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Joint Development Agreement

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JOINT DEVELOPMENT AGREEMENT


BETWEEN


TE PRODUCTS PIPELINE COMPANY,
LIMITED PARTNERSHIP


AND


LOUIS DREYFUS PLASTICS CORPORATION


DATED FEBRUARY 10, 2000


TABLE OF CONTENTS


PAGE ARTICLE I DEFINITIONS AND CONSTRUCTION.................................... 2
1.1 DEFINED TERMS....................................................... 2
1.2 OTHER DEFINITIONS AND PROVISIONS.................................... 9
1.3 HEADINGS............................................................ 9


ARTICLE II OPERATION OF TEPPCO ASSETS...................................... 10
2.1 STORAGE OPERATIONS.................................................. 10
2.2 MARKETING AND DEVELOPMENT ACTIVITIES................................ 11
2.3 BUDGETS............................................................. 12
2.4 COMMUNICATION....................................................... 12
2.5 CAPITAL EXPENDITURES................................................ 12
2.6 TEPPCO EXCULPATION.................................................. 12
2.7 DREYFUS EXCULPATION................................................. 13


ARTICLE III FINANCIAL OPERATIONS AND PAYMENTS............................... 13
3.1 FINANCIAL RESULTS................................................... 13
3.2 PAYMENTS TO DREYFUS................................................. 13
3.3 FUNDING OF MB BUSINESS.............................................. 14
3.4 ACCOUNTS, BOOKS AND RECORDS......................................... 14
3.5 EXCEPTIONS TO FINANCIAL REPORTS..................................... 15


ARTICLE IV REPRESENTATIONS AND WARRANTIES OF TEPPCO........................ 15
4.1 CORPORATE MATTERS; ASSET OWNERSHIP.................................. 15
4.2 VALIDITY OF AGREEMENT; NO CONFLICT.................................. 15
4.3 LIABILITIES OF THE MB BUSINESS...................................... 15
4.4 FINANCIAL STATEMENTS................................................ 16
4.5 FINDER'S FEE........................................................ 16


ARTICLE V REPRESENTATIONS AND WARRANTIES OF DREYFUS....................... 16
5.1 CORPORATE MATTERS; ASSET OWNERSHIP.................................. 16
5.2 VALIDITY OF AGREEMENT; NO CONFLICT.................................. 16
5.3 FINANCIAL STATEMENTS................................................ 16
5.4 FINDER'S FEE........................................................ 17


ARTICLE VI TRANSFER OF TEPPCO ASSETS OR RIGHT TO USE....................... 17
6.1 PERFORMANCE MILESTONE............................................... 17
6.2 FAILURE TO MEET MILESTONE........................................... 17
6.3 CLOSING TIME AND LOCATION FOR TRANSFER.............................. 18
6.4 FORMATION OF NEWCO.................................................. 18
6.5 CLOSING............................................................. 18
6.6 INABILITY TO TRANSFER ASSETS........................................ 19
6.7 FURTHER ASSURANCE BY THE PARTIES.................................... 19
6.8 THIRD PARTY CONSENTS................................................ 19


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PAGE ARTICLE VII CONDITIONS TO CLOSING........................................... 20
7.1 CONDITIONS TO OBLIGATION OF DREYFUS................................. 20
7.2 CONDITIONS TO OBLIGATION OF TEPPCO.................................. 21


ARTICLE VIII TRANSFER OF CONTRACT RIGHTS..................................... 22
8.1 TRANSFER OF CONTRACT RIGHTS PROHIBITED.............................. 22
8.2 FAILURE TO MEET MILESTONE........................................... 23
8.3 CHANGE OF CONTROL................................................... 23
8.4 OPERATIONAL DISPUTE................................................. 23
8.5 CERTAIN TERMINATION PAYMENTS........................................ 23
8.6 RIGHT OF FIRST REFUSAL.............................................. 24
8.7 CLOSING............................................................. 25
8.8 TRANSFER PROCEDURES................................................. 26


ARTICLE IX ADDITIONAL AGREEMENTS........................................... 26
9.1 EFFORTS TO SATISFY CONDITIONS....................................... 26
9.2 RETENTION OF RECORDS................................................ 27
9.3 NONDISCLOSURE OF PROPRIETARY INFORMATION............................ 27
9.4 TRADEMARK AND TRADE NAME LICENSE.................................... 27


ARTICLE X NONCOMPETITION AGREEMENT........................................ 28
10.1 NONCOMPETITION COVENANT............................................. 28
10.2 DEFINITIONS......................................................... 30
10.3 REASONABLENESS OF COVENANT.......................................... 30
10.4 INJUNCTIVE RELIEF................................................... 30


ARTICLE XI INDEMNIFICATION................................................. 31
11.1 INDEMNITY OBLIGATION................................................ 31
11.2 PROCEDURE........................................................... 31
11.3 INDEMNIFICATION THRESHOLD........................................... 33
11.4 SURVIVAL............................................................ 33
11.5 EXCLUSIVE REMEDY; LIMITATIONS....................................... 33


ARTICLE XII TERMINATION..................................................... 34
12.1 TERMINATION PRIOR TO CLOSING........................................ 34
12.2 LIABILITY UPON TERMINATION.......................................... 35
12.3 EFFECTIVE DATE OF TERMINATION....................................... 35
12.4 TERMINATION OF INTEREST............................................. 35


ARTICLE XIII EXPENSES........................................................ 35


ARTICLE XIV RESOLUTION OF DISPUTES; CONSENT TO JURISDICTION AND VENUE....... 35


ARTICLE XV GENERAL PROVISIONS.............................................. 36


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TABLE OF CONTENTS


PAGE
15.1 FURTHER ASSURANCES.................................................. 36
15.2 NOTICES............................................................. 36
15.3 GOVERNING LAW....................................................... 37
15.4 ENTIRE AGREEMENT.................................................... 37
15.5 ASSIGNMENT.......................................................... 37
15.6 SUCCESSORS.......................................................... 37
15.7 AMENDMENTS; WAIVER.................................................. 37
15.8 COUNTERPARTS........................................................ 38
15.9 SEVERABILITY........................................................ 38
15.10 NO THIRD PARTY BENEFICIARIES........................................ 38
15.11 INDEPENDENT CONTRACTOR; NO PARTNERSHIP.............................. 38
15.12 NEGOTIATED TRANSACTION.............................................. 38
15.13 BUSINESS DAYS....................................................... 38


iii


JOINT DEVELOPMENT AGREEMENT


This JOINT DEVELOPMENT AGREEMENT (this "Agreement") dated as of February 10, 2000, by and between TE Products Pipeline Company, Limited Partnership, a Delaware limited partnership ("TEPPCO"), and Louis Dreyfus Plastics Corporation, a Delaware corporation ("Dreyfus").


WITNESSETH:


WHEREAS, TEPPCO is engaged in the MB Business in Chambers and Harris Counties, Texas utilizing the TEPPCO Assets; and


WHEREAS, Dreyfus is engaged in the merchandising and trading of the Products, and in connection therewith currently utilizes the TEPPCO Assets; and


WHEREAS, TEPPCO and Dreyfus desire to achieve certain synergistic benefits by combining the MB Business and the expertise of Dreyfus in marketing such business activities to achieve increased utilization of the TEPPCO Assets during and after the Development Period; and


WHEREAS, TEPPCO intends to account for the MB Business as a separate division of TEPPCO during the Term of this Agreement as hereinafter set forth to better reflect the results of such operations; and


WHEREAS, upon successful completion of certain objectives during the Development Period in accordance with the provisions of this Agreement, the Parties intend to enter into a joint venture regarding the MB Business through the contribution of the assets and liabilities constituting the MB Business, the TEPPCO Assets and certain other assets and/or improvements to a newly formed Delaware limited partnership ("Newco"), which would be jointly owned by TEPPCO and Dreyfus, such contribution to be in accordance with the terms and conditions of this Agreement and the other agreements contemplated hereby;


NOW, THEREFORE, in consideration of the premises and the mutual promises and obligations contained herein, and intending to be legally bound, TEPPCO and Dreyfus agree as follows:


1


ARTICLE I


DEFINITIONS AND CONSTRUCTION


1.1 DEFINED TERMS. The capitalized terms used in this Agreement shall have the meanings ascribed to them as follows:


"Acceptance" shall have the meaning given that term in
Section 8.6;


"Accounting Procedures" shall mean the accounting policies and
procedures set forth in Annex I to the Operating Procedures;


"Acquisition Proposal" shall have the meaning given that term
in Section 8.6;


"Affiliate" means, when used with respect to a specified
Person, any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the
specified Person, provided that Newco shall not be deemed to be an
Affiliate of TEPPCO, Dreyfus or any of their respective subsidiaries or
Affiliates. For purposes of this definition, "control", when used with
respect to any specified Person, means the power to direct the
management and policies of the Person, directly or indirectly, whether
through the ownership of voting securities, by contract, by family
relationship or otherwise; and the terms "controlling" and "controlled"
have the meanings correlative to the foregoing. Notwithstanding the
foregoing, for purposes of this Agreement, Louis Dreyfus Natural Gas
Corporation, an Oklahoma corporation, shall not be deemed an Affiliate
of Dreyfus;


"Assumed Liabilities" shall mean the liabilities, debts and
obligations, whether known or unknown, contingent or liquidated,
including those set forth on Exhibit A hereto, of or relating to the MB
Business as of a specific date, including all liabilities, debts and
obligations related to the MB Business arising during the Term or based
upon events occurring or facts or circumstances existing prior to the
Effective Date, but excluding all indebtedness for borrowed money
except for indebtedness for Discretionary Capital Expenditures
previously approved by Dreyfus;


"Base EBITDA" means, for the MB Business, for any 12 month
period the lesser of (i) its EBITDA for such period and (ii) $7.3
Million;


"Budgets" shall have the meaning given that term in Section
2.3 hereof;


"Business Day" means any day other than a Saturday, Sunday or
bank holiday in Houston, Texas;


2


"Capital Budget" shall have the meaning given that term in
Section 2.3 hereof;


"Claim" means any demand, demand letter, claim or notice of
noncompliance or violation (written or oral) or Proceeding;


"Claim Notice" shall have the meaning given that term in
Section 11.211.2(a) hereof;


"Closing" shall have the meaning given that term in Section
6.3;


"Code" means the Internal Revenue Code of 1986, as amended, or
any amending or superseding tax laws of the United States of America;


"Competing Business Transaction" shall have the meaning given
that term in Section 10.1(c);


"Contract Rights" shall have the meaning given that term in
Section 8.1(a);


"Conveyance Document" means the General Conveyance and
Assumption Agreement in the form set forth in Exhibit B hereto;


"Development Period" shall mean the period beginning on
January 1, 2000 and ending at midnight on December 31, 2002;


"Discretionary Capital Expenditures" means any expenditure
during the Term relating to the TEPPCO Assets or the MB Business that
is classified under GAAP as a capital expenditure and (i) is not a
Mandatory Capital Expenditure, or (ii) if classified as a Mandatory
Capital Expenditure, is associated or is in conjunction with, or is the
result of, a prior or current Discretionary Capital Expenditure, in
which case the portion of such Mandatory Capital Expenditure that is
allocable to such prior or current Discretionary Capital Expenditure
shall be classified as a Discretionary Capital Expenditure;


"Disposition" shall have the meaning given that term in
Section 8.6;


"Dreyfus" shall have the meaning given that term in the
preamble and any successor or assign permitted by this Agreement;


"Dreyfus Change of Control" means an event that causes S. A.
Louis Dreyfus et Cie., a French societe anonyme, together with its
Affiliates, to cease to own, directly or indirectly, at least a 50%
voting interest in (x) Dreyfus or (y) in the event of the transfer of
Dreyfus' Interest to an Affiliate of Dreyfus, in such Affiliate;


3


"Dreyfus Investment" shall have the meaning given that term in
Section 8.2;


"Dreyfus Storage Agreement" shall mean the Storage and Service
Agreement in the form attached as Exhibit C hereto;


"EBITDA" means, for the MB Business, its earnings for any
period on a GAAP basis before all charges for such period for
depreciation and amortization, interest (except as provided below) and
income taxes. Notwithstanding the foregoing, all interest incurred in
connection with borrowings the proceeds of which are used for
Discretionary Capital Expenditures shall be included as an expense in
calculating EBITDA. As an example only, Exhibit D sets forth a
calculation of EBITDA for the MB Business based on historical averages
except as otherwise noted in such Exhibit;


"Effective Date" shall have the meaning given that term in
Section 6.3;


"Effective Time" shall have the meaning given that term in
Section 6.3;


"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, or penalties) resulting from or based upon (a) a
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment; or
(e) any contract, agreement or other consensual arrangement pursuant to
which liability is assumed or imposed with respect to any of the
foregoing.


"Environmental Law" or "Environmental Laws" means all laws,
rules, regulations, statutes, ordinances, decrees or orders of any
governmental entity relating to (i) the control of any potential
pollutant or protection of the air, water or land, (ii) solid, gaseous
or liquid waste generation, handling, treatment, storage, disposal or
transportation, and (iii) exposure to hazardous, toxic or other
substances alleged to be harmful, and includes without limitation, (a)
the terms and conditions of any license, permit, approval, or other
authorization by any governmental entity, and (b) judicial,
administrative, or other regulatory decrees, judgments, and orders of
any governmental entity.


"First Party" shall have the definition given that term in
Section 10.1(c);


"Fiscal Year" means the calendar year;


4


"GAAP" means Generally Accepted Accounting Principles in the
United States of America consistently applied for the time periods
involved;


"General Partner" means a Delaware limited liability company,
formed by the Parties to serve as the general partner of Newco;


"Governmental Authority" means any entity of or pertaining to
government, including any federal, state, local, other governmental or
administrative authority, agency, court, tribunal, arbitrator,
commission, board or bureau;


"Hazardous Materials" means any (i) toxic or hazardous
materials or substances; (ii) solid or hazardous wastes, including
asbestos, polychlorinated biphenyls, mercury, buried contaminants,
chemicals, flammable or explosive materials; (iii) radioactive
materials; (iv) petroleum wastes and spills or releases of petroleum
products; and (v) any other chemical, pollutant, contaminant, substance
or waste that is regulated by any governmental entity under any
Environmental Law.


"Indemnified Party" shall have the meaning given that term in
Section 11.2;


"Indemnifying Party" shall have the meaning given that term in
Section 11.2;


"IRS" means the Internal Revenue Service of the United States
of America;


"Lien" means any lien, mortgage, pledge, claim, charge,
security interest or other encumbrance, option, defect or other rights
of any third person of any nature whatsoever;


"LLC Agreement" means the Limited Liability Company Agreement
of the General Partner, in the form attached as Exhibit E hereto;


"Losses" means any and all damages, losses, liabilities,
judgments, payments, obligations, penalties, assessments, costs,
disbursements or expenses (including reasonable fees, disbursements and
expenses of attorneys, accountants and other professional advisors and
of expert witnesses and costs of investigation and preparation of any
kind or nature whatsoever);


"Mandatory Capital Expenditure" means all expenditures during
the Term relating to the TEPPCO Assets or the MB Business that are
classified under GAAP as a capital expenditure, the primary function of
which is for regulatory compliance, safety or operational integrity of
the


5


MB Business or TEPPCO Assets or is otherwise the result of actions by
TEPPCO in emergency situations as provided in the Operating Procedures;


"Material Adverse Effect" means, with respect to a Person, a
material adverse effect on the business, assets, financial condition or
results of operations of such Person and its subsidiaries, taken as a
whole;


"MB Balance Sheet" shall have the meaning given that term in
Section 4.4;


"MB Business" means the operation, maintenance and marketing
of the underground storage facility and related operations of shuttle,
gathering and local delivery pipelines owned by TEPPCO located near
Mont Belvieu in Chambers and Harris Counties, Texas for the
transportation of Products to and from such underground storage
facility and industries located along the Houston Ship Channel and at
Baytown and Mont Belvieu, Texas;


"Milestone" shall have the meaning given that term in Section
6.1;


"Net EBITDA" means, for the MB Business, the amount of EBITDA,
if any, in excess of the Base EBITDA during any period;


"Newco" shall have the meaning given that term in the
recitals;


"Notice Month" shall have the meaning given that term in
Section 8.3;


"Offer" shall have the meaning given that term in Section 8.6;


"Offer Period" shall have the meaning given that term in
Section 8.6;


"Operating Budget" shall have the meaning given that term in
Section 2.3. The initial Operating Budget for the calendar year
beginning January 1, 2000 is attached as Exhibit F;


"Operating Procedures" means the Operating Procedures in the
form attached as an exhibit to the Partnership Agreement and further
includes the Accounting Procedures;


"Organizational Agreements" means the Partnership Agreement,
the LLC Agreement and the agreements contemplated thereby;


6


"Parent" shall mean, with respect to TEPPCO, TEPPCO Partners,
L.P., a Delaware limited partnership, and with respect to Dreyfus, S.
A. Louis Dreyfus et Cie, a French societe anonyme.


"Partnership Agreement" means the Agreement of Limited
Partnership of Newco, in the form attached as Exhibit G hereto;


"Party" means TEPPCO or Dreyfus, as the case may be, and
"Parties" means TEPPCO and Dreyfus;


"Party Indemnitees" shall have the meaning given that term in
Section 11.1;


"Permit" means any license, permit, concession, warrant,
franchise or other governmental authorization or approval of any
Governmental Authority;


"Permitted Encumbrances" means (a) Liens for current taxes and
assessments not yet due, (b) inchoate mechanic and materialmen liens
for construction in progress, (c) inchoate workmen, repairmen,
warehousemen, customer, employee and carrier liens arising in the
ordinary course of business, (d) other minor imperfections in title
that do not affect marketability or use, (e) all validly existing
restrictions, covenants, agreements, encumbrances, conditions,
rights-of-way, easements, ordinances, mineral reservations, royalty
reservations and other matters of record, if any, affecting all or any
part of the TEPPCO Assets and (f) all of the terms and conditions of
the instruments creating or evidencing the TEPPCO Assets;


"Person" means any individual, corporation, partnership, joint
venture, association, limited liability company, joint stock company,
trust, unincorporated organization, Governmental Authority or
government (or agency or political subdivision thereof);


"Pricing Period" shall mean the trailing 12-month period
ending on a date or month as specified in the Agreement;


"Proceeding" means any action, suit, claim, investigation,
review or other judicial or administrative proceeding, at law or in
equity, before any Governmental Authority;


"Products" means propane, normal butane, isobutane, natural
gasoline and other commodities as mutually agreed between the Parties,
and for which products the TEPPCO Assets has at the relevant time all
necessary Permits;


7


"Records" means all agreements, documents, accounts, books,
records and files relating to the TEPPCO Assets and the MB Business;


"Restricted Affiliate" shall have the meaning given that term
in Section 10.2;


"Second Party" shall have the meaning given that term in
Section 10.1(c);


"Start Date" means January 1, 2000;


"TEPPCO" shall have the meaning given that term in the
preamble and any successor or assign permitted by this Agreement;


"TEPPCO Assets" means (i) all of the real property identified
in pink or blue on the map labeled "Real Property at Mont Belvieu"
attached to E
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