments of
$10,000 or more, or $100,000 or more per annum must also be approved by the CFO.
All lease payments including relevant terms such as the payment frequency, term
of the agreement, amount of payment, and item(s) leased must be reported in
writing to the CFO and the Controller.

(i)          Purchase requisitions are intended for goods versus services, which
should be approved by service contracts.

(j)     Authorization for recurring expenses such as utility bills that are
consistent with the annual budget may be approved by the Vice President
responsible for that area.

(k)    All computer hardware, software, software licensing, maintenance and
consulting services must also be approved by the Vice President - Information
Technology or his delegate.

(l)     Per the Management Authorization Policy, all sales or dispositions of
company assets with a sale price and or fair market value greater than $100,000
require approval by the CEO, the COO or the Chief Legal Officer and the CFO.

7

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

(m)   Premiums for new bonds require approval of the CFO or the Treasurer.

(n)    Authorization for settlements of claims and lawsuits by Senior Vice
Presidents or Vice Presidents is limited to the officer(s) in charge of
Corporate Risk Department.  All other settlements, other than tax settlements
involving less than $5M, must be approved and initialed by the Chief Legal
Officer or his delegate.

(o)    Authorizations for these transactions are specifically granted by Board
resolutions and are subject to restrictions. All such transactions must have the
involvement of or review by the CFO’s organization and Chief Legal Officer

(p)    All check requests for charitable contributions greater than $500 must be
approved by the Chairman, the CEO, the COO or a management director.

8

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

 

Exhibit B

Enterprise Products GP, LLC

Enterprise Products Partners L.P,

Enterprise Products Operating L.P.

Management Authorization Form for Delegation of Authority

Employee Name

 

Title

 

Employee Number

 

 

 

 

 

Department

 

Accounting Unit

 

Current Date

 

 

 

 

 

Officer Granting Authority

 

Officer’s Title

 

Effective Date
Of Delegation

 

Expenditure
Description

 

Maximum
Amount

 

Maximum
Term

Authorization for Expenditure (AFE)

 

 

 

N/A

Charges to AFEs

 

 

 

N/A

Supplemental AFEs for Over Expenditures

 

 

 

N/A

Contracts with Contingent Obligations, Take or Pay or Capacity Reservation > 1
year

 

 

 

 

Natural Gas, NGL Contracts and term

 

 

 

 

Payments under Natural Gas and NGL Contracts

 

 

 

 

Service Contracts, Leases & Rentals - Annual Amount

 

 

 

 

Operating Expenses, Non-AFE PO Requisitions & Payments on Service Contracts,
Leases & Rentals

 

 

 

 

Other – Specify

 

 

 

 

Explain any special circumstances, instructions or authority being granted
below.

 

 

 

 

 

 

Employee Signature

Initials

 

Risk Control Director - Within or Outside Policy

(Sign & initial as you intend to
authorize)

 

 

 

 

 

 

 

 

 

Delegating Officer Signature

 

Robert G. Phillips, CEO - Variance Approved

9

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

 

Revision History

 

Exhibit C

 

Date

 

Rev
Number

 

Change

 

Reference Section

November 2, 2004

 

0

 

New Policy

 

 

May 5, 2005

 

1

 

 

 

 

November 4, 2005

 

2

 

 

 

 

 

10

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

SCHEDULE 5.2

TO THE

AMENDED AND RESTATED

AGREEMENT OF PARTNERSHIP

OF

JONAH GAS GATHERING COMPANY

TAX MATTERS

1.             Tax Returns, Proceedings and Elections.  Tax returns,
proceedings, and elections shall be governed by the provisions of this Schedule
5.2 as it may be amended from time to time by a vote of the Partners.

(a)           Enterprise is designated the tax matters partner (“TMP”) as
defined in Section 6231(a)(7) of the Code.  The designation of TMP shall be
effective only for operations conducted by the Partnership pursuant to this
Agreement.

(b)           The TMP shall cause to be prepared all necessary federal, state,
and local Partnership income, excise, and property tax returns and, except for
excise taxes, furnish a copy of the proposed return to the Partners for their
review not later than one month prior to the due date, including extensions, for
filing such returns.  The TMP shall timely file such returns and, upon the
written request of a Partner, shall provide the Partners with schedules which
are consistent with the treatment of all items on those returns.  The TMP agrees
to use all reasonable efforts in the preparation and filing of such tax returns
but, in doing so, shall incur no Liability to any Partner with respect to such
returns or any elections relating thereto.  On or before the last day of May
after the end of the taxable year, the TMP will cause each Partner to be
provided with estimates of all information reasonably necessary or appropriate
to file its respective tax returns and reports.

(c)           The Partners shall furnish the TMP with such information as it may
reasonably request to aid in the preparation of the Partnership returns and
which will permit it to provide the Internal Revenue Service with sufficient
information so that proper notice can be mailed to such Partners as provided in
Section 6223 of the Code.

(d)           To the extent and in the manner provided by applicable
Regulations, the TMP shall keep each Partner informed of all administrative and
judicial proceedings for the adjustment of Partnership items (as defined in
Section 6231(a)(3) of the Code) at the Partnership level.

(e)           If an administrative proceeding contemplated under Section 6223 of
the Code has begun, the Partners shall notify the TMP of their treatment of any
Partnership item on

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

 

their federal income tax return in a manner which is or may be inconsistent with
the treatment of that item on the Partnership return.

(f)            The TMP shall not enter into any extension of the period of
limitations as provided under Section 6229 of the Code without the prior written
consent of the Partners.

(g)           Any Partner who enters into a settlement agreement with the
Secretary of the Treasury with respect to Partnership items shall promptly
notify the other Partners of such settlement agreement.

(h)           The TMP shall not bind the other Partners to a settlement
agreement without obtaining the written concurrence of the Partners who will be
bound by such agreement.

(i)            The TMP shall notify all Partners of any intention to file a
petition with a court for a readjustment of any Partnership items.  Such notice
shall be given within a reasonable time so that the Partners may participate in
choosing the forum for the filing of any petition.  This provision shall not
apply to any Partner who does not have an interest in the outcome of such
matter.  Whether a Partner has an interest in the outcome will be determined
using the standard in Section 6226(d) of the Code.  Further, the TMP or other
Partner who had brought the action under Section 6226 of the Code, shall provide
the other Partners with notice of any intention to seek review of a
determination by any court under that Section.

(j)            No Partner may file a request for an administrative adjustment of
Partnership items for any Partnership taxable year pursuant to Section 6227 of
the Code without first notifying all other Partners.  If the other Partners
agree with the requested adjustment, the TMP shall file the request for
administrative adjustment on behalf of the Partnership.

(k)           If any part of an administrative adjustment request filed by a
Partner is not allowed by the Internal Revenue Service, the Partner filing such
request shall seek the concurrence of other Partners with regard to the filing
of a petition with a court and with regard to seeking review of the
determination by any court in the same manner as provided in Section l(i) of
this Schedule 5.2.

(l)            The TMP and other Partners shall use all reasonable efforts to
comply with the responsibilities as outlined herein and in Sections 6222 through
6233 of the Code, but shall incur no Liability to any other Partner for failure
to fulfill such responsibilities.

(m)          The provisions of this Schedule 5.2 shall survive the termination
of the Partnership or the termination of any Partner’s interest in the
Partnership and shall remain binding on the Partners for a period of time
necessary to resolve with the Internal Revenue Service or the Department of the
Treasury any and all matters regarding the federal income taxation of the
Partnership and any applicable state income tax matters.

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

 

2.             Elections. The Partners agree that the TMP is directed to make
the following elections on behalf of the Partnership in the appropriate returns
of the Partnership prepared pursuant to Section 1 above:

(a)           To adopt the accrual method of accounting;

(b)           To compute the allowance for depreciation or cost recovery using
the shortest permissible life and most rapid recovery method permitted under the
Code;

(c)           To elect the calendar year as the Fiscal Year of the Partnership;

(d)           To elect to amortize all organization costs of the Partnership
under Section 709 of the Code; and

(e)           To make such other elections as the Partners may direct.

3.             Section 754 Election.  The Partnership shall make an election
pursuant to Section 754 of the Code to adjust the basis of Partnership property.

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

 

SCHEDULE 6.1

TO THE

AMENDED AND RESTATED

AGREEMENT OF PARTNERSHIP

OF

JONAH GAS GATHERING COMPANY

FINANCIAL RESPONSIBILITY REQUIREMENTS

Each potential new Partner in the Partnership must demonstrate adequate
financial responsibility itself or through an Affiliate that is willing to
execute a guarantee of the obligations of such prospective Partner on such terms
that are acceptable to the Partners. Such credit worthiness may be demonstrated
by satisfying one of the two methods of meeting financial responsibility
described below.

1.             Method I

The Partner or its Affiliate has senior unsecured debt outstanding which is
rated by:

(a)

 

Moody’s Investors Services

Baa3 or better, and

 

(b)

 

Standard and Poors

BBB or better

 

2.             Method II

If a Partner or its Affiliate fails to meet the above test, then the following
criteria will be applied to the proposed new Partner’s or its Affiliate’s
financial statements:

DEBT/CAPITAL IS LESS THAN OR EQUAL TO 55% AND SUCH PROPOSED PARTNER’S NET WORTH
IS GREATER THAN OR EQUAL TO $500 MILLION; OR

DEBT/EBITDA IS LESS THAN OR EQUAL TO 3.5 AND SUCH PROPOSED PARTNER’S NET WORTH
IS GREATER THAN OR EQUAL TO $500 MILLION; OR

CURRENT ASSETS/CURRENT LIABILITIES IS GREATER THAN OR EQUAL TO 1.0 AND SUCH
PROPOSED PARTNER’S NET WORTH IS GREATER THAN OR EQUAL TO $500 MILLION.

If the proposed Partner or its Affiliate meets any one of the above criteria,
then such proposed Partner or its Affiliate shall be deemed to have adequate
financial capability to fulfill the obligations of a Partner.

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

 

SCHEDULE 10.23

TO THE

AMENDED AND RESTATED

AGREEMENT OF PARTNERSHIP

OF

JONAH GAS GATHERING COMPANY

DISPUTE RESOLUTION PROCEDURE

1.             Initiation of Procedures.  Any Party desiring to initiate the
dispute resolution procedures set forth herein with respect to a dispute
(including a dispute described in the last sentence of Section 4.1(k) of the
Agreement) (“Dispute”) not resolved in the ordinary course of business (the
“Initiating Party”) must give written notice of the Dispute (the “Dispute
Notice”) to the other Party (the “Non-Initiating Party”).  The Dispute Notice
shall include (i) a statement of that Party’s position and a summary of
arguments supporting that position, and (ii) the name and title of the executive
who will represent that Party, and of any other person who will accompany the
executive, in the negotiations under Section 2 below.  For purposes of the
alternative dispute resolution procedure as set forth in this Schedule 10.23,
any reference to “Party” or “Parties” shall include the Partners.

2.             Negotiation Between Executives.  If one Party has given a Dispute
Notice under Section 1 above, the Parties shall attempt in good faith to resolve
the Dispute within forty-five (45) days following receipt of the Dispute Notice
by the Non-Initiating Party by negotiation between executives who have authority
to settle the Dispute and who are at a higher level of management than the
persons with direct responsibility for administration of this Agreement or the
matter in Dispute.  Within fifteen (15) days after receipt of the Dispute
Notice, the Non-Initiating Party shall submit to the other a written response. 
The response will include (i) a statement of that Party’s position and a summary
of arguments supporting that position, and (ii) the name and title of the
executive who will represent that Party and of any other person who will
accompany the executive.  Within forty-five (45) days following receipt of the
Dispute Notice by the Non-Initiating Party, the executives of both Parties will
meet at a mutually acceptable time and place, and thereafter, as often as they
reasonably deem necessary, to attempt to resolve the Dispute.

3.             Tolling and Performance.  Except as otherwise provided in these
procedures, all applicable statutes of limitation and defenses based upon the
passage of time and all contractual limitation periods specified in this
Agreement, if any, will be tolled while the procedures specified herein are
pending.  The Parties will take all actions necessary to effectuate the tolling
of any applicable statute of limitation or contractual limitation periods.  All
deadlines specified herein may be extended by mutual written agreement of the
Parties.  Each Party is required to continue to perform its obligations under
this Agreement pending final resolution of any Dispute, unless to do so would be
impossible or impracticable under the circumstances.

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