AMENDMENT NO. 5 TO AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF REGENCY ENERGY PARTNERS LP
AMENDMENT
NO. 5 TO
OF
This
Amendment No. 5 (this “Amendment
No. 5”) to the Amended and Restated Agreement of Limited Partnership
(as amended, the “Partnership
Agreement”) of Regency Energy Partners LP (the “Partnership”)
is hereby adopted effective as of January 1, 2007, by Regency GP LP, a Delaware
limited partnership (the “General
Partner”), as general partner of the Partnership. Capitalized
terms used but not defined herein are used as defined in the Partnership
Agreement.
WHEREAS, the General Partner
desires to amend the Partnership Agreement to make certain adjustments to
certain allocation provisions and the definitions related thereto;
and
WHEREAS, acting pursuant to
the power and authority granted to it under Section 13.1(d) of the
Partnership Agreement, the General Partner has determined that the following
amendment to the Partnership Agreement does not require the approval of any
Limited Partner.
NOW THEREFORE, the General
Partner does hereby amend the Partnership Agreement as follows:
Section
1. Amendment.
(a) Section
1.1 is hereby amended to add or amend and restate the following definitions,
each of which shall be and read in its entirety as follows:
(i) “Disposed of Adjusted
Property” has the meaning assigned to such term in Section
6.1(d)(xii)(B).
(ii) “Net Termination Gain” means,
for any taxable year, the sum, if positive, of all items of income, gain, loss
or deduction recognized by the Partnership (a) after the Liquidation Date or (b)
upon the sale, exchange or other disposition of all or substantially all of the
assets of the Partnership Group, taken as a whole, in a single transaction or a
series of related transactions (excluding any disposition to a member of the
Partnership Group). The items included in the determination of Net
Termination Gain shall be determined in accordance with Section 5.5(b) and shall
not include any items of income, gain or loss specially allocated under Section
6.1(d).
(iii) “Net Termination Loss” means,
for any taxable year, the sum, if negative, of all items of income, gain, loss
or deduction recognized by the Partnership (a) after the Liquidation Date or (b)
upon the sale, exchange or other disposition of all or substantially all of the
assets of the Partnership Group, taken as a whole, in a single transaction or a
series of related transactions (excluding any disposition to a member of the
Partnership Group). The items included in the determination of Net
Termination Loss shall be determined in accordance with Section 5.5(b) and shall
not include any items of income, gain or loss specially allocated under Section
6.1(d).
(b) Section 5.5(d)
is hereby amended and restated in its entirety as follows:
(i) In
accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), on an issuance
of additional Partnership Interests for cash or Contributed Property, the
issuance of Partnership Interests as consideration for the provision of services
or the conversion of the General Partner’s Combined Interest to Common Units
pursuant to Section 11.3(b), the Capital Accounts of all Partners and the
Carrying Value of each Partnership property immediately prior to such issuance
shall be adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as if such Unrealized
Gain or Unrealized Loss had been recognized on an actual sale of each such
property for an amount equal to its fair market value immediately prior to such
issuance and had been allocated to the Partners at such time pursuant to Section
6.1(c) in the same manner as any item of gain or loss actually recognized
following an event giving rise to the dissolution of the Partnership would have
been allocated. In determining such Unrealized Gain or Unrealized Loss, the
aggregate cash amount and fair market value of all Partnership assets (including
cash or cash equivalents) immediately prior to the issuance of additional
Partnership Interests shall be determined by the General Partner using such
method of valuation as it may adopt; provided, however, that the General
Partner, in arriving at such valuation, must take fully into account the fair
market value of the Partnership Interests of all Partners at such time. The
General Partner shall allocate such aggregate value among the assets of the
Partnership (in such manner as it determines) to arrive at a fair market value
for individual properties.
(ii) In
accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), immediately
prior to any actual or deemed distribution to a Partner of any Partnership
property (other than a distribution of cash that is not in redemption or
retirement of a Partnership Interest), the Capital Accounts of all Partners and
the Carrying Value of all Partnership property shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss attributable to such
Partnership property, as if such Unrealized Gain or Unrealized Loss had been
recognized on an actual sale of each such property immediately prior to such
distribution for an amount equal to its fair market value, and had been
allocated to the Partners, at such time, pursuant to Section 6.1(c) in the same
manner as any item of gain or loss actually recognized following an event giving
rise to the dissolution of the Partnership would have been allocated. In
determining such Unrealized Gain or Unrealized Loss, the aggregate cash amount
and fair market value of all Partnership assets (including cash or cash
equivalents) immediately prior to a distribution shall (A) in the case of an
actual distribution that is not made pursuant to Section 12.4 or in the case of
a deemed distribution, be determined and allocated in the same manner as that
provided in Section 5.5(d)(i) or (B) in the case of a liquidating distribution
pursuant to Section 12.4, be determined and allocated by the Liquidator using
such method of valuation as it may adopt.
(c) Section
6.1(d)(xii) is hereby amended and restated in its entirety as
follows:
Corrective and Other
Allocations. In the event of any allocation of Additional Book
Basis Derivative Items or any Book-Down Event or any recognition of a Net
Termination Loss, the following rules shall apply:
(A) Except
as provided in Section 6.1(d)(xii)(B), in the case of any allocation of
Additional Book Basis Derivative Items (other than an allocation of Unrealized
Gain or Unrealized Loss under Section 5.5(d) hereof) with respect to any
Partnership property, the General Partner shall allocate such Additional Book
Basis Derivative Items (1) to (aa) the holders of Incentive Distribution Rights
and (bb) the General Partner in the same manner that the Unrealized Gain or
Unrealized Loss attributable to such property is allocated pursuant to Section
5.5(d)(i) or Section 5.5(d)(ii) and (2) to all Unitholders, Pro Rata, to the
extent that the Unrealized Gain or Unrealized Loss attributable to such property
is allocated to any Unitholders pursuant to Section 5.5(d)(i) or Section
5.5(d)(ii).
(B) In
the case of any allocation of Additional Book Basis Derivative Items (other than
an allocation of Unrealized Gain or Unrealized Loss under Section 5.5(d) hereof
or an allocation of Net Termination Gain or Net Termination Loss pursuant to
Section 6.1(c) hereof) as a result of a sale or other taxable disposition of any
Partnership asset that is an Adjusted Property (“Disposed of Adjusted
Property”), the General Partner shall allocate (1) additional items of
income and gain (aa) away from the holders of Incentive Distribution Rights and
the General Partner and (bb) to the Unitholders, or (2) additional items of
deduction and loss (aa) away from the Unitholders and (bb) to the holders of
Incentive Distribution Rights and the General Partner, to the extent that the
Additional Book Basis Derivative Items allocated to the Unitholders exceed their
Share of Additional Book Basis Derivative Items with respect to such Disposed of
Adjusted Property. For this purpose, the Unitholders shall be treated as being
allocated Additional Book Basis Derivative Items to the extent that such
Additional Book Basis Derivative Items have reduced the amount of income that
would otherwise have been allocated to the Unitholders under this Agreement
(e.g., Additional Book Basis Derivative Items taken into account in computing
cost of goods sold would reduce the amount of book income otherwise available
for allocation among the Partners). Any allocation made pursuant to this Section
6.1(d)(xii)(B) shall be made after all of the other Agreed Allocations have been
made as if this Section 6.1(d)(xii) were not in this Agreement and, to the
extent necessary, shall require the reallocation of items that have been
allocated pursuant to such other Agreed Allocations.
(C) In
the case of any negative adjustments to the Capital Accounts of the Partners
resulting from a Book-Down Event or from the recognition of a Net Termination
Loss, such negative adjustment (1) shall first be allocated, to the extent of
the Aggregate Remaining Net Positive Adjustments, in such a manner, as
determined by the General Partner, that to the extent possible the aggregate
Capital Accounts of the Partners will equal the amount that would have been the
Capital Account balance of the Partners if no prior Book-Up Events had occurred,
and (2) any negative adjustment in excess of the Aggregate Remaining Net
Positive Adjustments shall be allocated pursuant to Section 6.1(c)
hereof.
(D) In
making the allocations required under this Section 6.1(d)(xii), the General
Partner may apply whatever conventions or other methodology it determines will
satisfy the purpose of this Section 6.1(d)(xii).
Section
2. General
Authority. The appropriate officers of the General Partner are
hereby authorized to make such further clarifying and conforming changes to the
Partnership Agreement as they deem necessary or appropriate, and to interpret
the Partnership Agreement, to give effect to the intent and purpose of this
Amendment No. 5.
Section
3. Ratification of Partnership
Agreement. Except as expressly modified and amended herein,
all of the terms and conditions of the Partnership Agreement shall remain in
full force and effect.
Section
4. Governing
Law. This Amendment No. 5 will be governed by and
construed in accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the
General Partner has executed this Amendment No. 5 as of the date first set
forth above.
GENERAL PARTNER:
REGENCY GP LP
By: REGENCY
GP LLC, its general partner
By:
Name:
Title:
