e424b5
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CALCULATION OF REGISTRATION FEE
 
                     
      Aggregate
         
      Maximum
         
Title of Each Class of
    Aggregate
      Amount of
 
Securities to Be Registered     Offering Price       Registration Fee  
Unsecured Senior Notes
    $ 1,500,000,000       $ 174,150.00(1 )
                     
 
(1)  The filing fee, calculated in accordance with Rule 457(r) of the Securities Act of 1933, was transmitted to the Securities and Exchange Commission on January 5, 2011 in connection with the securities offered under Registration Statement File Nos. 333-168049 and 333-168049-01 by means of this prospectus supplement.
 
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-168049
333-168049-01
 
PROSPECTUS SUPPLEMENT
(To Prospectus dated November 29, 2010)
 
(ENTERPRISE LOGO)
Enterprise Products Operating LLC
$750,000,000 3.20% Senior Notes due 2016
$750,000,000 5.95% Senior Notes due 2041
Unconditionally Guaranteed by
Enterprise Products Partners L.P.
 
 
 
 
This prospectus supplement relates to our offering of two series of senior notes. The senior notes due 2016, which we refer to as “2016 notes,” will bear interest at the rate of 3.20% per year and will mature on February 1, 2016. The senior notes due 2041, which we refer to as “2041 notes,” will bear interest at the rate of 5.95% per year and will mature on February 1, 2041. We refer to the 2016 notes and 2041 notes, collectively, as the “notes.” We will pay interest on the 2016 notes on February 1 and August 1 of each year, beginning August 1, 2011. We will pay interest on the 2041 notes on February 1 and August 1 of each year, beginning August 1, 2011. We may redeem some or all of the notes at any time at the applicable redemption price described beginning on page S-26 of this prospectus supplement, which includes a make-whole premium.
 
The notes are unsecured and rank equally with all other senior indebtedness of Enterprise Products Operating LLC (successor to Enterprise Products Operating L.P.). The notes will be guaranteed by our parent, Enterprise Products Partners L.P., and in certain circumstances may be guaranteed in the future on the same basis by one or more subsidiary guarantors.
 
The notes will not be listed on any securities exchange.
 
Investing in the notes involves certain risks. See “Risk Factors” beginning on page S-16 of this prospectus supplement and on page 2 of the accompanying prospectus.
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
 
                                 
    2016 Notes     2041 Notes  
    Per Note     Total     Per Note     Total  
 
Public Offering Price(1)
    99.901 %   $ 749,257,500       99.317 %   $ 744,877,500  
Underwriting Discount
    0.600 %   $ 4,500,000       0.875 %   $ 6,562,500  
Proceeds to Enterprise Products Operating LLC (before expenses)
    99.301 %   $ 744,757,500       98.442 %   $ 738,315,000  
 
 
(1) Plus accrued interest from January 13, 2011, if settlement occurs after that date.
 
The underwriters expect to deliver the notes in book-entry form only, through the facilities of The Depository Trust Company, against payment on January 13, 2011, the seventh trading day after the date of this prospectus.
 
 
 
Joint Book-Running Managers
 
 
J.P. Morgan  
  BNP PARIBAS  
  Deutsche Bank Securities  
  DnB NOR Markets  
  RBS  
  Scotia Capital
 
 
Senior Co-Managers
 
 
Barclays Capital Mizuho Securities USA Inc. Morgan Stanley
  SunTrust Robinson Humphrey            Wells Fargo Securities  
 
 
 
Co-Managers
 
 
Natixis Securities N.A.        RBC Capital Markets        UBS Investment Bank
 
 
 
Junior Co-Managers
 
 
BBVA Securities ING SOCIETE GENERALE US Bancorp
 
 
The date of this prospectus supplement is January 4, 2011.


 

 
TABLE OF CONTENTS
 
     
    Page
 
Prospectus Supplement
  S-1
  S-16
  S-20
  S-21
  S-24
  S-29
  S-34
  S-35
  S-37
  S-37
  S-38
  S-38
  F-1
     
     
 
Prospectus
About This Prospectus
  1
Our Company
  1
Risk Factors
  2
Use of Proceeds
  3
Ratio of Earnings to Fixed Charges
  3
Description of Debt Securities
  4
Description of Our Common Units
  18
Cash Distribution Policy
  20
Description of Our Partnership Agreement
  21
Material Tax Consequences
  27
Investment in Enterprise Products Partners L.P. by Employee Benefit Plans
  42
Plan of Distribution
  43
Where You Can Find More Information
  43
Forward-Looking Statements
  44
Legal Matters
  45
Experts
  45


Table of Contents

Important Notice About Information in This
Prospectus Supplement and the Accompanying Prospectus
 
This document is in two parts. The first part is this prospectus supplement, which describes the terms of this offering of notes and certain terms of the notes and the guarantee. The second part is the accompanying prospectus, which describes certain terms of the indenture under which the notes will be issued and which gives more general information, some of which may not apply to this offering of notes.
 
If the information varies between this prospectus supplement and the accompanying prospectus, you should rely on the information in this prospectus supplement.
 
You should rely only on the information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus or any free writing prospectus prepared by or on behalf of us. We have not authorized anyone to provide you with additional or different information. We are not making an offer to sell these notes or the guarantee in any jurisdiction where the offer is not permitted. You should not assume that the information contained in this prospectus supplement or the accompanying prospectus is accurate as of any date other than the date on the front of this document or that any information we have incorporated by reference is accurate as of any date other than the date of the document incorporated by reference. Our business, financial condition, results of operations and prospects may have changed since these dates.
 
We expect delivery of the notes will be made against payment therefor on or about January 13, 2011, which is the seventh business day following the date of pricing of the notes (such settlement being referred to as “T+7”). Under Rule 15c6-1 of the Securities Exchange Act of 1934, trades in the secondary market generally are required to settle in three business days unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade the notes on the date of pricing of the notes or the next succeeding three business days will be required, by virtue of the fact that the notes initially will settle in T+7, to specify an alternate settlement cycle at the time of any such trade to prevent failed settlement and should consult their own advisers.


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SUMMARY
 
This summary highlights information from this prospectus supplement and the accompanying prospectus to help you understand our business, the notes and the guarantee. It does not contain all of the information that is important to you. You should read carefully the entire prospectus supplement, the accompanying prospectus, the documents incorporated by reference and the other documents to which we refer for a more complete understanding of this offering and our business. You should read “Risk Factors” beginning on page S-16 of this prospectus supplement and page 2 of the accompanying prospectus for more information about important risks that you should consider before making a decision to purchase notes in this offering.
 
Enterprise Products Partners L.P. (which we refer to as “Enterprise Parent”) conducts substantially all of its business through Enterprise Products Operating LLC (successor to Enterprise Products Operating L.P.) (which we refer to as “Enterprise”) and the subsidiaries and unconsolidated affiliates of Enterprise. Accordingly, in the sections of this prospectus supplement that describe the business of Enterprise and Enterprise Parent, unless the context otherwise indicates, references to “Enterprise,” “us,” “we,” “our” and like terms refer to Enterprise Products Operating LLC together with its wholly owned subsidiaries, Duncan Energy Partners L.P. (NYSE: DEP) (“Duncan Energy Partners”), a publicly traded, consolidated subsidiary of Enterprise, and Enterprise’s investments in unconsolidated affiliates. Enterprise is the borrower under substantially all of the consolidated company’s credit facilities (except for credit facilities of Duncan Energy Partners and certain unconsolidated affiliates) and is the issuer of substantially all of the company’s publicly traded notes, all of which are guaranteed by Enterprise Parent. Enterprise’s financial results do not differ materially from those of Enterprise Parent; the number and dollar amount of reconciling items between Enterprise’s consolidated financial statements and those of Enterprise Parent are insignificant. All financial results presented in this prospectus supplement are those of Enterprise Parent. The pro forma financial information presented in this prospectus supplement gives effect to the recent merger of Enterprise GP Holdings L.P. (“Holdings”) with a subsidiary of Enterprise Parent as described under “Recent Developments” in this Summary section.
 
The notes are solely obligations of Enterprise and, to the extent described in this prospectus supplement, are guaranteed by Enterprise Parent. Accordingly, in the other sections of this prospectus supplement, including “The Offering” and “Description of the Notes,” unless the context otherwise indicates, references to “Enterprise,” “us,” “we,” “our” and like terms refer to Enterprise Products Operating LLC and do not include any of its subsidiaries or unconsolidated affiliates or Enterprise Parent. Likewise, in such sections, unless the context otherwise indicates, including with respect to financial and operating information that is presented on a consolidated basis, “Enterprise Parent” and “Parent Guarantor” refer to Enterprise Products Partners L.P. and not its subsidiaries or unconsolidated affiliates.
 
Enterprise and Enterprise Parent
 
Overview
 
We are a leading North American provider of midstream energy services to producers and consumers of natural gas, natural gas liquids (“NGLs”), crude oil, refined products and petrochemicals. Our midstream energy asset network links producers of natural gas, NGLs and crude oil from some of the largest supply basins in the United States, Canada and the Gulf of Mexico with domestic consumers and international markets.
 
Our midstream energy operations include: natural gas transportation, gathering, treating, processing and storage; NGL transportation, fractionation, storage, and import and export terminaling; crude oil and refined products transportation, storage and terminaling; offshore production platforms; petrochemical transportation and services; and a marine transportation business that operates primarily on the United States inland and Intracoastal Waterway systems and in the Gulf of Mexico. NGL products (ethane, propane, normal butane, isobutane and natural gasoline) are used as raw materials by the petrochemical industry, as feedstocks by refiners in the production of motor gasoline and as fuel by industrial and residential users. Our portfolio of integrated assets includes approximately: 49,100 miles of natural gas, NGL, crude oil, refined products and


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petrochemical pipelines; 200 million barrels (“MMBbls”) of NGL, refined products and crude oil storage capacity; 27 billion cubic feet (“Bcf”) of natural gas storage capacity; and 25 natural gas processing plants. In addition, our asset portfolio includes 19 fractionation facilities, six offshore hub platforms located in the Gulf of Mexico, a butane isomerization complex, NGL import and export terminals, and an octane enhancement facility.
 
For the year ended December 31, 2009 and the nine months ended September 30, 2010, Enterprise Parent had pro forma consolidated revenues of $25.5 billion and $24.2 billion, operating income of $1.9 billion and $1.6 billion, and net income from continuing operations of $1.1 billion and $1.1 billion, respectively.
 
Our principal offices, including those of Enterprise Parent, are located at 1100 Louisiana Street, 10th Floor, Houston, Texas 77002, and our and Enterprise Parent’s telephone number is (713) 381-6500.
 
Our Business Segments
 
We have six reportable business segments: (i) NGL Pipelines & Services; (ii) Onshore Natural Gas Pipelines & Services; (iii) Onshore Crude Oil Pipelines & Services; (iv) Offshore Pipelines & Services; (v) Petrochemical & Refined Products Services; and (vi) Other Investments. Our business segments are generally organized and managed along our asset base according to the type of services rendered (or technologies employed) and products produced and/or sold. We provide midstream energy services through our subsidiaries and unconsolidated affiliates.
 
NGL Pipelines & Services.  Our NGL Pipelines & Services business segment includes our (i) natural gas processing business and related NGL marketing activities, (ii) NGL pipelines aggregating approximately 16,300 miles, (iii) NGL and related product storage and terminal facilities with 163.4 MMBbls of working storage capacity and (iv) NGL fractionation facilities. This segment also includes our import and export terminal operations.
 
Onshore Natural Gas Pipelines & Services.  Our Onshore Natural Gas Pipelines & Services business segment includes approximately 19,600 miles of onshore natural gas pipeline systems that provide for the gathering and transportation of natural gas in Alabama, Colorado, Louisiana, Mississippi, New Mexico, Texas and Wyoming. We own two salt dome natural gas storage facilities located in Mississippi and lease natural gas storage facilities located in Texas and Louisiana. This segment also includes our related natural gas marketing activities.
 
Onshore Crude Oil Pipelines & Services.  Our Onshore Crude Oil Pipelines & Services business segment includes approximately 4,400 miles of onshore crude oil pipelines and 10.5 MMBbls of above-ground storage tank capacity. This segment also includes our crude oil marketing activities.
 
Offshore Pipelines & Services.  Our Offshore Pipelines & Services business segment serves some of the most active drilling development regions, including deepwater production fields in the northern Gulf of Mexico offshore Texas, Louisiana, Mississippi and Alabama. This segment includes approximately 1,400 miles of offshore natural gas pipelines, approximately 1,000 miles of offshore crude oil pipelines and six offshore hub platforms.
 
Petrochemical & Refined Products Services.  Our Petrochemical & Refined Products Services business segment consists of (i) propylene fractionation plants and related activities, (ii) butane isomerization facilities, (iii) an octane enhancement facility, (iv) refined products pipelines, including our Products Pipeline System and related activities and (v) marine transportation and other services.
 
Other Investments.  On November 22, 2010, we completed the merger with Holdings and, as a result, our financial results include a sixth segment, Other Investments, which consists of Holdings’ noncontrolling ownership interests in Energy Transfer Equity, L.P. (“Energy Transfer Equity”), a publicly traded limited partnership (NYSE: ETE). In May 2007, Holdings acquired 38,976,090 common units of Energy Transfer Equity, which it accounts for using the equity method of accounting.


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Recent Developments
 
Enterprise Parent Issues 13,225,000 Common Units.
 
In December 2010, Enterprise Parent issued 13,225,000 common units representing limited partner interests (including an over-allotment of 1,725,000 common units) to the public at an offering price of $41.25 per unit. We used the net cash proceeds of approximately $528.3 million to temporarily reduce borrowings under our multi-year revolving credit facility.
 
Merger of Enterprise GP Holdings L.P. with a Subsidiary of Enterprise Parent
 
On November 22, 2010, Enterprise Parent completed the merger of Holdings, the holder of 100% of the membership interests in Enterprise Parent’s prior general partner, with and into a wholly owned subsidiary of ours (the “Holdings Merger”). At the effective time of the Holdings Merger, EPE Holdings, LLC, the former general partner of Holdings (“Holdings GP”), succeeded as the general partner of Enterprise Parent, and each unit representing limited partner interests in Holdings issued and outstanding was cancelled and converted into the right to receive Enterprise Parent common units based on an exchange rate of 1.50 Enterprise Parent common units per Holdings unit. Enterprise Parent issued an aggregate of 208,813,454 common units (net of 23 fractional common units cashed out) as consideration in the Holdings Merger and, immediately after the merger, cancelled 21,563,177 Enterprise Parent common units previously owned by Holdings.
 
In connection with the Holdings Merger, Enterprise Parent’s partnership agreement was amended and restated to effect the cancellation of its general partner’s 2% economic general partner interest in Enterprise Parent and the incentive distribution rights held by Holdings’ general partner. Holdings GP succeeded as the non-economic general partner of Enterprise Parent and was subsequently renamed Enterprise Products Holdings LLC (“Enterprise GP”).
 
In connection with the Holdings Merger, an affiliate of Enterprise Products Company (“EPCO”) agreed to designate and waive its rights to quarterly distributions of “available cash” with respect to a specified number of Enterprise Parent common units over a five-year period: 30,610,000 common units during 2011; 26,130,000 common units during 2012; 23,700,000 common units during 2013; 22,560,000 common units during 2014; and 17,690,000 common units during 2015.
 
For information regarding the pro forma effects of the Holdings Merger, please read the Unaudited Pro Forma Condensed Consolidated Financial Statements beginning on page F-1 of this prospectus supplement.


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Organizational Structure
 
The following chart depicts our current organizational structure and ownership.
 
(FLOW CHART)
 
 
(1) Includes Enterprise Parent common units beneficially owned by the estate of Dan L. Duncan, related family trusts and other EPCO affiliates. DDLLC, a private affiliate of EPCO that owns 100% of the membership interests in our general partner, and EPCO are each controlled by separate voting trusts. The voting trustees of each of these voting trusts consist of three individuals, currently Randa Duncan Williams, Richard H. Bachmann and Dr. Ralph S. Cunningham. Accordingly, the common units beneficially owned by DDLLC and EPCO are now controlled by each of the respective voting trusts. Ms. Williams also has beneficial ownership in these common units to the extent of her pecuniary interest in DDLLC and EPCO. Ms. Williams, Mr. Bachmann and Dr. Cunningham are also co-executors of the estate of Dan L. Duncan.
 
Also includes 20,881 common units owned directly by Enterprise GP, and 4,520,431 Class B units held by a privately held affiliate of EPCO. The Class B units are entitled to vote together with the common units as a single class on partnership matters and have the same rights and privileges as our common units, except that they are not entitled to regular quarterly cash distributions for the first sixteen quarters following the closing date of our merger with TEPPCO Partners, L.P., which occurred on October 26, 2009. The Class B units automatically convert into the same number of common units on the date immediately following the payment date for the sixteenth quarterly distribution following the closing date of the TEPPCO merger.
 
There are currently 30,610,000 common units subject to a distribution waiver agreement. Please read “Summary — Recent Developments — Merger of Enterprise GP Holdings L.P. with a Subsidiary of Enterprise Parent” for a description of this agreement.


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The Offering
 
Issuer Enterprise Products Operating LLC
 
Guarantee The notes will be fully and unconditionally guaranteed by the Parent Guarantor on an unsecured and unsubordinated basis. Initially, the notes will not be guaranteed by any of our subsidiaries. In the future, however, if any of our subsidiaries become guarantors or co-obligors of our funded debt (as defined in the indenture), then these subsidiaries will jointly and severally, fully and unconditionally, guarantee our payment obligations under the notes. Please read “Description of the Notes — Parent Guarantee.”
 
Securities Offered $750,000,000 aggregate principal amount of 3.20% senior notes due 2016. $750,000,000 aggregate principal amount of 5.95% senior notes due 2041.
 
Interest The 2016 notes will bear interest at 3.20% per annum. The 2041 notes will bear interest at 5.95% per annum. All interest on the notes will accrue from and including January 13, 2011.
 
Interest Payment Dates Interest on the 2016 notes will be paid in cash semi-annually in arrears on February 1 and August 1 of each year, beginning August 1, 2011. Interest on the 2041 notes will be paid in cash semi-annually in arrears on February 1 and August 1 of each year, beginning August 1, 2011.
 
Maturity 2016 notes — February 1, 2016.
 
2041 notes — February 1, 2041.
 
Use of Proceeds We will receive aggregate net proceeds of approximately $1,482.8 million from the sale of the notes to the underwriters after deducting the underwriters’ discount and other offering expenses payable by us. We expect to use the net proceeds of this offering to temporarily reduce borrowings under our multi-year revolving credit facility, to repay outstanding amounts on the maturity of our $450 million principal amount of senior notes B due February 2011, and for general company purposes. Affiliates of certain of the underwriters are lenders under our multi-year revolving credit facility and, accordingly, will receive a substantial portion of the proceeds of this offering. Please read “Use of Proceeds” and “Underwriting.”
 
Ranking The notes will be our unsecured and unsubordinated obligations and will rank equally with all of our other existing and future unsubordinated indebtedness. Please read “Description of the Notes — Ranking.”
 
Optional Redemption We may redeem the notes in whole, at any time, or in part, from time to time, prior to maturity, at a redemption price that includes accrued and unpaid interest and a make-whole premium. For a more complete description of the redemption provisions of the notes, please read “Description of the Notes — Optional Redemption.”


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Certain Covenants We will issue the notes under an Indenture (as defined below) with Wells Fargo Bank, N.A., as trustee. The Indenture covenants include a limitation on liens and a restriction on sale-leasebacks. Each covenant is subject to a number of important exceptions, limitations and qualifications that are described under “Description of Debt Securities — Certain Covenants” in the accompanying prospectus.
 
Risk Factors Investing in the notes involves certain risks. You should carefully consider the risk factors discussed under the heading “Risk Factors” beginning on page S-16 of this prospectus supplement and on page 2 of the accompanying prospectus and the other information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus before deciding to invest in the notes.
 
Book-Entry Form/Denominations The notes of each series will be issued in denominations of $1,000 and integral multiples thereof in book-entry form and will be represented by one or more permanent global certificates deposited with, or on behalf of, The Depository Trust Company (“DTC”) and registered in the name of a nominee of DTC. Beneficial interests in any of the notes will be shown on, and transfers will be effected only through, records maintained by DTC or its nominee and any such interest may not be exchanged for certificated securities, except in limited circumstances.
 
Trading We will not list the notes for trading on any securities exchange.
 
Trustee Wells Fargo Bank, National Association
 
Governing Law The notes and the Indenture will be governed by, and construed in accordance with, the laws of the State of New York.


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Summary Historical and Pro Forma Financial and
Operating Information of Enterprise Parent and Holdings
 
The following tables set forth, for the periods and at the dates indicated, summary historical financial and operating information for Enterprise Parent and Holdings prior to the Holdings Merger and summary unaudited pro forma financial information for Enterprise Parent after giving effect to the Holdings Merger and related transactions. The summary historical financial data as of and for each of the years ended December 31, 2007, 2008 and 2009 are derived from and should be read in conjunction with the audited financial statements and accompanying footnotes of Enterprise Parent and Holdings, respectively. The summary historical financial data as of and for the nine month periods ended September 30, 2009 and 2010 are derived from and should be read in conjunction with the unaudited financial statements and accompanying footnotes of Enterprise Parent and Holdings, respectively.
 
Enterprise Parent’s consolidated balance sheets as of December 31, 2008 and 2009 and as of September 30, 2010, and the related statements of consolidated operations, comprehensive income, cash flows and equity for each of the three years in the period ended December 31, 2009 and the nine months ended September 30, 2010 and 2009 are incorporated by reference into this prospectus supplement from its annual report on Form 10-K for the year ended December 31, 2009, and its quarterly report on Form 10-Q for the period ended September 30, 2010. Holdings’ consolidated balance sheets as of December 31, 2008 and 2009 and as of September 30, 2010, and the related statements of consolidated operations, comprehensive income, cash flows and equity for each of the three years in the period ended December 31, 2009 and the nine months ended September 30, 2010 and 2009 are incorporated by reference into this prospectus supplement from Enterprise Parent’s current reports on Form 8-K and 8-K/A filed on November 23, 2010.
 
The summary unaudited pro forma condensed consolidated financial statements of Enterprise Parent give pro forma effect to the Holdings Merger and related transactions, which closed on November 22, 2010. Holdings will be treated as the surviving consolidated entity for accounting purposes, even though Enterprise Parent will be the surviving consolidated entity for legal and reporting purposes. For financial accounting and reporting purposes, Holdings is considered the accounting acquiror of its noncontrolling interests in Enterprise Parent (i.e., Enterprise Parent’s limited partner interests that are owned by third parties and related parties other than Holdings).
 
The unaudited pro forma condensed consolidated financial statements have been prepared to assist in the analysis of the financial effects of the Holdings Merger and related transactions. The unaudited pro forma condensed statements of consolidated operations for the nine months ended September 30, 2010 and the year ended December 31, 2009 assume the Holdings Merger and related transactions occurred on January 1, 2009. The unaudited pro forma condensed consolidated balance sheet shows the financial effects of the Holdings Merger and related transactions as if they occurred on September 30, 2010. The unaudited pro forma condensed consolidated financial statements are based upon assumptions that Enterprise Parent believes are reasonable under the circumstances and are intended for informational purposes only. They are not necessarily indicative of the financial results that would have occurred if the Holdings Merger and related transactions had taken place on the dates indicated, nor are they indicative of the future consolidated results of the combined entity. For a complete discussion of the pro forma adjustments, please read the section titled “Index to Unaudited Pro Forma Condensed Consolidated Financial Statements” beginning on page F-1 of this document.
 
Enterprise Parent’s non-generally accepted accounting principles, or non-GAAP, financial measures of gross operating margin and Adjusted EBITDA are presented in the summary historical and pro forma financial information. Please read “— Non GAAP Financial Measures,” which provides the necessary explanations and reconciliations for the non-GAAP financial measures.


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Summary Historical and Pro Forma Financial and Operating Information of Enterprise Parent
 
                                 
    Enterprise Parent Consolidated Historical     Enterprise Parent Pro Forma  
          For the Year Ended
 
    For the Year Ended December 31,     December 31,  
    2007     2008     2009     2009  
                      (Unaudited)  
    (Dollars in millions, except per unit amounts)  
 
Income statement data:
                               
Revenues
  $ 26,713.8     $ 35,469.6     $ 25,510.9     $ 25,510.9  
Costs and expenses
    25,529.3       33,756.1       23,738.1       23,748.6  
Equity in income of unconsolidated affiliates
    10.5       34.9       51.2       92.3  
                                 
Operating income
    1,195.0       1,748.4       1,824.0       1,854.6  
Other income (expense):
                               
Interest expense
    (413.0 )     (540.7 )     (641.8 )     (687.3 )
Other, net
    71.7       12.2       (1.8 )     (1.7 )
                                 
Total other expense, net
    (341.3 )     (528.5 )     (643.6 )     (689.0 )
                                 
Income before provision for income taxes
    853.7       1,219.9       1,180.4       1,165.6  
Provision for income taxes
    (15.7 )     (31.0 )     (25.3 )     (25.3 )
                                 
Net income
    838.0       1,188.9       1,155.1       1,140.3  
Net income attributable to noncontrolling interests
    (304.4 )     (234.9 )     (124.2 )     (110.7 )
                                 
Net income attributable to Enterprise Parent
  $ 533.6     $ 954.0     $ 1,030.9     $ 1,029.6  
                                 
Earnings per unit:
                               
Basic earnings per unit
  $ 0.95     $ 1.84     $ 1.73     $ 1.60  
                                 
Diluted earnings per unit
  $ 0.95     $ 1.84     $ 1.73     $ 1.53  
                                 
Distributions to limited partners:
                               
Per common unit (declared with respect to period)
  $ 1.9475     $ 2.0750     $ 2.1950     $ 2.1950  
                                 
Balance sheet data (at period end):
                               
Total assets
  $ 22,515.5     $ 24,211.6     $ 26,151.6       n/a  
Total long-term debt, including current maturities
    8,771.1       11,637.9       11,346.4       n/a  
Total equity
    9,016.5       9,295.9       10,042.3       n/a  
                                 
Other financial data:
                               
Net cash flows provided by operating activities
  $ 1,953.6     $ 1,567.1     $ 2,377.2       n/a  
Cash used in investing activities
    2,871.8       3,246.9       1,546.9       n/a  
Cash provided by (used in) financing activities
    946.3       1,690.7       (837.1 )     n/a  
Distributions received from unconsolidated affiliates
    87.0       80.8       86.6       n/a  
Total gross operating margin(1)
    1,964.4       2,609.0       2,839.8     $ 2,880.9  
Adjusted EBITDA(1)
    2,004.6       2,546.1       2,686.1       2,759.9  
 
 
(1) Unaudited. Please read “— Non-GAAP Financial Measures” beginning on page S-13 for a reconciliation of non-GAAP gross operating margin and Adjusted EBITDA to their most closely-related GAAP measures.


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    Enterprise Parent
    Enterprise Parent
 
    Consolidated Historical     Pro Forma  
    For the Nine Months
    For the Nine Months
 
    Ended September 30,     Ended September 30,  
    2009     2010     2010  
                (Unaudited)  
    (Dollars in millions, except per unit amounts)  
 
Income statement data:
                       
Revenues
  $ 17,110.6     $ 24,155.7     $ 24,155.7  
Costs and expenses
    15,930.2       22,537.7       22,557.1  
Equity in income of unconsolidated affiliates
    32.0       50.2       43.2  
                         
Operating income
    1,212.4       1,668.2       1,641.8  
Other income (expense):
                       
Interest expense
    (472.0 )     (496.9 )     (529.1 )
Other, net
    2.2       1.8       1.8  
                         
Total other expense, net
    (469.8 )     (495.1 )     (527.3 )
                         
Income before provision for income taxes
    742.6       1,173.1       1,114.5  
Provision for income taxes
    (26.8 )     (20.1 )     (20.1 )
                         
Net income
    715.8       1,153.0       1,094.4  
Net income attributable to noncontrolling interests
    (91.0 )     (46.1 )     (46.1 )
                         
Net income attributable to Enterprise Parent
  $ 624.8     $ 1,106.9     $ 1,048.3  
                         
Earnings per unit:
                       
Basic earnings per unit
  $ 1.09     $ 1.45     $ 1.33  
                         
Diluted earnings per unit
  $ 1.09     $ 1.44     $ 1.27  
                         
Distributions to limited partners:
                       
Per common unit (declared with respect to period)
  $ 1.6350     $ 1.7250     $ 1.7250  
                         
Balance sheet data (at period end):
                       
Total assets
  $ 25,931.2     $ 28,472.7     $ 29,929.7  
Total long-term debt, including current maturities
    11,999.2       12,704.8       13,790.1  
Total equity
    9,863.6       10,835.6       11,158.0  
                         
Other financial data:
                       
Net cash flows provided by operating activities
  $ 891.7     $ 1,415.1       n/a  
Cash used in investing activities
    1,072.2       2,501.5       n/a  
Cash provided by financing activities
    196.5       1,074.1       n/a  
Distributions received from unconsolidated affiliates
    55.2       82.3       n/a  
Total gross operating margin(1)
    1,974.9       2,430.9     $ 2,423.9  
Adjusted EBITDA(1)
    1,854.7       2,405.6       2,453.4  
 
 
(1) Unaudited. Please read “— Non-GAAP Financial Measures” beginning on page S-13 for a reconciliation of non-GAAP gross operating margin and Adjusted EBITDA to their most closely-related GAAP measures.


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Table of Contents

                                         
    Enterprise Parent Consolidated Historical
        For the Nine Months
    For the Year Ended December 31,   Ended September 30,
    2007   2008   2009   2009   2010
    (Unaudited)
 
Selected volumetric operating data by segment:
                                       
NGL Pipelines & Services, net:
                                       
NGL transportation volumes (MBPD)
    1,877       2,021       2,196       2,098       2,254  
NGL fractionation volumes (MBPD)
    405       441       461       456       471  
Equity NGL production (MBPD)
    88       108       117       116       123  
Fee-based natural gas processing (MMcf/d)
    2,565       2,524       2,650       2,685       2,795  
Onshore Natural Gas Pipelines & Services, net:
                                       
Natural gas transportation volumes (BBtus/d)
    8,465       9,612       10,435       10,502       11,432  
Onshore Crude Oil Pipelines & Services, net:
                                       
Crude oil transportation volumes (MBPD)
    652       696       680       683       678  
Offshore Pipelines & Services, net:
                                       
Natural gas transportation volumes (BBtus/d)
    1,641       1,408       1,420       1,458       1,284  
Crude oil transportation volumes (MBPD)
    163       169       308       278       325  
Platform natural gas processing (MMcf/d)
    494       632       700       741       547  
Platform crude oil processing (MBPD)
    24       15       12       10       18  
Petrochemical Services, net:
                                       
Butane isomerization volumes (MBPD)
    90       86       97       98       89  
Propylene fractionation volumes (MBPD)
    68       58       68       67       78  
Octane additive production volumes (MBPD)
    9       9       10       9       14  
Transportation volumes, primarily refined products and petrochemicals (MBPD)
    882       818       806       797       779  
 
 
/d = per day
BBtus = billion British thermal units
MBPD = thousand barrels per day
MMcf = million cubic feet


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Summary Historical Financial Information of Holdings
 
                                         
    Holdings Consolidated Historical  
          For the Nine Months
 
    For the Year Ended December 31,     Ended September 30,  
    2007     2008     2009     2009     2010  
                      (Unaudited)  
    (Dollars in millions, except per unit amounts)  
 
Income statement data:
                                       
Revenues
  $ 26,713.8     $ 35,469.6     $ 25,510.9     $ 17,110.6     $ 24,155.7  
Costs and expenses
    25,534.0       33,763.7       23,748.6       15,938.9       22,557.1  
Equity in income of unconsolidated affiliates
    13.6       66.2       92.3       57.7       43.2  
                                         
Operating income
    1,193.4       1,772.1       1,854.6       1,229.4       1,641.8  
Other income (expense):
                                       
Interest expense
    (487.4 )     (608.3 )     (687.3 )     (508.2 )     (529.1 )
Other, net
    71.8       12.3       (1.7 )     2.2       1.8  
                                         
Total other expense, net
    (415.6 )     (596.0 )     (689.0 )     (506.0 )     (527.3 )
                                         
Income before provision for income taxes
    777.8       1,176.1       1,165.6       723.4       1,114.5  
Provision for income taxes
    (15.8 )     (31.0 )     (25.3 )     (26.8 )     (20.1 )
                                         
Net income
    762.0       1,145.1       1,140.3       696.6       1,094.4  
Net income attributable to noncontrolling interests
    (653.0 )     (981.1 )     (936.2 )     (569.3 )     (933.4 )
                                         
Net income attributable to Holdings
  $ 109.0     $ 164.0     $ 204.1     $ 127.3     $ 161.0  
                                         
Earnings per unit:
                                       
Basic earnings per unit
  $ 0.97     $ 1.33     $ 1.48     $ 0.93     $ 1.16  
                                         
Diluted earnings per unit
  $ 0.97     $ 1.33     $ 1.48     $ 0.93     $ 1.16  
                                         
Distributions to limited partners:
                                       
Per common unit (declared with respect to period)
  $ 1.550     $ 1.790     $ 2.030     $ 1.500     $ 1.680  
                                         
Balance sheet data (at period end):
                                       
Total assets
  $ 24,084.4     $ 25,780.4     $ 27,686.3     $ 27,466.5     $ 29,946.6  
Total long-term debt, including current maturities
    9,861.2       12,714.9       12,427.9       13,077.7       13,790.1  
Total equity
    9,530.0       9,759.4       10,473.1       10,300.4       11,174.9  
Other financial data:
                                       
Net cash flows provided by operating activities
  $ 1,936.8     $ 1,566.4     $ 2,410.3     $ 910.1     $ 1,443.8  
Cash used in investing activities
    4,541.1       3,246.9       1,547.7       1,073.0       2,501.5  
Cash provided by (used in) financing activities
    2,622.5       1,695.9       (863.9 )     181.1       1,045.0  
Distributions received from unconsolidated affiliates
    116.9       157.2       169.3       117.0       146.0  
Total gross operating margin
    1,967.5       2,640.3       2,880.9       2,000.6       2,423.9  
 
 
(1) Unaudited. Please read “— Non-GAAP Financial Measures” beginning on page S-13 for a reconciliation of non-GAAP gross operating margin and Adjusted EBITDA to their most closely-related GAAP measures


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Non-GAAP Financial Measures
 
This section provides reconciliations of Enterprise Parent’s and Holdings’ non-GAAP financial measures included in this prospectus supplement to their most directly comparable financial measures calculated and presented in accordance with GAAP. Enterprise Parent and Holdings both present the non-GAAP financial measure of gross operating margin. Enterprise Parent also utilizes the non-GAAP financial measure of Adjusted EBITDA. These non-GAAP financial measures should not be considered as an alternative to GAAP measures such as net income, operating income, net cash flows provided by operating activities or any other measure of liquidity or financial performance calculated and presented in accordance with GAAP. These non-GAAP financial measures may not be comparable to similarly-titled measures of other companies because they may not calculate such measures in the same manner as Enterprise Parent or Holdings does.
 
Gross Operating Margin
 
Enterprise Parent and Holdings evaluate segment performance based on the non-GAAP financial measure of gross operating margin. Gross operating margin (either in total or by individual segment) is an important performance measure of the core profitability of both Enterprise Parent’s and Holdings’ operations. This measure forms the basis of Enterprise Parent’s and Holdings’ internal financial reporting and is used by management in deciding how to allocate capital resources among business segments. Enterprise Parent and Holdings believe that investors benefit from having access to the same financial measures that management uses in evaluating segment results. The GAAP measure most directly comparable to total segment gross operating margin is operating income. The non-GAAP financial measure of total segment gross operating margin should not be considered an alternative to GAAP operating income.
 
Enterprise Parent and Holdings define total segment gross operating margin as operating income before: (i) depreciation, amortization and accretion expense; (ii) non-cash asset impairment charges; (iii) operating lease expenses for which Enterprise Parent and Holdings do not have the payment obligation; (iv) gains and losses from asset sales and related transactions; and (v) general and administrative costs. Gross operating margin by segment is calculated by subtracting segment operating costs and expenses (net of the adjustments noted above) from segment revenues, with both segment totals before the elimination of intercompany transactions. In accordance with GAAP, intercompany accounts and transactions are eliminated in consolidation. Gross operating margin is presented on a 100% basis before the allocation of earnings to noncontrolling interests.
 
The following table presents a reconciliation of Enterprise Parent’s non-GAAP financial measure of total gross operating margin to the GAAP financial measure of operating income, on a historical and pro forma basis, as applicable for each of the periods indicated:
 
                                                         
    Enterprise Parent Consolidated Historical     Enterprise Parent Pro Forma  
          For the Nine
          For the Nine
 
          Months
          Months
 
          Ended
    For the Year Ended
    Ended
 
    For the Year Ended December 31,     September 30,     December 31,     September 30,  
    2007     2008     2009     2009     2010     2009     2010  
    (Dollars in millions)  
 
Total segment gross operating margin
  $ 1,964.4     $ 2,609.0     $ 2,839.8     $ 1,974.9     $ 2,430.9     $ 2,880.9     $ 2,423.9  
Adjustments to reconcile total segment gross operating margin to operating income:
                                                       
Depreciation, amortization and accretion in operating costs and expenses
    (647.9 )     (725.4 )     (809.3 )     (602.9 )     (674.5 )     (809.3 )     (674.5 )
Non-cash asset impairment charges in operating costs and expenses
                (33.5 )     (26.3 )     (1.5 )     (33.5 )     (1.5 )
Operating lease expenses paid by EPCO
    (2.1 )     (2.0 )     (0.7 )     (0.5 )     (0.5 )     (0.7 )     (0.5 )
Gains from asset sales and related transactions in operating costs and expenses
    7.8       4.0             0.5       45.3             45.3  
General and administrative costs
    (127.2 )     (137.2 )     (172.3 )     (133.3 )     (131.5 )     (182.8 )     (150.9 )
                                                         
Operating income
    1,195.0       1,748.4       1,824.0       1,212.4       1,668.2       1,854.6       1,641.8  
Other expense, net
    (341.3 )     (528.5 )     (643.6 )     (469.8 )     (495.1 )     (689.0 )     (527.3 )
                                                         
Income before provision of income taxes
  $ 853.7     $ 1,219.9     $ 1,180.4     $ 742.6     $ 1,173.1     $ 1,165.6     $ 1,114.5  
                                                         


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The following table presents a reconciliation of Holdings’ non-GAAP financial measure of total gross operating margin to the GAAP financial measure of operating income, on a historical basis, for each of the periods indicated:
 
                                         
    Holdings Consolidated Historical  
          For the Nine Months
 
    For the Year Ended December 31,     Ended September 30,  
    2007     2008     2009     2009     2010  
    (Dollars in millions)  
 
Total segment gross operating margin
  $ 1,967.5     $ 2,640.3     $ 2,880.9     $ 2,000.6     $ 2,423.9  
Adjustments to reconcile total segment gross operating margin to operating income:
                                       
Depreciation, amortization and accretion in operating costs and expenses
    (647.9 )     (725.4 )     (809.3 )     (602.9 )     (674.5 )
Non-cash asset impairment charges in operating costs and expenses
                (33.5 )     (26.3 )     (1.5 )
Operating lease expenses paid by EPCO
    (2.1 )     (2.0 )     (0.7 )     (0.5 )     (0.5 )
Gains from asset sales and related transactions in operating costs and expenses
    7.8       4.0             0.5       45.3  
General and administrative costs
    (131.9 )     (144.8 )     (182.8 )     (142.0 )     (150.9 )
                                         
Operating income
    1,193.4       1,772.1       1,854.6       1,229.4       1,641.8  
Other expense, net
    (415.6 )     (596.0 )     (689.0 )     (506.0 )     (527.3 )
                                         
Income before provision of income taxes
  $ 777.8     $ 1,176.1     $ 1,165.6     $ 723.4     $ 1,114.5  
                                         
 
Adjusted EBITDA of Enterprise Parent
 
Enterprise Parent defines Adjusted EBITDA as income from continuing operations less equity in income from unconsolidated affiliates; plus distributions received from unconsolidated affiliates, interest expense, provision for income taxes and depreciation, amortization and accretion expense. The GAAP measure most directly comparable to Adjusted EBITDA is net cash flows provided by operating activities. Adjusted EBITDA is commonly used as a supplemental financial measure by management and by external users of Enterprise Parent’s financial statements, such as investors, commercial banks, research analysts and rating agencies, to assess (i) the financial performance of Enterprise Parent’s assets without regard to financing methods, capital structures or historical cost basis; (ii) the ability of Enterprise Parent’s assets to generate cash sufficient to pay interest cost and support our indebtedness; and (iii) the viability of projects and the overall rates of return on alternative investment opportunities.


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The following table presents Enterprise Parent’s calculation of Adjusted EBITDA on a historical and pro forma basis and also a reconciliation of Enterprise Parent’s non-GAAP financial measure of Adjusted EBITDA to the GAAP financial measure of net cash flows provided by operating activities on a historical basis.
 
                                                         
    Enterprise Parent Consolidated Historical     Enterprise Parent Pro Forma  
          For the Nine Months
          For the Nine Months
 
          Ended
    For the Year Ended
    Ended
 
    For the Year Ended December 31,     September 30,     December 31,     September 30,  
    2007     2008     2009     2009     2010     2009     2010  
    (Dollars in millions)  
 
Net income
  $ 838.0     $ 1,188.9     $ 1,155.1     $ 715.8     $ 1,153.0     $ 1,140.3     $ 1,094.4  
Adjustments to GAAP net income to derive non-GAAP Adjusted EBITDA:
                                                       
Equity in income of unconsolidated affiliates
    (10.5 )     (34.9 )     (51.2 )     (32.0 )     (50.2 )     (92.3 )     (43.2 )
Distributions received from unconsolidated affiliates
    87.0       80.8       86.6       55.2       82.3       169.3       146.0  
Interest expense (including related amortization)
    413.0       540.7       641.8       472.0       496.9       687.3       529.1  
Provision for income taxes
    15.7       31.0       25.3       26.8       20.1       25.3       20.1  
Depreciation, amortization and accretion in costs and expenses
    661.4       739.6       828.5       616.9       703.5       830.0       707.0  
                                                         
Adjusted EBITDA
    2,004.6       2,546.1       2,686.1       1,854.7       2,405.6     $ 2,759.9     $ 2,453.4  
                                                         
Adjustments to non-GAAP Adjusted EBITDA to derive GAAP net cash flows provided by operating activities:
                                                       
Interest expense
    (413.0 )     (540.7 )     (641.8 )     (472.0 )     (496.9 )                
Provision for income taxes
    (15.7 )     (31.0 )     (25.3 )     (26.8 )     (20.1 )                
Operating lease expenses paid by EPCO
    2.1       2.0       0.7       0.5       0.5                  
Gain from asset sales and related transactions
    (67.4 )     (4.0 )           (0.5 )     (45.4 )                
Loss on forfeiture of Texas Offshore Port System
                68.4       68.4                        
Miscellaneous non-cash and other amounts to reconcile Adjusted EBITDA and net cash flows provided by operating activities
    8.1       5.8       43.2       42.3       (5.1 )                
Net effect of changes in operating accounts
    434.9       (411.1 )     245.9       (574.9 )     (423.5 )                
                                                         
Net cash flows provided by operating activities
  $ 1,953.6     $ 1,567.1     $ 2,377.2     $ 891.7     $ 1,415.1                  
                                                         


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Ratio of Earnings to Fixed Charges
 
Enterprise Parent’s ratio of earnings to fixed charges for each of the periods indicated is as follows:
 
                     
    Nine Months
    Ended
Year Ended December 31,   September 30,
2005   2006   2007   2008   2009   2010
 
2.7x
  2.9x   2.6x   2.8x   2.6x   3.1x
 
For purposes of these calculations, “earnings” is the amount resulting from adding and subtracting the following items:
 
Add the following, as applicable:
 
  •   consolidated pre-tax income from continuing operations before adjustment for income or loss from equity investees;
 
  •   fixed charges;
 
  •   amortization of capitalized interest;
 
  •   distributed income of equity investees; and
 
  •   our share of pre-tax losses of equity investees for which charges arising from guarantees are included in fixed charges.
 
From the subtotal of the added items, subtract the following, as applicable:
 
  •   interest capitalized;
 
  •   preference security dividend requirements of consolidated subsidiaries; and
 
  •   the noncontrolling interest in pre-tax income of subsidiaries that have not incurred fixed charges.
 
The term “fixed charges” means the sum of the following: interest expensed and capitalized; amortized premiums, discounts and capitalized expenses related to indebtedness; an estimate of interest within rental expense; and preference dividend requirements of consolidated subsidiaries.


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RISK FACTORS
 
An investment in our notes involves certain risks. You should carefully consider the supplemental risks described below in addition to the risks described under “Risk Factors” in the accompanying prospectus, in our Annual Report on Form 10-K filed March 1, 2010, in our Quarterly Reports for the quarters ended March 31, 2010, June 30, 2010 and September 30, 2010, and in Exhibit 99.2 of our Current Report on Form 8-K filed November 23, 2010, which reports are incorporated by reference herein, as well as the other information contained in or incorporated by reference into this prospectus supplement and the accompanying prospectus before making an investment decision. If any of these risks were to materialize, our business, results of operations, cash flows and financial condition could be materially adversely affected. In that case, the value of our notes could decline, and you could lose part or all of your investment.
 
Risks Related to Our Business
 
Our debt level may limit our future financial and operating flexibility.
 
On a pro forma basis and as adjusted to give effect to Enterprise Parent’s December 2010 equity offering and to this offering, as of September 30, 2010, Enterprise Parent had approximately $13.7 billion principal amount of consolidated long-term debt outstanding, including $529.8 million outstanding under the credit facilities of Duncan Energy Partners and none outstanding under our multi-year revolving credit facility. The amount of our future debt could have significant effects on our operations, including, among other things:
 
  •   a substantial portion of our cash flow, including that of Duncan Energy Partners, could be dedicated to the payment of principal and interest on our future debt and may not be available for other purposes, including the payment of distributions on the Enterprise Parent common units and capital expenditures;
 
  •   credit rating agencies may view our consolidated debt level negatively;
 
  •   covenants contained in our existing and future credit and debt arrangements will require us to continue to meet financial tests that may adversely affect our flexibility in planning for and reacting to changes in our business, including possible acquisition opportunities;
 
  •   our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired or such financing may not be available on favorable terms;
 
  •   we may be at a competitive disadvantage relative to similar companies that have less debt; and
 
  •   we may be more vulnerable to adverse economic and industry conditions as a result of our significant debt level.
 
Our public debt indentures currently do not limit the amount of future indebtedness that we can create, incur, assume or guarantee. Although our credit agreements restrict our ability to incur additional debt above certain levels, any debt we may incur in compliance with these restrictions may still be substantial.
 
Our credit agreements and each of our indentures for our public debt contain conventional financial covenants and other restrictions. For example, Enterprise Parent is prohibited from making distributions to our partners if such distributions would cause an event of default or otherwise violate a covenant under our credit agreements. A breach of any of these restrictions by us or Enterprise Parent could permit our lenders or noteholders, as applicable, to declare all amounts outstanding under these debt agreements to be immediately due and payable and, in the case of our credit agreements, to terminate all commitments to extend further credit.
 
Our ability to access capital markets to raise capital on favorable terms could be affected by our debt level, the amount of our debt maturing in the next several years and current maturities, and by prevailing market conditions. Moreover, if the rating agencies were to downgrade our credit ratings, then we could experience an increase in our borrowing costs, difficulty assessing capital markets or a reduction in the market price of our common units. Such a development could adversely affect our ability to obtain financing for working capital, capital expenditures or acquisitions or to refinance existing indebtedness. If we are unable to access the capital markets on favorable terms in the future, we might be forced to seek extensions for some of


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our short-term securities or to refinance some of our debt obligations through bank credit, as opposed to long-term public debt securities or equity securities. The price and terms upon which we might receive such extensions or additional bank credit, if at all, could be more onerous than those contained in existing debt agreements. Any such arrangements could, in turn, increase the risk that our leverage may adversely affect our future financial and operating flexibility.
 
Risks Related to the Notes
 
A significant amount of the common units of Enterprise Parent and all of its Class B units that are owned by EPCO and certain of its affiliates are pledged as security under the credit facility of an affiliate of EPCO. Upon an event of default under this credit facility, a change in ownership or control of Enterprise Parent or us could ultimately result.
 
An affiliate of EPCO has pledged substantially all of its common units in Enterprise Parent as security under its credit facility. This credit facility contains customary and other events of default relating to defaults of the borrower, including certain defaults by Enterprise Parent and other affiliates of EPCO. An event of default, followed by a foreclosure on the pledged collateral, could ultimately result in a change in ownership of Enterprise Parent.
 
The credit and risk profile of the general partner of Enterprise Parent and its owners could adversely affect our credit ratings and profile.
 
The credit and business risk profiles of the general partner or owners of a general partner may be factors in credit evaluations of a limited partnership. This is because the general partner can exercise significant influence over the business activities of the partnership, including its cash distribution and acquisition strategy and business risk profile. Another factor that may be considered is the financial condition of the general partner and its owners, including the degree of their financial leverage and their dependence on cash flow from the partnership to service their indebtedness.
 
Affiliates of the entities controlling the owner of the general partner of Enterprise Parent have significant indebtedness outstanding and are dependent principally on the cash distributions from their equity interests in us and Enterprise Parent to service such indebtedness. Any distributions by us to such entities will be made only after satisfying our then current obligations to creditors.
 
Although we have taken certain steps in our organizational structure, financial reporting and contractual relationships to reflect the separateness of us and our general partner from the entities that control our general partner, our credit ratings and business risk profile could be adversely affected if the ratings and risk profiles of Dan Duncan LLC, EPCO or the entities that control the general partner of Enterprise Parent were viewed as substantially lower or more risky than ours.
 
The notes are pari passu with a substantial portion of our other unsecured senior indebtedness.
 
Our payment obligations under the notes are unsecured and pari passu in right of payment with a substantial portion of our current and future indebtedness, including our indebtedness for borrowed money, indebtedness evidenced by bonds, debentures, notes or similar instruments, obligations arising from or with respect to guarantees and direct credit substitutes, obligations associated with hedges and derivative products, capitalized lease obligations and other senior indebtedness.
 
The Indenture does not limit our ability to incur additional indebtedness and other obligations, including indebtedness and other obligations that rank senior to or pari passu with the notes. On a pro forma basis as adjusted to give effect to Enterprise Parent’s December 2010 equity offering and to this offering, at September 30, 2010, the principal amount of direct long-term indebtedness (including current maturities) of Enterprise that would be pari passu with the notes totaled approximately $11.5 billion. As discussed below, the notes will also be effectively subordinated to all of our subsidiaries’ and unconsolidated affiliates’ existing and future indebtedness and other obligations, other than any subsidiaries that may guarantee the notes in the


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future. At September 30, 2010, indebtedness of our subsidiaries and unconsolidated affiliates totaled $9.7 billion on a pro forma as adjusted basis.
 
Enterprise Parent’s guarantee of the notes is pari passu with all of its other senior indebtedness.
 
Enterprise Parent’s guarantee of the notes ranks pari passu in right of payment with all of its current and future senior indebtedness, including Enterprise Parent’s indebtedness for borrowed money, indebtedness evidenced by bonds, debentures, notes or similar instruments, obligations arising from or with respect to guarantees and direct credit substitutes, obligations associated with hedges and derivative products, capitalized lease obligations and other senior indebtedness.
 
We may require cash from our subsidiaries to make payments on the notes.
 
We conduct the majority of our operations through our subsidiaries and unconsolidated affiliates, some of which are not wholly owned, and we rely to a significant extent on dividends, distributions, proceeds from inter-company transactions, interest payments and loans from those entities to meet our obligations for payment of principal and interest on our outstanding debt obligations and corporate expenses, including interest payments on the notes, which may be subject to contractual restrictions. Accordingly, the notes are structurally subordinated to all existing and future liabilities of our subsidiaries and unconsolidated affiliates, other than any subsidiaries that may guarantee the notes in the future. Holders of notes should look only to our assets and the assets of Enterprise Parent, and not any of our subsidiaries or unconsolidated affiliates, for payments on the notes, other than any subsidiaries that may guarantee the notes in the future. If we are unable to obtain cash from such entities to fund required payments in respect of the notes, we may be unable to make payments of principal of or interest on the notes.
 
We may elect to cause the redemption of the notes when prevailing interest rates are relatively low.
 
As discussed in “Description of the Notes — Optional Redemption,” we may redeem the notes at any time, in whole or in part, at a price equal to the greater of (i) 100% of the principal amount of the notes to be redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal and interest (at the rate in effect on the date of the calculation of the redemption price) on the notes to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Treasury Yield plus 20 basis points for the 2016 notes and 25 basis points for the 2041 notes; plus, in either case, accrued interest to the Redemption Date.
 
A market may not develop for the notes.
 
The notes constitute a new issue of securities with no established trading market and will not be listed on any exchange. An active market for the notes may not develop or be sustained. As a result, we cannot assure you that you will be able to sell your notes or at what price. Although the underwriters have indicated that they intend to make a market in the notes, as permitted by applicable laws and regulations, they are not obligated to do so and may discontinue that market-making at any time without notice.
 
There are restrictions on your ability to resell the notes.
 
The notes may not be purchased by or transferred to certain types of benefit plans. See “Certain ERISA Considerations.”
 
If we were treated as a corporation for federal income tax purposes or subject to a material amount of entity-level taxation for state tax purposes, then our cash available for payment on the notes would be substantially reduced.
 
Current law may change so as to cause us to be treated as a corporation for federal income tax purposes or otherwise subject us to a material amount of entity-level taxation. If we were treated as a corporation for United States federal income tax purposes, we would pay United States federal income tax on our taxable


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income at the corporate tax rate, which is currently a maximum of 35%, and we likely would pay state taxes as well. Because a tax would be imposed upon us as a corporation, the cash available for payment on the notes would be substantially reduced. Therefore, treatment of us as a corporation would result in a material reduction in our anticipated cash flows and could cause a reduction in the value of the notes.
 
In addition, several states are evaluating ways to subject partnerships to entity-level taxation through the imposition of state income, franchise and other forms of taxation. For example, we are now subject to a new entity-level tax on the portion of our gross income apportioned to Texas. If any additional state were to impose an entity-level tax on us, the cash available for payment on the notes would be reduced.


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USE OF PROCEEDS
 
We will receive aggregate net proceeds of approximately $1,482.8 million from the sale of the notes to the underwriters after deducting the underwriters’ discount and other offering expenses payable by us. We expect to use the net proceeds of this offering to temporarily reduce borrowings under our multi-year revolving credit facility, to repay outstanding amounts on the maturity of our $450 million principal amount of senior notes B due February 2011, and for general company purposes.
 
In general, our indebtedness under the multi-year revolving credit facility was incurred for working capital purposes, capital expenditures and other acquisitions. Amounts repaid under our multi-year revolving credit facility may be reborrowed from time to time for acquisitions, capital expenditures and other general partnership purposes. As of January 3, 2011, we had $648.0 million of borrowings outstanding under EPO’s multi-year revolving credit facility that bear interest at a variable rate, which on a weighted-average basis was approximately 0.761% per annum. Our multi-year revolving credit facility will mature in November 2012. We used availability under our multi-year revolving credit facility to retire approximately $1.1 billion of Holdings’ debt obligations concurrently with the Holdings Merger. Holdings no longer has any debt outstanding.
 
Affiliates of certain of the underwriters are lenders under our multi-year revolving credit facility and, accordingly, will receive a substantial portion of the proceeds of this offering. Please read “Underwriting.”


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CAPITALIZATION
 
The Holdings Merger resulted in Holdings being considered the surviving consolidated entity for accounting purposes rather than Enterprise, which is the surviving consolidated entity for legal and reporting purposes. As a result, the following table sets forth the capitalization of Holdings as of September 30, 2010 on:
 
  •   a consolidated historical basis;
 
  •   a pro forma basis to give effect to the Holdings Merger and related transactions;
 
  •   a pro forma as adjusted basis to give effect to the application of (i) the net proceeds of approximately $528.3 million from Enterprise Parent’s sale of 13,225,000 common units in December 2010 at a public offering price of $41.25 per common unit and (ii) the net proceeds from the sale of the notes in this offering to: (a) temporarily reduce borrowings outstanding under our multi-year revolving credit facility; (b) repay outstanding amounts on the maturity of our $450 million principal amount of senior notes B due February 2011; and (c) increase cash and cash equivalents, which we intend to use for general company purposes.
 
Since Enterprise Parent is the surviving entity for legal and reporting purposes, the pro forma condensed consolidated balance sheet information is labeled “Enterprise Parent Pro Forma.” The historical data in the table below is derived from and should be read in conjunction with Holdings’ consolidated historical financial statements, including the accompanying notes, incorporated by reference in this prospectus supplement. The data below does not reflect events after September 30, 2010 except as noted above for the Holdings Merger and December 2010 common unit offering. The Enterprise Parent pro forma information in the table below is derived from and should be read in conjunction with the unaudited pro forma condensed consolidated financial statements included elsewhere in this prospectus supplement.
 
                         
    At September 30, 2010  
    Holdings
          Enterprise Parent
 
    Consolidated
    Enterprise Parent
    Pro Forma
 
    Historical     Pro Forma     As Adjusted  
    (Dollars in millions)  
 
Cash and cash equivalents
  $ 42.9     $ 32.8     $ 473.6  
                         
Long-term debt:
                       
Holdings senior debt obligations:
                       
Holdings Revolver, variable-rate, due August 2012
    127.3              
$125 million Term Loan A, variable-rate, due
August 2012
    125.0              
$850 million Term Loan B, variable-rate, due November 2014(1)
    833.0              
Enterprise senior debt obligations:
                       
Multi-Year Revolving Credit Facility, variable-rate, due November 2012(2)
    35.0       1,120.3        
Petal GO Zone Bonds, variable-rate, due August 2034
    57.5       57.5       57.5  
Senior Notes B, 7.50% fixed-rate, due February 2011(1)
    450.0       450.0        
Senior Notes C, 6.375% fixed-rate, due February 2013
    350.0       350.0       350.0  
Senior Notes D, 6.875% fixed-rate, due March 2033
    500.0       500.0       500.0  
Senior Notes G, 5.60% fixed-rate, due October 2014
    650.0       650.0       650.0  
Senior Notes H, 6.65% fixed-rate, due October 2034
    350.0       350.0       350.0  
Senior Notes I, 5.00% fixed-rate, due March 2015
    250.0       250.0       250.0  


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    At September 30, 2010  
    Holdings
          Enterprise Parent
 
    Consolidated
    Enterprise Parent
    Pro Forma
 
    Historical     Pro Forma     As Adjusted  
    (Dollars in millions)  
 
Senior Notes J, 5.75% fixed-rate, due March 2035
    250.0       250.0       250.0  
Senior Notes L, 6.30% fixed-rate, due September 2017
    800.0       800.0       800.0  
Senior Notes M, 5.65% fixed-rate, due April 2013
    400.0       400.0       400.0  
Senior Notes N, 6.50% fixed-rate, due January 2019
    700.0       700.0       700.0  
Senior Notes O, 9.75% fixed-rate, due January 2014
    500.0       500.0       500.0  
Senior Notes P, 4.60% fixed-rate, due August 2012
    500.0       500.0       500.0  
Senior Notes Q, 5.25% fixed-rate, due January 2020
    500.0       500.0       500.0  
Senior Notes R, 6.125% fixed-rate, due October 2039
    600.0       600.0       600.0  
Senior Notes S, 7.625% fixed-rate, due February 2012
    490.5       490.5       490.5  
Senior Notes T, 6.125% fixed-rate, due February 2013
    182.5       182.5       182.5  
Senior Notes U, 5.90% fixed-rate, due April 2013
    237.6       237.6       237.6  
Senior Notes V, 6.65% fixed-rate, due April 2018
    349.7       349.7       349.7  
Senior Notes W, 7.55% fixed-rate, due April 2038
    399.6       399.6       399.6  
Senior Notes X, 3.70% fixed-rate, due June 2015
    400.0       400.0       400.0  
Senior Notes Y, 5.20% fixed-rate, due September 2020
    1,000.0       1,000.0       1,000.0  
Senior Notes Z, 6.45% fixed-rate, due September 2040
    600.0       600.0       600.0  
Senior Notes AA, 3.20% fixed-rate, due February 2016
                750.0  
Senior Notes BB, 5.95% fixed-rate, due February 2041
                750.0  
TEPPCO senior debt obligations:
                       
TEPPCO Senior Notes
    40.1       40.1       40.1  
Duncan Energy Partners’ debt obligations:(3)
                       
DEP Revolving Credit Facility, variable-rate, due February 2011(1)
    247.5       247.5       247.5  
DEP Term Loan, variable-rate, due December 2011
    282.3       282.3       282.3  
                         
Total principal amount of senior debt obligations
    12,207.6       12,207.6       12,137.3  
Enterprise Junior Subordinated Notes A, fixed/variable-rate, due August 2066
    550.0       550.0       550.0  
Enterprise Junior Subordinated Notes B, fixed/variable-rate, due January 2068
    682.7       682.7       682.7  
Enterprise Junior Subordinated Notes C, fixed/variable-rate, due June 2067
    285.8       285.8       285.8  
TEPPCO Junior Subordinated Notes, fixed/variable-rate, due June 2067
    14.2       14.2       14.2  
                         

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    At September 30, 2010  
    Holdings
          Enterprise Parent
 
    Consolidated
    Enterprise Parent
    Pro Forma
 
    Historical     Pro Forma     As Adjusted  
    (Dollars in millions)  
 
Total principal amount of senior and junior debt obligations
    13,740.3       13,740.3       13,670.0  
                         
Total other, non-principal amounts
    49.8       49.8       43.9  
                         
Total long-term debt obligations, including current maturities
    13,790.1       13,790.1       13,713.9  
                         
Equity:
                       
Partners’ equity
    1,863.6       10,630.5       11,158.8  
Noncontrolling interest
    9,311.3       527.5       527.5  
                         
Total equity
    11,174.9       11,158.0       11,686.3  
                         
Total capitalization
  $ 24,965.0     $ 24,948.1     $ 25,400.2  
                         
 
 
* Amount is negligible.
 
(1) Long-term and current maturities of debt reflect the classification of such obligations at September 30, 2010. With respect to an $8.5 million current maturity due under Holdings’ Term Loan B, Holdings had the ability to use available long-term credit capacity under the Holdings Revolver to fund repayment of this amount. We had the ability to use available forecast long-term borrowing capacity under our $1.75 billion multi-year revolving credit facility to satisfy the current maturity of Senior Notes B. Duncan Energy Partners used its borrowing capacity under a new $1.25 billion multi-year credit agreement executed in October 2010 to refinance amounts due under the DEP Revolving Credit Facility on a long-term basis.
 
(2) As of January 3, 2011, we had $648 million of borrowings outstanding under our $1.75 billion multi-year revolving credit facility and Duncan Energy Partners had $128 million of borrowings outstanding under its $850 million multi-year revolving credit facility.
 
(3) The borrowings of Holdings, TEPPCO and Duncan Energy Partners are presented as part of Enterprise Parent’s consolidated debt; however, Enterprise does not have any obligation for the payment of interest or repayment of borrowings incurred by Holdings, TEPPCO and Duncan Energy Partners.

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DESCRIPTION OF THE NOTES
 
We have summarized below certain material terms and provisions of the notes. This summary is not a complete description of all of the terms and provisions of the notes. You should read carefully the section entitled “Description of Debt Securities” in the accompanying prospectus for a description of other material terms of the notes, the Guarantee and the Base Indenture (defined below). For more information, we refer you to the notes, the Base Indenture and the Supplemental Indenture (defined below), all of which are available from us. We urge you to read the Base Indenture and the Supplemental Indenture because they, and not this description, define your rights as an owner of the notes.
 
The 2016 notes and the 2041 notes will each constitute a separate new series of debt securities that will be issued under the Indenture dated as of October 4, 2004, as amended by the Tenth Supplemental Indenture (which we refer to as the “Base Indenture”), as supplemented by the Twentieth Supplemental Indenture with respect to the 2016 notes and the 2041 notes, to be dated the date of delivery of the notes (which supplemental indenture we refer to as the “Supplemental Indenture” and, together with the Base Indenture, as the “Indenture”), among Enterprise Products Operating LLC (successor to Enterprise Products Operating L.P.), as issuer (which we refer to as the “Issuer”), Enterprise Products Partners L.P., as parent guarantor, any subsidiary guarantors party thereto (which we refer to as the “Subsidiary Guarantors”) and Wells Fargo Bank, National Association, as trustee (which we refer to as the “Trustee”). References in this section to the “Guarantee” refer to the Parent Guarantor’s Guarantee of payments on the notes.
 
In addition to these new series of notes, as of September 30, 2010, there were outstanding under the above-referenced Base Indenture (i) $650 million in aggregate principal amount of 5.600% senior notes G due 2014, (ii) $350 million in aggregate principal amount of 6.650% senior notes H due 2034, (iii) $250 million in aggregate principal amount of 5.00% senior notes I due 2015, (iv) $250 million in aggregate principal amount of 5.75% senior notes J due 2035, (v) $800 million in aggregate principal amount of 6.30% senior notes L due 2017, (vi) $400 million in aggregate principal amount of 5.65% senior notes M due 2013, (vii) $700 million in aggregate principal amount of 6.50% senior notes N due 2019, (viii) $500 million in aggregate principal amount of 9.75% senior notes O due 2014, (ix) $500 million in aggregate principal amount of 4.60% senior notes P due 2012, (x) $500 million in aggregate principal amount of 5.25% senior notes Q due 2020, (xi) $600 million in aggregate principal amount of 6.125% senior notes R due 2039, (xii) $490.5 million in aggregate principal amount of 7.625% senior notes S due 2012, (xiii) $182.5 million in aggregate principal amount of 6.125% senior notes T due 2013, (xiv) $237.6 million in aggregate principal amount of 5.90% senior notes U due 2013, (xv) $349.7 million in aggregate principal amount of 6.65% senior notes V due 2018, (xvi) $399.6 million in aggregate principal amount of 7.55% senior notes W due 2038, (xvii) $400.0 million in aggregate principal amount of 3.70% senior notes X due 2015, (xviii) $1,000.0 million in aggregate principal amount of 5.20% senior notes Y due 2020, (xix) $600.0 million in aggregate principal amount of 6.45% senior notes Z due 2040, (xx) $550 million in aggregate principal amount of 8.375% fixed/floating rate junior subordinated notes A due 2066, (xxi) $682.7 million in aggregate principal amount of 7.034% fixed/floating rate junior subordinated notes B due 2068, and (xxii) $285.8 million in aggregate principal amount of 7.000% fixed/floating rate junior subordinated notes C due 2067.
 
General
 
The Notes.  The notes:
 
  •   will be general unsecured, senior obligations of the Issuer;
 
  •   will constitute two new series of debt securities issued under the Indenture and will be initially limited to $750.0 million aggregate principal amount of 2016 notes and $750.0 million aggregate principal amount of 2041 notes;
 
  •   with respect to the 2016 notes, will mature on February 1, 2016, and with respect to the 2041 notes, will mature on February 1, 2041;
 
  •   will be issued in denominations of $1,000 and integral multiples of $1,000;


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  •   initially will be issued only in book-entry form represented by one or more notes in global form registered in the name of Cede & Co., as nominee of DTC, or such other name as may be requested by an authorized representative of DTC, and deposited with the Trustee as custodian for DTC; and
 
  •   will be fully and unconditionally guaranteed on an unsecured, unsubordinated basis by the Parent Guarantor, and in certain circumstances may be guaranteed in the future on the same basis by one or more Subsidiary Guarantors.
 
Interest.  Interest on the notes will:
 
  •   with respect to the 2016 notes, accrue at the rate of 3.20% per annum, and with respect to the 2041 notes, accrue at the rate of 5.95% per annum, in each case from the date of issuance (January 13, 2011 with respect to both the 2016 notes and the 2041 notes) or the most recent interest payment date;
 
  •   with respect to the 2016 notes, be payable in cash semi-annually in arrears on February 1 and August 1 of each year, commencing on August 1, 2011, and with respect to the 2041 notes, be payable in cash semi-annually in arrears on February 1 and August 1 of each year, commencing on August 1, 2011;
 
  •   with respect to the 2016 notes, be payable to holders of record on the January 15 and July 15 immediately preceding the related interest payment dates, and with respect to the 2041 notes, be payable to holders of record on the January 15 and July 15 immediately preceding the related interest payment dates; and
 
  •   be computed on the basis of a 360-day year consisting of twelve 30-day months.
 
Payment and Transfer.
 
Initially, the notes will be issued only in global form. Beneficial interests in notes in global form will be shown on, and transfers of interests in notes in global form will be made only through, records maintained by DTC and its participants. Notes in definitive form, if any, may be presented for registration of transfer or exchange at the office or agency maintained by us for such purpose (which initially will be the corporate trust office of the Trustee located at 45 Broadway, 14th Floor, New York, New York 10006).
 
Payment of principal, premium, if any, and interest on notes in global form registered in the name of DTC’s nominee will be made in immediately available funds to DTC’s nominee, as the registered holder of such global notes. If any of the notes is no longer represented by a global note, payment of interest on the notes in definitive form may, at our option, be made at the corporate trust office of the Trustee indicated above or by check mailed directly to holders at their respective registered addresses or by wire transfer to an account designated by a holder.
 
If any interest payment date, maturity date or redemption date falls on a day that is not a business day, the payment will be made on the next business day with the same force and effect as if made on the relevant interest payment date, maturity date or redemption date. No interest will accrue for the period from and after the applicable interest payment date, maturity date or redemption date.
 
No service charge will be made for any registration of transfer or exchange of notes, but we may require payment of a sum sufficient to cover any transfer tax or other governmental charge payable in connection therewith. We are not required to register the transfer of or exchange any note selected for redemption or for a period of 15 days before mailing a notice of redemption of notes of the same series.
 
The registered holder of a note will be treated as the owner of it for all purposes, and all references in this “Description of the Notes” to “holders” mean holders of record, unless otherwise indicated.
 
Investors may hold interests in the notes outside the United States through Euroclear or Clearstream if they are participants in those systems, or indirectly through organizations which are participants in those systems. Euroclear and Clearstream will hold interests on behalf of their participants through customers’ securities accounts in Euroclear’s and Clearstream’s names on the books of their respective depositaries which


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in turn will hold such positions in customers’ securities accounts in the names of the nominees of the depositaries on the books of DTC. All securities in Euroclear or Clearstream are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts.
 
Transfers of notes by persons holding through Euroclear or Clearstream participants will be effected through DTC, in accordance with DTC’s rules, on behalf of the relevant European international clearing system by its depositaries; however, such transactions will require delivery of exercise instructions to the relevant European international clearing system by the participant in such system in accordance with its rules and procedures and within its established deadlines (European time). The relevant European international clearing system will, if the exercise meets its requirements, deliver instructions to its depositaries to take action to effect exercise of the notes on its behalf by delivering notes through DTC and receiving payment in accordance with its normal procedures for next-day funds settlement. Payments with respect to the notes held through Euroclear or Clearstream will be credited to the cash accounts of Euroclear participants in accordance with the relevant system’s rules and procedures, to the extent received by its depositaries.
 
Replacement of Notes.
 
We will replace any mutilated, destroyed, stolen or lost notes at the expense of the holder upon surrender of the mutilated notes to the Trustee or evidence of destruction, loss or theft of a note satisfactory to us and the Trustee.
 
In the case of a destroyed, lost or stolen note, we may require an indemnity satisfactory to the Trustee and to us before a replacement note will be issued.
 
Further Issuances
 
We may from time to time, without notice or the consent of the holders of the notes of either series, create and issue further notes of the same series ranking equally and ratably with the original notes in all respects (or in all respects except for the payment of interest accruing prior to the issue date of such further notes, the public offering price and the issue date), so that such further notes form a single series with the original notes of that series and have the same terms as to status, redemption or otherwise as the original notes of that series.
 
Optional Redemption
 
Each series of notes will be redeemable, at our option, at any time in whole, or from time to time in part, at a price equal to the greater of:
 
  •   100% of the principal amount of the notes to be redeemed; or
 
  •   the sum of the present values of the remaining scheduled payments of principal and interest (at the rate in effect on the date of calculation of the redemption price) on the notes to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the date of redemption (the “Redemption Date”) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Treasury Yield plus 20 basis points for the 2016 notes and 25 basis points for the 2041 notes;
 
  •   plus, in either case, accrued interest to the Redemption Date.
 
The actual redemption price, calculated as provided below, will be calculated and certified to the Trustee and us by the Independent Investment Banker.
 
Notes called for redemption become due on the Redemption Date. Notices of optional redemption will be mailed at least 30 but not more than 60 days before the Redemption Date to each holder of the notes to be redeemed at its registered address. The notice of optional redemption for the notes will state, among other things, the amount of notes to be redeemed, the Redemption Date, the method of calculating the redemption price and each place that payment will be made upon presentation and surrender of notes to be redeemed. If less than all of the notes of either series are redeemed at any time, the Trustee will select the notes to be redeemed on a pro rata basis or by any other method the Trustee deems fair and appropriate. Unless we


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default in payment of the redemption price, interest will cease to accrue on the Redemption Date with respect to any notes called for optional redemption.
 
For purposes of determining the optional redemption price, the following definitions are applicable:
 
“Treasury Yield” means, with respect to any Redemption Date applicable to the notes, the rate per annum equal to the semi-annual equivalent yield to maturity (computed as of the third business day immediately preceding such Redemption Date) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the applicable Comparable Treasury Price for such Redemption Date.
 
“Comparable Treasury Issue” means the United States Treasury security selected by the Independent Investment Banker as having a maturity comparable to the remaining term of the notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the notes to be redeemed; provided, however, that if no maturity is within three months before or after the maturity date for such notes, yields for the two published maturities most closely corresponding to such United States Treasury security will be determined and the treasury rate will be interpolated or extrapolated from those yields on a straight line basis rounding to the nearest month.
 
“Independent Investment Banker” means any of J.P. Morgan Securities LLC, BNP Paribas Securities Corp., Deutsche Bank Securities Inc., DnB NOR Markets, Inc., RBS Securities Inc., Scotia Capital (USA) Inc., and their respective successors or, if no such firm is willing and able to select the applicable Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Trustee and reasonably acceptable to the Issuer.
 
“Comparable Treasury Price” means, with respect to any Redemption Date, (a) the average of the Reference Treasury Dealer Quotations for the Redemption Date, after excluding the highest and lowest Reference Treasury Dealer Quotations, or (b) if the Independent Investment Banker obtains fewer than six Reference Treasury Dealer Quotations, the average of all such quotations.
 
“Reference Treasury Dealer” means each of J. P. Morgan Securities LLC, BNP Paribas Securities Corp., Deutsche Bank Securities Inc., DnB NOR Markets, Inc., RBS Securities Inc., Scotia Capital (USA) Inc., so long as it is a Primary Treasury Dealer at the relevant time and, if it is not then a Primary Treasury Dealer, then a Primary Treasury Dealer selected by it, and in each case their respective successors (each, a “Primary Treasury Dealer”); provided, however, that if any of the foregoing shall not be a Primary Treasury Dealer at such time and shall fail to select a Primary Treasury Dealer, then the Issuer will substitute therefor another Primary Treasury Dealer.
 
“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date for the notes, an average, as determined by an Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue for the notes (expressed in each case as a percentage of its principal amount) quoted in writing to an Independent Investment Banker by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third business day preceding such Redemption Date.
 
Ranking
 
The notes will be unsecured, unless we are required to secure them pursuant to the limitations on liens covenant described in the accompanying prospectus under “Description of Debt Securities — Certain Covenants — Limitations on Liens.” The notes will also be the unsubordinated obligations of the Issuer and will rank equally with all other existing and future unsubordinated indebtedness of the Issuer. Each guarantee of the notes will be an unsecured and unsubordinated obligation of the Guarantor and will rank equally with all other existing and future unsubordinated indebtedness of the Guarantor. The notes and each guarantee will effectively rank junior to any future indebtedness of the Issuer and the Guarantor that is both secured and unsubordinated to the extent of the assets securing such indebtedness, and the notes will effectively rank junior to all indebtedness and other liabilities of the Issuer’s subsidiaries that are not Subsidiary Guarantors.
 
On a pro forma as adjusted basis at September 30, 2010, the Issuer had approximately $13.7 billion principal amount of consolidated indebtedness, including $11.5 billion in senior notes and $1.5 billion of junior subordinated notes, outstanding under the Base Indenture and a similar indenture, and the Parent


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Guarantor had no indebtedness (excluding guarantees totaling $13.1 billion), in each case excluding intercompany loans. Please read “Capitalization.”
 
Parent Guarantee
 
The Parent Guarantor will fully and unconditionally guarantee to each holder and the Trustee, on an unsecured and unsubordinated basis, the full and prompt payment of principal of, premium, if any, and interest on the notes, when and as the same become due and payable, whether at stated maturity, upon redemption, by declaration of acceleration or otherwise.
 
Potential Guarantee of Notes by Subsidiaries
 
Initially, the notes will not be guaranteed by any of our Subsidiaries. In the future, however, if our Subsidiaries become guarantors or co-obligors of our Funded Debt (as defined below), then these Subsidiaries will jointly and severally, fully and unconditionally, guarantee our payment obligations under the notes. We refer to any such Subsidiaries as “Subsidiary Guarantors” and sometimes to such guarantees as “Subsidiary Guarantees.” Each Subsidiary Guarantor will execute a supplement to the Indenture to effect its guarantee.
 
The obligations of each Guarantor under its guarantee of the notes will be limited to the maximum amount that will not result in the obligations of the Guarantor under the guarantee constituting a fraudulent conveyance or fraudulent transfer under federal or state law, after giving effect to:
 
  •   all other contingent and fixed liabilities of the Guarantor; and
 
  •   any collection from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its guarantee.
 
“Funded Debt” means all Indebtedness maturing one year or more from the date of the creation thereof, all Indebtedness directly or indirectly renewable or extendible, at the option of the debtor, by its terms or by the terms of any instrument or agreement relating thereto, to a date one year or more from the date of the creation thereof, and all Indebtedness under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of one year or more.
 
Addition and Release of Subsidiary Guarantors
 
The guarantee of any Guarantor may be released under certain circumstances. If we exercise our legal or covenant defeasance option with respect to notes of either series as described in the accompanying prospectus under “Description of Debt Securities — Defeasance and Discharge,” then any guarantee will be released with respect to that series. Further, if no Default has occurred and is continuing under the Indenture, a Subsidiary Guarantor will be unconditionally released and discharged from its guarantee:
 
  •   automatically upon any sale, exchange or transfer, whether by way of merger or otherwise, to any person that is not our affiliate, of all of the Parent Guarantor’s direct or indirect limited partnership or other equity interests in the Subsidiary Guarantor;
 
  •   automatically upon the merger of the Subsidiary Guarantor into us or any other Guarantor or the liquidation and dissolution of the Subsidiary Guarantor; or
 
  •   following delivery of a written notice by us to the Trustee, upon the release of all guarantees or other obligations of the Subsidiary Guarantor with respect to any Funded Debt of ours, except the notes and any other series of debt securities issued under the Indenture.
 
If at any time following any release of a Subsidiary Guarantor from its initial guarantee of the notes pursuant to the third bullet point in the preceding paragraph, the Subsidiary Guarantor again guarantees or co-issues any of our Funded Debt (other than our obligations under the Indenture), then the Parent Guarantor will cause the Subsidiary Guarantor to again guarantee the notes in accordance with the Indenture.
 
No Sinking Fund
 
We are not required to make mandatory redemption or sinking fund payments with respect to the notes.


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MATERIAL U.S. INCOME TAX CONSEQUENCES
 
The following discussion summarizes the material U.S. federal income tax consequences of purchasing, owning and disposing of the notes. This discussion applies only to initial holders of the notes who acquire the notes for a price equal to the issue price of the notes and who hold the notes as capital assets within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) (generally, property held for investment). The issue price of the notes is the first price at which a substantial amount of the notes is sold other than to bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers.
 
In this discussion, we do not purport to address all tax considerations that may be important to a particular holder in light of the holder’s circumstances, or to certain categories of investors that may be subject to special rules, such as:
 
  •   dealers in securities or currencies;
 
  •   traders in securities;
 
  •   U.S. holders (as defined below) whose functional currency is not the U.S. dollar;
 
  •   persons holding notes as part of a hedge, straddle, conversion or other “synthetic security” or integrated transaction;
 
  •   certain U.S. expatriates;
 
  •   financial institutions;
 
  •   insurance companies;
 
  •   entities that are tax-exempt for U.S. federal income tax purposes; and
 
  •   partnerships and other pass-through entities and holders of interests therein.
 
This discussion is included for general information only and does not address all of the aspects of U.S. federal income taxation that may be relevant to you in light of your particular circumstances. In addition, this discussion does not address any state or local, foreign, or other tax consequences. This discussion is based on U.S. federal income tax law, including the provisions of the Internal Revenue Code, Treasury Regulations, administrative rulings and judicial authority, all as in effect as of the date of this prospectus supplement. Subsequent developments in U.S. federal income tax law, including changes in law or differing interpretations, which may be applied retroactively, could have a material effect on the U.S. federal income tax consequences of purchasing, owning and disposing of notes as described below. Before you purchase notes, you are urged to consult your own tax advisor regarding the particular U.S. federal income, state and local, foreign and other tax consequences of purchasing, owning and disposing of notes that may be applicable to you.
 
U.S. Holders
 
The following summary applies to you only if you are a U.S. holder (as defined below).
 
Definition of a U.S. Holder
 
A “U.S. holder” is a beneficial owner of a note or notes who or which is for U.S. federal income tax purposes:
 
  •   an individual citizen or resident of the United States;
 
  •   a corporation (or other entity classified as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any of its states or the District of Columbia;
 
  •   an estate, the income of which is subject to U.S. federal income taxation regardless of the source of that income; or
 
  •   a trust, if, in general, a U.S. court is able to exercise primary supervision over the trust’s administration and one or more United States persons (within the meaning of the Internal Revenue Code) have the authority to control all of the trust’s substantial decisions, or the trust has a valid election in effect under applicable Treasury Regulations to be treated as a United States person.


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If a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is a beneficial owner of notes, the treatment of a partner in the partnership will generally depend upon the status of the partner and upon the activities of the partnership. Holders of notes that are a partnership or partners in such partnership are urged to consult their own tax advisors regarding the U.S. federal income tax consequences of purchasing, owning and disposing of the notes.
 
Taxation of Interest
 
Interest on your notes will be taxed as ordinary interest income. In addition:
 
  •   if you use the cash method of accounting for U.S. federal income tax purposes, you will have to include the interest on your notes in your gross income at the time that you receive the interest; and
 
  •   if you use the accrual method of accounting for U.S. federal income tax purposes, you will have to include the interest on your notes in your gross income at the time that the interest accrues.
 
Sale or Other Disposition of Notes
 
When you sell or otherwise dispose of your notes in a taxable transaction, you generally will recognize taxable gain or loss equal to the difference, if any, between:
 
  •   the amount realized on the sale or other disposition less any amount attributable to accrued interest, which will be taxable as ordinary interest income to the extent you have not previously included the accrued interest in income; and
 
  •   your adjusted tax basis in the notes.
 
Your adjusted tax basis in your notes generally will equal the amount you paid for the notes. Your gain or loss generally will be capital gain or loss and will be long-term capital gain or loss if at the time of the sale or other taxable disposition you have held the notes for more than one year. Subject to limited exceptions, your capital losses cannot be used to offset your ordinary income. If you are a non-corporate U.S. holder, your long-term capital gain generally will be subject to a maximum tax rate of 15% for taxable years beginning on or before December 31, 2012. For taxable years beginning on or after January 1, 2013, the long-term capital gain rate is scheduled to increase to 20%.
 
Existence of the Optional Redemption
 
We do not intend to treat the possibility of the payment of additional amounts described in “Description of the Notes — Optional Redemption,” as (i) giving rise to original issue discount or recognition of ordinary income on the sale or other taxable disposition of the notes or (ii) resulting in the notes being treated as contingent payment debt instruments under the applicable Treasury Regulations. It is possible that the Internal Revenue Service may take a different position, in which case a holder might be required to accrue interest at a higher rate than the stated interest rate and to treat as ordinary interest income any gain realized on the taxable disposition of the notes.
 
Information Reporting and Backup Withholding
 
Information reporting requirements apply to payments of interest on the notes and the proceeds of sales before maturity. These amounts generally must be reported to the Internal Revenue Service and to you unless you are an exempt recipient. In general, “backup withholding” (currently at a rate of 28%) may apply:
 
  •   to any payments made to you of interest on your notes, and
 
  •   to payment of the proceeds of a sale or other disposition of your notes before maturity,
 
if you are a non-corporate U.S. holder and fail to provide a correct taxpayer identification number, certified under penalties of perjury, or otherwise fail to comply with applicable requirements of the backup withholding rules.
 
Backup withholding is not an additional tax and may be credited against your U.S. federal income tax liability if the required information is timely provided to the Internal Revenue Service.


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New Legislation
 
For taxable years beginning after December 31, 2012, newly enacted legislation is scheduled to impose a 3.8% tax on the “net investment income” of certain U.S. citizens and residents, and on the undistributed “net investment income” of certain estates and trusts. Among other items, “net investment income” would generally include gross income from interest, less certain deductions. Prospective investors are urged to consult their own tax advisors with respect to the tax consequences of this new legislation.
 
Non-U.S. Holders
 
The following summary applies to you if you are a beneficial owner of notes and you are an individual, corporation, estate or trust and are not a U.S. holder (as defined above). An individual may, subject to exceptions, be deemed to be a resident alien, as opposed to a non-resident alien, by, among other ways, being present in the United States:
 
  •   on at least 31 days in the calendar year, and
 
  •   for an aggregate of at least 183 days during a three-year period ending in the current calendar year, counting for these purposes all of the days present in the current year, one-third of the days present in the immediately preceding year and one-sixth of the days present in the second preceding year.
 
Resident aliens are subject to U.S. federal income tax as if they were U.S. citizens.
 
U.S. Federal Withholding Tax
 
Under current U.S. federal income tax laws, and subject to the discussion below, U.S. federal withholding tax will not apply to payments by us or our paying agent (in its capacity as such) of interest on your notes under the “portfolio interest” exemption of the Internal Revenue Code, provided that interest on the notes is not effectively connected with your conduct of a trade or business in the United States and:
 
  •   you do not, directly or indirectly, actually or constructively, own (including through an interest in Enterprise Parent) 10% or more of the interests in our capital or profits; and
 
  •   you are not a controlled foreign corporation for U.S. federal income tax purposes that is related, directly or indirectly, to us through sufficient equity ownership (as provided in the Internal Revenue Code); and
 
  •   you certify that you are not a U.S. holder by providing a properly executed IRS Form W-8BEN or appropriate substitute form to us or our paying agent or a securities clearing organization, bank or other financial institution that holds customers’ securities in the ordinary course of its trade or business and holds your notes on your behalf and that certifies to us or our paying agent under penalties of perjury that it has received from you your signed, written statement and provides us or our paying agent with a copy of this statement.
 
If you cannot satisfy the requirements described above, payments of interest made to you will be subject to the 30% U.S. federal withholding tax, unless you provide us or our paying agent with a properly executed IRS Form W-8BEN (or successor form) claiming an exemption from (or a reduction of) withholding under a U.S. income tax treaty, or you provide us or our paying agent with a properly executed IRS Form W-8ECI claiming that the payments of interest are effectively connected with your conduct of a trade or business in the United States, in which case you generally will be subject to U.S. income tax on a net income basis on such payments of interest (see “U.S. Federal Income Tax” below).
 
U.S. Federal Income Tax
 
Except for the possible application of U.S. federal withholding tax (as described immediately above) and backup withholding tax (see “Backup Withholding and Information Reporting” below), you generally will not have to pay U.S. federal income tax on payments of interest on your notes, or on any gain or income realized from the sale, redemption, retirement at maturity or other taxable disposition of your notes (subject to, in the


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case of proceeds representing accrued interest, the conditions described in “U.S. Federal Withholding Tax” immediately above) unless:
 
  •   in the case of gain, you are an individual who is present in the United States for 183 days or more during the taxable year of the sale or other taxable disposition of your notes and specific other conditions are present; or
 
  •   the income or gain is effectively connected with your conduct of a U.S. trade or business, and, if a U.S. income tax treaty applies, is attributable to a U.S. “permanent establishment” you maintain.
 
If you are described in the first bullet point above, you will be subject to a flat 30% tax (unless a lower applicable income tax treaty rate applies) on the gain realized on the sale, redemption, retirement at maturity or other taxable disposition, and such gain may be offset by U.S. source capital losses, even though you are not considered a resident of the United States. If you are engaged in a trade or business in the United States and interest, gain or any other income attributable to your notes is effectively connected with the conduct of your trade or business, and, if a U.S. income tax treaty applies, you maintain a U.S. “permanent establishment” to which the interest, gain or other income is generally attributable, you generally will be subject to U.S. income tax on a net income basis on such interest, gain or income. In this instance, however, the interest on your notes will be exempt from the 30% U.S. withholding tax discussed immediately above under “U.S. Federal Withholding Tax” if you provide a properly executed IRS Form W-8ECI or appropriate substitute form to us or our paying agent on or before any payment date to claim the exemption.
 
In addition, if you are a foreign corporation, you may be subject to a U.S. branch profits tax equal to 30% of your effectively connected earnings and profits for the taxable year, as adjusted for certain items, unless a lower rate applies to you under a U.S. income tax treaty with your country of residence. For this purpose, you must include interest and gain on your notes in the earnings and profits subject to the U.S. branch profits tax if these amounts are effectively connected with the conduct of your U.S. trade or business.
 
Backup Withholding and Information Reporting
 
Payments of interest on a note, and amounts of tax withheld from such payments, if any, generally will be required to be reported to the U.S. Internal Revenue Service and to you. Backup withholding will not apply to payments made by us or our paying agent (in its capacity as such) to you if you have provided the required certification that you are a non-U.S. holder as described in “U.S. Federal Withholding Tax” above, and if neither we nor our paying agent has actual knowledge or reason to know that you are a U.S. holder (as described in “— U.S. Holders — Definition of a U.S. Holder” above).
 
The gross proceeds from the disposition of your notes may be subject to information reporting and backup withholding. If you sell your notes outside the United States through a non-U.S. office of a non-U.S. broker and the sales proceeds are paid to you outside the United States, then the U.S. backup withholding and information reporting requirements generally will not apply to that payment. However, U.S. information reporting, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made outside the United States, if you sell your notes through a non-U.S. office of a broker that is:
 
  •   a United States person (as defined in the Internal Revenue Code);
 
  •   a foreign person that derives 50% or more of its gross income in specific periods from the conduct of a trade or business in the United States;
 
  •   a “controlled foreign corporation” for U.S. federal income tax purposes; or
 
  •   a foreign partnership that, at any time during its taxable year, has more than 50% of its income or capital interests owned by United States persons or is engaged in the conduct of a U.S. trade or business;


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unless the broker has documentary evidence in its files that you are not a United States person and certain other conditions are met or you otherwise establish an exemption. If you receive payments of the proceeds of a sale of your notes to or through a U.S. office of a broker, the payment is subject to both U.S. backup withholding and information reporting unless you provide an IRS Form W-8BEN certifying that you are not a United States person or you otherwise establish an exemption.
 
You are urged to consult your own tax advisor regarding application of backup withholding in your particular circumstances and the availability of and procedure for obtaining an exemption from backup withholding under current Treasury Regulations. Any amounts withheld under the backup withholding rules from a payment to you will be allowed as a refund or credit against your U.S. federal income tax liability, provided that the required information is timely furnished to the Internal Revenue Service.


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CERTAIN ERISA CONSIDERATIONS
 
A fiduciary of a pension, profit-sharing or other employee benefit plan subject to Section 406 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), a plan or other arrangement subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), or a plan or other arrangement subject to any other law or other restrictions materially similar to Section 406 of ERISA or Section 4975 of the Code (“Similar Law”) (each, a “Plan”), should consider the fiduciary standards of ERISA or Similar Law in the context of such a Plan’s particular circumstances before authorizing an investment in the notes. Among other factors, the fiduciary should consider whether such an investment is in accordance with the documents governing the Plan and whether the investment is appropriate for the Plan in view of its overall investment policy and the prudence and diversification requirements of ERISA or Similar Law.
 
The notes may not be sold to any Plan unless either (i) the purchase and holding of the notes would not be a transaction prohibited under Section 406 of ERISA, Section 4975 of the Code or Similar Law, or (ii) an exemption under ERISA, the Code or Similar Law or one of the following Prohibited Transaction Class Exemptions (“PTCE”) issued by the U.S. Department of Labor (or a materially similar exemption or exception under Similar Law) applies to the purchase, holding and disposition of the notes:
 
  •   PTCE 96-23 for transactions determined by in-house asset managers;
 
  •   PTCE 95-60 for transactions involving insurance company general accounts;
 
  •   PTCE 91-38 for transactions involving bank collective investment funds;
 
  •   PTCE 90-1 for transactions involving insurance company pooled separate accounts; or
 
  •   PTCE 84-14 for transactions determined by independent qualified professional asset managers.
 
Any purchaser of the notes or any interest therein and any subsequent transferee will be deemed to have represented and warranted to us on each day from and including the date of its purchase of such notes through and including the date of its disposition of such notes that either:
 
  (a)  Plan assets under ERISA and the regulations issued thereunder, or under any Similar Law, are not being used to acquire the notes; or
 
  (b)  Plan assets as so defined are being used to acquire such notes but the purchase, holding and disposition of such notes either (1) are not and will not be a “prohibited transaction” within the meaning of ERISA, the Code or Similar Law or (2) are and will be exempt from the prohibited transaction rules under ERISA, the Code and Similar Law under a provision of ERISA, the Code or Similar Law or by one or more of the following prohibited transaction exemptions: PTCE 96-23, 95-60, 91-38, 90-1 or 84-14, or a materially similar exemption or exception under Similar Law.
 
The discussion set forth above is general in nature and is not intended to be complete. Accordingly, it is important that any person considering the purchase of notes with Plan assets consult with its counsel regarding the consequences under ERISA, the Code or other Similar Law of the acquisition and ownership of the notes. Purchasers of the notes have exclusive responsibility for ensuring that their purchase and holding of the notes do not violate the fiduciary or prohibited transaction rules of ERISA, the Code or any Similar Law. The sale of the notes to a Plan is in no respect a representation by us or the underwriters that such an investment meets all relevant legal requirements with respect to investments by Plans generally or any particular Plan, or that such an investment is appropriate for Plans generally or any particular Plan.


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UNDERWRITING
 
Subject to the terms and conditions set forth in an underwriting agreement, dated the date of this prospectus supplement, between us and the underwriters named below, we have agreed to sell to each of the underwriters, and the underwriters have agreed, severally and not jointly, to purchase, the principal amount of the notes set forth opposite their respective names below:
 
                 
    Principal Amount
    Principal Amount
 
Underwriters
  of 2016 Notes     of 2041 Notes  
 
J.P. Morgan Securities LLC
  $ 90,000,000     $ 90,000,000  
BNP Paribas Securities Corp. 
    90,000,000       90,000,000  
Deutsche Bank Securities Inc. 
    90,000,000       90,000,000  
DnB NOR Markets, Inc. 
    69,375,000       69,375,000  
RBS Securities Inc. 
    90,000,000       90,000,000  
Scotia Capital (USA) Inc. 
    90,000,000       90,000,000  
Barclays Capital Inc. 
    30,000,000       30,000,000  
Mizuho Securities USA Inc. 
    30,000,000       30,000,000  
Morgan Stanley & Co. Incorporated
    30,000,000       30,000,000  
SunTrust Robinson Humphrey, Inc. 
    30,000,000       30,000,000  
Wells Fargo Securities, LLC
    30,000,000       30,000,000  
Natixis Securities North America Inc. 
    16,875,000       16,875,000  
RBC Capital Markets, LLC
    16,875,000       16,875,000  
UBS Securities LLC
    16,875,000       16,875,000  
BBVA Securities Inc. 
    7,500,000       7,500,000  
ING Financial Markets LLC
    7,500,000       7,500,000  
SG Americas Securities, LLC
    7,500,000       7,500,000  
US Bancorp Investments, Inc. 
    7,500,000       7,500,000  
                 
Total
  $ 750,000,000     $ 750,000,000  
                 
 
The underwriting agreement provides that the obligations of the underwriters to purchase the notes included in this offering are subject to approval of legal matters by counsel and to other conditions. Under the terms of the underwriting agreement, the underwriters are committed to purchase all of the notes if any are purchased.
 
The underwriters propose initially to offer the notes to the public at the public offering prices set forth on the cover page of this prospectus supplement and may offer the notes to certain dealers at such prices less a concession not in excess of 0.35% of the principal amount of the 2016 notes and 0.50% of the principal amount of the 2041 notes. The underwriters may allow a discount not in excess of 0.225% of the principal amount of the 2016 notes and 0.25% of the principal amount of the 2041 notes on sales to certain other brokers and dealers. After this initial public offering, the public offering prices, concessions and discounts may be changed.
 
The following table summarizes the compensation to be paid by us to the underwriters.
 
                                 
    2016 Notes   2041 Notes
    Per Note   Total   Per Note   Total
 
Underwriting discount paid by us
    0.600 %   $ 4,500,000       0.875 %   $ 6,562,500  
 
We estimate that our share of the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $300,000.
 
We do not intend to apply for listing of the notes on a national securities exchange. We have been advised by the underwriters that the underwriters intend to make a market in the notes of each series but are not obligated to do so and may discontinue market making at any time without notice. No assurance can be


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given as to whether or not a trading market for the notes will develop or as to the liquidity of any trading market for the notes of either series which may develop.
 
In connection with the offering of the notes, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the notes of either series. Specifically, the underwriters may overallot in connection with the offering of the notes, creating a syndicate short position. In addition, the underwriters may bid for, and purchase, notes in the open market to cover syndicate short positions or to stabilize the price of the notes of either series. Finally, the underwriting syndicate may reclaim selling concessions allowed for distributing the notes in the offering, if the syndicate repurchases previously distributed notes in syndicate covering transactions, stabilization transactions or otherwise. Any of these activities may stabilize or maintain the market price of the notes of either series above independent market levels. The underwriters are not required to engage in any of these activities and may end any of them at any time. Neither we nor the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the notes of either series. In addition, neither we nor the underwriters make any representation that the underwriters will engage in such transactions or that such transactions, once commenced, will not be discontinued without notice.
 
We expect delivery of the notes will be made against payment therefor on or about January 13, 2011, which is the seventh business day following the date of pricing of the notes (such settlement being referred to as “T+7”). Under Rule 15c6-1 of the Securities Exchange Act of 1934, trades in the secondary market generally are required to settle in three business days unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade the notes on the date of pricing of the notes or the next succeeding three business days will be required, by virtue of the fact that the notes initially will settle in T+7, to specify an alternate settlement cycle at the time of any such trade to prevent failed settlement and should consult their own advisers.
 
We, Enterprise Parent and certain of our affiliates have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act of 1933, or to contribute to payments the underwriters may be required to make because of those liabilities.
 
Conflicts of Interest
 
Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory, commercial banking and investment banking services for us and our affiliates, for which they received or will receive customary fees and expense reimbursement. Affiliates of J.P. Morgan Securities LLC, BNP Paribas Securities Corp., Deutsche Bank Securities Inc., DnB NOR Markets, Inc., RBS Securities Inc., Scotia Capital (USA) Inc. and other co-managers are lenders under our multi-year revolving credit facility. These affiliates will receive their respective share of any repayment by us of amounts outstanding under the multi-year revolving credit facility from the proceeds of this offering. Because we intend to use the net proceeds from this offering to reduce indebtedness owed by us under our multi-year revolving credit facility, each of the underwriters whose affiliates will receive at least 5% of the net proceeds is considered by the Financial Industry Regulatory Authority, or FINRA, to have a conflict of interest with us in regards to this offering. However, no qualified independent underwriter is needed for this offering because the senior notes offered hereby are “investment grade rated” as defined in FINRA Rule 5121(f)(8). Wells Fargo Securities, LLC is an affiliate of the Trustee under the Indenture for the notes.


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LEGAL MATTERS
 
Andrews Kurth LLP, Houston, Texas, will pass upon the validity of the notes, the guarantees and certain federal income tax matters related to the notes for Enterprise Parent and us. Certain legal matters with respect to the notes and the guarantees will be passed upon for the underwriters by Vinson & Elkins L.L.P., Houston, Texas. Vinson & Elkins L.L.P. performs legal services for Enterprise Parent and us from time to time on matters unrelated to this offering.
 
EXPERTS
 
The consolidated financial statements of Enterprise Products Partners L.P. and subsidiaries incorporated in this prospectus supplement by reference from Enterprise Products Partners L.P.’s Annual Report on Form 10-K for the year ended December 31, 2009 and the effectiveness of Enterprise Products Partners L.P. and subsidiaries’ internal control over financial reporting have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports, which are incorporated herein by reference (which reports (i) express an unqualified opinion on the financial statements and include an explanatory paragraph concerning the retroactive effects of the common control acquisition of TEPPCO Partners, L.P. and Texas Eastern Products Pipeline Company, LLC by Enterprise Products Partners L.P. on October 26, 2009 and the related change in the composition of reportable segments as a result of these acquisitions and (ii) express an unqualified opinion on the effectiveness of internal control over financial reporting). Such consolidated financial statements have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
 
The consolidated balance sheet of Enterprise Products GP, LLC and subsidiaries as of December 31, 2009, incorporated in this prospectus supplement by reference from Enterprise Products Partners L.P.’s Current Report on Form 8-K filed on March 8, 2010, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report, which is incorporated herein by reference. Such consolidated balance sheet has been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
 
The consolidated financial statements of Enterprise GP Holdings L.P. and subsidiaries, except Energy Transfer Equity, L.P., an investment of Enterprise GP Holdings L.P. which is accounted for by the use of the equity method, incorporated in this prospectus supplement by reference from Enterprise Products Partners L.P.’s Current Report on Form 8-K filed on November 23, 2010, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report, which is incorporated herein by reference (which report expresses an unqualified opinion on the financial statements, refers to the report of the other auditors as it relates to an equity method investment in Energy Transfer Equity, L.P., and includes an explanatory paragraph concerning the retroactive effects of the common control acquisition of TEPPCO Partners, L.P. and Texas Eastern Products Pipeline Company, LLC by Enterprise Products Partners L.P. on October 26, 2009 and the related change in the composition of reportable segments as a result of these acquisitions). The consolidated financial statements of Energy Transfer Equity, L.P. have been audited by Grant Thornton LLP, an independent registered public accounting firm, as stated in their report, which report is incorporated herein by reference from Enterprise Products Partners L.P.’s Current Report on Form 8-K filed on November 23, 2010. Such consolidated financial statements are incorporated herein by reference, and have been so incorporated in reliance upon the report of Deloitte & Touche LLP, and as it relates to the Company’s investment in Energy Transfer Equity, L.P., the report of Grant Thornton LLP, in each case, given upon their authority as experts in accounting and auditing.


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INFORMATION INCORPORATED BY REFERENCE
 
Enterprise Parent files annual, quarterly and current reports, and other information with the Commission under the Exchange Act (Commission File No. 1-4323). You may read and copy any document Enterprise Parent files at the Commission’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the Commission at 1-800-732-0330 for further information on the public reference room. Enterprise Parent’s filings are also available to the public at the Commission’s web site at http://www.sec.gov. In addition, documents filed by Enterprise Parent can be inspected at the offices of the New York Stock Exchange, Inc. 20 Broad Street, New York, New York 10002.
 
The Commission allows Enterprise Parent to incorporate by reference into this prospectus supplement and the accompanying prospectus the information Enterprise Parent files with it, which means that Enterprise Parent can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus supplement and the accompanying prospectus, and later information that Enterprise Parent files with the Commission will automatically update and supersede this information. Enterprise Parent incorporates by reference the document listed below and any future filings it makes with the Commission under section 13(a), 13(c), 14 or 15(d) of the Exchange Act until this offering is completed (other than information furnished under Items 2.02 or 7.01 of any Form 8-K, which is not deemed filed under the Exchange Act):
 
  •   Annual Report on Form 10-K for the year ended December 31, 2009;
 
  •   Quarterly Reports on Form 10-Q for the quarters ended March 31, 2010, June 30, 2010 and September 30, 2010; and
 
  •   Current Reports on Form 8-K filed with the Commission on January 4, 2010, January 8, 2010, February 26, 2010, March 8, 2010, March 29, 2010, April 1, 2010, April 15, 2010, May 17, 2010, May 20, 2010, May 21, 2010, June 3, 2010, August 23, 2010, September 7, 2010, September 28, 2010, October 1, 2010, October 14, 2010, October 26, 2010, November 9, 2010, November 23, 2010 (as amended by Amendment No. 1 filed with the Commission on November 23, 2010), December 6, 2010 and December 10, 2010.
 
Enterprise Parent will provide without charge to each person, including any beneficial owner, to whom this prospectus supplement has been delivered, a copy of any and all of our filings with the Commission. You may request a copy of these filings by writing or telephoning Enterprise Parent at:
 
Enterprise Products Partners L.P.
1100 Louisiana Street, 10th Floor
Houston, Texas 77002
Attention: Investor Relations
Telephone: (713) 381-6500
 
FORWARD-LOOKING STATEMENTS
 
This prospectus supplement, the accompanying prospectus and some of the documents we have incorporated herein and therein by reference contain various forward-looking statements and information that are based on our beliefs and those of our general partner, as well as assumptions made by and information currently available to us. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. When used in this prospectus supplement, the accompanying prospectus or the documents we have incorporated herein or therein by reference, words such as “anticipate,” “project,” “expect,” “plan,” “seek,” “goal,” “estimate,” “forecast,” “intend,” “could,” “should,” “will,” “believe,” “may,” “potential” and similar expressions and statements regarding our plans and objectives for future operations, are intended to identify forward-looking statements. Although we and our general partner believe that such


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expectations reflected in such forward-looking statements are reasonable, neither we nor our general partner can give assurances that such expectations will prove to be correct.
 
Such statements are subject to a variety of risks, uncertainties and assumptions. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or expected. Among the key risk factors that may have a direct bearing on our results of operations and financial condition are:
 
  •   fluctuations in oil, natural gas and NGL prices and production due to weather and other natural and economic forces;
 
  •   a reduction in demand for our products by the petrochemical, refining or heating industries;
 
  •   the effects of our debt level on our future financial and operating flexibility;
 
  •   a decline in the volumes of NGLs delivered by our facilities;
 
  •   the failure of our credit risk management efforts to adequately protect us against customer non-payment;
 
  •   terrorist attacks aimed at our facilities; and
 
  •   our failure to successfully integrate our operations with assets or companies we acquire.
 
You should not put undue reliance on any forward-looking statements. When considering forward-looking statements, please review the risk factors described under “Risk Factors” in this prospectus supplement, in the accompanying prospectus, in our Annual Report on Form 10-K filed March 1, 2010, our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2010, June 30, 2010 and September 30, 2010 and in Exhibit 99.2 of our Current Report on 8-K filed on November 23, 2010.
 
* * * *


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INDEX TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
Enterprise Products Partners L.P. Unaudited Pro Forma Condensed Consolidated Financial Statements:
 
         
    F-2  
    F-3  
    F-4  
    F-5  
    F-6  


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ENTERPRISE PRODUCTS PARTNERS L.P.
 
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
Introduction
 
Enterprise Products Partners L.P. (the “Partnership,” NYSE: EPD), Enterprise GP Holdings L.P. (“Holdings,” NYSE: EPE), and their respective general partners entered into an Agreement and Plan of Merger dated September 3, 2010 (the “merger agreement”). Pursuant to the merger agreement, all Holdings units (including 13,921 Holdings units issued in a transformation of the 0.01% economic general partner interest of Holdings immediately prior to the merger), or 139,208,985 units, converted into 208,813,454 common units (net of 23 fractional common units cashed out) representing limited partner interests in the Partnership (“Partnership common units”). The merger agreement and related documents also provided for (i) the cancellation of the Partnership’s incentive distribution rights held indirectly by Holdings through its ownership of the Partnership’s general partner (the “Partnership GP”), (ii) the conversion of the Partnership GP’s 2% economic interest in the Partnership into a non-economic general partner interest in the Partnership and (iii) the cancellation of 21,563,177 Partnership common units owned by Holdings.
 
Prior to the merger, the Partnership was a consolidated subsidiary of Holdings. After the merger was completed on November 22, 2010, Holdings became a subsidiary of the Partnership, with the Partnership as the sole limited partner of Holdings and the general partner of Holdings continuing as a non-economic general partner of the Partnership. Holdings will be treated as the surviving consolidated entity for accounting purposes, even though the Partnership will be the surviving consolidated entity for legal and reporting purposes. For financial accounting and reporting purposes, Holdings is considered the accounting acquirer of its noncontrolling interests in the Partnership (i.e., the Partnership’s limited partner interests that are owned by third parties and related parties other than Holdings). The transaction was accounted for as an equity transaction and no gain or loss was recognized as a result of the merger.
 
The unaudited pro forma condensed consolidated balance sheet combines the historical balance sheets of the Partnership and Holdings, after giving effect to the merger and related transactions as if they had occurred on September 30, 2010. The unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2010 and the year ended December 31, 2009 give effect to the merger and related transactions as if they had occurred on January 1, 2009. The historical consolidated financial information has been adjusted to give effect to pro forma events that are directly attributable to the merger and related transactions and are factually supportable.
 
These unaudited pro forma condensed consolidated financial statements should be read in conjunction with the historical audited consolidated financial information and accompanying notes of Holdings and the Partnership.
 
The unaudited pro forma condensed consolidated financial statements are intended for informational purposes only and do not reflect any cost savings or other synergies that may be achieved as a result of the merger and are based on assumptions that the Partnership believes are reasonable under the circumstances. As such, these statements do not necessarily reflect the results of operations or financial position of the Partnership that would have resulted had the merger actually been consummated as of the dates indicated, and are not necessarily indicative of the future results of operations or the future financial position of the Partnership following completion of the merger.


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ENTERPRISE PRODUCTS PARTNERS L.P.
 
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 2010
 
                         
                Enterprise
 
    Enterprise GP
          Products
 
    Holdings L.P.
    Pro Forma
    Partners L.P.
 
    Historical     Adjustments     Pro Forma  
 
ASSETS
Current assets:
                       
Cash and cash equivalents
  $ 42.9     $ (10.1 )(a)   $ 32.8  
                         
Restricted cash
    32.5             32.5  
Accounts and notes receivable, net
    3,067.6             3,067.6  
Inventories
    1,210.0             1,210.0  
Other current assets
    292.9       (1.9 )(b)     291.0  
                         
Total current assets
    4,645.9       (12.0 )     4,633.9  
Property, plant and equipment, net
    18,810.0             18,810.0  
Investments in unconsolidated affiliates
    2,331.2             2,331.2  
Intangible assets, net
    1,860.3             1,860.3  
Goodwill
    2,052.7             2,052.7  
Other assets
    246.5       (4.9 )(b)     241.6  
                         
Total assets
  $ 29,946.6     $ (16.9 )   $ 29,929.7  
                         
 
LIABILITIES AND EQUITY
Current liabilities:
                       
Accounts payable
  $ 618.4     $     $ 618.4  
Accrued product payables
    3,338.6             3,338.6  
Other current liabilities
    672.3             672.3  
                         
Total current liabilities
    4,629.3             4,629.3  
Long-term debt
    13,790.1       1,085.3 (b)     13,790.1  
              (1,085.3 )(b)        
Other long-term liabilities
    352.3             352.3  
Commitments and contingencies
                       
Equity:
                       
Partners’ equity
    1,863.6       (10.1 )(a)     10,630.5  
              (6.8 )(b)        
              8,783.8 (c)        
Noncontrolling interest
    9,311.3       (8,783.8 )(c)     527.5  
                         
Total equity
    11,174.9       (16.9 )     11,158.0  
                         
Total liabilities & equity
  $ 29,946.6     $ (16.9 )   $ 29,929.7  
                         
 
The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.


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ENTERPRISE PRODUCTS PARTNERS L.P.
 
UNAUDITED PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED OPERATIONS
For the Nine Months Ended September 30, 2010
 
                         
                Enterprise
 
    Enterprise GP
          Products
 
    Holdings L.P.
    Pro Forma
    Partners L.P.
 
    Historical     Adjustments     Pro Forma  
 
Revenues
  $ 24,155.7     $     $ 24,155.7  
Costs and expenses:
                       
Operating costs and expenses
    22,406.2             22,406.2  
General and administrative costs
    150.9             150.9  
                         
Total costs and expenses
    22,557.1             22,557.1  
                         
Equity in income of unconsolidated affiliates
    43.2             43.2  
                         
Operating income
    1,641.8             1,641.8  
                         
Other income (expense):
                       
Interest expense
    (529.1 )           (529.1 )
Other, net
    1.8             1.8  
                         
Total other expense, net
    (527.3 )           (527.3 )
                         
Income before provision for income taxes
    1,114.5             1,114.5  
                         
Provision for income taxes
    (20.1 )           (20.1 )
                         
Income from continuing operations
  $ 1,094.4     $     $ 1,094.4  
                         
Allocation of income from continuing operations:
                       
Limited partners
  $ 161.0     $ 887.3 (d)   $ 1,048.3  
                         
Noncontrolling interests
  $ 933.4     $ (887.3 )(d)   $ 46.1  
                         
Basic earnings per unit:
                       
Weighted-average number of units outstanding (see Note e)
    139.2               791.0  
                         
Income per unit from continuing operations
  $ 1.16             $ 1.33  
                         
Diluted earnings per unit:
                       
Weighted-average number of units outstanding (see Note f)
    139.2               822.6  
                         
Income per unit from continuing operations
  $ 1.16             $ 1.27  
                         
 
The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.


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ENTERPRISE PRODUCTS PARTNERS L.P.
 
UNAUDITED PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED OPERATIONS
For the Year Ended December 31, 2009
 
                         
                Enterprise
 
    Enterprise GP
          Products
 
    Holdings L.P.
    Pro Forma
    Partners L.P.
 
    Historical     Adjustments     Pro Forma  
 
Revenues
  $ 25,510.9     $     $ 25,510.9  
Costs and expenses:
                       
Operating costs and expenses
    23,565.8             23,565.8  
General and administrative costs
    182.8             182.8  
                         
Total costs and expenses
    23,748.6             23,748.6  
                         
Equity in income of unconsolidated affiliates
    92.3             92.3  
                         
Operating income
    1,854.6             1,854.6  
                         
Other income (expense):
                       
Interest expense
    (687.3 )           (687.3 )
Other, net
    (1.7 )           (1.7 )
                         
Total other expense, net
    (689.0 )           (689.0 )
                         
Income before provision for income taxes
    1,165.6             1,165.6  
                         
Provision for income taxes
    (25.3 )           (25.3 )
                         
Income from continuing operations
  $ 1,140.3     $     $ 1,140.3  
                         
Allocation of income from continuing operations:
                       
Limited partners
  $ 204.1     $ 825.5 (d)   $ 1,029.6  
                         
Noncontrolling interests
  $ 936.2     $ (825.5 )(d)   $ 110.7  
                         
Basic earnings per unit:
                       
Weighted-average number of units outstanding (see Note e)
    137.8               643.4  
                         
Income per unit from continuing operations
  $ 1.48             $ 1.60  
                         
Diluted earnings per unit:
                       
Weighted-average number of units outstanding (see Note f)
    137.8               675.0  
                         
Income per unit from continuing operations
  $ 1.48             $ 1.53  
                         
 
The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.


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ENTERPRISE PRODUCTS PARTNERS L.P.
 
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
These unaudited pro forma condensed consolidated financial statements and underlying pro forma adjustments are based upon currently available information and certain estimates and assumptions made by the management of the general partner of Holdings (“Holdings GP”) and the Partnership GP; therefore, actual results could materially differ from the pro forma information. However, Holdings and the Partnership believe that the assumptions provide a reasonable basis for presenting the significant effects of the transactions noted herein. We believe that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the pro forma information.
 
The merger and related transactions result in Holdings being considered the surviving consolidated entity for accounting purposes rather than the Partnership, which is the surviving consolidated entity for legal and reporting purposes. As a result, the merger will be accounted for in Holdings’ consolidated financial statements as an equity transaction in accordance with Financial Accounting Standards Board Accounting Standards Codification 810-10-45, Consolidation — Overall — Changes in Parent’s Ownership Interest in a Subsidiary. As a result, that portion of noncontrolling owners’ interest attributable to the limited partners of the Partnership other than Holdings (as recognized in Holdings’ consolidated balance sheet) will be reclassified to partners’ equity. Consequently, no fair value adjustment would be made to the assets or liabilities of Holdings and no gain or loss would be recognized in Holdings’ net income. Since the Partnership is the surviving entity for legal purposes, the pro forma condensed consolidated balance sheet and statements of operations are entitled “Enterprise Products Partners L.P. Pro Forma.”
 
Pro Forma Adjustments
 
The following pro forma adjustments made to the historical financial statements of the Partnership and Holdings presented herein are described as follows:
 
  (a)  To reflect the payment of $10.1 million of estimated incremental transaction costs associated with completing the merger and related transactions including the payment of remaining financial advisory fees, legal and accounting fees and other professional fees and expenses using cash on hand. For purposes of this pro forma presentation, these material non-recurring charges have been reflected in the pro forma balance sheet only; however, such fees will also be recognized as expenses in the Partnership’s statement of operations during the periods in which the underlying services are rendered. As of September 30, 2010, Holdings and the Partnership expensed an aggregate of $13.9 million of transaction costs related to the merger.
 
  (b)  To reflect the pro forma refinancing of Holdings’ variable rate credit facilities at September 30, 2010 using availability under the multi-year revolving credit facility of Enterprise Products Operating LLC (“EPO”), a subsidiary of the Partnership. For purposes of the pro forma balance sheet presentation, the $1.1 billion increase in long-term debt attributable to additional borrowings under the EPO credit facility is offset by an equal reduction in the amount of debt principal outstanding under the Holdings’ credit facilities. The pro forma balance sheet adjustments related to this refinancing include the write-off of $6.8 million of unamortized debt issuance costs recorded by Holdings.
 
For purposes of the pro forma statements of operations, we have assumed that the Partnership would have refinanced Holdings’ debt principal amounts in prior periods using the same terms that Holdings entered into its debt originally. As a result, the pro forma statements of operations do not reflect any adjustments to interest expense for the years ended December 31, 2009 or the nine months ended September 30, 2010.
 
In addition, the pro forma statements of operations do not reflect a nonrecurring charge of $29.8 million for the redesignation of Holdings’ interest rate swaps in connection with the refinancing of Holdings’ long-term debt concurrent with the merger. At September 30, 2010, these derivative instruments were in a $29.8 million liability position, which was a component of partners’ equity (i.e., accumulated other comprehensive loss) for Holdings on a consolidated historical basis. The


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reclassification of this accumulated other comprehensive loss to earnings in connection with the refinancing will result in an increase in the Partnership’s consolidated interest expense for the fourth quarter of 2010. From a pro forma balance sheet perspective, no pro forma adjustment is necessary since the accumulated other comprehensive loss is already a component of partners’ equity.
 
As an aid to the reader, the following table presents the amount of interest expense, excluding amortization of debt issuance costs and the effect of interest rate swaps, that was recognized by Holdings in connection with its debt agreements for the periods presented along with the associated weighted-average interest rate charged and principal balance outstanding during each period. The interest expense amounts presented in the following table are a component of consolidated interest expense as presented in Holdings’ historical financial statements.
 
                         
        Weighted
  Weighted
        Average
  Average
        Interest
  Principal
    Interest
  Rate for
  Outstanding
    Expense   Period   for Period
 
Year ended December 31, 2009
  $ 29.1       2.7 %   $ 1,078.9  
Nine months ended September 30, 2010
  $ 19.1       2.3 %   $ 1,096.1  
 
If the weighted-average variable interest rates charged during the year ended December 31, 2009 and the nine months ended September 30, 2010 were 1/8% higher than the historical weighted-average rates presented in the preceding table, Holdings’ interest expense would have increased by approximately $1.4 million and $0.8 million, respectively.
 
At November 22, 2010, the total principal amount of Holdings’ long-term debt principal outstanding was approximately $1.1 billion and the weighted-average interest rate charged on such debt was 2.2%. During the nine months ended September 30, 2010, the interest rate paid on the EPO multi-year revolving credit facility ranged from 0.73% to 3.25%, with a weighted-average interest rate paid of 0.84%.
 
  (c)  To reclassify to partners’ capital the noncontrolling owners’ interests in consolidated subsidiaries previously reported by Holdings related to the Partnership’s public limited partner unitholders other than Holdings.
 
  (d)  To reclassify to limited partners’ interest the net income previously allocated to noncontrolling owners’ interest in consolidated subsidiaries previously reported by Holdings related to the Partnership’s public limited partner unitholders.
 
  (e)  The Partnership’s pro forma weighted-average basic number of units outstanding was calculated as follows:
 
                 
    Nine Months
    Year
 
    Ended
    Ended
 
    September 30,
    December 31,
 
    2010     2009  
 
Weighted-average basic number of Partnership units
               
outstanding — as reported
    629.9       486.8  
Weighted-average Partnership units issued in exchange for Holdings’ units(1)
    182.7       178.2  
Cancellation of Partnership units owned by Holdings
    (21.6 )     (21.6 )
                 
Pro forma weighted-average basic number of Partnership units outstanding
    791.0       643.4  
                 
 
 
(1) The amount presented for the nine months ended September 30, 2010 excludes 26.1 million Partnership common units (the “Designated Units,” as discussed below) issued to certain privately


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held affiliates of Enterprise Products Company. The amount presented for the year ended December 31, 2009 excludes 30.6 million Designated Units.
 
In connection with the merger, certain privately held affiliates of Enterprise Products Company have agreed to temporarily waive the cash distributions they would otherwise receive on 30,610,000 of the Partnership common units (the “Designated Units”) they would receive upon completion of the merger. The temporary distribution waiver would lapse on a fixed number of Designated Units as follows: none in calendar year 2011, 4,480,000 Partnership common units in calendar year 2012, 2,430,000 Partnership common units in calendar year 2013, 1,140,000 Partnership common units in calendar year 2014, 4,870,000 Partnership common units in calendar year 2015 and the remaining 17,690,000 units in calendar year 2016.
 
From a financial accounting perspective, the Designated Units are excluded from basic earnings per unit until they become eligible to receive quarterly cash distributions. The Designated Units will not be allocated any book earnings until the applicable waiver periods expire for each tranche of units. For purposes of this pro forma presentation, all of the 30,610,000 Designated Units were excluded from the Partnership’s pro forma basic earnings per unit computation for the year ended December 31, 2009 and 26,130,000 Designated Units were excluded from the pro forma basic earnings per unit computation for the nine months ended September 30, 2010. The full amount of Designated Units, or 30,610,000 units, are reflected in the pro forma diluted earnings per unit calculation for both the year ended December 31, 2009 and nine months ended September 30, 2010 (see Note f).
 
  (f)  The Partnership’s pro forma weighted-average diluted number of units outstanding was calculated as follows:
 
                 
    Nine Months
    Year
 
    Ended
    Ended
 
    September 30,
    December 31,
 
    2010     2009  
 
Weighted-average diluted number of Partnership units
               
outstanding — as reported
    635.4       487.8  
Partnership units issued in exchange for Holdings’ units
    208.8       208.8  
Cancellation of Partnership units owned by Holdings
    (21.6 )     (21.6 )
                 
Pro forma weighted-average diluted number of Partnership units outstanding
    822.6       675.0  
                 


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PROSPECTUS
 
Enterprise Products Partners L.P.
Enterprise Products Operating LLC
 
COMMON UNITS
DEBT SECURITIES
 
We may offer an unlimited number and amount of the following securities under this prospectus:
 
  •  common units representing limited partner interests in Enterprise Products Partners L.P.; and
 
  •  debt securities of Enterprise Products Operating LLC (successor to Enterprise Products Operating L.P.), which will be guaranteed by its parent company, Enterprise Products Partners L.P.
 
This prospectus provides you with a general description of the securities we may offer. Each time we sell securities we will provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus. You should read carefully this prospectus and any prospectus supplement before you invest. You should also read the documents we have referred you to in the “Where You Can Find More Information” section of this prospectus for information about us, including our financial statements.
 
Our common units are listed on the New York Stock Exchange under the trading symbol “EPD.”
 
Unless otherwise specified in a prospectus supplement, the senior debt securities, when issued, will be unsecured and will rank equally with our other unsecured and unsubordinated indebtedness. The subordinated debt securities, when issued, will be subordinated in right of payment to our senior debt.
 
Investing in our common units and debt securities involves risks. Limited partnerships are inherently different from corporations. You should review carefully “Risk Factors” beginning on page 2 for a discussion of important risks you should consider before investing on our securities.
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
 
This prospectus may not be used to consummate sales of securities by the registrants unless accompanied by a prospectus supplement.
 
The date of this prospectus is November 29, 2010.


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You should rely only on the information contained or incorporated by reference in this prospectus or any prospectus supplement. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. You should not assume that the information incorporated by reference or provided in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front of each document.
 
Unless the context requires otherwise or unless otherwise noted, “our,” “we,” “us” and “Enterprise” as used in this prospectus refer to Enterprise Products Partners L.P. and Enterprise Products Operating LLC, their consolidated subsidiaries and their investments in unconsolidated affiliates.


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ABOUT THIS PROSPECTUS
 
This prospectus is part of a registration statement that we file with the Securities and Exchange Commission (the “Commission”) using a “shelf” registration process. Under this shelf process, we may offer from time to time an unlimited number and amount of our securities. Each time we offer securities, we will provide you with a prospectus supplement that will describe, among other things, the specific amounts, types and prices of the securities being offered and the terms of the offering. Any prospectus supplement may add, update or change information contained or incorporated by reference in this prospectus. Any statement that we make in or incorporate by reference in this prospectus will be modified or superseded by any inconsistent statement made by us in a prospectus supplement. Therefore, you should read this prospectus (including any documents incorporated by reference) and any attached prospectus supplement before you invest in our securities.
 
OUR COMPANY
 
We are a leading North American provider of midstream energy services to producers and consumers of natural gas, natural gas liquids (or NGLs), crude oil, refined products and petrochemicals. Our midstream energy asset network links producers of natural gas, NGLs and crude oil from some of the largest supply basins in the United States, Canada and the Gulf of Mexico with domestic consumers and international markets. In addition, we are an industry leader in the development of pipeline and other midstream energy infrastructure in the continental United States and Gulf of Mexico. We operate an integrated midstream energy asset network within the United States that includes: natural gas gathering, treating, processing, transportation and storage; NGL fractionation (or separation), transportation, storage, and import and export terminaling; crude oil transportation, import terminaling and storage; refined product transportation and storage; offshore production platform services; and petrochemical transportation and services. NGL products (ethane, propane, normal butane, isobutane and natural gasoline) are used as raw materials by the petrochemical industry, as feedstocks by refiners in the production of motor gasoline and by industrial and residential users as fuel.
 
Our Business Segments
 
We have six reportable business segments: (i) NGL Pipelines & Services; (ii) Onshore Natural Gas Pipelines & Services; (iii) Onshore Crude Oil Pipelines & Services; (iv) Offshore Pipelines & Services; (v) Petrochemical & Refined Products Services; and (vi) Other Investments. Our business segments are generally organized and managed along our asset base according to the type of services rendered (or technologies employed) and products produced and/or sold.
 
NGL Pipelines & Services.  Our NGL Pipelines & Services business segment includes our (i) natural gas processing business and related NGL marketing activities, (ii) NGL pipelines aggregating approximately 16,300 miles, (iii) NGL and related product storage and terminal facilities with 163.4 million barrels, or MMBbls, of working storage capacity and (iv) NGL fractionation facilities. This segment also includes our import and export terminal operations.
 
Onshore Natural Gas Pipelines & Services.  Our Onshore Natural Gas Pipelines & Services business segment includes approximately 19,600 miles of onshore natural gas pipeline systems that provide for the gathering and transportation of natural gas in Alabama, Colorado, Louisiana, Mississippi, New Mexico, Texas and Wyoming. We own two salt dome natural gas storage facilities located in Mississippi and lease natural gas storage facilities located in Texas and Louisiana. This segment also includes our related natural gas marketing activities.
 
Onshore Crude Oil Pipelines & Services.  Our Onshore Crude Oil Pipelines & Services business segment includes approximately 4,400 miles of onshore crude oil pipelines and 10.5 MMBbls of above-ground storage tank capacity. This segment also includes our crude oil marketing activities.
 
Offshore Pipelines & Services.  Our Offshore Pipelines & Services business segment serves some of the most active drilling and development regions, including deepwater production fields, in the northern Gulf of Mexico offshore Texas, Louisiana, Mississippi and Alabama. This segment includes approximately 1,400 miles


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of offshore natural gas pipelines, approximately 1,000 miles of offshore crude oil pipelines and six offshore hub platforms.
 
Petrochemical & Refined Products Services.  Our Petrochemical & Refined Products Services business segment consists of (i) propylene fractionation plants and related activities, (ii) butane isomerization facilities, (iii) an octane enhancement facility, (iv) refined products pipelines, including our Products Pipeline System and related activities and (v) marine transportation and other services.
 
Other Investments.  Our Other Investments business segment consists of our non-controlling ownership interests in Energy Transfer Equity L.P. (“Energy Transfer Equity”) and its general partner, LE GP, LLC (“LE GP”), which we acquired in connection with our acquisition of Enterprise GP Holdings L.P. on November 22, 2010.
 
Enterprise Products Operating LLC provides the foregoing services directly and through our subsidiaries and unconsolidated affiliates. Our principal offices are located at 1100 Louisiana Street, 10th Floor, Houston, Texas 77002, and our telephone number is (713) 381-6500.
 
RISK FACTORS
 
Limited partner interests are inherently different from the capital stock of a corporation, although many of the business risks to which we are subject are similar to those that would be faced by a corporation engaged in a similar business. Before you invest in our securities, you should carefully consider the risk factors included as Exhibit 99.2 to our current report on Form 8-K filed on November 23, 2010 and in our most recent annual report on Form 10-K and our quarterly reports on Form 10-Q that are incorporated herein by reference and those that may be included in the applicable prospectus supplement, together with all of the other information included in this prospectus, any prospectus supplement and the documents we incorporate by reference in evaluating an investment in our securities.
 
If any of the risks discussed in the foregoing documents were actually to occur, our business, financial condition, results of operations, or cash flow could be materially adversely affected. In that case, our ability to make distributions to our unitholders or pay interest on, or the principal of, any debt securities, may be reduced, the trading price of our securities could decline and you could lose all or part of your investment.


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USE OF PROCEEDS
 
We will use the net proceeds from any sale of securities described in this prospectus for future business acquisitions and other general partnership or company purposes, such as working capital, investments in subsidiaries, the retirement of existing debt and/or the repurchase of common units or other securities. The prospectus supplement will describe the actual use of the net proceeds from the sale of securities. The exact amounts to be used and when the net proceeds will be applied to partnership or company purposes will depend on a number of factors, including our funding requirements and the availability of alternative funding sources.
 
RATIO OF EARNINGS TO FIXED CHARGES
 
Enterprise’s ratio of earnings to fixed charges for each of the periods indicated is as follows:
 
                     
    Nine Months
    Ended
Year Ended December 31,   September 30,
2005   2006   2007   2008   2009   2010
 
2.7x
  2.9x   2.6x   2.8x   2.6x   3.1x
 
For purposes of these calculations, “earnings” is the amount resulting from adding and subtracting the following items:
 
Add the following, as applicable:
 
  •  consolidated pre-tax income from continuing operations before adjustment for income or loss from equity investees;
 
  •  fixed charges;
 
  •  amortization of capitalized interest;
 
  •  distributed income of equity investees; and
 
  •  our share of pre-tax losses of equity investees for which charges arising from guarantees are included in fixed charges.
 
From the subtotal of the added items, subtract the following, as applicable:
 
  •  interest capitalized;
 
  •  preference security dividend requirements of consolidated subsidiaries; and
 
  •  the noncontrolling interest in pre-tax income of subsidiaries that have not incurred fixed charges.
 
The term “fixed charges” means the sum of the following: interest expensed and capitalized; amortized premiums, discounts and capitalized expenses related to indebtedness; an estimate of interest within rental expense; and preference dividend requirements of consolidated subsidiaries.


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DESCRIPTION OF DEBT SECURITIES
 
In this Description of Debt Securities references to the “Issuer” mean only Enterprise Products Operating LLC (successor to Enterprise Products Operating L.P.) and not its subsidiaries. References to the “Guarantor” mean only Enterprise Products Partners L.P. and not its subsidiaries. References to “we” and “us” mean the Issuer and the Guarantor collectively.
 
The debt securities will be issued under an Indenture dated as of October 4, 2004, as amended by the Tenth Supplemental Indenture, dated as of June 30, 2007, and as further amended by one or more additional supplemental indentures (collectively, the “Indenture”), among the Issuer, the Guarantor, and Wells Fargo Bank, National Association, as trustee (the “Trustee”). The terms of the debt securities will include those expressly set forth in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”). Capitalized terms used in this Description of Debt Securities have the meanings specified in the Indenture.
 
This Description of Debt Securities is intended to be a useful overview of the material provisions of the debt securities and the Indenture. Since this Description of Debt Securities is only a summary, you should refer to the Indenture for a complete description of our obligations and your rights.
 
General
 
The Indenture does not limit the amount of debt securities that may be issued thereunder. Debt securities may be issued under the Indenture from time to time in separate series, each up to the aggregate amount authorized for such series. The debt securities will be general obligations of the Issuer and the Guarantor and may be subordinated to Senior Indebtedness of the Issuer and the Guarantor. See “— Subordination.”
 
A prospectus supplement and a supplemental indenture (or a resolution of our Board of Directors and accompanying officers’ certificate) relating to any series of debt securities being offered will include specific terms relating to the offering. These terms will include some or all of the following:
 
  •  the form and title of the debt securities;
 
  •  the total principal amount of the debt securities;
 
  •  the portion of the principal amount which will be payable if the maturity of the debt securities is accelerated;
 
  •  the currency or currency unit in which the debt securities will be paid, if not U.S. dollars;
 
  •  any right we may have to defer payments of interest by extending the dates payments are due whether interest on those deferred amounts will be payable as well;
 
  •  the dates on which the principal of the debt securities will be payable;
 
  •  the interest rate which the debt securities will bear and the interest payment dates for the debt securities;
 
  •  any optional redemption provisions;
 
  •  any sinking fund or other provisions that would obligate us to repurchase or otherwise redeem the debt securities;
 
  •  any changes to or additional Events of Default or covenants;
 
  •  whether the debt securities are to be issued as Registered Securities or Bearer Securities or both; and any special provisions for Bearer Securities;
 
  •  the subordination, if any, of the debt securities and any changes to the subordination provisions of the Indenture; and
 
  •  any other terms of the debt securities.


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The prospectus supplement will also describe any material United States federal income tax consequences or other special considerations applicable to the applicable series of debt securities, including those applicable to:
 
  •  Bearer Securities;
 
  •  debt securities with respect to which payments of principal, premium or interest are determined with reference to an index or formula, including changes in prices of particular securities, currencies or commodities;
 
  •  debt securities with respect to which principal, premium or interest is payable in a foreign or composite currency;
 
  •  debt securities that are issued at a discount below their stated principal amount, bearing no interest or interest at a rate that at the time of issuance is below market rates; and
 
  •  variable rate debt securities that are exchangeable for fixed rate debt securities.
 
At our option, we may make interest payments, by check mailed to the registered holders thereof or, if so stated in the applicable prospectus supplement, at the option of a holder by wire transfer to an account designated by the holder. Except as otherwise provided in the applicable prospectus supplement, no payment on a Bearer Security will be made by mail to an address in the United States or by wire transfer to an account in the United States.
 
Registered Securities may be transferred or exchanged, and they may be presented for payment, at the office of the Trustee or the Trustee’s agent in New York City indicated in the applicable prospectus supplement, subject to the limitations provided in the Indenture, without the payment of any service charge, other than any applicable tax or governmental charge. Bearer Securities will be transferable only by delivery. Provisions with respect to the exchange of Bearer Securities will be described in the applicable prospectus supplement.
 
Any funds we pay to a paying agent for the payment of amounts due on any debt securities that remain unclaimed for two years will be returned to us, and the holders of the debt securities must thereafter look only to us for payment thereof.
 
Guarantee
 
The Guarantor will unconditionally guarantee to each holder and the Trustee the full and prompt payment of principal of, premium, if any, and interest on the debt securities, when and as the same become due and payable, whether at maturity, upon redemption or repurchase, by declaration of acceleration or otherwise.
 
Certain Covenants
 
Except as set forth below or as may be provided in a prospectus supplement and supplemental indenture, neither the Issuer nor the Guarantor is restricted by the Indenture from incurring any type of indebtedness or other obligation, from paying dividends or making distributions on its partnership interests or capital stock or purchasing or redeeming its partnership interests or capital stock. The Indenture does not require the maintenance of any financial ratios or specified levels of net worth or liquidity. In addition, the Indenture does not contain any provisions that would require the Issuer to repurchase or redeem or otherwise modify the terms of any of the debt securities upon a change in control or other events involving the Issuer which may adversely affect the creditworthiness of the debt securities.
 
Limitations on Liens.  The Indenture provides that the Guarantor will not, nor will it permit any Subsidiary to, create, assume, incur or suffer to exist any mortgage, lien, security interest, pledge, charge or other encumbrance (“liens”) other than Permitted Liens (as defined below) upon any Principal Property (as defined below) or upon any shares of capital stock of any Subsidiary owning or leasing, either directly or through ownership in another Subsidiary, any Principal Property (a “Restricted Subsidiary”), whether owned or leased on the date of the Indenture or thereafter acquired, to secure any indebtedness for borrowed money


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(“debt”) of the Guarantor or the Issuer or any other person (other than the debt securities), without in any such case making effective provision whereby all of the debt securities outstanding shall be secured equally and ratably with, or prior to, such debt so long as such debt shall be so secured.
 
In the Indenture, the term “Consolidated Net Tangible Assets” means, at any date of determination, the total amount of assets of the Guarantor and its consolidated subsidiaries after deducting therefrom:
 
(1) all current liabilities (excluding (A) any current liabilities that by their terms are extendable or renewable at the option of the obligor thereon to a time more than 12 months after the time as of which the amount thereof is being computed, and (B) current maturities of long-term debt); and
 
(2) the value (net of any applicable reserves) of all goodwill, trade names, trademarks, patents and other like intangible assets, all as set forth, or on a pro forma basis would be set forth, on the consolidated balance sheet of the Guarantor and its consolidated subsidiaries for the Guarantor’s most recently completed fiscal quarter, prepared in accordance with generally accepted accounting principles.
 
“Permitted Liens” means:
 
(1) liens upon rights-of-way for pipeline purposes;
 
(2) any statutory or governmental lien or lien arising by operation of law, or any mechanics’, repairmen’s, materialmen’s, suppliers’, carriers’, landlords’, warehousemen’s or similar lien incurred in the ordinary course of business which is not yet due or which is being contested in good faith by appropriate proceedings and any undetermined lien which is incidental to construction, development, improvement or repair; or any right reserved to, or vested in, any municipality or public authority by the terms of any right, power, franchise, grant, license, permit or by any provision of law, to purchase or recapture or to designate a purchaser of, any property;
 
(3) liens for taxes and assessments which are (a) for the then current year, (b) not at the time delinquent, or (c) delinquent but the validity or amount of which is being contested at the time by the Guarantor or any Subsidiary in good faith by appropriate proceedings;
 
(4) liens of, or to secure performance of, leases, other than capital leases; or any lien securing industrial development, pollution control or similar revenue bonds;
 
(5) any lien upon property or assets acquired or sold by the Guarantor or any Subsidiary resulting from the exercise of any rights arising out of defaults on receivables;
 
(6) any lien in favor of the Guarantor or any Subsidiary; or any lien upon any property or assets of the Guarantor or any Subsidiary in existence on the date of the execution and delivery of the Indenture;
 
(7) any lien in favor of the United States of America or any state thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any state thereof, to secure partial, progress, advance, or other payments pursuant to any contract or statute, or any debt incurred by the Guarantor or any Subsidiary for the purpose of financing all or any part of the purchase price of, or the cost of constructing, developing, repairing or improving, the property or assets subject to such lien;
 
(8) any lien incurred in the ordinary course of business in connection with workmen’s compensation, unemployment insurance, temporary disability, social security, retiree health or similar laws or regulations or to secure obligations imposed by statute or governmental regulations;
 
(9) liens in favor of any person to secure obligations under provisions of any letters of credit, bank guarantees, bonds or surety obligations required or requested by any governmental authority in connection with any contract or statute; or any lien upon or deposits of any assets to secure performance of bids, trade contracts, leases or statutory obligations;
 
(10) any lien upon any property or assets created at the time of acquisition of such property or assets by the Guarantor or any Subsidiary or within one year after such time to secure all or a portion of the purchase price for such property or assets or debt incurred to finance such purchase price, whether such debt was incurred prior to, at the time of or within one year after the date of such acquisition; or


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any lien upon any property or assets to secure all or part of the cost of construction, development, repair or improvements thereon or to secure debt incurred prior to, at the time of, or within one year after completion of such construction, development, repair or improvements or the commencement of full operations thereof (whichever is later), to provide funds for any such purpose;
 
(11) any lien upon any property or assets existing thereon at the time of the acquisition thereof by the Guarantor or any Subsidiary and any lien upon any property or assets of a person existing thereon at the time such person becomes a Subsidiary by acquisition, merger or otherwise; provided that, in each case, such lien only encumbers the property or assets so acquired or owned by such person at the time such person becomes a Subsidiary;
 
(12) liens imposed by law or order as a result of any proceeding before any court or regulatory body that is being contested in good faith, and liens which secure a judgment or other court-ordered award or settlement as to which the Guarantor or the applicable Subsidiary has not exhausted its appellate rights;
 
(13) any extension, renewal, refinancing, refunding or replacement (or successive extensions, renewals, refinancing, refunding or replacements) of liens, in whole or in part, referred to in clauses (1) through (12) above; provided, however, that any such extension, renewal, refinancing, refunding or replacement lien shall be limited to the property or assets covered by the lien extended, renewed, refinanced, refunded or replaced and that the obligations secured by any such extension, renewal, refinancing, refunding or replacement lien shall be in an amount not greater than the amount of the obligations secured by the lien extended, renewed, refinanced, refunded or replaced and any expenses of the Guarantor and its Subsidiaries (including any premium) incurred in connection with such extension, renewal, refinancing, refunding or replacement; or
 
(14) any lien resulting from the deposit of moneys or evidence of indebtedness in trust for the purpose of defeasing debt of the Guarantor or any Subsidiary.
 
“Principal Property” means, whether owned or leased on the date of the Indenture or thereafter acquired:
 
(1) any pipeline assets of the Guarantor or any Subsidiary, including any related facilities employed in the transportation, distribution, storage or marketing of refined petroleum products, natural gas liquids, and petrochemicals, that are located in the United States of America or any territory or political subdivision thereof; and
 
(2) any processing or manufacturing plant or terminal owned or leased by the Guarantor or any Subsidiary that is located in the United States or any territory or political subdivision thereof,
 
except, in the case of either of the foregoing clauses (1) or (2):
 
(a) any such assets consisting of inventories, furniture, office fixtures and equipment (including data processing equipment), vehicles and equipment used on, or useful with, vehicles; and
 
(b) any such assets, plant or terminal which, in the opinion of the board of directors of the general partner of the Issuer, is not material in relation to the activities of the Issuer or of the Guarantor and its Subsidiaries taken as a whole.
 
“Subsidiary” means:
 
(1) the Issuer; or
 
(2) any corporation, association or other business entity of which more than 50% of the total voting power of the equity interests entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof or any partnership of which more than 50% of the partners’ equity interests (considering all partners’ equity interests as a single class) is, in each case, at the time owned or controlled, directly or indirectly, by the Guarantor, the Issuer or one or more of the other Subsidiaries of the Guarantor or the Issuer or combination thereof.
 
Notwithstanding the preceding, under the Indenture, the Guarantor may, and may permit any Subsidiary to, create, assume, incur, or suffer to exist any lien (other than a Permitted Lien) upon any Principal Property


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or capital stock of a Restricted Subsidiary to secure debt of the Guarantor, the Issuer or any other person (other than the debt securities), without securing the debt securities, provided that the aggregate principal amount of all debt then outstanding secured by such lien and all similar liens, together with all Attributable Indebtedness from Sale-Leaseback Transactions (excluding Sale-Leaseback Transactions permitted by clauses (1) through (4), inclusive, of the first paragraph of the restriction on sale-leasebacks covenant described below) does not exceed 10% of Consolidated Net Tangible Assets.
 
Restriction on Sale-Leasebacks.  The Indenture provides that the Guarantor will not, and will not permit any Subsidiary to, engage in the sale or transfer by the Guarantor or any Subsidiary of any Principal Property to a person (other than the Issuer or a Subsidiary) and the taking back by the Guarantor or any Subsidiary, as the case may be, of a lease of such Principal Property (a “Sale-Leaseback Transaction”), unless:
 
(1) such Sale-Leaseback Transaction occurs within one year from the date of completion of the acquisition of the Principal Property subject thereto or the date of the completion of construction, development or substantial repair or improvement, or commencement of full operations on such Principal Property, whichever is later;
 
(2) the Sale-Leaseback Transaction involves a lease for a period, including renewals, of not more than three years;
 
(3) the Guarantor or such Subsidiary would be entitled to incur debt secured by a lien on the Principal Property subject thereto in a principal amount equal to or exceeding the Attributable Indebtedness from such Sale-Leaseback Transaction without equally and ratably securing the debt securities; or
 
(4) the Guarantor or such Subsidiary, within a one-year period after such Sale-Leaseback Transaction, applies or causes to be applied an amount not less than the Attributable Indebtedness from such Sale-Leaseback Transaction to (a) the prepayment, repayment, redemption, reduction or retirement of any debt of the Guarantor or any Subsidiary that is not subordinated to the debt securities, or (b) the expenditure or expenditures for Principal Property used or to be used in the ordinary course of business of the Guarantor or its Subsidiaries.
 
“Attributable Indebtedness,” when used with respect to any Sale-Leaseback Transaction, means, as at the time of determination, the present value (discounted at the rate set forth or implicit in the terms of the lease included in such transaction) of the total obligations of the lessee for rental payments (other than amounts required to be paid on account of property taxes, maintenance, repairs, insurance, assessments, utilities, operating and labor costs and other items that do not constitute payments for property rights) during the remaining term of the lease included in such Sale-Leaseback Transaction (including any period for which such lease has been extended). In the case of any lease that is terminable by the lessee upon the payment of a penalty or other termination payment, such amount shall be the lesser of the amount determined assuming termination upon the first date such lease may be terminated (in which case the amount shall also include the amount of the penalty or termination payment, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated) or the amount determined assuming no such termination.
 
Notwithstanding the preceding, under the Indenture the Guarantor may, and may permit any Subsidiary to, effect any Sale-Leaseback Transaction that is not excepted by clauses (1) through (4), inclusive, of the first paragraph under “— Restrictions on Sale-Leasebacks,” provided that the Attributable Indebtedness from such Sale-Leaseback Transaction, together with the aggregate principal amount of all other such Attributable Indebtedness deemed to be outstanding in respect of all Sale-Leaseback Transactions and all outstanding debt (other than the debt securities) secured by liens (other than Permitted Liens) upon Principal Properties or upon capital stock of any Restricted Subsidiary, do not exceed 10% of Consolidated Net Tangible Assets.
 
Merger, Consolidation or Sale of Assets.  The Indenture provides that each of the Guarantor and the Issuer may, without the consent of the holders of any of the debt securities, consolidate with or sell, lease,


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convey all or substantially all of its assets to, or merge with or into, any partnership, limited liability company or corporation if:
 
(1) the entity surviving any such consolidation or merger or to which such assets shall have been transferred (the “successor”) is either the Guarantor or the Issuer, as applicable, or the successor is a domestic partnership, limited liability company or corporation and expressly assumes all the Guarantor’s or the Issuer’s, as the case may be, obligations and liabilities under the Indenture and the debt securities (in the case of the Issuer) and the Guarantee (in the case of the Guarantor);
 
(2) immediately after giving effect to the transaction no Default or Event of Default has occurred and is continuing; and
 
(3) the Issuer and the Guarantor have delivered to the Trustee an officers’ certificate and an opinion of counsel, each stating that such consolidation, merger or transfer complies with the Indenture.
 
The successor will be substituted for the Guarantor or the Issuer, as the case may be, in the Indenture with the same effect as if it had been an original party to the Indenture. Thereafter, the successor may exercise the rights and powers of the Guarantor or the Issuer, as the case may be, under the Indenture, in its name or in its own name. If the Guarantor or the Issuer sells or transfers all or substantially all of its assets, it will be released from all liabilities and obligations under the Indenture and under the debt securities (in the case of the Issuer) and the Guarantee (in the case of the Guarantor) except that no such release will occur in the case of a lease of all or substantially all of its assets.
 
Events of Default
 
Each of the following will be an Event of Default under the Indenture with respect to a series of debt securities:
 
(1) default in any payment of interest on any debt securities of that series when due, continued for 30 days;
 
(2) default in the payment of principal of or premium, if any, on any debt securities of that series when due at its stated maturity, upon optional redemption, upon declaration or otherwise;
 
(3) failure by the Guarantor or the Issuer to comply for 60 days after notice with its other agreements contained in the Indenture;
 
(4) certain events of bankruptcy, insolvency or reorganization of the Issuer or the Guarantor (the “bankruptcy provisions”); or
 
(5) the Guarantee ceases to be in full force and effect or is declared null and void in a judicial proceeding or the Guarantor denies or disaffirms its obligations under the Indenture or the Guarantee.
 
However, a default under clause (3) of this paragraph will not constitute an Event of Default until the Trustee or the holders of at least 25% in principal amount of the outstanding debt securities of that series notify the Issuer and the Guarantor of the default such default is not cured within the time specified in clause (3) of this paragraph after receipt of such notice.
 
An Event of Default for a particular series of debt securities will not necessarily constitute an Event of Default for any other series of debt securities that may be issued under the Indenture. If an Event of Default (other than an Event of Default described in clause (4) above) occurs and is continuing, the Trustee by notice to the Issuer, or the holders of at least 25% in principal amount of the outstanding debt securities of that series by notice to the Issuer and the Trustee, may, and the Trustee at the request of such holders shall, declare the principal of, premium, if any, and accrued and unpaid interest, if any, on all the debt securities of that series to be due and payable. Upon such a declaration, such principal, premium and accrued and unpaid interest will be due and payable immediately. If an Event of Default described in clause (4) above occurs and is continuing, the principal of, premium, if any, and accrued and unpaid interest on all the debt securities will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any holders. However, the effect of such provision may be limited by applicable law. The holders of a majority in principal


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amount of the outstanding debt securities of a series may rescind any such acceleration with respect to the debt securities of that series and its consequences if rescission would not conflict with any judgment or decree of a court of competent jurisdiction and all existing Events of Default with respect to that series, other than the nonpayment of the principal of, premium, if any, and interest on the debt securities of that series that have become due solely by such declaration of acceleration, have been cured or waived.
 
Subject to the provisions of the Indenture relating to the duties of the Trustee, if an Event of Default with respect to a series of debt securities occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the holders of debt securities of that series, unless such holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium, if any, or interest when due, no holder of debt securities of any series may pursue any remedy with respect to the Indenture or the debt securities of that series unless:
 
(1) such holder has previously given the Trustee notice that an Event of Default with respect to the debt securities of that series is continuing;
 
(2) holders of at least 25% in principal amount of the outstanding debt securities of that series have requested the Trustee to pursue the remedy;
 
(3) such holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense;
 
(4) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and
 
(5) the holders of a majority in principal amount of the outstanding debt securities of that series have not given the Trustee a direction that, in the opinion of the Trustee, is inconsistent with such request within such 60-day period.
 
Subject to certain restrictions, the holders of a majority in principal amount of the outstanding debt securities of each series have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee with respect to that series of debt securities. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other holder of debt securities of that series or that would involve the Trustee in personal liability.
 
The Indenture provides that if a Default (that is, an event that is, or after notice or the passage of time would be, an Event of Default) with respect to the debt securities of a particular series occurs and is continuing and is known to the Trustee, the Trustee must mail to each holder of debt securities of that series notice of the Default within 90 days after it occurs. Except in the case of a Default in the payment of principal of, premium, if any, or interest on the debt securities of that series, the Trustee may withhold notice, but only if and so long as the Trustee in good faith determines that withholding notice is in the interests of the holders of debt securities of that series. In addition, the Issuer is required to deliver to the Trustee, within 120 days after the end of each fiscal year, an officers’ certificate as to compliance with all covenants in the Indenture and indicating whether the signers thereof know of any Default or Event of Default that occurred during the previous year. The Issuer also is required to deliver to the Trustee, within 30 days after the occurrence thereof, an officers’ certificate specifying any Default or Event of Default, its status and what action the Issuer is taking or proposes to take in respect thereof.
 
Amendments and Waivers
 
Amendments of the Indenture may be made by the Issuer, the Guarantor and the Trustee with the consent of the holders of a majority in principal amount of all debt securities of each series affected thereby then outstanding under the Indenture (including consents obtained in connection with a tender offer or exchange


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offer for the debt securities). However, without the consent of each holder of outstanding debt securities affected thereby, no amendment may, among other things:
 
(1) reduce the percentage in principal amount of debt securities whose holders must consent to an amendment;
 
(2) reduce the stated rate of or extend the stated time for payment of interest on any debt securities;
 
(3) reduce the principal of or extend the stated maturity of any debt securities;
 
(4) reduce the premium payable upon the redemption of any debt securities or change the time at which any debt securities may be redeemed;
 
(5) make any debt securities payable in money other than that stated in the debt securities;
 
(6) impair the right of any holder to receive payment of, premium, if any, principal of and interest on such holder’s debt securities on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such holder’s debt securities;
 
(7) make any change in the amendment provisions which require each holder’s consent or in the waiver provisions;
 
(8) release any security that may have been granted in respect of the debt securities; or
 
(9) release the Guarantor or modify the Guarantee in any manner adverse to the holders.
 
The holders of a majority in aggregate principal amount of the outstanding debt securities of each series affected thereby, may waive compliance by the Issuer and the Guarantor with certain restrictive covenants on behalf of all holders of debt securities of such series, including those described under “— Certain Covenants — Limitations on Liens” and “— Certain Covenants — Restriction on Sale-Leasebacks.” The holders of a majority in principal amount of the outstanding debt securities of each series affected thereby, on behalf of all such holders, may waive any past Default or Event of Default with respect to that series (including any such waiver obtained in connection with a tender offer or exchange offer for the debt securities), except a Default or Event of Default in the payment of principal, premium or interest or in respect of a provision that under the Indenture that cannot be amended without the consent of all holders of the series of debt securities that is affected.
 
Without the consent of any holder, the Issuer, the Guarantor and the Trustee may amend the Indenture to:
 
(1) cure any ambiguity, omission, defect or inconsistency;
 
(2) provide for the assumption by a successor of the obligations of the Guarantor or the Issuer under the Indenture;
 
(3) provide for uncertificated debt securities in addition to or in place of certificated debt securities (provided that the uncertificated debt securities are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated debt securities are described in Section 163(f)(2)(B) of the Code);
 
(4) add or release guarantees by any Subsidiary with respect to the debt securities, in either case as provided in the Indenture;
 
(5) secure the debt securities or a guarantee;
 
(6) add to the covenants of the Guarantor or the Issuer for the benefit of the holders or surrender any right or power conferred upon the Guarantor or the Issuer;
 
(7) make any change that does not adversely affect the rights of any holder;
 
(8) comply with any requirement of the Commission in connection with the qualification of the Indenture under the Trust Indenture Act; and
 
(9) issue any other series of debt securities under the Indenture.


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The consent of the holders is not necessary under the Indenture to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment. After an amendment requiring consent of the holders becomes effective, the Issuer is required to mail to the holders of an affected series a notice briefly describing such amendment. However, the failure to give such notice to all such holders, or any defect therein, will not impair or affect the validity of the amendment.
 
Defeasance and Discharge
 
The Issuer at any time may terminate all its obligations under the Indenture as they relate to a series of debt securities (“legal defeasance”), except for certain obligations, including those respecting the defeasance trust and obligations to register the transfer or exchange of the debt securities of that series, to replace mutilated, destroyed, lost or stolen debt securities of that series and to maintain a registrar and paying agent in respect of such debt securities.
 
The Issuer at any time may terminate its obligations under covenants described under “— Certain Covenants” (other than “Merger, Consolidation or Sale of Assets”) and the bankruptcy provisions with respect to the Guarantor, and the Guarantee provision, described under “— Events of Default” above with respect to a series of debt securities (“covenant defeasance”).
 
The Issuer may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Issuer exercises its legal defeasance option, payment of the defeased series of debt securities may not be accelerated because of an Event of Default with respect thereto. If the Issuer exercises its covenant defeasance option, payment of the affected series of debt securities may not be accelerated because of an Event of Default specified in clause (3), (4), (with respect only to the Guarantor) or (5) under “— Events of Default” above. If the Issuer exercises either its legal defeasance option or its covenant defeasance option, each guarantee will terminate with respect to the debt securities of the defeased series and any security that may have been granted with respect to such debt securities will be released.
 
In order to exercise either defeasance option, the Issuer must irrevocably deposit in trust (the “defeasance trust”) with the Trustee money, U.S. Government Obligations (as defined in the Indenture) or a combination thereof for the payment of principal, premium, if any, and interest on the relevant series of debt securities to redemption or maturity, as the case may be, and must comply with certain other conditions, including delivery to the Trustee of an opinion of counsel (subject to customary exceptions and exclusions) to the effect that holders of that series of debt securities will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and defeasance and will be subject to federal income tax on the same amounts and in the same manner and at the same times as would have been the case if such defeasance had not occurred. In the case of legal defeasance only, such opinion of counsel must be based on a ruling of the Internal Revenue Service (“IRS”) or other change in applicable federal income tax law.
 
In the event of any legal defeasance, holders of the debt securities of the relevant series would be entitled to look only to the trust fund for payment of principal of and any premium and interest on their debt securities until maturity.
 
Although the amount of money and U.S. Government Obligations on deposit with the Trustee would be intended to be sufficient to pay amounts due on the debt securities of a defeased series at the time of their stated maturity, if the Issuer exercises its covenant defeasance option for the debt securities of any series and the debt securities are declared due and payable because of the occurrence of an Event of Default, such amount may not be sufficient to pay amounts due on the debt securities of that series at the time of the acceleration resulting from such Event of Default. The Issuer would remain liable for such payments, however.
 
In addition, the Issuer may discharge all its obligations under the Indenture with respect to debt securities of any series, other than its obligation to register the transfer of and exchange notes of that series, provided that it either:
 
  •  delivers all outstanding debt securities of that series to the Trustee for cancellation; or


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  •  all such debt securities not so delivered for cancellation have either become due and payable or will become due and payable at their stated maturity within one year or are called for redemption within one year, and in the case of this bullet point the Issuer has deposited with the Trustee in trust an amount of cash sufficient to pay the entire indebtedness of such debt securities, including interest to the stated maturity or applicable redemption date.
 
Subordination
 
Debt securities of a series may be subordinated to our Senior Indebtedness, which we define generally to include all notes or other evidences of indebtedness for money borrowed by the Issuer, including guarantees, that are not expressly subordinate or junior in right of payment to any other indebtedness of the Issuer. Subordinated debt securities and the Guarantor’s guarantee thereof will be subordinate in right of payment, to the extent and in the manner set forth in the Indenture and the prospectus supplement relating to such series, to the prior payment of all indebtedness of the Issuer and Guarantor that is designated as “Senior Indebtedness” with respect to the series.
 
The holders of Senior Indebtedness of the Issuer will receive payment in full of the Senior Indebtedness before holders of subordinated debt securities will receive any payment of principal, premium or interest with respect to the subordinated debt securities:
 
  •  upon any payment of distribution of our assets of the Issuer to its creditors;
 
  •  upon a total or partial liquidation or dissolution of the Issuer; or
 
  •  in a bankruptcy, receivership or similar proceeding relating to the Issuer or its property.
 
Until the Senior Indebtedness is paid in full, any distribution to which holders of subordinated debt securities would otherwise be entitled will be made to the holders of Senior Indebtedness, except that such holders may receive units representing limited partner interests and any debt securities that are subordinated to Senior Indebtedness to at least the same extent as the subordinated debt securities.
 
If the Issuer does not pay any principal, premium or interest with respect to Senior Indebtedness within any applicable grace period (including at maturity), or any other default on Senior Indebtedness occurs and the maturity of the Senior Indebtedness is accelerated in accordance with its terms, the Issuer may not:
 
  •  make any payments of principal, premium, if any, or interest with respect to subordinated debt securities;
 
  •  make any deposit for the purpose of defeasance of the subordinated debt securities; or
 
  •  repurchase, redeem or otherwise retire any subordinated debt securities, except that in the case of subordinated debt securities that provide for a mandatory sinking fund, we may deliver subordinated debt securities to the Trustee in satisfaction of our sinking fund obligation,
 
unless, in either case,
 
  •  the default has been cured or waived and the declaration of acceleration has been rescinded;
 
  •  the Senior Indebtedness has been paid in full in cash; or
 
  •  the Issuer and the Trustee receive written notice approving the payment from the representatives of each issue of “Designated Senior Indebtedness.”
 
Generally, “Designated Senior Indebtedness” will include:
 
  •  indebtedness for borrowed money under a bank credit agreement, called “Bank Indebtedness”; and
 
  •  any specified issue of Senior Indebtedness of at least $100 million.
 
During the continuance of any default, other than a default described in the immediately preceding paragraph, that may cause the maturity of any Senior Indebtedness to be accelerated immediately without further notice, other than any notice required to effect such acceleration, or the expiration of any applicable


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grace periods, the Issuer may not pay the subordinated debt securities for a period called the “Payment Blockage Period.” A Payment Blockage Period will commence on the receipt by us and the Trustee of written notice of the default, called a “Blockage Notice,” from the representative of any Designated Senior Indebtedness specifying an election to effect a Payment Blockage Period.
 
The Payment Blockage Period may be terminated before its expiration:
 
  •  by written notice from the person or persons who gave the Blockage Notice;
 
  •  by repayment in full in cash of the Senior Indebtedness with respect to which the Blockage Notice was given; or
 
  •  if the default giving rise to the Payment Blockage Period is no longer continuing.
 
Unless the holders of Senior Indebtedness shall have accelerated the maturity of the Senior Indebtedness, we may resume payments on the subordinated debt securities after the expiration of the Payment Blockage Period.
 
Generally, not more than one Blockage Notice may be given in any period of 360 consecutive days unless the first Blockage Notice within the 360-day period is given by holders of Designated Senior Indebtedness, other than Bank Indebtedness, in which case the representative of the Bank Indebtedness may give another Blockage Notice within the period. The total number of days during which any one or more Payment Blockage Periods are in effect, however, may not exceed an aggregate of 179 days during any period of 360 consecutive days.
 
After all Senior Indebtedness is paid in full and until the subordinated debt securities are paid in full, holders of the subordinated debt securities shall be subrogated to the rights of holders of Senior Indebtedness to receive distributions applicable to Senior Indebtedness.
 
By reason of the subordination, in the event of insolvency, our creditors who are holders of Senior Indebtedness, as well as certain of our general creditors, may recover more, ratably, than the holders of the subordinated debt securities.
 
Form and Denomination
 
Unless otherwise indicated in a prospectus supplement, the debt securities of a series will be issued as Registered Securities in denominations of $1,000 and any integral multiple thereof.
 
Book-Entry System
 
Unless otherwise indicated in a prospectus supplement, we will issue the debt securities in the form of one or more global securities in fully registered form initially in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), or such other name as may be requested by an authorized representative of DTC. Unless otherwise indicated in a prospectus supplement, the global securities will be deposited with the Trustee as custodian for DTC and may not be transferred except as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or by DTC or any nominee to a successor of DTC or a nominee of such successor.
 
DTC has advised us as follows:
 
  •  DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended, or the Exchange Act.
 
  •  DTC holds securities that its participants deposit with DTC and facilitates the post-trade settlement among direct participants of sales and other securities transactions in deposited securities, such as transfers and pledges, through electronic computerized book-entry transfers and pledges between direct participants’ accounts, thereby eliminating the need for physical movement of securities certificates.


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  •  Direct participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations.
 
  •  DTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries.
 
  •  Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a direct participant, either directly or indirectly.
 
  •  The rules applicable to DTC and its direct and indirect participants are on file with the Commission.
 
Purchases of debt securities under the DTC system must be made by or through direct participants, which will receive a credit for the debt securities on DTC’s records. The ownership interest of each actual purchaser of debt securities is in turn to be recorded on the direct and indirect participants’ records. Beneficial owners of the debt securities will not receive written confirmation from DTC of their purchase, but beneficial owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the direct or indirect participant through which the beneficial owner entered into the transaction. Transfers of ownership interests in the debt securities are to be accomplished by entries made on the books of direct and indirect participants acting on behalf of beneficial owners. Beneficial owners will not receive certificates representing their ownership interests in the debt securities, except in the event that use of the book-entry system for the debt securities is discontinued.
 
To facilitate subsequent transfers, all debt securities deposited by direct participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of debt securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual beneficial owners of the debt securities; DTC’s records reflect only the identity of the direct participants to whose accounts such debt securities are credited, which may or may not be the beneficial owners. The direct and indirect participants will remain responsible for keeping account of their holdings on behalf of their customers.
 
Conveyance of notices and other communications by DTC to direct participants, by, direct participants to indirect participants, and by direct participants and indirect participants to beneficial owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
 
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the global securities. Under its usual procedures, DTC mails an omnibus proxy to the issuer as soon as possible after the record date. The omnibus proxy assigns Cede & Co.’s consenting or voting rights to those direct participants to whose accounts the debt securities are credited on the record date (identified in the listing attached to the omnibus proxy).
 
All payments on the global securities will be made to Cede & Co., as holder of record, or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit direct participants’ accounts upon DTC’s receipt of funds and corresponding detail information from us or the Trustee on payment dates in accordance with their respective holdings shown on DTC’s records. Payments by participants to beneficial owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such participant and not of DTC, us or the Trustee, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, premium, if any, and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) shall be the responsibility of us or the Trustee. Disbursement of such payments to direct participants shall be the responsibility of DTC, and disbursement of such payments to the beneficial owners shall be the responsibility of direct and indirect participants.


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DTC may discontinue providing its service as securities depositary with respect to the debt securities at any time by giving reasonable notice to us or the Trustee. In addition, we may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depositary). Under such circumstances, in the event that a successor securities depositary is not obtained, note certificates in fully registered form are required to be printed and delivered to beneficial owners of the global securities representing such debt securities.
 
Neither we nor the Trustee will have any responsibility or obligation to direct or indirect participants, or the persons for whom they act as nominees, with respect to the accuracy of the records of DTC, its nominee or any participant with respect to any ownership interest in the debt securities, or payments to, or the providing of notice to participants or beneficial owners.
 
So long as the debt securities are in DTC’s book-entry system, secondary market trading activity in the debt securities will settle in immediately available funds. All payments on the debt securities issued as global securities will be made by us in immediately available funds.
 
The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that we believe to be reliable, but we take no responsibility for the accuracy thereof.
 
Limitations on Issuance of Bearer Securities
 
The debt securities of a series may be issued as Registered Securities (which will be registered as to principal and interest in the register maintained by the registrar for the debt securities) or Bearer Securities (which will be transferable only by delivery). If the debt securities are issuable as Bearer Securities, certain special limitations and conditions will apply.
 
In compliance with United States federal income tax laws and regulations, we and any underwriter, agent or dealer participating in an offering of Bearer Securities will agree that, in connection with the original issuance of the Bearer Securities and during the period ending 40 days after the issue date, they will not offer, sell or deliver any such Bearer Securities, directly or indirectly, to a United States Person (as defined below) or to any person within the United States, except to the extent permitted under United States Treasury regulations.
 
Bearer Securities will bear a legend to the following effect: “Any United States person who holds this obligation will be subject to limitations under the United States federal income tax laws, including the limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue Code.” The sections referred to in the legend provide that, with certain exceptions, a United States taxpayer who holds Bearer Securities will not be allowed to deduct any loss with respect to, and will not be eligible for capital gain treatment with respect to any gain realized on the sale, exchange, redemption or other disposition of, the Bearer Securities.
 
For this purpose, “United States” includes the United States of America and its possessions, and “United States person” means a citizen or resident of the United States, a corporation, partnership or other entity created or organized in or under the laws of the United States, or an estate or trust the income of which is subject to United States federal income taxation regardless of its source.
 
Pending the availability of a definitive global security or individual Bearer Securities, as the case may be, debt securities that are issuable as Bearer Securities may initially be represented by a single temporary global security, without interest coupons, to be deposited with a common depositary for the Euroclear System as operated by Euroclear Bank S.A./N.V. (“Euroclear”) and Clearstream Banking S.A. (“Clearstream”, formerly Cedelbank), for credit to the accounts designated by or on behalf of the purchasers thereof. Following the availability of a definitive global security in bearer form, without coupons attached, or individual Bearer Securities and subject to any further limitations described in the applicable prospectus supplement, the temporary global security will be exchangeable for interests in the definitive global security or for the individual Bearer Securities, respectively, only upon receipt of a “Certificate of Non-U.S. Beneficial Ownership,” which is a certificate to the effect that a beneficial interest in a temporary global security is owned by a person that is not a United States Person or is owned by or through a financial institution in compliance with applicable United States Treasury regulations. No Bearer Security will be delivered in or to


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the United States. If so specified in the applicable prospectus supplement, interest on a temporary global security will be paid to each of Euroclear and Clearstream with respect to that portion of the temporary global security held for its account, but only upon receipt as of the relevant interest payment date of a Certificate of Non-U.S. Beneficial Ownership.
 
No Recourse Against General Partner
 
The Issuer’s general partner, the Guarantor’s general partner and their respective directors, officers, employees and members, as such, shall have no liability for any obligations of the Issuer or the Guarantor under the debt securities, the Indenture or the guarantee or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder by accepting a note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the debt securities. Such waiver may not be effective to waive liabilities under the federal securities laws, and it is the view of the Commission that such a waiver is against public policy.
 
Concerning the Trustee
 
The Indenture contains certain limitations on the right of the Trustee, should it become our creditor, to obtain payment of claims in certain cases, or to realize for its own account on certain property received in respect of any such claim as security or otherwise. The Trustee is permitted to engage in certain other transactions. However, if it acquires any conflicting interest within the meaning of the Trust Indenture Act, it must eliminate the conflict or resign as Trustee.
 
The holders of a majority in principal amount of all outstanding debt securities (or if more than one series of debt securities under the Indenture is affected thereby, all series so affected, voting as a single class) will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy or power available to the Trustee for the debt securities or all such series so affected.
 
If an Event of Default occurs and is not cured under the Indenture and is known to the Trustee, the Trustee shall exercise such of the rights and powers vested in it by the Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. Subject to such provisions, the Trustee will not be under any obligation to exercise any of its rights or powers under the Indenture at the request of any of the holders of debt securities unless they shall have offered to such Trustee reasonable security and indemnity.
 
Wells Fargo Bank, National Association is the Trustee under the Indenture and has been appointed by the Issuer as Registrar and Paying Agent with regard to the debt securities. Wells Fargo Bank, National Association is a lender under the Issuer’s credit facilities.
 
Governing Law
 
The Indenture, the debt securities and the guarantee are governed by, and will be construed in accordance with, the laws of the State of New York.


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DESCRIPTION OF OUR COMMON UNITS
 
Generally, our common units represent limited partner interests that entitle the holders to participate in our cash distributions and to exercise the rights and privileges available to limited partners under our partnership agreement. We also have issued and outstanding Class B units, which are entitled to the rights and privileges as noted below. The Class B units are held by a privately held affiliate of Enterprise Products Company, a Texas corporation formerly named EPCO, Inc. (“EPCO”). The Class B units generally have the same rights and privileges as our common units, except that they are not entitled to regular quarterly cash distributions for the first sixteen quarters following October 26, 2009, which was the closing date of our merger with TEPPCO Partners, L.P. (“TEPPCO”). The Class B units will automatically convert into the same number of common units on the date immediately following the payment date for the sixteenth quarterly distribution following the closing of the TEPPCO merger. For a description of the relative rights and preferences of unitholders in and to cash distributions, please read “Cash Distribution Policy” elsewhere in this prospectus.
 
Our outstanding common units are listed on the NYSE under the symbol “EPD.” Any additional common units we issue will also be listed on the NYSE.
 
The transfer agent and registrar for our common units is BNY Mellon Shareowner Services.
 
Meetings/Voting
 
Each holder of common units and Class B units is entitled to one vote for each unit on all matters submitted to a vote of the common unitholders. Holders of the Class B units are entitled to vote as a separate class on any matter that adversely affects the rights or preference of such class in relation to other classes of partnership interests. The approval of a majority of the Class B units is required to approve any matter for which the Class B unitholders are entitled to vote as a separate class.
 
Status as Limited Partner or Assignee
 
Except as described below under “— Limited Liability,” the common units will be fully paid, and unitholders will not be required to make additional capital contributions to us.
 
Each purchaser of our common units must execute a transfer application whereby the purchaser requests admission as a substituted limited partner and makes representations and agrees to provisions stated in the transfer application. If this action is not taken, a purchaser will not be registered as a record holder of common units on the books of our transfer agent or issued a common unit certificate or other evidence of the issuance of uncertificated units. Purchasers may hold common units in nominee accounts.
 
An assignee, pending its admission as a substituted limited partner, is entitled to an interest in us equivalent to that of a limited partner with respect to the right to share in allocations and distributions, including liquidating distributions. Our general partner will vote and exercise other powers attributable to common units owned by an assignee who has not become a substituted limited partner at the written direction of the assignee. Transferees who do not execute and deliver transfer applications will be treated neither as assignees nor as record holders of common units and will not receive distributions, federal income tax allocations or reports furnished to record holders of common units. The only right the transferees will have is the right to admission as a substituted limited partner in respect of the transferred common units upon execution of a transfer application in respect of the common units. A nominee or broker who has executed a transfer application with respect to common units held in street name or nominee accounts will receive distributions and reports pertaining to its common units.
 
Limited Liability
 
Assuming that a limited partner does not participate in the control of our business within the meaning of the Delaware Revised Uniform Limited Partnership Act (the “Delaware Act”) and that he otherwise acts in conformity with the provisions of our partnership agreement, his liability under the Delaware Act will be


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limited, subject to some possible exceptions, generally to the amount of capital he is obligated to contribute to us in respect of his units plus his share of any undistributed profits and assets.
 
Under the Delaware Act, a limited partnership may not make a distribution to a partner to the extent that at the time of the distribution, after giving effect to the distribution, all liabilities of the partnership, other than liabilities to partners on account of their partnership interests and liabilities for which the recourse of creditors is limited to specific property of the partnership, exceed the fair value of the assets of the limited partnership.
 
For the purposes of determining the fair value of the assets of a limited partnership, the Delaware Act provides that the fair value of the property subject to liability of which recourse of creditors is limited shall be included in the assets of the limited partnership only to the extent that the fair value of that property exceeds the nonrecourse liability. The Delaware Act provides that a limited partner who receives a distribution and knew at the time of the distribution that the distribution was in violation of the Delaware Act is liable to the limited partnership for the amount of the distribution for three years from the date of the distribution.
 
Reports and Records
 
As soon as practicable, but in no event later than 120 days after the close of each fiscal year, our general partner will mail or furnish to each unitholder of record (as of a record date selected by our general partner) an annual report containing our audited financial statements for the past fiscal year. These financial statements will be prepared in accordance with United States generally accepted accounting principles. In addition, no later than 90 days after the close of each quarter (except the fourth quarter), our general partner will mail or furnish to each unitholder of record (as of a record date selected by our general partner) a report containing our unaudited financial statements and any other information required by law.
 
Our general partner will use all reasonable efforts to furnish each unitholder of record information reasonably required for tax reporting purposes within 90 days after the close of each fiscal year. Our general partner’s ability to furnish this summary tax information will depend on the cooperation of unitholders in supplying information to our general partner. Each unitholder will receive information to assist him in determining his U.S. federal and state and Canadian federal and provincial tax liability and filing his U.S. federal and state and Canadian federal and provincial income tax returns.
 
A limited partner can, for a purpose reasonably related to the limited partner’s interest as a limited partner, upon reasonable demand and at his own expense, have furnished to him:
 
  •  a current list of the name and last known address of each partner;
 
  •  a copy of our tax returns;
 
  •  information as to the amount of cash and a description and statement of the agreed value of any other property or services, contributed or to be contributed by each partner and the date on which each became a partner;
 
  •  copies of our partnership agreement, our certificate of limited partnership, amendments to either of them and powers of attorney which have been executed under our partnership agreement;
 
  •  information regarding the status of our business and financial condition; and
 
  •  any other information regarding our affairs as is just and reasonable.
 
Our general partner may, and intends to, keep confidential from the limited partners trade secrets and other information the disclosure of which our general partner believes in good faith is not in our best interest or which we are required by law or by agreements with third parties to keep confidential.


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CASH DISTRIBUTION POLICY
 
Distributions of Available Cash
 
General.  Within approximately 45 days after the end of each quarter, we will distribute all of our available cash to unitholders of record (excluding holders of our Class B units as set forth in our partnership agreement and subject to terms applicable under a distribution waiver agreement with one of our common unitholders) on the applicable record date.
 
Definition of Available Cash.  Available cash is defined in our partnership agreement and generally means, with respect to any calendar quarter, all cash on hand at the end of such quarter:
 
  •  less the amount of cash reserves that is necessary or appropriate in the reasonable discretion of our general partner to:
 
  •  provide for the proper conduct of our business (including reserves for our future capital expenditures and for our future credit needs) subsequent to such quarter;
 
  •  comply with applicable law or any loan agreement, security agreement, mortgage, debt instrument or other agreement or obligation to which we are a party or to which we are bound or our assets are subject; or
 
  •  provide funds for distributions to unitholders in respect of any one or more of the next four quarters;
 
  •  plus all cash on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made after the end of the quarter or certain interim capital transactions after the end of such quarter designated by our general partner as operating surplus in accordance with the partnership agreement. Working capital borrowings are generally borrowings that are made under our credit facilities and in all cases are used solely for working capital purposes or to pay distributions to partners.
 
Distributions of Cash upon Liquidation
 
If we dissolve in accordance with the partnership agreement, we will sell or otherwise dispose of our assets in a process called a liquidation. We will first apply the proceeds of liquidation to the payment of our creditors in the order of priority provided in the partnership agreement and by law and, thereafter, we will distribute any remaining proceeds to the unitholders in accordance with their respective capital account balances as so adjusted.
 
Manner of Adjustments for Gain.  The manner of the adjustment is set forth in the partnership agreement. Upon our liquidation, we will allocate any net gain (or unrealized gain attributable to assets distributed in kind to the partners) as follows:
 
  •  first, to the unitholders having negative balances in their capital accounts to the extent of and in proportion to such negative balances; and
 
  •  second, to the unitholders, pro rata.
 
Manner of Adjustments for Losses.  Upon our liquidation, any net loss will generally be allocated to the unitholders as follows:
 
  •  first, to the unitholders in proportion to the positive balances in their respective capital accounts, until the capital accounts of the unitholders have been reduced to zero; and
 
  •  second, to the unitholders, pro rata.
 
Adjustments to Capital Accounts.  In addition, interim adjustments to capital accounts will be made at the time we issue additional partnership interests or make distributions of property. Such adjustments will be based on the fair market value of the partnership interests or the property distributed and any gain or loss resulting therefrom will be allocated to the unitholders in the same manner as gain or loss is allocated upon liquidation.


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DESCRIPTION OF OUR PARTNERSHIP AGREEMENT
 
The following is a summary of the material provisions of our partnership agreement. Our amended and restated partnership agreement has been filed with the Commission. The following provisions of our partnership agreement are summarized elsewhere in this prospectus:
 
  •  distributions of our available cash are described under “Cash Distribution Policy”;
 
  •  rights of holders of common units are described under “Description of Our Common Units.”
 
In addition, allocations of taxable income and other matters are described under “Material Tax Consequences.”
 
Purpose
 
Our purpose under our partnership agreement is to serve as a member of Enterprise Products Operating LLC (“EPO”), our primary operating subsidiary, and to engage in any business activities that may be engaged in by EPO or that are approved by our general partner. The limited liability company agreement of EPO provides that it may engage in any activity that was engaged in by our predecessors at the time of our initial public offering or reasonably related thereto and any other activity approved by our general partner.
 
Power of Attorney
 
Each limited partner, and each person who acquires a unit from a unitholder and executes and delivers a transfer application, grants to our general partner and, if appointed, a liquidator, a power of attorney to, among other things, execute and file documents required for our qualification, continuance or dissolution. The power of attorney also grants the authority for the amendment of, and to make consents and waivers under, our partnership agreement.
 
Voting Rights
 
Unitholders will not have voting rights except with respect to the following matters, for which our partnership agreement requires the approval of the holders of a majority of the units, unless otherwise indicated:
 
  •  the merger of our partnership or a sale, exchange or other disposition of all or substantially all of our assets;
 
  •  the removal of our general partner (requires 60% of the outstanding units, including units held by our general partner and its affiliates);
 
  •  the election of a successor general partner;
 
  •  the dissolution of our partnership or the reconstitution of our partnership upon dissolution;
 
  •  approval of certain actions of our general partner (including the transfer by the general partner of its general partner interest under certain circumstances); and
 
  •  certain amendments to the partnership agreement, including any amendment that would cause us to be treated as an association taxable as a corporation.
 
Under the partnership agreement, our general partner generally will be permitted to effect, without the approval of unitholders, amendments to the partnership agreement that do not adversely affect unitholders.
 
Class B Units.  Holders of Class B units are entitled to vote together with the our common unitholders as a single class on all matters that our common unitholders are entitled to vote on. Holders of the Class B units are entitled to vote as a separate class on any matter that adversely affects the rights or preference of such class in relation to other classes of partnership interests. The approval of the holders of a majority of the Class B units is required to approve any matter for which the Class B unitholders are entitled to vote as a separate class.


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Issuance of Additional Securities
 
Our partnership agreement authorizes us to issue an unlimited number of additional limited partner interests and other equity securities that are equal in rank with or junior to our common units on terms and conditions established by our general partner in its sole discretion without the approval of any limited partners.
 
It is possible that we will fund acquisitions through the issuance of additional common units or other equity securities. Holders of any additional common units we issue will be entitled to share equally with the then-existing holders of common units in our cash distributions. In addition, the issuance of additional partnership interests may dilute the value of the interests of the then-existing holders of common units in our net assets.
 
In accordance with Delaware law and the provisions of our partnership agreement, we may also issue additional partnership interests that, in the sole discretion of our general partner, may have special voting rights to which common units are not entitled.
 
Our general partner has the right, which it may from time to time assign in whole or in part to any of its affiliates, to purchase common units or other equity securities whenever, and on the same terms that, we issue those securities to persons other than our general partner and its affiliates, to the extent necessary to maintain their percentage interests in us that existed immediately prior to the issuance. The holders of common units will not have preemptive rights to acquire additional common units or other partnership interests in us.
 
Our partnership agreement authorizes a series of Enterprise limited partner interests called our Class B units. The Class B units will not be entitled to regular quarterly cash distributions for the first sixteen quarters following the closing of the TEPPCO merger (which occurred on October 26, 2009). The Class B units will convert automatically into the same number of our common units on the date immediately following the payment date of the sixteenth quarterly distribution following October 26, 2009, and holders of such converted units will thereafter be entitled to receive distributions of available cash.
 
Amendments to Our Partnership Agreement
 
Amendments to our partnership agreement may be proposed only by our general partner. Any amendment that materially and adversely affects the rights or preferences of any type or class of limited partner interests in relation to other types or classes of limited partner interests or our general partner interest will require the approval of at least a majority of the type or class of limited partner interests or general partner interests so affected. However, in some circumstances, more particularly described in our partnership agreement, our general partner may make amendments to our partnership agreement without the approval of our limited partners or assignees to reflect:
 
  •  a change in our names, the location of our principal place of business, our registered agent or our registered office;
 
  •  the admission, substitution, withdrawal or removal of partners;
 
  •  a change to qualify or continue our qualification as a limited partnership or a partnership in which our limited partners have limited liability under the laws of any state or to ensure that neither we, EPO, nor any of our subsidiaries will be treated as an association taxable as a corporation or otherwise taxed as an entity for federal income tax purposes;
 
  •  a change that does not adversely affect our limited partners in any material respect;
 
  •  a change to (i) satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal or state agency or judicial authority or contained in any federal or state statute or (ii) facilitate the trading of our limited partner interests or comply with any rule, regulation, guideline or requirement of any national securities exchange on which our limited partner interests are or will be listed for trading;
 
  •  a change in our fiscal year or taxable year and any changes that are necessary or advisable as a result of a change in our fiscal year or taxable year;


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  •  an amendment that is necessary to prevent us, or our general partner or its directors, officers, trustees or agents from being subjected to the provisions of the Investment Company Act of 1940, as amended, the Investment Advisers Act of 1940, as amended, or “plan asset” regulations adopted under the Employee Retirement Income Security Act of 1974, as amended;
 
  •  an amendment that is necessary or advisable in connection with the authorization or issuance of any class or series of our securities;
 
  •  any amendment expressly permitted in our partnership agreement to be made by our general partner acting alone;
 
  •  an amendment effected, necessitated or contemplated by a merger agreement approved in accordance with our partnership agreement;
 
  •  an amendment that is necessary or advisable to reflect, account for and deal with appropriately our formation of, or investment in, any corporation, partnership, joint venture, limited liability company or other entity other than EPO, in connection with our conduct of activities permitted by our partnership agreement;
 
  •  a merger or conveyance to effect a change in our legal form; or
 
  •  any other amendments substantially similar to the foregoing.
 
Any amendment to our partnership agreement that would have the effect of reducing the voting percentage required to take any action must be approved by the written consent or the affirmative vote of our limited partners constituting not less than the voting requirement sought to be reduced.
 
No amendment to our partnership agreement may (i) enlarge the obligations of any limited partner without its consent, unless such shall have occurred as a result of an amendment approved by not less than a majority of the outstanding partnership interests of the class affected, (ii) enlarge the obligations of, restrict in any way any action by or rights of, or reduce in any way the amounts distributable, reimbursable or otherwise payable to, our general partner or any of its affiliates without its consent, which consent may be given or withheld in its sole discretion, (iii) change the provision of our partnership agreement that provides for our dissolution (A) at the expiration of its term or (B) upon the election to dissolve us by the general partner that is approved by the holders of a majority of our outstanding common units and by “special approval” (as such term is defined under our partnership agreement), or (iv) change the term of us or, except as set forth in the provision described in clause (iii)(B) of this paragraph, give any person the right to dissolve us.
 
Except for certain amendments in connection with the merger or consolidation of us and except for those amendments that may be effected by the general partner without the consent of limited partners as described above, any amendment that would have a material adverse effect on the rights or preferences of any class of partnership interests in relation to other classes of partnership interests must be approved by the holders of not less than a majority of the outstanding partnership interests of the class so affected.
 
Except for those amendments that may be effected by the general partner without the consent of limited partners as described above or certain provisions in connection with our merger or consolidation, no amendment shall become effective without the approval of the holders of at least 90% of the outstanding units unless we obtain an opinion of counsel to the effect that such amendment will not affect the limited liability of any limited partner under applicable law.
 
Except for those amendments that may be effected by the general partner without the consent of limited partners as described above, the foregoing provisions described above relating to the amendment of our partnership agreement may only be amended with the approval of the holders of at least 90% of the outstanding units.
 
Merger, Sale or Other Disposition of Assets
 
Our partnership agreement generally prohibits the general partner, without the prior approval of a majority of our outstanding common units, from causing us to, among other things, sell, exchange or


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otherwise dispose of all or substantially all of the assets us or EPO in a single transaction or a series of related transactions (including by way of merger, consolidation or other combination). The general partner may, however, mortgage, pledge, hypothecate or grant a security interest in all or substantially all of the assets of us or EPO without the approval of a Unit Majority (as defined in the our partnership agreement). Our partnership agreement generally prohibits the general partner from causing us to merge or consolidate with another entity without the approval of a majority of the members of our Audit and Conflicts Committee, at least one of which majority meets certain independence requirements (such approval constituting “special approval” under our partnership agreement).
 
If certain conditions specified in our partnership agreement are satisfied, our general partner may merge us or any of our subsidiaries into, or convey some or all of our assets to, a newly formed entity if the sole purpose of that merger or conveyance is to change our legal form into another limited liability entity.
 
Reimbursements of Our General Partner
 
Our general partner does not receive any compensation for its services as our general partner. It is, however, entitled to be reimbursed for all of its costs incurred in managing and operating our business. Our partnership agreement provides that our general partner will determine the expenses that are allocable to us in any reasonable manner determined by our general partner in its sole discretion.
 
Withdrawal or Removal of Our General Partner
 
Our general partner may withdraw as general partner without first obtaining approval of any unitholder by giving 90 days’ written notice, and that withdrawal will not constitute a violation of our partnership agreement. In addition, our general partner may withdraw without unitholder approval upon 90 days’ notice to our limited partners if at least 50% of our outstanding common units are held or controlled by one person and its affiliates other than our general partner and its affiliates.
 
Upon the voluntary withdrawal of our general partner, the holders of a majority of our outstanding common units, excluding the common units held by the withdrawing general partner and its affiliates, may elect a successor to the withdrawing general partner. If a successor is not elected, or is elected but an opinion of counsel regarding limited liability and tax matters cannot be obtained, we will be dissolved, wound up and liquidated, unless within 90 days after that withdrawal, the holders of a majority of our outstanding units, excluding the common units held by the withdrawing general partner and its affiliates, agree to continue our business and to appoint a successor general partner.
 
Our general partner may not be removed unless that removal is approved by the vote of the holders of not less than 60% of our outstanding units, including units held by our general partner and its affiliates, and we receive an opinion of counsel regarding limited liability and tax matters. In addition, if our general partner is removed as our general partner under circumstances where cause does not exist and units held by our general partner and its affiliates are not voted in favor of such removal, our general partner will have the right to convert its general partner interest into common units or to receive cash in exchange for such interests. Cause is narrowly defined to mean that a court of competent jurisdiction has entered a final, non-appealable judgment finding the general partner liable for actual fraud, gross negligence or willful or wanton misconduct in its capacity as our general partner. Any removal of this kind is also subject to the approval of a successor general partner by the vote of the holders of a majority of our outstanding common units, including those held by our general partner and its affiliates.
 
Transfer of the General Partner Interest
 
While our partnership agreement limits the ability of our general partner to withdraw, it allows the general partner interest to be transferred to an affiliate or to a third party in conjunction with a merger or sale of all or substantially all of the assets of our general partner. In addition, our partnership agreement expressly permits the sale, in whole or in part, of the ownership of our general partner. Our general partner may also transfer, in whole or in part, the common units it owns.


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At any time, the owners of our general partner may sell or transfer all or part of their ownership interests in the general partner without the approval of the unitholders.
 
Dissolution and Liquidation
 
We will continue as a limited partnership until terminated under our partnership agreement. We will dissolve upon:
 
(1) the expiration of the term of our partnership agreement on December 31, 2088;
 
(2) the withdrawal, removal, bankruptcy or dissolution of the general partner unless a successor is elected and an opinion of counsel is received that such withdrawal (following the selection of a successor general partner) would not result in the loss of the limited liability of any limited partner or of any member of EPO or cause us or EPO to be treated as an association taxable as a corporation or otherwise to be taxed as an entity for U.S. federal income tax purposes (to the extent not previously treated as such) and such successor is admitted to the partnership as required by our partnership agreement;
 
(3) an election to dissolve us by the general partner that receives “special approval” (as defined in our partnership agreement) and is approved by a majority of the holders of our common units;
 
(4) the entry of a decree of judicial dissolution of us pursuant to the provisions of the Delaware Act; or
 
(5) the sale of all or substantially all of the assets and properties of us, EPO and their subsidiaries.
 
Upon (a) our dissolution following the withdrawal or removal of the general partner and the failure of the partners to select a successor general partner, then within 90 days thereafter, or (b) our dissolution upon the bankruptcy or dissolution of the general partner, then, to the maximum extent permitted by law, within 180 days thereafter, the holders of a majority of the holders of our common units may elect to reconstitute us and continue our business on the same terms and conditions set forth in the our partnership agreement by forming a new limited partnership on terms identical to those set forth in our partnership agreement and having as the successor general partner a person approved by the holders of a majority of the holders of our common units. Unless such an election is made within the applicable time period as set forth above, we shall conduct only activities necessary to wind up our affairs.
 
Liquidation and Distribution of Proceeds
 
Upon our dissolution, unless we are reconstituted and continued as a new limited partnership, the person authorized to wind up our affairs (the liquidator) will, acting with all the powers of our general partner that the liquidator deems necessary or desirable in its good faith judgment, liquidate our assets. The proceeds of the liquidation will be applied as follows:
 
  •  first, towards the payment of all of our creditors and the creation of a reserve for contingent liabilities; and
 
  •  then, to all partners in accordance with the positive balance in the respective capital accounts.
 
Under some circumstances and subject to some limitations, the liquidator may defer liquidation or distribution of our assets for a reasonable period of time. If the liquidator determines that a sale would be impractical or would cause a loss to our partners, our general partner may distribute assets in kind to our partners.
 
Limited Call Right
 
If at any time our general partner and its affiliates own 85% or more of the issued and outstanding limited partner interests of any class, our general partner will have the right to purchase all, but not less than all, of the outstanding limited partner interests of that class that are held by non-affiliated persons. The record date for determining ownership of the limited partner interests would be selected by our general partner on at least 10 but not more than 60 days’ notice. The purchase price in the event of a purchase under these


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provisions would be the greater of (1) the current market price (as defined in our partnership agreement) of the limited partner interests of the class as of the date three days prior to the date that notice is mailed to the limited partners as provided in the partnership agreement and (2) the highest cash price paid by our general partner or any of its affiliates for any limited partner interest of the class purchased within the 90 days preceding the date our general partner mails notice of its election to purchase the units.
 
As of November 23, 2010 our general partner and its affiliates (excluding directors and officers except Randa Duncan Williams) owned the non-economic general partner interest in us and 307,587,486 common units and 4,520,431 Class B units, representing an aggregate 37.5% of our issued and outstanding units representing limited partner interests. Our Class B units are entitled to vote together with our common units as a single class on partnership matters and generally have the same rights and privileges as our common units, except that they are not entitled to regular quarterly cash distributions for the first sixteen quarters following October 26, 2009, which was the closing date of the TEPPCO merger. The Class B units will automatically convert into the same number of common units on the date immediately following the payment date for the sixteenth quarterly distribution following the closing date of the TEPPCO merger.
 
Indemnification
 
Section 17-108 of the Delaware Act empowers a Delaware limited partnership to indemnify and hold harmless any partner or other person from and against all claims and demands whatsoever. Our partnership agreement provides that we will indemnify (i) the general partner, (ii) any departing general partner, (iii) any person who is or was an affiliate of the general partner or any departing general partner, (iv) any person who is or was a member, partner, officer director, employee, agent or trustee of the general partner or any departing general partner or any affiliate of the general partner or any departing general partner or (v) any person who is or was serving at the request of the general partner or any departing general partner or any affiliate of any such person, any affiliate of the general partner or any fiduciary or trustee of another person (each, a “Partnership Indemnitee”), to the fullest extent permitted by law, from and against any and all losses, claims, damages, liabilities (joint or several), expenses (including, without limitation, legal fees and expenses), judgments, fines, penalties, interest, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, in which any Partnership Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, by reason of its status as a Partnership Indemnitee; provided that in each case the Partnership Indemnitee acted in good faith and in a manner that such Partnership Indemnitee reasonably believed to be in or not opposed to our best interests and, with respect to any criminal proceeding, had no reasonable cause to believe its conduct was unlawful. The termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not create an assumption that the Partnership Indemnitee acted in a manner contrary to that specified above. Any indemnification under these provisions will be only out of the our assets, and the general partner shall not be personally liable for, or have any obligation to contribute or lend funds or assets to us to enable it to effectuate, such indemnification. We are authorized to purchase (or to reimburse the general partner or its affiliates for the cost of) insurance against liabilities asserted against and expenses incurred by such persons in connection with our activities, regardless of whether we would have the power to indemnify such person against such liabilities under the provisions described above.
 
Registration Rights
 
Under our partnership agreement, we have agreed to register for resale under the Securities Act of 1933, as amended (the “Securities Act”), and applicable state securities laws any common units or other partnership securities proposed to be sold by our general partner or any of its affiliates or their assignees if an exemption from the registration requirements is not otherwise available. We are obligated to pay all expenses incidental to the registration, excluding underwriting discounts and commissions.


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MATERIAL TAX CONSEQUENCES
 
This section is a discussion of the material tax considerations that may be relevant to prospective unitholders who are individual citizens or residents of the United States and, unless otherwise noted in the following discussion, represents the opinion of Andrews Kurth LLP, special counsel to our general partner and us, insofar as it relates to matters of United States federal income tax law and legal conclusions with respect to those matters. This section is based upon current provisions of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, existing and proposed Treasury Regulations and current administrative rulings and court decisions, all of which are subject to change. Later changes in these authorities may cause the tax consequences to vary substantially from the consequences described below. Unless the context otherwise requires, references in this section to “us” or “we” are references to Enterprise Products Partners L.P. and Enterprise Products Operating LLC.
 
The following discussion does not address all federal, state and local tax matters affecting us or our unitholders. Moreover, the discussion focuses on unitholders who are individual citizens or residents of the United States and has only limited application to corporations, estates, trusts, nonresident aliens or other unitholders subject to specialized tax treatment, such as tax-exempt institutions, foreign persons, individual retirement accounts (IRAs), real estate investment trusts (REITs), employee benefit plans or mutual funds. Accordingly, we urge each prospective unitholder to consult, and depend on, his own tax advisor in analyzing the federal, state, local and foreign tax consequences particular to him of the ownership or disposition of the common units. All statements as to matters of law and legal conclusions, but not as to factual matters, contained in this section, unless otherwise noted, are the opinion of Andrews Kurth LLP and are based on the accuracy of the representations made by us and our general partner.
 
No ruling has been or will be requested from the IRS regarding our status as a partnership for federal income tax purposes. Instead, we will rely on opinions and advice of Andrews Kurth LLP. Unlike a ruling, an opinion of counsel represents only that counsel’s best legal judgment and does not bind the IRS or the courts. Accordingly, the opinions and statements made in this discussion may not be sustained by a court if contested by the IRS. Any contest of this sort with the IRS may materially and adversely impact the market for the common units and the prices at which the common units trade. In addition, the costs of any contest with the IRS, principally legal, accounting and related fees, will result in a reduction in cash available for distribution to our unitholders and our general partner and thus will be borne indirectly by our unitholders and our general partner. Furthermore, the tax treatment of us, or of an investment in us, may be significantly modified by future legislative or administrative changes or court decisions. Any modifications may or may not be retroactively applied.
 
For the reasons described below, Andrews Kurth LLP has not rendered an opinion with respect to the following specific federal income tax issues: the treatment of a unitholder whose common units are loaned to a short seller to cover a short sale of common units (please read “— Tax Consequences of Unit Ownership — Treatment of Short Sales”); whether our monthly convention for allocating taxable income and losses is permitted by existing Treasury Regulations (please read “— Disposition of Common Units — Allocations Between Transferors and Transferees”); and whether our method for depreciating Section 743 adjustments is sustainable in certain cases (please read “— Tax Consequences of Unit Ownership — Section 754 Election” and “— Uniformity of Units.”).
 
Partnership Status
 
A partnership is not a taxable entity and incurs no federal income tax liability. Instead, each partner of a partnership is required to take into account his share of items of income, gain, loss and deduction of the partnership in computing his federal income tax liability, regardless of whether cash distributions are made to him by the partnership. Distributions by a partnership to a partner are generally not taxable to the partner unless the amount of cash distributed to him is in excess of the partner’s adjusted basis in his partnership interest.
 
Section 7704 of the Internal Revenue Code provides that publicly traded partnerships will, as a general rule, be taxed as corporations. However, an exception, referred to as the “Qualifying Income Exception,” exists


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with respect to publicly traded partnerships of which 90% or more of the gross income for every taxable year consists of “qualifying income.” Qualifying income includes income and gains derived from the exploration, development, mining or production, processing, refining, transportation, storage and marketing of any mineral or natural resource, including our allocable share of such income from Duncan Energy Partners and Energy Transfer Equity (the “MLP Entities”). Other types of qualifying income include interest (other than from a financial business), dividends, gains from the sale of real property and gains from the sale or other disposition of capital assets held for the production of income that otherwise constitutes qualifying income. We estimate that less than 5% of our current gross income is not qualifying income; however, this estimate could change from time to time. Based on and subject to this estimate, the factual representations made by us and our general partner and a review of the applicable legal authorities, Andrews Kurth LLP is of the opinion that at least 90% of our current gross income constitutes qualifying income. The portion of our income that is qualifying income may change from time to time.
 
No ruling has been or will be sought from the IRS and the IRS has made no determination as to our status or the status of Enterprise Products Operating LLC as partnerships for federal income tax purposes. Instead, we will rely on the opinion of Andrews Kurth LLP on such matters. It is the opinion of Andrews Kurth LLP that, based upon the Internal Revenue Code, its regulations, published revenue rulings and court decisions and the representations described below, we and Enterprise Products Operating LLC will be classified as partnerships for federal income tax purposes.
 
In rendering its opinion, Andrews Kurth LLP has relied on factual representations made by us and our general partner. The representations made by us and our general partner upon which Andrews Kurth LLP has relied include:
 
(a) Neither we, Enterprise Products Operating LLC nor the MLP Entities has elected or will elect to be treated as a corporation; and
 
(b) For each taxable year, more than 90% of our gross income has been and will be income that Andrews Kurth LLP has opined or will opine is “qualifying income” within the meaning of Section 7704(d) of the Internal Revenue Code.
 
If we fail to meet the Qualifying Income Exception, other than a failure that is determined by the IRS to be inadvertent and that is cured within a reasonable time after discovery (in which case the IRS may also require us to make adjustments with respect to our unitholders or pay other amounts), we will be treated as if we had transferred all of our assets, subject to liabilities, to a newly formed corporation, on the first day of the year in which we fail to meet the Qualifying Income Exception, in return for stock in that corporation, and then distributed that stock to the unitholders in liquidation of their interests in us. This deemed contribution and liquidation should be tax-free to unitholders and us except to the extent that our liabilities exceed the tax basis of our assets at that time. Thereafter, we would be treated as a corporation for federal income tax purposes.
 
If we were taxable as a corporation in any taxable year, either as a result of a failure to meet the Qualifying Income Exception or otherwise, our items of income, gain, loss and deduction would be reflected only on our tax return rather than being passed through to the unitholders, and our net income would be taxed to us at corporate rates. Moreover, if any MLP Entity were taxable as a corporation in any taxable year, our share of such entity’s items of income, gain, loss and deduction would not be passed through to us and such entity would pay tax on its income at corporate rates. If an MLP Entity or we were taxable as a corporation, losses recognized by the MLP Entity would not flow through to us or our losses would not flow through to our unitholders, as the case may be. In addition, any distribution made by us to a unitholder (or by the MLP Entity to us) would be treated as either taxable dividend income, to the extent of our current or accumulated earnings and profits, or, in the absence of earnings and profits, a nontaxable return of capital, to the extent of the unitholder’s tax basis in his common units (or our tax basis in the MLP Entities), or taxable capital gain, after the unitholder’s tax basis in his common units (or our tax basis in the MLP Entities) is reduced to zero. Accordingly, taxation of either us or any MLP Entity as a corporation would result in a material reduction in a unitholder’s cash flow and after-tax return and thus would likely result in a substantial reduction of the value of the units.


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The discussion below is based on Andrews Kurth LLP’s opinion that we will be classified as a partnership for federal income tax purposes.
 
Limited Partner Status
 
Unitholders who have become limited partners of Enterprise Products Partners L.P. will be treated as partners of Enterprise Products Partners L.P. for federal income tax purposes. Also, assignees who have executed and delivered transfer applications, and are awaiting admission as limited partners, and unitholders whose common units are held in street name or by a nominee and who have the right to direct the nominee in the exercise of all substantive rights attendant to the ownership of their common units, will be treated as partners of Enterprise Products Partners L.P. for federal income tax purposes. As there is no direct authority addressing assignees of common units who are entitled to execute and deliver transfer applications and thereby become entitled to direct the exercise of attendant rights, but who fail to execute and deliver transfer applications, Andrews Kurth LLP’s opinion does not extend to these persons. Furthermore, a purchaser or other transferee of common units who does not execute and deliver a transfer application may not receive some federal income tax information or reports furnished to record holders of common units unless the common units are held in a nominee or street name account and the nominee or broker has executed and delivered a transfer application for those common units.
 
A beneficial owner of common units whose units have been transferred to a short seller to complete a short sale would appear to lose his status as a partner with respect to those units for federal income tax purposes. Please read “— Tax Consequences of Unit Ownership — Treatment of Short Sales.”
 
Items of our income, gain, loss and deduction would not appear to be reportable by a unitholder who is not a partner for federal income tax purposes, and any cash distributions received by a unitholder who is not a partner for federal income tax purposes would therefore appear to be fully taxable as ordinary income. These unitholders are urged to consult their own tax advisors with respect to their tax consequences of holding units in Enterprise Products Partners L.P. The references to “unitholders” in the discussion that follows are to persons who are treated as partners in Enterprise Products Partners L.P. for federal income tax purposes.
 
Tax Consequences of Unit Ownership
 
Flow-through of Taxable Income.  We do not pay any federal income tax. Instead, each unitholder is required to report on his income tax return his share of our income, gains, losses and deductions without regard to whether corresponding cash distributions are received by him. Consequently, we may allocate income to a unitholder even if he has not received a cash distribution. Each unitholder will be required to include in income his allocable share of our income, gains, losses and deductions for our taxable year or years ending with or within his taxable year. Our taxable year ends on December 31.
 
Treatment of Distributions.  Distributions by us to a unitholder generally will not be taxable to the unitholder for federal income tax purposes, except to the extent the amount of any such cash distribution exceeds his tax basis in his common units immediately before the distribution. Our cash distributions in excess of a unitholder’s tax basis in his common units generally will be considered to be gain from the sale or exchange of the common units, taxable in accordance with the rules described under “— Disposition of Common Units” below. Any reduction in a unitholder’s share of our liabilities for which no partner, bears the economic risk of loss, known as “nonrecourse liabilities,” will be treated as a distribution of cash to that unitholder. To the extent our distributions cause a unitholder’s “at risk” amount to be less than zero at the end of any taxable year, the unitholder must recapture any losses deducted in previous years. Please read “— Limitations on Deductibility of Losses.”
 
A decrease in a unitholder’s percentage interest in us because of our issuance of additional common units will decrease his share of our nonrecourse liabilities, and thus will result in a corresponding deemed distribution of cash which may constitute a non-pro rata distribution. A non-pro rata distribution of money or property may result in ordinary income to a unitholder, regardless of his tax basis in his common units, if the distribution reduces the unitholder’s share of our “unrealized receivables,” including depreciation recapture, and/or substantially appreciated “inventory items,” both as defined in Section 751 of the Internal Revenue Code, and collectively, “Section 751


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Assets.” To that extent, he will be treated as having been distributed his proportionate share of the Section 751 Assets and having then exchanged those assets with us in return for the non-pro rata portion of the actual distribution made to him. This latter deemed exchange will generally result in the unitholder’s realization of ordinary income, which will equal the excess of the non-pro rata portion of that distribution over the unitholder’s tax basis for the share of Section 751 Assets deemed relinquished in the exchange.
 
Basis of Common Units.  A unitholder’s initial tax basis for his common units will be the amount he paid for the common units plus his share of our nonrecourse liabilities. That basis generally will be increased by his share of our income and gains and by any increases in his share of our nonrecourse liabilities. That basis generally will be decreased, but not below zero, by distributions from us, by the unitholder’s share of our losses and deductions, by any decreases in his share of our nonrecourse liabilities and by his share of our expenditures that are not deductible in computing taxable income and are not required to be capitalized. A unitholder will have a share of our nonrecourse liabilities generally based on the Book-Tax Disparity (as described in “— Allocation of Income, Gain, Loss and Deduction”) attributable to the unitholder, to the extent of such amount, and thereafter, the unitholder’s share of our profits. Please read “— Disposition of Common Units — Recognition of Gain or Loss.”
 
Limitations on Deductibility of Losses.  The deduction by a unitholder of his share of our losses will be limited to the tax basis in his units and, in the case of an individual unitholder or a corporate unitholder, if more than 50% of the value of the corporate unitholder’s stock is owned directly or indirectly by or for five or fewer individuals or some tax-exempt organizations, to the amount for which the unitholder is considered to be “at risk” with respect to our activities, if that amount is less than his tax basis. A unitholder subject to these limitations must recapture losses deducted in previous years to the extent that distributions cause his at risk amount to be less than zero at the end of any taxable year. Losses disallowed to a unitholder or recaptured as a result of these limitations will carry forward and will be allowable as a deduction in a later year to the extent that his tax basis or at risk amount, whichever is the limiting factor, is subsequently increased provided that such losses are otherwise allowable. Upon the taxable disposition of a unit, any gain recognized by a unitholder can be offset by losses that were previously suspended by the at risk limitation but may not be offset by losses suspended by the basis limitation. Any excess loss above that gain previously suspended by the at risk or basis limitations is no longer utilizable.
 
In general, a unitholder will be at risk to the extent of the tax basis of his units, excluding any portion of that basis attributable to his share of our nonrecourse liabilities, reduced by (i) any portion of that basis representing amounts other than those protected against loss because of a guarantee, stop-loss agreement or other similar arrangement and (ii) any amount of money he borrows to acquire or hold his units, if the lender of those borrowed funds owns an interest in us, is related to another unitholder who has an interest in us, or can look only to the units for repayment. A unitholder’s at risk amount will increase or decrease as the tax basis of the unitholder’s units increases or decreases, other than tax basis increases or decreases attributable to increases or decreases in his share of our nonrecourse liabilities.
 
In addition to the basis and at-risk limitations on the deductibility of losses, the passive loss limitations generally provide that individuals, estates, trusts and some closely-held corporations and personal service corporations are permitted to deduct losses from passive activities, which are generally trade or business activities in which the taxpayer does not materially participate, only to the extent of the taxpayer’s income from those passive activities. The passive loss limitations are applied separately with respect to each publicly traded partnership. However, the application of the passive loss limitations to tiered publicly traded partnerships is uncertain. We will take the position that any passive losses we generate that are reasonably allocable to our investment in Duncan Energy Partners or Energy Transfer Equity, as applicable, will only be available to offset our passive income generated in the future that is reasonably allocable to our investment in Duncan Energy Partners or Energy Transfer Equity, as applicable, and will not be available to offset income from other passive activities or investments, including other investments in private businesses or investments we may make in other publicly traded partnerships. Moreover, because the passive loss limitations are applied separately with respect to each publicly traded partnership, any passive losses we generate will only be available to offset our passive income generated in the future and will not be available to offset income from other passive activities or investments, including our investments or investments in other publicly traded


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partnerships, or a unitholder’s salary or active business income. Further, a unitholder’s share of our net income may be offset by any suspended passive losses from his investment in us, but may not be offset by his current or carryover losses from other passive activities, including those attributable to other publicly traded partnerships. Passive losses that are not deductible because they exceed a unitholder’s share of income we generate may be deducted in full when the unitholder disposes of his entire investment in us in a fully taxable transaction with an unrelated party. The passive activity loss limitations are applied after other applicable limitations on deductions, including the at risk rules and the basis limitation.
 
The IRS could take the position that for purposes of applying the passive loss limitation rules to tiered publicly traded partnerships, such as the MLP Entities and us, the related entities are treated as one publicly traded partnership. In that case, any passive losses we generate would be available to offset income from a unitholder’s investment in the MLP Entities, as applicable. However, passive losses that are not deductible because they exceed a unitholder’s share of income we generate would not be deductible in full until a unitholder disposes of his entire investment in both us and each MLP Entity in a fully taxable transaction with an unrelated party.
 
A unitholder’s share of our net income may be offset by any of our suspended passive losses, but it may not be offset by any other current or carryover losses from other passive activities, including those attributable to other publicly traded partnerships.
 
Limitations on Interest Deductions.  The deductibility of a non-corporate taxpayer’s “investment interest expense” is generally limited to the amount of that taxpayer’s “net investment income.” Investment interest expense includes:
 
  •  interest on indebtedness properly allocable to property held for investment;
 
  •  our interest expense attributed to portfolio income; and
 
  •  the portion of interest expense incurred to purchase or carry an interest in a passive activity to the extent attributable to portfolio income.
 
The computation of a unitholder’s investment interest expense will take into account interest on any margin account borrowing or other loan incurred to purchase or carry a unit. Net investment income includes gross income from property held for investment and amounts treated as portfolio income under the passive loss rules, less deductible expenses, other than interest, directly connected with the production of investment income, but generally does not include gains attributable to the disposition of property held for investment. The IRS has indicated that net passive income earned by a publicly traded partnership will be treated as investment income to its unitholders for purposes of the investment interest deduction limitation. In addition, the unitholder’s share of our portfolio income will be treated as investment income.
 
Entity-Level Collections.  If we are required or elect under applicable law to pay any federal, state, local or foreign income tax on behalf of any unitholder or any former unitholder, we are authorized to pay those taxes from our funds. That payment, if made, will be treated as a distribution of cash to the unitholder on whose behalf the payment was made. If the payment is made on behalf of a person whose identity cannot be determined, we are authorized to treat the payment as a distribution to all current unitholders. We are authorized to amend our partnership agreement in the manner necessary to maintain uniformity of intrinsic tax characteristics of units and to adjust later distributions, so that after giving effect to these distributions, the priority and characterization of distributions otherwise applicable under our partnership agreement is maintained as nearly as is practicable. Payments by us as described above could give rise to an overpayment of tax on behalf of an individual unitholder in which event the unitholder would be required to file a claim in order to obtain a credit or refund.
 
Allocation of Income, Gain, Loss and Deduction.  In general, if we have a net profit, our items of income, gain, loss and deduction will be allocated among the unitholders in accordance with their percentage interests in us. If we have a net loss for the entire year, that loss will be allocated to the unitholders in accordance with their percentage interests in us.


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Specified items of our income, gain, loss and deduction will be allocated under Section 704(c) of the Internal Revenue Code to account for (i) any difference between the tax basis and fair market value of our assets at the time we issue units in an offering, or (ii) any difference between the tax basis and fair market value of any property contributed to us at the time of such contribution, together referred to in this discussion as “Contributed Property.” These allocations are required to eliminate the difference between a partner’s “book” capital account, credited with the fair market value of Contributed Property, and the “tax” capital account, credited with the tax basis of Contributed Property, referred to in the discussion as the “Book-Tax Disparity.” The effect of these allocations to a unitholder purchasing common units in such an offering will be essentially the same as if the tax basis of our assets were equal to their fair market value at the time of such an offering. In the event we issue additional common units or engage in certain other transactions in the future, “reverse Section 704(c) allocations,” similar to the Section 704(c) allocations described above, will be made to all partners to account for the difference, at the time of the future transaction, between the “book” basis for purposes of maintaining capital accounts and the fair market value of all property held by us at the time of the future transaction. In addition, items of recapture income will be allocated to the extent possible to the unitholder who was allocated the deduction giving rise to the treatment of that gain as recapture income in order to minimize the recognition of ordinary income by other unitholders. Finally, although we do not expect that our operations will result in the creation of negative capital accounts, if negative capital accounts nevertheless result, items of our income and gain will be allocated in an amount and manner sufficient to eliminate the negative balance as quickly as possible.
 
An allocation of items of our income, gain, loss or deduction, other than an allocation required by Section 704(c) to eliminate the Book-Tax Disparity will generally be given effect for federal income tax purposes in determining a partner’s share of an item of income, gain, loss or deduction only if the allocation has substantial economic effect. In any other case, a partner’s share of an item will be determined on the basis of his interest in us, which will be determined by taking into account all the facts and circumstances, including:
 
  •  his relative contributions to us;
 
  •  the interests of all the partners in profits and losses;
 
  •  the interest of all the partners in cash flow and other nonliquidating distributions; and
 
  •  the rights of all the partners to distributions of capital upon liquidation.
 
Andrews Kurth LLP is of the opinion that, with the exception of the issues described in “— Tax Consequences of Unit Ownership — Section 754 Election” “— Uniformity of Units” and “— Disposition of Common Units — Allocations Between Transferors and Transferees,” allocations under our partnership agreement will be given effect for federal income tax purposes in determining a partner’s share of an item of income, gain, loss or deduction.
 
Treatment of Short Sales.  A unitholder whose units are loaned to a “short seller” to cover a short sale of units may be considered as having disposed of those units. If so, he would no longer be treated for tax purposes as a partner with respect to those units during the period of the loan and may recognize gain or loss from the disposition. As a result, during this period:
 
  •  any of our income, gain, loss or deduction with respect to those units would not be reportable by the unitholder;
 
  •  any cash distributions received by the unitholder as to those units would be fully taxable; and
 
  •  all of these distributions would appear to be ordinary income.
 
Andrews Kurth LLP has not rendered an opinion regarding the tax treatment of a unitholder where common units are loaned to a short seller to cover a short sale of common units. Therefore, unitholders desiring to assure their status as partners and avoid the risk of gain recognition from a loan to a short seller are urged to modify any applicable brokerage account agreements to prohibit their brokers from borrowing and loaning their units. The IRS has previously announced that it is studying issues relating to the tax


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treatment of short sales of partnership interests. Please also read “— Disposition of Common Units — Recognition of Gain or Loss.”
 
Alternative Minimum Tax.  Each unitholder will be required to take into account his distributive share of any items of our income, gain, loss or deduction for purposes of the alternative minimum tax. The current minimum tax rate for noncorporate taxpayers is 26% on the first $175,000 of alternative minimum taxable income in excess of the exemption amount and 28% on any additional alternative minimum taxable income. Prospective unitholders are urged to consult with their tax advisors as to the impact of an investment in units on their liability for the alternative minimum tax.
 
Tax Rates.  Under current law, the highest marginal United States federal income tax rate applicable to ordinary income of individuals is 35% and the maximum United States federal income tax rate for net capital gains of an individual is 15% if the asset disposed of was a capital asset held for more than 12 months at the time of disposition. However, absent new legislation extending the current rates, beginning January 1, 2011, the highest marginal U.S. federal income tax rate applicable to ordinary income and long-term capital gains of individuals will increase to 39.6% and 20%, respectively. Moreover, these rates are subject to change by new legislation at any time.
 
Recently enacted legislation will impose a 3.8% Medicare tax on certain investment income earned by individuals, estates and trusts for taxable years beginning after December 31, 2012. For these purposes, net investment income generally includes a unitholder’s allocable share of our income and gain realized by a unitholder from a sale of common units. In the case of an individual, the tax will be imposed on the lesser of (1) the unitholder’s net investment income or (2) the amount by which the unitholder’s modified adjusted gross income exceeds $250,000 (if the unitholder is married and filing jointly or a surviving spouse), $125,000 (if the unitholder is married and filing separately) or $200,000 (in any other case).
 
Section 754 Election.  We have made the election permitted by Section 754 of the Internal Revenue Code. That election is irrevocable without the consent of the IRS. The election generally permits us to adjust a common unit purchaser’s tax basis in our assets (“inside basis”) under Section 743(b) of the Internal Revenue Code to reflect his purchase price. This election applies to a person who purchases units from a selling unitholder but does not apply to a person who purchases common units directly from us. The Section 743(b) adjustment belongs to the purchaser and not to other unitholders. For purposes of this discussion, a unitholder’s inside basis in our assets will be considered to have two components: (1) his share of our tax basis in our assets (“common basis”) and (2) his Section 743(b) adjustment to that basis.
 
Treasury Regulations under Section 743 of the Internal Revenue Code require, if the remedial allocation method is adopted (which we have adopted), a portion of the Section 743(b) adjustment that is attributable to recovery property subject to depreciation under Section 168 of the Internal Revenue Code to be depreciated over the remaining cost recovery period for the property’s unamortized Book-Tax Disparity. Under Treasury Regulation Section 1.167(c)-1(a)(6), a Section 743(b) adjustment attributable to property subject to depreciation under Section 167 of the Internal Revenue Code, rather than cost recovery deductions under Section 168, is generally required to be depreciated using either the straight-line method or the 150% declining balance method. Under our partnership agreement, our general partner is authorized to take a position to preserve the uniformity of units even if that position is not consistent with these and any other Treasury Regulations. Please read “— Uniformity of Units.”
 
Although Andrews Kurth LLP is unable to opine as to the validity of this approach because there is no controlling authority on this issue, we intend to depreciate the portion of a Section 743(b) adjustment attributable to unrealized appreciation in the value of Contributed Property, to the extent of any unamortized Book-Tax Disparity, using a rate of depreciation or amortization derived from the depreciation or amortization method and useful life applied to the unamortized Book-Tax Disparity of the property, or treat that portion as non-amortizable to the extent attributable to property which is not amortizable. This method is consistent with methods employed by other publicly traded partnerships but is arguably inconsistent with Treasury Regulation Section 1.167(c)-1(a)(6), which is not expected to directly apply to a material portion of our assets. To the extent this Section 743(b) adjustment is attributable to appreciation in value in excess of the unamortized Book-Tax Disparity, we will apply the rules described in the Treasury Regulations and legislative


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history. If we determine that this position cannot reasonably be taken, we may take a depreciation or amortization position under which all purchasers acquiring units in the same month would receive depreciation or amortization, whether attributable to common basis or a Section 743(b) adjustment, based upon the same applicable rate as if they had purchased a direct interest in our assets. This kind of aggregate approach may result in lower annual depreciation or amortization deductions than would otherwise be allowable to some unitholders. Please read “— Uniformity of Units.” A unitholder’s tax basis for his common units is reduced by his share of our deductions (whether or not such deductions were claimed on an individual’s income tax return) so that any position we take that understates deductions will overstate the common unitholder’s basis in his common units, which may cause the unitholder to understate gain or overstate loss on any sale of such units. Please read “— Disposition of Common Units — Recognition of Gain or Loss.” The IRS may challenge our position with respect to depreciating or amortizing the Section 743(b) adjustment we take to preserve the uniformity of the units. If such a challenge were sustained, the gain from the sale of units might be increased without the benefit of additional deductions.
 
A Section 754 election is advantageous if the transferee’s tax basis in his units is higher than the units’ share of the aggregate tax basis of our assets immediately prior to the transfer. In that case, as a result of the election, the transferee would have, among other items, a greater amount of depreciation deductions and his share of any gain or loss on a sale of our assets would be less. Conversely, a Section 754 election is disadvantageous if the transferee’s tax basis in his units is lower than those units’ share of the aggregate tax basis of our assets immediately prior to the transfer. Thus, the fair market value of the units may be affected either favorably or unfavorably by the election. A basis adjustment is required regardless of whether a Section 754 election is made in the case of a transfer of an interest in us if we have a substantial built-in loss immediately after the transfer, or if we distribute property and have a substantial basis reduction. Generally a basis reduction or a built-in loss is substantial if it exceeds $250,000.
 
The calculations involved in the Section 754 election are complex and will be made on the basis of assumptions as to the value of our assets and other matters. For example, the allocation of the Section 743(b) adjustment among our assets must be made in accordance with the Internal Revenue Code. The IRS could seek to reallocate some or all of any Section 743(b) adjustment we allocated to our tangible assets or the tangible assets owned by the MLP Entities to goodwill instead. Goodwill, as an intangible asset, is generally either non-amortizable or amortizable over a longer period of time or under a less accelerated method than our tangible assets. We cannot assure you that the determinations we make will not be successfully challenged by the IRS and that the deductions resulting from them will not be reduced or disallowed altogether. Should the IRS require a different basis adjustment to be made, and should, in our opinion, the expense of compliance exceed the benefit of the election, we may seek permission from the IRS to revoke our Section 754 election. If permission is granted, a subsequent purchaser of units may be allocated more income than he would have been allocated had the election not been revoked.
 
Tax Treatment of Operations
 
Accounting Method and Taxable Year.  We use the year ending December 31 as our taxable year and the accrual method of accounting for federal income tax purposes. Each unitholder will be required to include in income his share of our income, gain, loss and deduction for our taxable year or years ending within or with his taxable year. In addition, a unitholder who has a taxable year different than our taxable year and who disposes of all of his units following the close of our taxable year but before the close of his taxable year must include his share of our income, gain, loss and deduction in income for his taxable year, with the result that he will be required to include in income for his taxable year his share of more than one year of our income, gain, loss and deduction. Please read “— Disposition of Common Units — Allocations Between Transferors and Transferees.”
 
Tax Basis, Depreciation and Amortization.  We use the tax basis of our and the MLP Entities’ assets for purposes of computing depreciation and cost recovery deductions and, ultimately, gain or loss on the disposition of these assets. The federal income tax burden associated with the difference between the fair market value of our assets and their tax basis immediately prior to the time we issue units in an offering will


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be borne by partners holding interests in us immediately prior to an offering. Please read “— Tax Consequences of Unit Ownership — Allocation of Income, Gain, Loss and Deduction.”
 
To the extent allowable, we may elect to use the depreciation and cost recovery methods that will result in the largest deductions being taken in the early years after assets subject to these allowances are placed in service. Property we subsequently acquire or construct may be depreciated using accelerated methods permitted by the Internal Revenue Code.
 
If we or the MLP Entities dispose of depreciable property by sale, foreclosure, or otherwise, all or a portion of any gain, determined by reference to the amount of depreciation previously deducted and the nature of the property, may be subject to the recapture rules and taxed as ordinary income rather than capital gain. Similarly, a common unitholder who has taken cost recovery or depreciation deductions with respect to property we or the MLP Entities own will likely be required to recapture some, or all, of those deductions as ordinary income upon a sale of his interest in us. Please read “— Tax Consequences of Unit Ownership — Allocation of Income, Gain, Loss and Deduction” and “— Disposition of Common Units — Recognition of Gain or Loss.”
 
The costs incurred in selling our units (called “syndication expenses”) must be capitalized and cannot be deducted currently, ratably or upon our termination. There are uncertainties regarding the classification of costs as organization expenses, which we may amortize, and as syndication expenses, which we may not be able to amortize. The underwriting discounts and commissions we incur will be treated as syndication expenses.
 
Valuation and Tax Basis of Our Properties.  The federal income tax consequences of the ownership and disposition of units will depend in part on our estimates of the relative fair market values, and the tax bases, of our assets and the MLP Entities’ assets. Although we may from time to time consult with professional appraisers regarding valuation matters, we will make many of the relative fair market value estimates ourselves. These estimates and determinations of basis are subject to challenge and will not be binding on the IRS or the courts. If the estimates of fair market value or basis are later found to be incorrect, the character and amount of items of income, gain, loss or deductions previously reported by unitholders might change, and unitholders might be required to adjust their tax liability for prior years and incur interest and penalties with respect to those adjustments.
 
Disposition of Common Units
 
Recognition of Gain or Loss.  Gain or loss will be recognized on a sale of units equal to the difference between the unitholder’s amount realized and the unitholder’s tax basis for the units sold. A unitholder’s amount realized will be measured by the sum of the cash or the fair market value of other property received by him plus his share of our nonrecourse liabilities attributable to the common units sold. Because the amount realized includes a unitholder’s share of our nonrecourse liabilities, the gain recognized on the sale of units could result in a tax liability in excess of any cash received from the sale.
 
Prior distributions from us in excess of cumulative net taxable income for a common unit that decreased a unitholder’s tax basis in that common unit will, in effect, become taxable income if the common unit is sold at a price greater than the unitholder’s tax basis in that common unit, even if the price received is less than his original cost.
 
Except as noted below, gain or loss recognized by a unitholder, other than a “dealer” in units, on the sale or exchange of a unit will generally be taxable as capital gain or loss. Capital gain recognized by an individual on the sale of units held more than 12 months will generally be taxed at a maximum U.S. federal income tax rate of 15% through December 31, 2010 and 20% thereafter (absent legislation extending or adjusting the current rate). However, a portion, which will likely be substantial, of this gain or loss will be separately computed and taxed as ordinary income or loss under Section 751 of the Internal Revenue Code to the extent attributable to assets giving rise to depreciation recapture or other “unrealized receivables” or to “inventory items” we or the MLP Entities own. The term “unrealized receivables” includes potential recapture items, including depreciation recapture. Ordinary income attributable to unrealized receivables, inventory items and depreciation recapture may exceed net taxable gain realized on the sale of a unit and may be recognized


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even if there is a net taxable loss realized on the sale of a unit. Thus, a unitholder may recognize both ordinary income and a capital loss upon a sale of units. Net capital losses may offset capital gains and no more than $3,000 of ordinary income each year in the case of individuals and may only be used to offset capital gains in the case of corporations.
 
The IRS has ruled that a partner who acquires interests in a partnership in separate transactions must combine those interests and maintain a single adjusted tax basis for all those interests. Upon a sale or other disposition of less than all of those interests, a portion of that tax basis must be allocated to the interests sold using an “equitable apportionment” method, which generally means that the tax basis allocated to the interest sold equals an amount that bears the same relation to the partner’s tax basis in his entire interest in the partnership as the value of the interest sold bears to the value of the partner’s entire interest in the partnership. Treasury Regulations under Section 1223 of the Internal Revenue Code allow a selling unitholder who can identify common units transferred with an ascertainable holding period to elect to use the actual holding period of the common units transferred. Thus, according to the ruling discussed above, a common unitholder will be unable to select high or low basis common units to sell as would be the case with corporate stock, but, according to the Treasury Regulations, may designate specific common units sold for purposes of determining the holding period of units transferred. A unitholder electing to use the actual holding period of common units transferred must consistently use that identification method for all subsequent sales or exchanges of common units. A unitholder considering the purchase of additional units or a sale of common units purchased in separate transactions is urged to consult his tax advisor as to the possible consequences of this ruling and application of the Treasury Regulations.
 
Specific provisions of the Internal Revenue Code affect the taxation of some financial products and securities, including partnership interests, by treating a taxpayer as having sold an “appreciated” partnership interest, one in which gain would be recognized if it were sold, assigned or terminated at its fair market value, if the taxpayer or related persons enter(s) into:
 
  •  a short sale;
 
  •  an offsetting notional principal contract; or
 
  •  a futures or forward contract with respect to the partnership interest or substantially identical property.
 
Moreover, if a taxpayer has previously entered into a short sale, an offsetting notional principal contract or a futures or forward contract with respect to the partnership interest, the taxpayer will be treated as having sold that position if the taxpayer or a related person then acquires the partnership interest or substantially identical property. The Secretary of the Treasury is also authorized to issue regulations that treat a taxpayer that enters into transactions or positions that have substantially the same effect as the preceding transactions as having constructively sold the financial position.
 
Allocations Between Transferors and Transferees.  In general, our taxable income or loss will be determined annually, will be prorated on a monthly basis and will be subsequently apportioned among the unitholders in proportion to the number of units owned by each of them as of the opening of the applicable exchange on the first business day of the month, which we refer to in this prospectus as the “Allocation Date.” However, gain or loss realized on a sale or other disposition of our assets other than in the ordinary course of business will be allocated among the unitholders on the Allocation Date in the month in which that gain or loss is recognized. As a result, a unitholder transferring units may be allocated income, gain, loss and deduction realized after the date of transfer.
 
Although simplifying conventions are contemplated by the Internal Revenue Code and most publicly traded partnerships use similar simplifying conventions, the use of this method may not be permitted under existing Treasury Regulations. Recently, the Department of the Treasury and the IRS issued proposed Treasury Regulations that provide a safe harbor pursuant to which a publicly traded partnership may use a similar monthly simplifying convention to allocate tax items among transferor and transferee unitholders, although such tax items must be prorated on a daily basis. Existing publicly traded partnerships are entitled to rely on these proposed Treasury Regulations; however, they are not binding on the IRS and are subject to change until final Treasury Regulations are issued. Accordingly, Andrews Kurth LLP is unable to opine on the validity of this method of allocating income and deductions between transferor and transferee unitholders. If this method


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is not allowed under the Treasury Regulations, or only applies to transfers of less than all of the unitholder’s interest, our taxable income or losses might be reallocated among the unitholders. We are authorized to revise our method of allocation between transferor and transferee unitholders, as well as unitholders whose interests vary during a taxable year, to conform to a method permitted under future Treasury Regulations.
 
A unitholder who owns units at any time during a quarter and who disposes of them prior to the record date set for a cash distribution for that quarter will be allocated items of our income, gain, loss and deductions attributable to that quarter but will not be entitled to receive that cash distribution.
 
Notification Requirements.  A unitholder who sells any of his units, other than through a broker, generally is required to notify us in writing of that sale within 30 days after the sale (or, if earlier, January 15 of the year following the sale). A purchaser of units who purchases units from another unitholder is also generally required to notify us in writing of that purchase within 30 days after the purchase. Upon receiving such notification, we are required to notify the IRS of that transaction and to furnish specified information to the transferor and transferee. Failure to notify us of a transfer of units may, in some cases, lead to the imposition of penalties. However, these reporting requirements do not apply to a sale by an individual who is a citizen of the U.S. and who effects the sale or exchange through a broker who will satisfy such requirements.
 
Constructive Termination.  We will be considered to have been terminated for tax purposes if there are sales or exchanges which, in the aggregate, constitute 50% or more of the total interests in our capital and profits within a 12-month period. A constructive termination results in the closing of our taxable year for all unitholders. In the case of a unitholder reporting on a taxable year different from our taxable year, the closing of our taxable year may result in more than 12 months of our taxable income or loss being includable in his taxable income for the year of termination. A constructive termination occurring on a date other than December 31 will result in us filing two tax returns (and unitholders could receive two Schedules K-1) for one fiscal year and the cost of the preparation of these returns will be borne by all common unitholders. We would be required to make new tax elections after a termination, including a new election under Section 754 of the Internal Revenue Code, and a termination would result in a deferral of our deductions for depreciation. A termination could also result in penalties if we were unable to determine that the termination had occurred. Moreover, a termination might either accelerate the application of, or subject us to, any tax legislation enacted before the termination. The IRS has recently announced a relief procedure whereby if a publicly traded partnership that has technically terminated requests and is granted relief from the IRS, among other things, the partnership will only have to provide one Schedule K-1 to unitholders for the fiscal year notwithstanding that two partnership tax years result from the termination.
 
Uniformity of Units
 
Because we cannot match transferors and transferees of units, we must maintain uniformity of the economic and tax characteristics of the units to a purchaser of these units. In the absence of uniformity, we may be unable to completely comply with a number of federal income tax requirements, both statutory and regulatory. A lack of uniformity can result from a literal application of Treasury Regulation Section 1.167(c)-1(a)(6). Any non-uniformity could have a negative impact on the value of the units. Please read “— Tax Consequences of Unit Ownership — Section 754 Election.”
 
We intend to depreciate the portion of a Section 743(b) adjustment attributable to unrealized appreciation in the value of Contributed Property, to the extent of any unamortized Book-Tax Disparity, using a rate of depreciation or amortization derived from the depreciation or amortization method and useful life applied to the unamortized Book-Tax Disparity of that property, or treat that portion as nonamortizable, to the extent attributable to property which is not amortizable, consistent with the Treasury Regulations under Section 743 of the Internal Revenue Code, even though that position may be inconsistent with Treasury Regulation Section 1.167(c)-1(a)(6). Please read “— Tax Consequences of Unit Ownership — Section 754 Election.” To the extent that the Section 743(b) adjustment is attributable to appreciation in value in excess of the unamortized Book-Tax Disparity, we will apply the rules described in the Treasury Regulations and legislative history. If we determine that this position cannot reasonably be taken, we may adopt a depreciation and


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amortization position under which all purchasers acquiring units in the same month would receive depreciation and amortization deductions, whether attributable to a common basis or Section 743(b) adjustment, based upon the same applicable methods and lives as if they had purchased a direct interest in our property. If this position is adopted, it may result in lower annual depreciation and amortization deductions than would otherwise be allowable to some unitholders and risk the loss of depreciation and amortization deductions not taken in the year that these deductions are otherwise allowable. This position will not be adopted if we determine that the loss of depreciation and amortization deductions will have a material adverse effect on the unitholders. If we choose not to utilize this aggregate method, we may use any other reasonable depreciation and amortization method to preserve the uniformity of the intrinsic tax characteristics of any units that would not have a material adverse effect on the unitholders. Our counsel, Andrews Kurth LLP, is unable to opine on the validity of any of these positions. The IRS may challenge any method of depreciating the Section 743(b) adjustment described in this paragraph. If this challenge were sustained, the uniformity of units might be affected, and the gain from the sale of units might be increased without the benefit of additional deductions. We do not believe these allocations will affect any material items of income, gain, loss or deduction. Please read “— Disposition of Common Units — Recognition of Gain or Loss.”
 
Tax-Exempt Organizations and Other Investors
 
Ownership of units by employee benefit plans, other tax-exempt organizations, regulated investment companies, non-resident aliens, foreign corporations, and other foreign persons raises issues unique to those investors and, as described below, may have substantially adverse tax consequences to them.
 
Employee benefit plans and most other organizations exempt from federal income tax, including individual retirement accounts and other retirement plans, are subject to federal income tax on unrelated business taxable income. Virtually all of our income allocated to a unitholder that is a tax-exempt organization will be unrelated business taxable income and will be taxable to them.
 
A regulated investment company or “mutual fund” is required to derive 90% or more of its gross income from certain permitted sources. The American Jobs Creation Act of 2004 generally treats net income from the ownership of publicly traded partnerships as derived from such a permitted source. We anticipate that all of our net income will be treated as derived from such a permitted source.
 
Non-resident aliens and foreign corporations, trusts or estates that own units will be considered to be engaged in business in the United States because of the ownership of units. As a consequence they will be required to file federal tax returns to report their share of our income, gain, loss or deduction and pay federal income tax at regular rates on their share of our net income or gain. Moreover, under rules applicable to publicly traded partnerships, we will withhold tax at the highest applicable effective tax rate from cash distributions made quarterly to foreign unitholders. Each foreign unitholder must obtain a taxpayer identification number from the IRS and submit that number to our transfer agent on a Form W-8 BEN or applicable substitute form in order to obtain credit for these withholding taxes. A change in applicable law may require us to change these procedures.
 
In addition, because a foreign corporation that owns units will be treated as engaged in a United States trade or business, that corporation may be subject to the United States branch profits