EXHIBIT 3.6
NRP (GP) LP
A Delaware Limited Partnership
FORM OF
FIRST AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
July ____, 2002
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.............................................................................................1
ARTICLE II ORGANIZATION...........................................................................................8
2.1 Formation of Limited Partnership......................................................................8
2.2 Name of Partnership...................................................................................8
2.3 Principal Office; Registered Office...................................................................9
2.4 Term of Partnership...................................................................................9
2.5 Purpose of Partnership................................................................................9
2.6 Actions by Partnership................................................................................9
2.7 Reliance by Third Parties.............................................................................9
ARTICLE III CAPITAL...............................................................................................9
3.1 Capital Contributions.................................................................................9
3.2 Additional Capital Contributions.....................................................................10
3.3 Loans................................................................................................10
3.4 Maintenance of Capital Accounts......................................................................10
3.5 Capital Withdrawal Rights, Interest and Priority.....................................................11
ARTICLE IV DISTRIBUTIONS.........................................................................................12
4.1 Distributions of Available Cash......................................................................12
4.2 Persons Entitled to Distributions....................................................................12
4.3 Limitations on Distributions.........................................................................12
ARTICLE V ALLOCATIONS............................................................................................12
5.1 Profits..............................................................................................12
5.2 Losses...............................................................................................12
5.3 Regulatory Allocations...............................................................................13
5.4 Tax Allocations: Code Section 704(c).................................................................14
5.5 Change in Partnership Percentage.....................................................................15
5.6 Withholding..........................................................................................15
ARTICLE VI MANAGEMENT............................................................................................16
6.1 Duties and Powers of the General Partner.............................................................16
6.2 No Liability to Limited Partners.....................................................................16
6.3 Indemnification of General Partner...................................................................17
6.4 Rights of Limited Partners...........................................................................17
ARTICLE VII TRANSFERS OF PARTNERSHIP INTERESTS...................................................................17
7.1 Transfer of Limited Partnership Interests............................................................17
7.2 Permitted Transferees................................................................................18
7.3 Substitute Limited Partners..........................................................................19
7.4 Effect of Admission as a Substitute Limited Partner..................................................20
7.5 Consent..............................................................................................20
7.6 Additional Limited Partners..........................................................................20
7.7 Right of First Refusal...............................................................................20
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ARTICLE VIII DISSOLUTION AND LIQUIDATION.........................................................................21
8.1 Dissolution of Partnership...........................................................................21
8.2 Final Accounting.....................................................................................22
8.3 Distributions Following Dissolution and Termination..................................................22
8.4 Termination of the Partnership.......................................................................23
8.5 No Action for Dissolution............................................................................24
ARTICLE IX ACCOUNTING; BOOKS AND RECORDS.........................................................................24
9.1 Fiscal Year and Accounting Method....................................................................24
9.2 Books and Records....................................................................................24
9.3 Delivery to Partners; Inspection.....................................................................25
9.4 Financial Statements.................................................................................25
9.5 Filings..............................................................................................25
9.6 Non-Disclosure.......................................................................................25
ARTICLE X MISCELLANEOUS..........................................................................................26
10.1 Waiver of Default....................................................................................26
10.2 Amendment of Partnership Agreement...................................................................26
10.3 Notices to Tax Matters Partners......................................................................26
10.4 No Third Party Rights................................................................................27
10.5 Severability.........................................................................................27
10.6 Nature of Interest in the Partnership................................................................27
10.7 Binding Agreement....................................................................................27
10.8 Headings.............................................................................................27
10.9 Word Meanings........................................................................................27
10.10 Counterparts......................................................................................27
10.11 Entire Agreement..................................................................................27
10.12 Partition.........................................................................................28
10.13 Governing Law; Consent to Jurisdiction and Venue..................................................28
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FIRST AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
NRP (GP) LP
THIS FIRST AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT (this
"AGREEMENT") of NRP (GP) LP, a
Delaware limited partnership (the "PARTNERSHIP"),
is made and entered into as of this ____ day of July, 2002 by and among GP
Natural Resource Partners LLC, a
Delaware limited liability company, as the
general partner, and the Persons listed as limited partners in Schedule I hereto
(the "LIMITED PARTNERS").
This Agreement amends and restates in its entirety the original
Limited
Partnership Agreement dated as of April 9, 2002 between the General Partner, New
Gauley, Western Pocahontas, Great Northern and Ark Land (the "Original
Limited
Partnership Agreement").
ARTICLE I
DEFINITIONS
For purposes of this Agreement:
"ACCEPTANCE NOTICE" is defined in Section 7.8(b).
"ACT" means the
Delaware Revised Uniform Limited Partnership Act, as
amended from time to time.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to a Partner,
the deficit balance, if any, in such Partner's Capital Account as of the end of
the relevant Taxable Year, after giving effect to the following adjustments:
(a) Credit to such Capital Account any amounts which such
Partner is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to restore pursuant to
Regulation Sections 1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) and
1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in
Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5),
and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Regulations Sections
1.704(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"AFFILIATE" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person. For the purposes of this definition, "control" when used with respect to
any Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"AGREEMENT" means this Amended and Restated
Limited Partnership
Agreement, as amended from time to time in accordance with its terms.
"ARCH COAL" means Arch Coal, Inc., a
Delaware corporation.
"ARK LAND" means Ark Land Company, a
Delaware corporation.
"AVAILABLE CASH" means, with respect to a fiscal quarter, all cash and
cash equivalents of the Partnership at the end of such quarter less the amount
of cash reserves that is necessary or appropriate in the reasonable discretion
of the General Partner to (a) provide for the proper conduct of the business of
the Partnership (including reserves for future capital expenditures and for
anticipated future credit needs of the Partnership) subsequent to such quarter
or (b) comply with applicable law or any loan agreement, security agreement,
mortgage, debt instrument or other agreement or obligation to which the
Partnership is a party or by which it is bound or its assets or Property is
subject; provided, however, that disbursements made by the Master Limited
Partnership to the Partnership or cash reserves established, increased or
reduced after the expiration of such quarter but on or before the date of
determination of Available Cash with respect to such quarter shall be deemed to
have been made, established, increased or reduced, for purposes of determining
Available Cash, during such quarter if the General Partner so determines in its
reasonable discretion.
"BUSINESS DAY" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States of
America or the State of Texas shall not be regarded as a Business Day.
"CAPITAL ACCOUNT" means, with respect to any Partner, a separate
account established by the Partnership and maintained for each Partner in
accordance with Section 3.4 hereof.
"CAPITAL CONTRIBUTION" means, with respect to any Partner, the amount
of money and the initial Gross Asset Value of any Property (other than money)
contributed to the Partnership by such Partner with respect to its Partnership
Interest pursuant to the terms of this Agreement. Any reference in this
Agreement to the Capital Contribution of a Partner shall include a Capital
Contribution of its predecessors in interest.
"CERTIFICATE" means the Certificate of Limited Partnership of the
Partnership filed with the Secretary of State of
Delaware, as amended or
restated from time to time.
"CODE" means the United States Internal Revenue Code of 1986, as
amended.
"DEPRECIATION" means, for each Taxable Year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such Taxable Year, except that if the
Gross Asset Value of an asset differs from its adjusted basis for federal income
tax purposes at the beginning of such Taxable Year, Depreciation shall be an
amount which bears the same ratio to such beginning Gross Asset Value as the
federal income tax depreciation, amortization or other cost recovery deduction
for such Taxable Year bears to
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such beginning adjusted tax basis; provided, however, that if the adjusted basis
for federal income tax purposes of an asset at the beginning of such Taxable
Year is zero, Depreciation shall be determined with reference to such beginning
Gross Asset Value using any reasonable method selected by the General Partner.
"ECONOMIC RISK OF LOSS" shall have the meaning set forth in Regulation
Section 1.752-2(a).
"ENCUMBRANCE" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, any defect or imperfection in title, preferential
arrangement or restriction, right to purchase, right of first refusal or other
burden or encumbrance of any kind, other than those imposed by this Agreement.
"FIRST REFUSAL NOTICE" is defined in Section 7.8(a).
"GENERAL PARTNER" means GP Natural Resource Partners LLC, a
Delaware
limited liability company, any successor thereto, and any Persons hereafter
admitted as additional general partners, each in its capacity as a general
partner of the Partnership.
"GREAT NORTHERN" means Great Northern Properties Limited Partnership, a
Delaware limited partnership.
"GROSS ASSET VALUE" means with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows and as
otherwise provided in Section 3.2(b):
(a) The initial Gross Asset Value of any asset contributed by
a Partner to the Partnership shall be the gross fair market value of
such asset, as reasonably determined by the General Partner; in a
manner that is consistent with Section 7701(g) of the Code, provided,
however, that the initial Gross Asset Values of the assets contributed
to the Partnership pursuant to Section 3.1 hereof shall be as set forth
in such section or the schedule referred to therein;
(b) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values, as
reasonably determined by the General Partner, in a manner that is
consistent with section 7701(g) of the Code, as of the following times:
(i) the acquisition of an additional interest in the Partnership by any
new or existing Partner in exchange for more than a de minimis Capital
Contribution; (ii) the distribution by the Partnership to a Partner of
more than a de minimis amount of Partnership property other than money
as consideration for an interest in the Partnership; and (iii) the
liquidation of the Partnership within the meaning of Regulation Section
1.704-1(b)(2)(ii)(g); provided, however, that adjustments pursuant to
clauses (i) and (ii) above shall be made only if the Tax Matters
Partner reasonably determines that such adjustments are necessary or
appropriate to reflect the relative economic interests of the Partners
in the Partnership;
(c) The Gross Asset Value of any Partnership assets
distributed to any Partner shall be adjusted to equal the gross fair
market value of such asset on the date of
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distribution as reasonably determined by the General Partner, in a
manner that is consistent with Section 7701(g) of the Code; and
(d) The Gross Asset Values of any Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Section 734(b) or the Code or Section
743(b) of the Code, but only to the extent that such adjustments are
taken into account in determining Capital Accounts pursuant to
Regulation Section 1.704-1(b)(2)(iv)(m) and clause (f) of the
definition of Profits and Losses, provided, however, that Gross Asset
Values shall not be adjusted pursuant to this subparagraph (d) to the
extent the Tax Matters Partner determines that an adjustment pursuant
to the foregoing subparagraph (b) of this definition is necessary or
appropriate in connection with a transaction that would otherwise
result in an adjustment pursuant to this subparagraph (d).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to subparagraphs (a), (b), or (d), such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect to
such asset, for purposes of computing Profits and Losses.
"INCENTIVE DISTRIBUTION RIGHTS" means the incentive distribution rights
issued by the Master Limited Partnership.
"LIMITED PARTNER" means any Person admitted to the Partnership as a
Limited Partner and who is shown as such on the books and records of the
Partnership.
"LIMITED PARTNERSHIP INTEREST" means, a limited partnership interest in
the Partnership, which refers to all of a limited partner's rights and interests
in the Partnership in such Person's capacity as a limited partner thereof, all
as provided in the Partnership Agreement and the Act.
"LIQUIDATING TRUSTEE" is defined in Section 8.3(a).
"LLC AGREEMENT" means the Second Amended and Restated Agreement Limited
Liability Company Agreement of the General Partner, dated as of the date hereof,
by and among Xxxxxxxxx Coal Management LLC and Ark Land, as the initial members,
and any other Persons who become members in the General Partner as provided
therein, as amended from time to time in accordance with the terms thereof.
"LOSSES" is defined in the definition of "Profits" and "Losses".
"MASTER LIMITED PARTNERSHIP" means Natural Resource Partners L.P., and
any successor thereto.
"MASTER
LIMITED PARTNERSHIP AGREEMENT" means the First Amended and
Restated Agreement of Limited Partnership of the Master Limited Partnership,
dated as of July ___, 2002, as amended, modified, supplemented or restated from
time to time in accordance with the terms thereof.
"MEMBER" means a record holder of a Membership Interest.
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"MEMBERSHIP INTEREST" means a member's limited liability company
interest in the General Partner, which refers to all of a member's rights and
interests in the General Partner in such Person's capacity as a member thereof,
all as provided in the LLC Agreement and the
Delaware Limited Liability Company
Act.
"MEMBERSHIP TRANSFER" is defined in Section 7.1(b).
"MINIMUM GAIN" shall have the meaning assigned to that term in
Regulation Section 1.704-2(d).
"NEW GAULEY" shall mean New Gauley Coal Corporation, a West Virginia
corporation.
"NONRECOURSE DEDUCTIONS" shall have the meaning assigned to that term
in Regulation Section 1.704-2(b)(1).
"NONRECOURSE LIABILITY" shall have the meaning assigned to that term in
Regulation Section 1.752-1(a)(2).
"NON-SELLING PARTNER" is defined in Section 7.8(b).
"NOTICE" means a writing, containing the information required by this
Agreement to be communicated to a party, and shall be deemed to have been
received (a) when personally delivered or sent by telecopy, (b) one day
following delivery by overnight delivery courier with all delivery charges
pre-paid, or (c) on the third Business Day following the date on which it was
sent by United States mail postage prepaid, to such party at the address or fax
number, as the case may be, of such party as shown on the records of the
Partnership.
"OFFER" is defined in Section 7.8(a).
"OFFEROR" is defined in Section 7.8(a).
"OMNIBUS AGREEMENT" is defined in the MLP Partnership Agreement.
"OPTIONED INTEREST" is defined in Section 7.8(a).
"ORIGINAL
LIMITED PARTNERSHIP AGREEMENT" is defined in the preamble
hereof.
"PARTNER" means the General Partner or any of the Limited Partners, and
"Partners" means the General Partner and all of the Limited Partners.
"PARTNER NONRECOURSE DEBT" shall have the meaning assigned to the term
"partner nonrecourse debt" in Regulation Section 1.704-2(b)(4).
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" shall have the meaning assigned
to the term "partner nonrecourse debt minimum gain" set forth in Regulation
Section 1.704-2(i)(2).
"PARTNER NONRECOURSE DEDUCTIONS" shall have the meaning assigned to the
term "partner nonrecourse deduction" in Regulation Section 1.704-2(i)(1).
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"PARTNERSHIP" is defined in the preamble hereof.
"PARTNERSHIP INTEREST" means a Partner's limited partnership or general
partnership interest in the Partnership which refers to all of a Partner's
rights and interests in the Partnership in such Partner's capacity as a Partner,
all as provided in this Agreement and the Act.
"PARTNERSHIP PERCENTAGE" of a Partner means the aggregate percentage of
Partnership Interests of such Partner set forth in Schedule I hereto, as the
same may be modified from time to time as provided herein.
"PERMITTED TRANSFER" shall mean:
(a) a Transfer of all of a Partnership Interest by any Partner
who is a natural person to (i) such Partner's spouse, children
(including legally adopted children and stepchildren), spouses of
children or grandchildren or spouses of grandchildren, (ii) a trust for
the benefit of the Partner and/or any of the Persons described in
clause (i), or (iii) a limited partnership or limited liability company
whose sole partners or members, as the case may be, are the Partner and
or any of the Persons described in clause (i) or clause (ii); provided,
that in any of clauses (i), (ii), or (iii), the Partner transferring
such Partnership Interest retains exclusive power to exercise all
rights under this Agreement;
(b) a Transfer of all of a Partnership Interest by any Partner
to the Partnership;
(c) a Transfer of all of a Partnership Interest by a Partner
to any Affiliate of such Partner; provided, however, that such transfer
shall be a Permitted Transfer only so long as such Partnership Interest
is held by such Affiliate or is otherwise transferred in another
Permitted Transfer.
Provided, however, that no Permitted Transfer shall be effective unless
and until the transferee of the Partnership Interest so transferred complies
with Section 7.1(b). Except in the case of a Permitted Transfer pursuant to
clause (b) above, from and after the date on which a Permitted Transfer becomes
effective, the Permitted Transferee of the Partnership Interest so transferred
shall have the same rights, and shall be bound by the same obligations, under
this Agreement as the transferor of such Partnership Interest, or portion
thereof, and shall be deemed for all purposes hereunder a Partner and such
Permitted Transferee shall, as a condition to such Transfer, agree in writing to
be bound by the terms of this Agreement. No Permitted Transfer shall conflict
with or result in any violation of any judgment, order, decree, statute, law,
ordinance, rule or regulation or require the Partnership, if not currently
subject, to become subject, or if currently subject, to become subject to a
greater extent, to any statute, law, ordinance, rule or regulation, excluding
matters of a ministerial nature that are not materially burdensome to the
Partnership.
"PERMITTED TRANSFEREE" shall mean any Person who shall have acquired
and who shall hold a Partnership Interest pursuant to a Permitted Transfer.
"PERSON" means any individual, partnership, corporation, limited
liability company, trust, incorporated or unincorporated organization or other
legal entity of any kind.
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"PROFITS" and "LOSSES" means, for each Taxable Year, an amount equal to
the Partnership's net taxable income or loss for a taxable year, determined in
accordance with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in computing such taxable income
or loss), with the following adjustments (without duplication):
(a) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Profits or
Losses shall be added to such taxable income or loss;
(b) Any expenditures of the Partnership described in Section
705(a)(2)(B) of the Code or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Regulation Section l.704-1(b)(2)(iv)(i), and
not otherwise taken into account in computing Profits or Losses, shall
be subtracted from such taxable income or loss;
(c) In the event the Gross Asset Value of any Partnership
asset is adjusted pursuant to subparagraphs (b) or (c) of the
definition of Gross Asset Value the amount of such adjustment shall be
treated as an item of gain (if the adjustment increases the Gross Asset
Value of the asset) or an item of loss (if the adjustment decreases the
Gross Asset Value of the asset) from the disposition of such asset and
shall be taken into account for purposes of computing Profits or
Losses;
(d) Gain or loss resulting from any disposition of Property
(other than money) with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the Gross
Asset Value of the Property disposed of, notwithstanding that the
adjusted tax basis of such Property differs from its Gross Asset Value;
(e) In lieu of the depreciation amortization, and other cost
recovery deductions taken into account in computing such taxable income
or loss there shall be taken into account Depreciation for such Taxable
Year computed in accordance with the definition of Depreciation;
(f) To the extent an adjustment to the adjusted tax basis of
any Partnership asset pursuant to Code Section 734(b) or Code Section
743(b) is required, pursuant to Regulation Sections
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital
Accounts as a result of a distribution other than in liquidation of a
Partner's interest in the Partnership, the amount of such adjustment
shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis)
from the disposition of such asset and shall be taken into account for
purposes of computing Profits or Losses; and
(g) Any items that are allocated pursuant to the Regulatory
Allocations shall not be taken into account in computing Profits and
Losses. The amounts of the items of Partnership income, gain, loss or
deduction available to be allocated pursuant to the Regulatory
Allocations shall be determined by applying rules analogous to those
set forth in clauses (a) through (f) hereof.
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"PROPERTY" means all assets, real or intangible, that the Partnership
may own or otherwise have an interest in from time to time.
"REGULATIONS" means the regulations, including temporary regulations
promulgated by the United States Department of Treasury with respect to the
Code, as such regulations are amended from time to time or corresponding
provisions of future regulations.
"REGULATORY ALLOCATIONS" is defined in Section 5.3(g).
"SELLING PARTNER" is defined in Section 7.8(a).
"SPLS" means the special limited partnership interests in the Master
Limited Partnership to be contributed to the Partnership by the Limited
Partners.
"TAXABLE YEAR" means the calendar year.
"TAX MATTERS PARTNER" is defined in Section 6.1(c).
"TRANSFER" or "TRANSFERRED" means to give, sell, exchange, assign,
transfer, pledge, hypothecate, bequeath, devise or otherwise dispose of or
encumber, voluntarily or involuntarily, by operation of law or otherwise. When
referring to a Partnership Interest, "Transfer" shall mean the Transfer of such
Partnership Interest whether of record, beneficially, by participation or
otherwise.
"WESTERN POCAHONTAS" shall mean Western Pocahontas Properties Limited
Partnership, a Delaware limited partnership.
"WPP GROUP" shall mean collectively Western Pocahontas, Great Northern
and New Gauley.
ARTICLE II
ORGANIZATION
2.1 FORMATION OF LIMITED PARTNERSHIP
The Partners have previously formed the Partnership as a limited
partnership pursuant to the provisions of the Act, and the parties hereto hereby
agree to amend and restate the Original
Limited Partnership Agreement. The
parties hereto acknowledge that they intend that the Partnership be taxed as a
partnership and not as an association taxable as a corporation for federal
income tax purposes. No election may be made to treat the Partnership as other
than a partnership for federal income tax purposes.
2.2 NAME OF PARTNERSHIP
The name of the Partnership is NRP (GP) LP, or such other name as the
General Partner may hereafter adopt from time to time. The General Partner shall
execute and file in the proper offices such certificates as may be required by
any assumed name act or similar law in effect in the jurisdictions in which the
Partnership may elect to conduct business.
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2.3 PRINCIPAL OFFICE; REGISTERED OFFICE
The principal office address of the Partnership is located at 000
Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, or such other place as the
General Partner designates from time to time. The registered office address and
the name of the registered agent of the Partnership for service of process on
the Partnership in the State of Delaware is as stated in the Certificate or as
designated from time to time by the General Partner.
2.4 TERM OF PARTNERSHIP
The term of the Partnership commenced on April 9, 2002, and shall
continue until dissolved pursuant to Section 8.1 hereof. The legal existence of
the Partnership as a separate legal entity continues until the cancellation of
the Certificate.
2.5 PURPOSE OF PARTNERSHIP
The Partnership is formed for the object and purpose of, and the nature
of the business to be conducted and promoted by the Partnership is, (a) acting
as the general partner of the Master Limited Partnership pursuant to the Master
Limited Partnership Agreement, (b) holding the general partner interest in the
Master Limited Partnership and a portion of the Incentive Distribution Rights
and (c) engaging in any and all activities necessary or incidental to the
foregoing.
2.6 ACTIONS BY PARTNERSHIP
The Partnership may execute, deliver and perform all contracts,
agreements and other undertakings and engage in all activities and transactions
as may in the opinion of the General Partner be necessary or advisable to carry
out its objects.
2.7 RELIANCE BY THIRD PARTIES
Persons dealing with the Partnership are entitled to rely conclusively
upon the power and authority of the General Partner as herein set forth.
ARTICLE III
CAPITAL
3.1 CAPITAL CONTRIBUTIONS
(a) On or before the date of this Agreement, each Partner agrees to
make, or shall have made, a Capital Contribution consisting of cash or property
as set forth opposite such Partner's name on Schedule I hereto.
(b) Each Partner agrees to make Capital Contributions in proportion to
such Partner's Partnership Percentage for equity issuances by the Master Limited
Partnership pursuant to Section 5.2(b) of the Master Limited Partnership
Agreement.
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3.2 ADDITIONAL CAPITAL CONTRIBUTIONS
(a) No Partner shall be required to make any additional Capital
Contribution other than as required under Section 3.1.
(b) The Partnership may offer additional Partnership Interests to any
Person with the approval of the General Partner. If any additional Capital
Contributions are made by Partners but not in proportion to their respective
Percentage Interests, the Percentage Interest of each Partner shall be adjusted
such that each Partner's revised Percentage Interest determined immediately
following each such additional Capital Contribution shall be equal to a fraction
(i) the numerator of which is the sum of (A) the positive Capital Account
balance of the Partner determined immediately preceding the date such additional
Capital Contribution is made (such Capital Account to be computed by adjusting
the book value for Capital Account purposes of each Partnership asset to equal
its Gross Asset Value as of such date, as provided in subparagraph (b) of the
definition herein of "Gross Asset Value"), and (B) such additional Capital
Contribution, if any, made by such Partner, and (ii) the denominator of which is
the sum of the positive Capital Account balances immediately preceding the date
such additional Capital Contribution is made plus additional Capital
Contributions of all Partners on the date of such additional Capital
Contribution, including Capital Contributions of any new Partners (in each case
calculated as provided in (i) above). The names, addresses and Capital
Contributions of the Partners shall be reflected in the books and records of the
Partnership.
3.3 LOANS
(a) No Partner shall be obligated to loan funds to the Partnership.
Loans by a Partner to the Partnership shall not be considered Capital
Contributions. The amount of any such loan shall be a debt of the Partnership
owed to such Partner in accordance with the terms and conditions upon which such
loan is made.
(b) A Partner may (but shall not be obligated to) guarantee a loan made
to the Partnership. If a Partner guarantees a loan made to the Partnership and
is required to make payment pursuant to such guarantee to the maker of the loan,
then the amounts so paid to the maker of the loan shall be treated as a loan by
such Partner to the Partnership and not as an additional Capital Contribution.
3.4 MAINTENANCE OF CAPITAL ACCOUNTS
(a) The Partnership shall maintain for each Partner a separate Capital
Account with respect to the Partnership Interest owned by such Partner in
accordance with the following provisions:
(i) To each Partner's Capital Account there shall be credited
(A) such Partner's Capital Contributions, (B) such Partner's share of
Profits and any items in the nature of income or gain which are
allocated to such Partner pursuant to the Regulatory Allocations and
(C) the amount of any Partnership liabilities assumed by such Partner
or which are secured by any Property distributed to such Partner. The
principal amount of a promissory note which is not readily traded on an
established securities market and which is contributed to the
Partnership by the maker of the note (or a Partner related to the
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maker of the note within the meaning of Regulation Section
1.704-1(b)(2)(ii)(c)) shall not be included in the Capital Account of
any Partner until the Partnership makes a taxable disposition of the
note or until (and only to the extent) principal payments are made on
the note, all in accordance with Regulation Section
1.704-1(b)(2)(iv)(d)(2);
(ii) To each Partner's Capital Account there shall be debited
(A) the amount of money and the Gross Asset Value of any Property
distributed or treated as an advance distribution to such Partner
pursuant to any provision of this Agreement (including without
limitation any distributions pursuant to Section 4.1), (B) such
Partner's share of Losses and any items in the nature of deduction or
loss which are allocated to such Partner pursuant to the Regulatory
Allocations and (C) the amount of any liabilities of such Partner
assumed by the Partnership or which are secured by any Property
contributed by such Partner to the Partnership:
(iii) In the event Partnership Interests are Transferred in
accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent such
Capital Account relates to the Transferred Partnership Interests; and
(iv) In determining the amount of any liability for purposes
of Sections 3.4(a)(i) and (ii) there shall be taken into account Code
Section 752(c) and any other applicable provisions of the Code and
Regulations.
(b) The foregoing Section 3.4(a) and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Regulation Section 1.704-1(b) and, to the greatest extent practicable,
shall be interpreted and applied in a manner consistent with such Regulation.
The General Partner in its discretion and to the extent otherwise consistent
with the terms of this Agreement shall (i) make any adjustments that are
necessary or appropriate to maintain equality between the Capital Accounts of
the Partners and the amount of capital reflected on the Partnership's balance
sheet, as computed for book purposes, in accordance with Regulation Section
1.704-1(b)(2)(iv)(q), and (ii) make any appropriate modifications in the event
unanticipated events might otherwise cause this Agreement not to comply with
Regulation Section 1.704-1(b).
3.5 CAPITAL WITHDRAWAL RIGHTS, INTEREST AND PRIORITY
Except as expressly provided in this Agreement, no Partner shall be
entitled to (a) withdraw or reduce such Partner's Capital Contribution or to
receive any distributions from the Partnership, or (b) receive or be credited
with any interest on the balance of such Partner's Capital Contribution at any
time. An unrepaid Capital Contribution is not a liability of the Partnership or
of any Partner.
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ARTICLE IV
DISTRIBUTIONS
4.1 DISTRIBUTIONS OF AVAILABLE CASH
An amount equal to 100% of Available Cash with respect to each fiscal
quarter of the Partnership shall be distributed to the Partners in proportion to
their relative Percentage Interests within forty-five days after the end of such
quarter.
4.2 PERSONS ENTITLED TO DISTRIBUTIONS
All distributions of Available Cash to Partners for a fiscal quarter
pursuant to Section 4.1 shall be made to the Partners shown on the records of
the Partnership to be entitled thereto as of the last day of such quarter unless
the transferor and transferee of any Partnership Interest otherwise agree in
writing to a different distribution and such distribution is consented to in
writing by the General Partner.
4.3 LIMITATIONS ON DISTRIBUTIONS
(a) Notwithstanding any provision of this Agreement to the contrary no
distributions shall be made except pursuant to this Article IV or Article VIII.
(b) Notwithstanding any provision of this Agreement to the contrary, no
distribution hereunder shall be permitted if such distribution would violate
Section 17-607 of the Act or other applicable law.
ARTICLE V
ALLOCATIONS
5.1 PROFITS
Profits for any Taxable Year shall be allocated:
(a) first to those Partners to which Losses have previously been
allocated pursuant to Section 5.2(d) hereof so as to bring each such Partner's
Capital Account to zero, pro rata in accordance with the sum of each such
Partner's Losses; and
(b) second, any remaining Profits shall be allocated among the Partners
in proportion to their respective Percentage Interests.
5.2 LOSSES
Losses for any Taxable Year shall be allocated:
(a) first, to the Partners to which Profits have previously been
allocated pursuant to Section 5.1(b) to the extent of such Profits;
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(b) second, among the Partners in proportion to their respective
Percentage Interests provided however that no Partner shall be allocated any
loss pursuant to this Section 5.2(b) which would result in a negative Capital
Account balance for such Partner.
(c) third, to Partners in proportion to their positive Capital Account
balances until such Capital Account balances have been reduced to zero; and
(d) fourth, any remaining Losses shall be allocated to the General
Partner.
5.3 REGULATORY ALLOCATIONS
The following allocations shall be made in the following order:
(a) Nonrecourse Deductions. Nonrecourse Deductions shall be allocated
to the Partners in accordance with their Percentage Interests.
(b) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions
attributable to Partner Nonrecourse Debt shall be allocated to the Partners
bearing the Economic Risk of Loss for such Partner Nonrecourse Debt as
determined under Regulation Section 1.704-2(b)(4). If more than one Partner
bears the Economic Risk of Loss for such Member Nonrecourse Debt, the Partner
Nonrecourse Deductions attributable to such Partner Nonrecourse Debt shall be
allocated among the Partners according to the ratio in which they bear the
Economic Risk of Loss. This Section 5.3(b) is intended to comply with the
provisions of Regulation Section 1.704-2(i) and shall be interpreted
consistently therewith.
(c) Minimum Gain Chargeback. Notwithstanding any other provision hereof
to the contrary, if there is a net decrease in Minimum Gain for a Taxable Year
(or if there was a net decrease in Minimum Gain for a prior Taxable Year and the
Partnership did not have sufficient amounts of income and gain during prior
years to allocate among the Partners under this Section 5.3(c)), items of income
and gain shall be allocated to each Partner in an amount equal to such Partner's
share of the net decrease in such Minimum Gain (as determined pursuant to
Regulation Section 1.704-2(g)(2)). This Section 5.3(c) is intended to constitute
a minimum gain chargeback under Regulation Section 1.704-2(f) and shall be
interpreted consistently therewith.
(d) Member Minimum Gain Chargeback. Notwithstanding any provision
hereof to the contrary except Section 5.3(c) (dealing with Minimum Gain), if
there is a net decrease in Partner Nonrecourse Debt Minimum Gain for a Taxable
Year (or if there was a net decrease in Partner Nonrecourse Debt Minimum Gain
for a prior Taxable Year and the Company did not have sufficient amounts of
income and gain during prior years to allocate among the Partners under this
Section 5.3(d)), items of income and gain shall be allocated to each Partner in
an amount equal to such Partner's share of the net decrease in Partner
Nonrecourse Debt Minimum Gain (as determined pursuant to Regulation Section
1.704-2(i)(4)). This Section 5.3(d) is intended to constitute a partner
nonrecourse debt minimum gain chargeback under Regulation Section 1.704-2(i)(4)
and shall be interpreted consistently therewith.
(e) Gross Income Allocation. In the event any Partner has an Adjusted
Capital Account Deficit at the end of any Taxable Year, such Partner shall be
specially allocated items of Partnership income and gain in the amount of such
deficit balance as quickly as possible;
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provided, that, an allocation pursuant to this Section 5.3(e) shall be made only
if and to the extent that such Partner would have an Adjusted Capital Account
Deficit balance after all other allocations provided for in this Article V have
been made.
(f) Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Regulation
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
allocated to such Partner in an amount and manner sufficient to eliminate, to
the extent required by the Regulations, the Adjusted Capital Account Deficit of
such Partner as quickly as possible, provided, that, an allocation pursuant to
this Section 5.3(f) shall be made only if and to the extent that such Partner
would have an Adjusted Capital Account Deficit after all other allocations
provided for in this Article V have been made.
(g) Curative Allocations. The allocations set forth in Sections 5.3(a),
(b), (c), (d), (e) and (f) hereof (the "Regulatory Allocations") are intended to
comply with certain requirements of the Regulations. It is the intent of the
Partners that, to the extent possible, all Regulatory Allocations shall be
offset either with other Regulatory Allocations or with special allocations of
other items of Partnership income, gain, loss or deduction pursuant to this
Section 5.3(g). Therefore, notwithstanding any other provision of this Article V
(other than the Regulatory Allocations), the General Partner shall make such
offsetting special allocations of income, gain, loss or deduction in whatever
mariner it determines appropriate so that, after such offsetting allocations are
made, each Partner's Capital Account balance is, to the extent possible, equal
to the Capital Account balance such Partner would have had if the Regulatory
Allocations were not part of this Agreement and all such items were allocated
pursuant to Sections 5.1 and 5.2 without regard to the Regulatory Allocations.
5.4 TAX ALLOCATIONS: CODE SECTION 704(c)
(a) Except as otherwise provided herein, for federal income tax
purposes, (i) each item of income, gain, loss and deduction shall be allocated
among the Partners in the same manner as its correlative item of "book" income,
gain, loss or deduction is allocated pursuant to Sections 5.1 and 5.2, and (ii)
each tax credit shall be allocated to the Partners in the same manner as the
receipt or expenditure giving rise to such credit is allocated pursuant to
Section 5.1 or 5.2.
(b) In accordance with Code Section 704(c) and the Regulations
thereunder, income, gain, loss and deduction with respect to any Property
contributed to the capital of the Partnership shall, solely for tax purposes, be
allocated among the Partners so as to take account of any variation between the
adjusted basis of such Property to the Partnership for federal income tax
purposes and its initial Gross Asset Value (computed in accordance with the
definition herein of "Gross Asset Value"). The Partnership shall use the
remedial method of allocations specified in Treas. Reg. Section 1.704-3(d), or
successor regulations, unless otherwise required by law, with respect to the
initial contribution property set forth on Schedule I.
(c) In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to subparagraph (b) of the definition herein of "Gross Asset
Value", subsequent allocations of income, gain, loss and deduction with respect
to such asset shall take account of any variation
14
between the adjusted basis of such asset for federal income tax purposes and its
Gross Asset Value in the same manner as under Code Section 704(c) and the
Regulations thereunder.
(d) Any elections or other decisions relating to such allocations shall
be made by the General Partner in any manner that reasonably reflects the
purpose and intention of this Agreement; provided, that the Partnership, in the
discretion of the General Partner, may make, or not make, "curative" or
"remedial" allocations (within the meaning of the Regulations under Code Section
704(c)) including, but not limited to, "curative" allocations which offset the
effect of the "ceiling rule" for a prior Taxable Year (within the meaning of
Regulation Section 1.704-3(c)(3)(ii)) and "curative" allocations from
disposition of contributed property (within the meaning of Regulation Section
1.704-3(c)(3)(iii)(B)). Allocations pursuant to this Section 5.4 are solely for
purposes of federal, state, and local taxes and shall not affect, or in any way
be taken into account in computing, any Partner's Capital Account or share of
Profits, Losses, other items, or distributions pursuant to any provision of this
Agreement.
5.5 CHANGE IN PARTNERSHIP PERCENTAGE
In the event that the Partners' Partnership Percentages change during a
Taxable Year, Profits and Losses shall be allocated taking into account the
Partners' varying Percentage Interests for such Taxable Year, determined on a
daily, monthly or other basis as determined by the General Partner, using any
permissible method under Code Section 706 and the Regulations thereunder.
5.6 WITHHOLDING
Each Partner hereby authorizes the Partnership to withhold from income
or distributions allocable to such Partner and to pay over any taxes payable by
the Partnership or any of its Affiliates as a result of such Partner's
participation in the Partnership; if and to the extent that the Partnership
shall be required to withhold any such taxes, such Partner shall be deemed for
all purposes of this Agreement to have received a distribution from the
Partnership as of the time such withholding is required to be paid, which
distribution shall be deemed to be a distribution to such Partner to the extent
that the Partner is then entitled to receive a distribution. To the extent that
the aggregate of such distributions in respect of a Partner for any period
exceeds the distributions to which such Partner is entitled for such period, the
amount of such excess shall be considered a demand loan from the Partnership to
such Partner, with interest at the rate of interest per annum that Citibank,
N.A., or any successor entity thereto, announces from time to time as its prime
lending rate, which interest shall be treated as an item of Partnership income,
until discharged by such Partner by repayment, which may be made in the sole
discretion of the General Partner out of distributions to which such Partner
would otherwise be subsequently entitled. The withholdings referred to in this
Section 5.6 shall be made at the maximum applicable statutory rate under
applicable tax law unless the General Partner shall have received an opinion of
counsel or other evidence, satisfactory to the General Partner, to the effect
that a lower rate is applicable, or that no withholding is applicable.
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ARTICLE VI
MANAGEMENT
6.1 DUTIES AND POWERS OF THE GENERAL PARTNER
(a) The business and affairs of the Partnership shall be managed by the
General Partner. Except for situations in which the approval of the Limited
Partners is expressly required by this Agreement or by nonwaivable provisions of
applicable law, the General Partner shall have full and complete authority,
power and discretion to manage and control the business, affairs and property of
the Partnership, to make all decisions regarding those matters and to perform
any and all other acts or activities customary or incident to the management of
the Partnership's business. Without limiting the generality of the foregoing,
the General Partner has full power and authority to execute, deliver and perform
such contracts, agreements and other undertakings on behalf of the Partnership,
without the consent or approval of any other Partner, and to engage in all
activities and transactions, as it may deem necessary or advisable for, or as
may be incidental to, the conduct of the business and affairs of the
Partnership.
(b) Each Limited Partner agrees to cooperate with the General Partner
and to execute and deliver such documents, agreements and instruments, and do
all such further acts, as deemed necessary or advisable by the General Partner
to give effect to the exercise of the General Partner's powers under this
Section 6.1. Without limiting the foregoing, each Limited Partner hereby
irrevocably appoints the General Partner as its proxy and attorney-in-fact (with
full power of substitution and resubstitution) to vote or act by written consent
with respect to its Partnership Interest as a Limited Partner as determined by
the General Partner on all matters requiring the vote, approval or consent of
the Limited Partners. The Partners acknowledge that such proxy is coupled with
an interest and is irrevocable.
(c) The General Partner is the tax matters partner (the "Tax Matters
Partner") for purposes of Section 6231 of the Code and analogous provisions of
state law. The Tax Matters Partner has the exclusive authority and discretion to
make any elections required or permitted to be made by the Partnership under any
provisions of the Code or any other applicable laws; provided, however, that no
election shall be made by or on behalf of the Partnership to be excluded from
application of Subchapter K Chapter I of Subtitle A of the Code or from any
similar provisions of any state tax laws or to be treated as a corporation for
federal tax purposes. The Tax Matters Partner shall use its reasonable best
efforts to keep each Partner informed of any administrative and judicial
proceedings for the adjustment at the Partnership level of any item required to
be taken into account by a Partner for income tax purposes or any extension of
the period of limitations for making assessments of any tax against a Partner
with respect to any Partnership item, or of any agreement with the Internal
Revenue Service that would result in any material change either in Profits or
Losses as previously reported.
6.2 NO LIABILITY TO LIMITED PARTNERS
Except in case of gross negligence or willful malfeasance of the person
(the General Partner or any of the Members, managers, directors, officers,
agents or employees of the General Partner) who is sought to be held liable,
neither the General Partner nor the Members, managers, directors, officers,
agents or employees of the General Partner will be liable to any Limited
16
Partner or the Partnership (i) for any action taken with respect to the
Partnership which is not in violation of the provisions of this Agreement, or
(ii) for any action taken by any Member, manager, director, officer, agent or
employee of the General Partner.
6.3 INDEMNIFICATION OF GENERAL PARTNER
The Partnership shall indemnify the General Partner, the Members,
managers, directors, officers, agents and employees of the General Partner
against any losses, liabilities, damages and expenses to which any of such
persons may become subject, including attorneys' fees, judgments and amounts
paid in settlement, actually and reasonably incurred by them, and advance all
expenses to them, in connection with any threatened, pending or completed
action, suit or proceeding to which any of them was or is a party or is
threatened to be made a party by reason of the direct or indirect association by
them with the Partnership to the maximum extent permitted by applicable law.
6.4 RIGHTS OF LIMITED PARTNERS
The Limited Partners will not be personally liable for any obligations
of the Partnership nor will they have any obligation to make contributions to
the Partnership in excess of their respective Capital Contributions required
under Section 3.1 or have any liability for the repayment or discharge of the
debts and obligations of the Partnership except to the extent provided herein or
as required by law. The Limited Partners shall take no part in the management,
control or operation of the Partnership's business and shall have no power to
bind the Partnership and no right or authority to act for the Partnership or to
vote on matters other than the matters set forth in this Agreement or as
required by applicable law.
ARTICLE VII
TRANSFERS OF PARTNERSHIP INTERESTS
7.1 TRANSFER OF LIMITED PARTNERSHIP INTERESTS
(a) A Limited Partner may Transfer such Partner's Partnership Interest
only in its entirety. A Limited Partner may transfer all of such Partner's
Partnership Interest (i) to a Permitted Transferee pursuant to Section 7.2, or
(ii) pursuant to the terms of Section 7.7; provided, however, any such Transfer
under (i) or (ii) above shall comply with the terms of Section 7.1(b). Other
than a Transfer permitted pursuant to clause (a) or clause (c) of the definition
of Permitted Transfer, the Limited Partners who are members of the WPP Group may
only transfer the entirety of their Partnership Interests collectively as a
group. Any purported Transfer of a Partnership Interest in violation of the
terms of this Agreement shall be null and void and of no force and effect.
Except upon a Transfer of all of a Limited Partner's Partnership Interest in
accordance with this Section 7.1, no Limited Partner shall have the right to
withdraw as a Partner of the Partnership.
(b) As a condition to a Transfer by a Limited Partner of all of such
Partner's Partnership Interest to a transferee as permitted under Section
7.l(a)(i) or (ii) (a "PARTNERSHIP TRANSFER"), such Partner, or such Partner's
Affiliate holding a Membership Interest, as applicable, shall simultaneously
Transfer (the "MEMBERSHIP TRANSFER") to such transferee an amount of such
Partner's or such Partner's Affiliate's Membership Interest equal to: (i) such
17
Partner's or such Partner's Affiliate's Membership Interest, multiplied by (ii)
a percentage equal to (1) the portion of such Partner's Partnership Interest to
be Transferred to such transferee, divided by (2) such Partner's Partnership
Interest immediately before such Transfer. If for any reason the Membership
Transfer does not occur simultaneously with the Partnership Transfer, then the
Partnership Transfer shall be null and void and of no force and effect.
(c) Notwithstanding any other provision of this Agreement, no Limited
Partner may pledge, mortgage or otherwise subject its Limited Partnership
Interest to any Encumbrance.
7.2 PERMITTED TRANSFEREES
(a) Notwithstanding the provisions of Section 7.7, each Limited Partner
shall, subject to Section 7.1(b), have the right to Transfer (but not to
substitute the transferee as a substitute Partner in such Partner's place,
except in accordance with Section 7.3), by a written instrument, all of a
Limited Partner's Partnership Interest to a Permitted Transferee.
Notwithstanding the previous sentence, if the Permitted Transferee is such
because it was an Affiliate of the transferring Limited Partner at the time of
such Transfer or the Transfer was a Permitted Transfer under clause (a) of the
definition herein of "Permitted Transfer" and, at any time after such Transfer,
such Permitted Transferee ceases to be an Affiliate of such Limited Partner or
such Transfer or such Permitted Transferee ceases to qualify under such clause
(a) (a "NON-QUALIFYING TRANSFEREE"), such Transfer shall be deemed to not be a
Permitted Transfer and shall be subject to Section 7.7. Pursuant to Section 7.7,
such transferring Limited Partner or such transferring Limited Partner's legal
representative shall deliver the First Refusal Notice promptly after the time
when such transferee ceases to be an Affiliate of such transferring Limited
Partner or such Transfer or such Permitted Transferee ceases to qualify under
clause (a) of the definition herein of "Permitted Transfer", and such
transferring Limited Partner shall otherwise comply with the terms of Section
7.7 with respect to such Transfer; provided, that the purchase price for such
Transfer for purposes of Section 7.7 shall be an amount agreed upon by such
transferring Limited Partner and the General Partner or, if such Limited Partner
and the General Partner cannot agree on a price within five Business Days after
delivery of the First Refusal Notice, such price shall be the fair market value
of the Partnership Interest transferred pursuant to the Transfer as of the date
the transferee ceased to be an Affiliate of such transferring Limited Partner or
such Transfer or such Permitted Transferee ceases to qualify under clause (a) of
the definition herein of "Permitted Transfer" (such date, the "NON-QUALIFYING
DATE"), as determined at the Partnership's expense by a nationally recognized
investment banking firm mutually selected by such transferring Limited Partner
and the General Partner. If such transferring Limited Partner and the General
Partner are unable, within ten days after the expiration of such five Business
Day period, to mutually agree upon an investment banking firm, then each of such
transferring Limited Partner and the General Partner shall choose a nationally
recognized investment banking firm and the two investment banking firms so
chosen shall choose a third nationally recognized investment banking firm which
shall determine the fair market value of the Partnership Interest transferred
pursuant to such Transfer at the Partnership's expense. The determination of
fair market value shall be based on the value that a willing buyer with
knowledge of all relevant facts would pay a willing seller for all the
outstanding equity securities of the Partnership in connection with an auction
for the Partnership as a going concern and shall not take into account any
acquisitions made by the Partnership or its Affiliates or any other events
subsequent to the Non-Qualifying Date and shall not be subject to any discount
for a sale of a minority interest. If
18
such transferring Limited Partner fails to comply with all the terms of Section
7.7, such Transfer shall be null and void and of no force and effect. No
Non-Qualifying Transferee shall be entitled to receive any distributions from
the Partnership on or after the Non-Qualifying Date and any distributions made
in respect of the Partnership Interests on or after the Non-Qualifying Date and
held by such Non-Qualifying Transferee shall be paid to the Limited Partner who
transferred such Partnership Interests or otherwise to the rightful owner
thereof as reasonably, determined by the General Partner.
(b) Unless and until admitted as a substitute Limited Partner pursuant
to Section 7.3, a transferee of a Limited Partner's Partnership Interest, in
whole or in part, shall be an assignee with respect to such Transferred
Partnership Interest and shall not be entitled to become, or to exercise the
rights of, a Limited Partner, including the right to vote, the right to require
any information or accounting of the Partnership's business, or the right to
inspect the Partnership's books and records. Such transferee shall only be
entitled to receive, to the extent of the Partnership Interest Transferred to
such transferee, the share of distributions and profits, including distributions
representing the return of Capital Contributions, to which the transferor would
otherwise be entitled with respect to the Transferred Partnership Interest.
Subject to the provisions of Section 6.1(b), the transferor shall have the right
to vote such Transferred Partnership Interest until the transferee is admitted
to the Partnership as a substitute Limited Partner with respect to the
Transferred Partnership Interest.
7.3 SUBSTITUTE LIMITED PARTNERS
No transferee of all or part of a Limited Partner's Partnership
Interest shall become a substitute Limited Partner in place of the transferor
unless and until:
(a) such Transfer is in compliance with the terms of Section 7.1;
(b) the transferee has executed an instrument in form and substance
reasonably satisfactory to the General Partner accepting and adopting, and
agreeing to be bound by, the terms and provisions of the Certificate and this
Agreement; and
(c) the transferee has executed an instrument in form and substance
reasonably satisfactory to the General Partner whereby it agrees to become a
party to the Omnibus Agreement and to be bound by the noncompetition provisions
of Article II of the Omnibus Agreement.
(d) the transferee has caused to be paid all reasonable expenses of the
Partnership in connection with the admission of the transferee as a substitute
Limited Partner.
Upon satisfaction of all the foregoing conditions with respect to a
particular transferee, the General Partner shall cause the books and records of
the Partnership to reflect the admission of the transferee as a substitute
Limited Partner to the extent of the Transferred Partnership Interest held by
such transferee.
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7.4 EFFECT OF ADMISSION AS A SUBSTITUTE LIMITED PARTNER
A transferee who has become a substitute Limited Partner has to the
extent of the Transferred Partnership Interest all the rights powers and
benefits of and is subject to the obligations, restrictions and liabilities of a
Partner under the Certificate this Agreement and the Act Upon admission of a
transferee as a substitute Limited Partner the transferor of the Partnership
Interest so held by the substitute Limited Partner shall cease to be a Partner
of the Partnership to the extent of such Transferred Partnership Interest.
7.5 CONSENT
Each Partner hereby agrees that upon satisfaction of the terms and
conditions of this Article VII with respect to any proposed Transfer the
transferee may be admitted as a Partner without any further action by a Partner
hereunder.
7.6 ADDITIONAL LIMITED PARTNERS
Subject to Section 3.2, any person acceptable to the General Partner
may become an additional Limited Partner of the Partnership for such
consideration as the General Partner shall determine, provided that such
additional Limited Partner complies with all the requirements of a transferee
under Section 7.3 (b), (c) and (d).
7.7 RIGHT OF FIRST REFUSAL
The Limited Partners shall have the following right of first refusal:
(a) If at any time any of the Limited Partners (a "SELLING PARTNER")
has received and wishes to accept a bona fide offer (the "OFFER") for cash from
a third party (the "OFFEROR") for all of such Selling Partner's Partnership
Interest (and a proportionate amount of such Selling Partner's (or it's
Affiliate's) Membership Interest in accordance with Section 7.1(b)) such Selling
Partner shall give Notice thereof (the "FIRST REFUSAL NOTICE") to each of the
other Partners and the Partnership. The First Refusal Notice shall state the
portion of the Selling Partner's Partnership Interest and the Selling Partner's
(or its Affiliate's) Membership Interest that the Selling Partner and its
Affiliate, if applicable, wish to sell (the "OPTIONED INTEREST"), the price and
all other material terms of the Offer, the name of the Offeror, and
certification from the Selling Partner affirming that the Offer is bona fide and
that the description thereof is true and correct and that the Offeror has stated
that it will purchase the Optioned Interest if the rights of first refusal
herein described are not exercised.
(b) Each of the Limited Partners other than the Selling Partner (the
"NON-SELLING PARTNERS") shall have the right exercisable by Notice (an
"ACCEPTANCE NOTICE") given to the Selling Partner and the Partnership within 20
days after receipt of the First Refusal Notice, to agree that it will purchase
up to 100% of the Optioned Interest on the terms set forth in the First Refusal
Notice; provided, however, if the Non-Selling Partners in the aggregate desire
to purchase more than 100% of the Optioned Interest, each such Non-Selling
Partner's right to purchase the Optioned Interest shall be reduced (pro rata
based on the percentage of the Optioned Interest for which such Non-Selling
Partner has exercised its right to purchase hereunder compared to all other
Non-Selling Partners, but not below such Non-Selling Partner's
20
Partnership Interest as a percentage of the aggregate Partnership Interests of
all Non-Selling Partners who have exercised their right to purchase) so that
such Non-Selling Partners purchase no more than 100% of the Optioned Interest.
If a Non-Selling Partner does not submit an Acceptance Notice within the 20 day
period set forth in this Section 7.7(b), such Non-Selling Partner shall be
deemed to have rejected the offer to purchase any portion of the Optioned
Interest.
(c) If the Non-Selling Partners do not in the aggregate exercise the
right to purchase all of the Optioned Interest by the expiration of the 20 day
period set forth in Section 7.7(b), then any Acceptance Notice shall be void and
of no effect, and the Selling Partner shall be entitled to complete the proposed
sale at any time in the 30 day period commencing on the date of the First
Refusal Notice, but only upon the terms set forth in the First Refusal Notice.
If no such sale is completed in such 30 day period, the provisions hereof shall
apply again to any proposed sale of the Optioned Interest.
(d) If any Non-Selling Partner exercises the right to purchase the
Optioned Interest as provided herein and such Non-Selling Partner(s) have
elected to purchase all of the Optioned Interest, the purchase of such Optioned
Interest shall be completed within the 30 day period commencing on the date of
delivery of the First Refusal Notice on the terms set forth in the First Refusal
Notice. If such Non-Selling Partner does not consummate the Purchase of such
Optioned Interest, (x) the Selling Partner shall be entitled to all expenses of
collection, (y) the Selling Partner shall be entitled to pursue all available
legal remedies against the Non-Selling Partner, including specific enforcement
of the purchase of the Optioned Interest on the terms set forth in the First
Refusal Notice and (z) notwithstanding the specific enforcement remedy, the
Selling Partner may complete the sale of the Optioned Interest to the third
party on the terms set forth in the First Refusal Notice.
(e) With respect to the Limited Partners who are members of the WPP
Group, the provisions of Section 7.7 will apply to the sale of the collective
Partnership Interests of all of the members of the WPP Group, and no Offer will
be deemed to be valid unless it is an Offer for the entirety of the collective
Partnership Interests of the WPP Group and the associated Membership Interests
to be offered pursuant to Section 7.1(b).
ARTICLE VIII
DISSOLUTION AND LIQUIDATION
8.1 DISSOLUTION OF PARTNERSHIP
(a) The Partnership shall be dissolved and its affairs wound up upon
the first to occur of the following events:
(i) the written election of the General Partner, in its sole
discretion, to dissolve the Partnership;
(ii) the occurrence of any event that results in the General
Partner ceasing to be the general partner of the Partnership under the
Act, provided that the Partnership will not be dissolved and required
to be wound up in connection with any such event if (A) at the time of
the occurrence of such event there is at least one remaining general
partner of
21
the Partnership who is hereby authorized to and does carry on the
business of the Partnership, or (B) within 90 days after the occurrence
of such event, all of the Limited Partners agree in writing to continue
the business of the Partnership and to the appointment, effective as of
the date of such event, if required, of one or more additional general
partners of the Partnership;
(iii) the Transfer of all or substantially all of the assets
of the Partnership and the receipt and distribution of all the proceeds
therefrom;
(iv) at any time that there are no limited partners of the
Partnership, unless the business of the Partnership is continued in
accordance with the Act; and
(v) the entry of a decree of judicial dissolution under
Section 17-802 of the Act.
(b) The withdrawal, death, dissolution, retirement, resignation,
expulsion, liquidation or bankruptcy of a Partner, the admission to the
Partnership of a new General Partner or Limited Partner, the withdrawal of a
Partner from the Partnership, or the transfer by a Partner of its Partnership
Interest to a third party shall not, in and of itself, cause the Partnership to
dissolve.
8.2 FINAL ACCOUNTING
Upon dissolution and winding up of the Partnership, an accounting will
be made of the accounts of the Partnership and each Partner and of the
Partnership's assets, liabilities and operations from the date of the last
previous accounting to the date of such dissolution.
8.3 DISTRIBUTIONS FOLLOWING DISSOLUTION AND TERMINATION
(a) Liquidating Trustee. Upon the dissolution of the Partnership, such
party as is designated by the General Partner will act as liquidating trustee of
the Partnership (the "LIQUIDATING TRUSTEE") and proceed to wind up the business
and affairs of the Partnership in accordance with the terms of this Agreement
and applicable law. The Liquidating Trustee will use its commercially reasonable
efforts to sell all Partnership assets (except cash) under the circumstances
then presented, that it deems in the best interest of the Partners. The
Liquidating Trustee will attempt to convert all assets of the Partnership to
cash so long as it can do so consistently with prudent business practice. The
Partners and their respective designees will have the right to purchase any
Partnership property to be sold on liquidation, provided that the terms on which
such sale is made are no less favorable than would otherwise be available from
third parties. The gains and losses from the sale of the Partnership assets,
together with all other revenue, income, gain, deduction, expense, loss and
credit during the period, will be allocated in accordance with Article V. A
reasonable amount of time shall be allowed for the period of winding up in light
of prevailing market conditions and so as to avoid undue loss in connection with
any sale of the Partnership's assets. This Agreement shall remain in full force
and effect during the period of winding up. In addition, upon request of the
General Partner and if the Liquidating Trustee determines that it would be
imprudent to dispose of any non-cash assets of the Partnership, such assets may
be distributed in kind to the Partners in lieu of cash, proportionately to their
right to receive cash distributions under this Agreement.
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(b) Accounting. Upon completion of its efforts under Section 8.3(a),
the Liquidating Trustee will cause proper accounting to be made of the Capital
Account of each Partner, including recognition of gain or loss on any asset to
be distributed in kind as if such asset had been sold for consideration equal to
the fair market value of the asset at the time of the distribution. The Partners
intend that the allocations provided herein shall result in Capital Account
balances in proportion to the Partnership Percentages of the Partners.
(c) Liquidating Distributions. In settling accounts after dissolution
of the Partnership, the assets of the Partnership shall be paid to creditors of
the Partnership and to the Partners in the following order:
(i) to creditors of the Partnership (including Partners) in
the order of priority as provided by law whether by payment or the
making of reasonable provision for payment thereof, and in connection
therewith there shall be withheld such reasonable reserves for
contingent, conditioned or unconditioned liabilities as the Liquidating
Trustee in its reasonable discretion deems adequate, such reserves (or
balances thereof) to be held and distributed in such manner and at such
times as the Liquidating Trustee, in its discretion, deems reasonably
advisable; provided, however, that such amounts will be maintained in a
separate bank account and that any amounts in such bank account
remaining after three years be distributed to the Partners or their
successors and assigns as if such amount had been available for
distribution under Section 8.3(c)(ii), and then
(ii) to the Partners in proportion to the positive balances of
their Capital Accounts, as fully adjusted pursuant to Section 3.4,
including adjustment for all gains and losses actually or deemed
realized upon disposition or distribution of assets in connection with
the liquidation and winding up of the Partnership.
Any distribution to the Partners in liquidation of the Partnership
shall be made by the later of the end of the taxable year in which the
liquidation occurs or 90 days after the date of such liquidation. For purposes
of the preceding sentence, the term "liquidation" shall have the same meaning as
set forth in Regulation Section 1.704-2(b)(2)(ii) as in effect at such time and
liquidating distributions shall be further deemed to be made pursuant to this
Agreement upon the event of a liquidation as defined in such Regulation for
which no actual liquidation occurs with a deemed recontribution by the Partners
of such deemed liquidating distributions to the continuing Partnership pursuant
to this Agreement.
(d) The provisions of this Agreement, including, without limitation,
this Section 8.3, are intended solely to benefit the Partners and, to the
fullest extent permitted by law, shall not be construed as conferring any
benefit upon any creditor of the Partnership. No such creditor of the
Partnership shall be a third-party beneficiary of this Agreement, and no Partner
shall have any duty or obligation to any creditor of the Partnership to issue
any call for capital pursuant to this Agreement.
8.4 TERMINATION OF THE PARTNERSHIP
The Partnership shall terminate when all assets of the Partnership,
after payment or due provision for all debts, liabilities and obligations of the
Partnership, shall have been distributed to
23
the Partners in the manner provided for in this Article VIII, and the
Certificate shall have been canceled in the manner required by the Act.
8.5 NO ACTION FOR DISSOLUTION
The Limited Partners acknowledge that irreparable damage would be done
to the goodwill and reputation of the Partnership if any Limited Partner should
bring an action in court to dissolve the Partnership under circumstances where
dissolution is not required by Section 8.1. Accordingly, except where the
General Partner has failed to cause the liquidation of the Partnership as
required by Section 8.1 and except as specifically provided in Section 17-802 of
the Act, each Limited Partner hereby to the fullest extent permitted by law
waives and renounces his or its right to initiate legal action to seek
dissolution of the Partnership or to seek the appointment of a receiver or
trustee to wind up the affairs of the Partnership, except in the cases of fraud,
violation of law, bad faith, gross negligence, willful misconduct or willful
violation of this Agreement.
ARTICLE IX
ACCOUNTING; BOOKS AND RECORDS
9.1 FISCAL YEAR AND ACCOUNTING METHOD
The fiscal year and taxable year of the Partnership shall be the
calendar year. The Partnership shall use an accrual method of accounting.
9.2 BOOKS AND RECORDS
The Partnership shall maintain at its principal office, or such other
office as may be determined by the General Partner, all the following:
(a) A current list of the full name and last known business or
residence address of each Partner, together with information regarding the
amount of cash and a description and statement of the agreed value of any other
property or services contributed by each Partner and which each Partner has
agreed to contribute in the future, and the date on which each Partner became a
Partner of the Partnership;
(b) A copy of the Certificate and this Agreement, including any and all
amendments to either thereof, together with executed copies of any powers of
attorney pursuant to which the Certificate, this Agreement, or any amendments
have been executed;
(c) Copies of the Partnership's Federal, state, and local income tax or
information returns and reports, if any, which shall be retained for at least
six fiscal years;
(d) The financial statements of the Partnership; and
(e) The Partnership's books and records.
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9.3 DELIVERY TO PARTNERS; INSPECTION
Upon the request of any Limited Partner, for any purpose reasonably
related to such Partner's interest as a partner of the Partnership, the General
Partner shall cause to be made available to the requesting Partner the
information required to be maintained by clauses (a) through (e) of Section 9.2
and such other information regarding the business and affairs and financial
condition of the Partnership as any Partner may reasonably request.
9.4 FINANCIAL STATEMENTS
The General Partner shall cause to be prepared for the Partners at
least annually, at the Partnership's expense, financial statements of the
Partnership, and its subsidiaries, prepared in accordance with generally
accepted accounting principles and audited by a nationally recognized accounting
firm. The financial statements so furnished shall include a balance sheet,
statement of income or loss, statement of cash flows, and statement of Partners'
equity. In addition, the General Partner shall provide on a timely basis to the
Partners monthly and quarterly financial statements, any available internal
budgets or forecast or other available financial reports, as well as any reports
or notices as are provided by the Partnership, or any of its subsidiaries to any
financial institution.
9.5 FILINGS
At the Partnership's expense, the General Partner shall cause the
income tax returns for the Partnership to be prepared and timely filed with the
appropriate authorities and to have prepared and to furnish to each Partner a
schedule K-1 and such other information with respect to the Partnership as is
necessary (or as may be reasonably requested by a Partner) to enable the
Partners to prepare their Federal, state and local income tax returns. The
General Partner, at the Partnership's expense, shall also cause to be prepared
and timely filed, with appropriate Federal, state and local regulatory and
administrative bodies, all reports required to be filed by the Partnership with
those entities under then current applicable laws, rules, and regulations. The
reports shall be prepared on the accounting or reporting basis required by the
regulatory bodies.
9.6 NON-DISCLOSURE
Each Limited Partner agrees that, except as otherwise consented to by
the General Partner in writing, all non-public and confidential information
furnished to it pursuant to this Agreement will be kept confidential and will
not be disclosed by such Partner, or by any of its agents, representatives, or
employees, in any manner whatsoever, in whole or in part, except that (a) each
Partner shall be permitted to disclose such information to those of its agents,
representatives, and employees who need to be familiar with such information in
connection with such Partner's investment in the Partnership (collectively,
"REPRESENTATIVES") and are apprised of the confidential nature of such
information, (b) each Partner shall be permitted to disclose information to the
extent required by law, legal process or regulatory requirements so long as such
Partner shall have used its reasonable efforts to first afford the Partnership
with a reasonable opportunity to contest the necessity of disclosing such
information; provided that each Partner and its Affiliates may disclose any
information required to be disclosed under the federal securities laws without
affording the Partnership such opportunity, (c) each Partner shall
25
be permitted to disclose such information to possible purchasers of the
Partner's Partnership Interest, provided that such prospective purchaser shall
execute a suitable confidentiality agreement in a form approved by the General
Partner and containing terms not less restrictive than the terms set forth
herein, and (d) each Partner shall be permitted to disclose information to the
extent necessary for the enforcement of any right of such Partner arising under
this Agreement. Each Partner shall be responsible for any breach of this Section
9.6 by any of its Representatives.
ARTICLE X
MISCELLANEOUS
10.1 WAIVER OF DEFAULT
No consent or waiver, express or implied, by the Partnership or a
Partner with respect to any breach or default by the Partnership or a Partner
under this Agreement shall be deemed or construed to be a consent or waiver with
respect to any other breach or default by any party of the same provision or any
other provision of this Agreement. Failure on the part of the Partnership or a
Partner to complain of any act or failure to act of the Partnership or a Partner
or to declare such party in default shall not be deemed or constitute a waiver
by the Partnership or the Partner of any rights under this Agreement.
10.2 AMENDMENT OF PARTNERSHIP AGREEMENT
(a) Except as otherwise expressly provided elsewhere in this Agreement,
this Agreement shall not be altered, modified or changed except by an amendment
approved by the General Partner.
(b) In addition to any amendments otherwise authorized herein, the
General Partner may make any amendments to any of the Schedules to this
Agreement from time to time to reflect transfers of Partnership Interests and
issuances of additional Partnership Interests. Copies of such amendments shall
be delivered to the Partners promptly upon execution thereof.
(c) The General Partner shall cause to be prepared and filed any
amendment to the Certificate that may be required to be filed under the Act as a
consequence of any amendment to this Agreement.
(d) Any modification or amendment to this Agreement or the Certificate
made in accordance with this Section 10.2 shall be binding on all Partners.
10.3 NOTICES TO TAX MATTERS PARTNERS
Any Partner that receives a notice of an administrative proceeding
under Section 6233 of the Code relating to the Partnership shall promptly
provide Notice to the Tax Matters Partner of the treatment of any Partnership
item on such Partner's Federal income tax return that is or may be inconsistent
with the treatment of that item on the Partnership's return. Any Partner that
enters into a settlement agreement with the Internal Revenue Service or any
other government agency or official with respect to any Partnership item shall
provide Notice to the Tax Matters Partner of such agreement and its terms within
60 days after the date of such agreement.
26
10.4 NO THIRD PARTY RIGHTS
Except as provided in Section 6.2 and Section 6.3, none of the
provisions contained in this Agreement shall be for the benefit of or
enforceable by any third parties, including creditors of the Partnership.
10.5 SEVERABILITY
In the event any provision of this Agreement is held to be illegal
invalid or unenforceable to any extent the legality validity and enforceability
of the remainder of this Agreement shall not be affected thereby and shall
remain in full force and effect and shall be enforced to the greatest extent
permitted by law.
10.6 NATURE OF INTEREST IN THE PARTNERSHIP
A Partner's Partnership Interest shall be personal property for all
purposes.
10.7 BINDING AGREEMENT
The provisions of this Agreement shall be binding upon, and inure to
the benefit of, the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns
10.8 HEADINGS
The headings of the sections of this Agreement are for convenience only
and shall not be considered in construing or interpreting any of the terms or
provisions hereof.
10.9 WORD MEANINGS
The words "herein", "hereinafter", "hereof", and "hereunder" refer to
this Agreement as a whole and not merely to a subdivision in which such words
appear unless the context otherwise requires. The singular shall include the
plural, and vice versa unless the context otherwise requires. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". When verbs are used as
nouns, the nouns correspond to such verbs and vice-versa.
10.10 COUNTERPARTS
This Agreement may be executed in several counterparts, all of which
together shall constitute one agreement binding on all parties hereto
notwithstanding that all the parties have not signed the same counterpart.
10.11 ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties hereto
and thereto and supersedes all prior writings or agreements with respect to the
subject matter hereof.
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10.12 PARTITION
The Partners agree that the Property is not and will not he suitable
for partition Accordingly, each of the Partners hereby irrevocably waives any
and all right such Partner may have to maintain any action for partition of any
of the Property. No Partner shall have any right to any specific assets of the
Partnership upon the liquidation of, or any distribution from, the Partnership.
10.13 GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE
This Agreement shall be construed according to and governed by the laws
of the State of Delaware without regard to principles of conflict of laws. The
parties hereby submit to the exclusive jurisdiction and venue of the Court of
Chancery of the State of Delaware and the United States District Court for the
Southern District of Texas and of the United States District Court for the
District of Delaware, as the case may be, and agree that the Partnership or
Partners may, at their option, enforce their rights hereunder in such courts.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written
GENERAL PARTNER:
GP NATURAL RESOURCE PARTNERS LLC
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
LIMITED PARTNERS:
NEW GAULEY COAL CORPORATION
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
WESTERN POCAHONTAS PROPERTIES
LIMITED PARTNERSHIP
By: Western Pocahontas Corporation,
its general partner
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
GREAT NORTHERN PROPERTIES
LIMITED PARTNERSHIP
By: GNP Management Corporation,
its general partner
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
29
SCHEDULE I
PARTNERS, CAPITAL CONTRIBUTIONS AND PERCENTAGE INTERESTS
GENERAL PARTNER:
INITIAL CAPITAL
ACCOUNTS/ TOTAL
CASH GROSS CAPITAL PERCENTAGE
NAME AND ADDRESS CONTRIBUTED ASSET VALUE CONTRIBUTION INTEREST
---------------- ------------ ------------- --------------- ------------
GP Natural Resource Partners LLC $ .01 $0.00 $ .01 .001%
LIMITED PARTNERS:
TOTAL
CASH GROSS ASSET CAPITAL PERCENTAGE
NAME AND ADDRESS CONTRIBUTED VALUE OF SPLS CONTRIBUTION INTEREST
---------------- ------------ ------------- ------------ ------------
New Gauley Coal Corporation $ 18.40 [.0368% SPL] $[ ] 1.83998%
Western Pocahontas Properties
Limited Partnership $ 460.80 [.9216% SPL] $[ ] 46.07955%
Great Northern Properties
Limited Partnership $ 98.30 [1966% SPL] $[ ] 9.8299%
Ark Land Company $ 422.50 [.8450% SPL] $[ ] 42.24957%
Schedule I-1
