AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
TABLE OF CONTENTS
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Page
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1. Parties
1.1 TransCanada Iroquois, Ltd. 1
1.2 Alenco Iroquois Pipelines Inc. 1
1.3 NorthEast Transmission Co. 1
1.4 TEN Transmission Company 2
1.5 NJNR Pipeline Company 2
1.6 LILCO Energy Systems, Inc. 2
1.7 JMC-Iroquois, Inc. 2
1.8 ANR New England Pipeline Company 2
1.9 ANR Iroquois, Inc. 3
1.10 CNG Iroquois, Inc. 3
1.11 NETCO 3
1.12 TEN Company 3
1.13 JMC-Iroquois 3
2 Definitions 3
2.1 Additional Commitment Date 3
2.2 Additional Necessary Regulatory Approvals 4
2.3 Additional Partner 4
2.4 Affiliate 4
2.5 Capital Account 5
2.6 Capital Contribution 5
2.7 Certified Public Accountants 5
2.8 Code 6
2.9 Cost of an Incremental Expansion 6
2.10 Defaulting Partner 6
2.11 Estimated Cost of an Incremental Expansion 6
2.12 Facilities 6
2.13 FERC 7
2.14 Financing Commitment 7
2.15 Financing Corporation 8
2.16 Gas Transportation Contracts 8
2.17 General Partner 8
2.18 Incremental Expansion 8
2.19 Limited Partner 8
2.20 Management Comnuttee 9
2.21 Operating Agreement 9
2.22 Operator 9
2.23 Parent 9
2.24 Partner 9
2.25 Partnership 10
2.26 Percentage Interest 10
2.27 Person 10
2.28 Representative 10
2.29 Required Accounting Practice 11
2.30 Shippers 11
2.31 Withdrawn Partner 11
2.32 Limited Partnership Certificate Date 11
3 Voting 11
3.1 Three Blocs 11
3.2 Bloc Voting 12
3.3 Bloc Voting Agreements 13
3.4 Effect on Transfer of Partnership Interests 13
3.5 Restrictions on Control of More than One Bloc 14
3.5.1 14
3.5.2 14
3.5.3 15
4 Formation and Purpose of the Limited Partnership 15
4.1 Formation 15
4.2 Name 16
4.3 Purpose 16
4.4 Regulatory Status 16
4.5 Representations and Warranties 16
4.5.1 17
4.5.2 18
4.6 Offices 20
4.7 Qualification in Other Jurisdictions 21
4.8 Incremental Expansion 21
4.8.1 21
4.8.2 22
4.8.3 23
4.9 Commitment to Construct or Acquire 23
4.9.1 23
4.9.2 24
4.10 Regulatory & Financing Decisions 25
4.11 26
5 Capital Contributions 27
5.1 Capital Accounts 27
5.2 Additional Capital Contributions 28
5.2.1 28
5.2.2 29
5.2.3 29
5.3 Payment of Capital Contributions 30
5.3.1 30
5.3.2 31
5.3.3 32
5.3.4 32
5.4 Voluntary Contributions 35
5.5 Withdrawn Partner 35
5.5.1 35
5.5.2 37
5.5.3 37
6 Allocation of Profits and Losses 41
6.1 Agreed Allocations 41
6.2 Required Allocations 42
6.2.1 42
6.2.2 43
6.2.3 43
6.2.4 45
6.3 Definition of Profits and Losses 46
6.4 Section 754 Adjustments 46
6.5 Curative Allocations 46
6.6 Curative Amendments 47
7 Distributions 47
8. Accounting and Taxation 48
8.1 Fiscal Year 48
8.2 Location of Records 48
8.3 Books of Accounts 49
8.3.1 49
8.3.2 49
8.4 Annual Financial Statements and Tax Information 49
8.4.1 49
8.4.2 49
8.5 Interim Financial Statements 50
8.5.1 50
8.5.2 50
8.5.3 50
8.6 Taxation 50
8.7 Governmental Reports 51
8.8 Inspection of Facilities and Records 51
8.9 Deposit and Withdrawal of Funds 52
9. Management of the Partnership 52
9.1 General Management Structure 52
9.1.1 52
9.1.2 53
9.1.3 53
9.2 Management Committee 54
9.2.1 54
9.2.2 55
9.2.3 56
9.2.3.1 56
9.2.4 57
9.2.5 57
9.2.6 58
9.2.7
61
9.2.8
62
9.2.9 63
9.3 Executive Committee 64
9.3.1 64
9.3.2
64
9.3.3 65
9.3.4
66
9.4 Audit Committee 66
9.4.1 66
9.4.2
67
9.4.3 68
9.4.4 68
9.5 Finance Advisory Committee 69
9.5.1 69
9.5.2
69
9.5.3 70
9.5.4 70
9.6 Legal Advisory Committee 70
9.6.1 70
9.6.2 71
9.6.3 71
9.6.4 72
9.7 Design & Construction of the Facilities 72
9.8 Operation of the Facilities 72
9.9 Limitation of Authority 74
9.10 Indemnification 74
9.11 Other Position or Representations 74
9.12 Adjustments 75
10 Limitation of Liabilities 75
10.1 Limitation on Liability of Partners Generally 75
10.2 Limitation on Liability of Limited Partners 75
10.3 Limitation of Authority of Partners 77
10.4 Cross-Indemnification 77
11 Transfer or Pledge of Partnership Interests 79
11.1 Limitation on Right to Transfer Partner's Interest 79
11.1.1 79
11.1.2 82
11.1.3 83
11.2 Legends on Evidences of Indebtedness Held
by Partners 83
11.3 Permitted Transfers by Partners 84
11.3.1 84
11.3.2 85
11.4 Effect of Permitted Transfers 86
11.4.1 86
11.5 Further Limitation on Transfers 86
11.6 Effect of Prohibited Transfers 87
11.7 Tax Election 87
11.8 Pledge of Interest 87
11.9 General Partner as a Limited Partner 87
12 Termination and Right of Withdrawal 88
12.1 Term of Partnership; Voluntary Dissolution 88
12.2 Automatic Dissolution 89
12.2.1 89
12.2.2 89
12.2.3 90
12.3 Automatic Withdrawal 90
12.3.1 90
12.3.2 90
12.3.3 91
12.3.4 91
12.3.5 91
12.4 Other Withdrawals 92
12.5 Winding Up and Liquidation 92
12.5.1 92
12.5.2 95
12.6 Continuance of Partnership 95
12.6.1 96
12.6.2 96
12.6.3 97
12.6.4 97
12.6.5 97
12.6.6 97
13 General 98
13.1 Effect of Agreement 98
13.2 Notices 99
13.2.1 99
13.2.2 99
13.3 Further Assurances 100
13.4 Applicable Law 100
13.5 Counterparts 100
13.6 Headings 100
13.7 Waiver 101
13.8 Partition 101
13.9 Laws and Regulatory Bodies 102
13.10 Partnership Opportunity 102
13.11 Section Numbers 102
13.12 Confidentiality 103
13.13 References to Money 105
13.14 Severability 105
13.15 Third Persons 105
Signature Pages 107
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
The parties to this Agreement agree as follows:
1. Parties. The following are the parties to this Agreement:
As General Partners of the Partnership:
1.1 TransCanada Iroquois Ltd. (hereinafter called "TCIL"), a corporation
organized under the laws of the State of Delaware, with its principal
offices in Shelton, Connecticut and address for purposes of notice
under Section 13.2 at 000 Xxxxxxxxxx Xxxxxx, X.X., Xxxxx 000 Xxxxx,
Xxxxxxxxxx, X.X. 00000, Attention: X. Xxxxxx.
1.2 Alenco Iroquois Pipelines Inc. (hereinafter called "Alenco"), a
corporation organized under the laws of the State of Delaware, with
its principal office and address at 3900, 000 Xxxxxxx Xxxxxx X.X.,
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0.
1.3 NorthEast Transmission Co. (hereinafter called "NETCO"), a corporation
organized under the laws of the State of Delaware, with its principal
offices and address at Xxx Xxxxx Xxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxx,
Xxx Xxxx 00000-0000.
1.4 TEN Transmission Company (hereinafter called "TEN Company"), a
corporation organized under the laws of the State of Connecticut, with
its principal offices and address at 000 Xxxxxxxx Xxxxxxxxx, X.X. Xxx
0000, Xxxxxxxx, Xxxxxxxxxxx 00000.
1.5 NJNR Pipeline Company (hereinafter called "NJNR"), a corporation
organized under the laws of the State of New Jersey, with its
principal offices and address at 0000 Xxxxxxx Xxxx, Xxxx, Xxx Xxxxxx
00000.
1.6 LILCO Energy Systems, Inc. (hereinafter called "LESCO"), a corporation
organized under the laws of the State of New York, with its principal
offices and address at 000 Xxxx Xxx Xxxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxx
00000.
1.7 JMC-Iroquois, Inc. (hereinafter called "JMC-Iroquois"), a corporation
organized under the laws of the State of Delaware, with its principal
offices and address at Xxx Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000.
1.8 ANR New England Pipeline Company (hereinafter called "ANR NEP"), a
corporation organized under the laws of the State of Delaware, with
its principal offices and address at 000 Xxxxxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000.
2
1.9 ANR Iroquois, Inc. (hereinafter called "ANR Iroquois"), a corporation
organized under the laws of the State of Delaware, with its principal
offices and address at 000 Xxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
00000.
1.10 CNG Iroquois, Inc. (hereinafter called "CNG Iroquois"), a corporation
organized under the laws of the State of Delaware, with its principal
offices and address at X.X. Xxx 0000, 000 Xxxx Xxxx Xxxxxx,
Xxxxxxxxxx, Xxxx Xxxxxxxx 00000.
As Limited Partners of the Partnership:
1.11 NETCO.
1.12 TEN Company.
1.13 JMC-Iroquois.
2. Definitions. Unless otherwise required by the context, the terms defined in
this Section 2 shall, for all purposes of this Agreement, have the
respective meanings set forth below:
2.1 Additional Commitment Date. The date on which the Management Committee
votes to commit the Partnership to an Incremental Expansion pursuant
to Section 4.9.
3
2.2 Additional Necessary Regulatory Approvals. All licenses, certificates,
permits, approvals and determinations (all of which must be final and
nonappealable) from United States and Canadian authorities having
jurisdiction as may be required in connection with (a) the
construction or acquisition and operation of an Incremental Expansion,
other than those licenses, certificates, permits, approvals and
determinations of a nature not customarily obtained prior to
commencement of construction or acquisition of the Incremental
Expansion and (b) the export, import and transportation if any, of the
gas to be transported as a result of such Incremental Expansion.
2.3 Additional Partner. A Partner under this Agreement admitted in
accordance with the provisions of Section 11.4.
2.4 Affiliate. Any Person which, directly or indirectly through one or
more intermediaries, controls or is controlled by or is under common
control with any Person, including, but not limited to: a Parent of a
Partner; a corporation more than 50% of the outstanding voting stock
of which is owned directly or indirectly by a Partner or a Parent of a
Partner; or a corporation more than 50% of the outstanding voting
stock of which is owned directly or indirectly by a corporation more
than 50% of the outstanding voting stock of which is owned directly or
indirectly by a Partner or by a Parent of a Partner.
4
2.5 Capital Account. The Capital Contributions credited to the account of
a Partner in accordance with Section 5, plus any profits of the
Partnership and less any losses of the Partnership determined in
accordance with Required Accounting Practice and allocated to such
account in accordance with Section 6, and less any distribution to
such Partner pursuant to Sections 7 or 12.5. The Capital Accounts of
the Partners established pursuant to this Agreement shall not be
deemed to be, nor have the same meaning as, the capital account of the
Partnership under the Natural Gas Act. The Capital Account of a Person
acquiring all or part of a Partner's Percentage Interest in accordance
with any provision of this Agreement authorizing or permitting such
acquisition shall include the portion allocable to such Person of the
Capital Account of the Partner whose Percentage Interest such Person
acquired, as such Capital Account stood at the date of such
acquisition, and a corresponding adjustment shall be made to the
Capital Account of the Partner whose Percentage Interest such Person
acquired.
2.6 Capital Contribution. A capital contribution made by a Partner
pursuant to this Agreement.
2.7 Certified Public Accountants. A firm of independent public accountants
selected from time to time by the Management Committee.
5
2.8 Code. The Internal Revenue Code of 1986, as amended.
2.9 Cost of an Incremental Expansion. All costs and expenses, including
any allowance for funds used during construction ("AFUDC"), incurred,
assumed or paid by the Partnership for the acquisition, planning,
design, engineering, financing, construction and start-up of an
Incremental Expansion, and securing Additional Necessary Regulatory
Approvals therefor.
2.10 Defaulting Partner. A Partner which is in default of any of its
material obligations hereunder, including, without limitation, (a) its
failure to make Capital Contributions hereunder, having received
notice of such default pursuant to Section 5.3.4(a), or (b) its
failure to perform its indemnification obligation pursuant to Section
10.4.
2.11 Estimated Cost of an Incremental Expansion. The total estimated Cost
of an Incremental Expansion as approved from time to time by vote of
the members of the Management Committee.
2.12 Facilities. The real, personal and mixed property (whether tangible or
intangible) owned and operated by the Partnership for the transmission
of natural gas or otherwise, as such property may exist from time to
time, with such changes in such property as may be approved by the
Management Committee (including, but not limited to, Incremental
6
Expansions approved by the Management Committee pursuant to Section
4.9).
2.13 FERC. The Federal Energy Regulatory Commission or any commission,
agency or other governmental body succeeding to the powers of such
commission.
2.14 Financing Commitment. Definitive agreements between financial
institution(s) and the Partnership or the Financing Corporation
pursuant to which such financial institution(s) agree, subject to the
conditions set forth therein, to lend money to, or purchase securities
of, the Partnership or the Financing Corporation, the proceeds of
which shall be used to finance all or a portion of the Facilities or
of an Incremental Expansion. It is the intention of the Partnership to
ensure that the terms of Financing Commitments shall limit the claim
of the parties thereunder to the assets of the Partnership and shall
waive any rights of such parties and other beneficiaries to proceed
against the Partners individually. No Financing Commitment may bind
any Affiliate or require a Partner to cause an Affiliate to undertake
any obligation in connection with any Financing Commitment without
said Affiliate's consent. No Financing Commitment may bind any Limited
Partner unless such Financing Commitment expressly recognizes the
limitations of liability of a Limited Partner set forth in Section
10.2 of this Agreement.
7
2.15 Financing Corporation. A corporation wholly owned by the Partnership
which may be organized for the purpose of issuing securities, the
proceeds from which are to be advanced directly or indirectly to the
Partnership to finance in whole or in part the cost of the Facilities
or the Cost of an Incremental Expansion.
2.16 Gas Transportation Contracts. The gas transportation contracts by and
between the Partnership and the Shippers for the transportation of
natural gas.
2.17 General Partner. Each of the Partners designated as a General Partner
under Sections 1.1 through 1.10, or any Additional Partner admitted to
the Partnership as a General Partner pursuant to Section 11 or any
Person substituted as a General Partner pursuant to this Agreement.
2.18 Incremental Expansion. Any facilities installed or acquired to modify,
improve or expand the Facilities or any portion thereof, or gas
transportation or delivery facilities installed or acquired, except in
connection with customary maintenance, to permit the delivery capacity
and/or throughput of the Facilities to be increased.
2.19 Limited Partner. Each of the Partners designated as a Limited Partner
under Sections 1.11 through 1.13, or any Additional Partner admitted
to the Partnership as a Limited Partner pursuant to Section 11 or any
8
Person which becomes a transferee of all or part of the Percentage
Interest of a Limited Partner or is otherwise substituted as a Limited
Partner pursuant to this Agreement.
2.20 Management Committee. The Management Committee provided for in Section
9.
2.21 Operating Agreement. The Amended and Restated Operating Agreement
dated as of February 28, 1997, between the Partnership and the
Operator, as the same may be further amended, supplemented or
otherwise modified from time to time in accordance with the terms
hereof and thereof.
2.22 Operator. Iroquois Pipeline Operating Company, a Delaware Corporation.
2.23 Parent. Any Person which owns directly or indirectly more than 50% of
the outstanding voting stock of a Partner.
2.24 Partner. Each of the Persons executing this Agreement, whether so
executing as a General Partner or a Limited Partner, and any Person
substituted for an original Partner and any Additional Partner which
is admitted to the Partnership pursuant to Section 11, excluding any
9
Withdrawn Partner or any Person for whom another Person has been
substituted as a Partner in the Partnership pursuant to this
Agreement.
2.25 Partnership. Iroquois Gas Transmission System, L.P., the Delaware
limited partnership created pursuant to Section 4.1 of this Agreement
as originally executed as of November 30, 1989.
2.26 Percentage Interest. That percentage interest for each Partner
determined in accordance with Sections 5.1, 5.5.3 and 11.4. The
initial Percentage Interest of each Partner as either a General
Partner or a Limited Partner shall be as set forth on Schedule A
hereto. Upon any transfer or allocation of all or part of the
Percentage Interest of a Limited Partner to any Person in accordance
with the provisions of this Agreement, the Person to which such
transfer or allocation is made shall hold the transferred or allocated
Percentage Interest as a Limited Partner.
2.27 Person. An individual, corporation, voluntary association, joint stock
company, business trust, partnership or other entity.
2.28 Representative. The individual designated by a Partner or Partners to
serve as a member of the Management Committee.
10
2.29 Required Accounting Practice. The accounting rules and regulations, if
any, at the time prescribed by the regulatory body or bodies under the
jurisdiction of which the Partnership is at the time operating and, to
the extent of matters not covered by such rules and regulations,
generally accepted accounting principles as practiced in the United
States at the time prevailing for companies engaged in a business
similar to that of the Partnership.
2.30 Shippers. Those Persons which, with the approval of the Management
Committee, propose to enter into or have entered into a Gas
Transportation Contract with the Partnership for the transportation of
gas through the Facilities.
2.31 Withdrawn Partner. A person who (a) has withdrawn from the Partnership
pursuant to Section 12.4 or (b) is deemed to have withdrawn from the
Partnership pursuant to Sections 5.3.4 or 12.3 of this Agreement.
2.32 Limited Partnership Certificate Date. December 1, 1989.
3. Voting.
3.1 Three Blocs. The Partners agree that, for purposes of voting under
this Agreement, they shall be organized into three blocs. The first
bloc
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(hereinafter referred to as the "Canadian Bloc") shall be comprised of
TCIL and Alenco, Affiliates of which are Canadian companies. Partners
in the Canadian Bloc hold Percentage Interests totaling 35%. The
second bloc (hereinafter referred to as the "LDC Bloc") shall be
comprised of NETCO; TEN Company; NJNR; LESCO; and JMC-Iroquois,
Affiliates of which are local distribution companies or, in the case
of JMC-Iroquois, an energy consulting venture. The Partners in the LDC
Bloc hold Percentage Interests totaling 33%. The third bloc
(hereinafter referred to as the "U.S. Interstate Bloc") shall be
comprised of ANR NEP, CNG Iroquois, and ANR Iroquois, the Parents of
which are U.S. interstate pipeline companies. The Partners in the U.S.
Interstate Bloc hold Percentage Interests totaling 32%.
3.2 Bloc Voting. The Partners agree that all voting under this Agreement,
whether designated as a vote, consent, approval or other form of
concurrence, and whether such action is to be taken by the Partners or
the Management Committee, shall be bloc voting in accordance with the
three blocs identified in Section 3.1, except as otherwise
specifically stated herein. Thus, each Partner in a bloc agrees that
its Representative shall cast its vote on any matter under this
Agreement requiring a vote in the same manner as all other Partners in
that bloc. Nothing herein shall be construed as requiring a Partner in
one bloc to vote in the same
12
manner as a Partner in a different bloc nor as requiring any
Representative of a Limited Partner, as a member of a bloc, to cast
its vote with respect to any matter as to which such Limited Partner
shall refrain from acting pursuant to Section 9.
3.3 Bloc Voting Agreements. The manner in which Partners in a given bloc
shall cast their votes on any matter under this Agreement requiring a
vote shall be determined in accordance with Bloc Voting Agreements to
be entered into by the Partners in each bloc. Copies of such Bloc
Voting Agreements, and of any subsequent amendments or modifications
to such Bloc Voting Agreements, shall be distributed to all Partners
within ten days of execution.
3.4 Effect On Transfer Of Partnership Interests. The Partners agree that
the total Percentage Interests in the three blocs shall always remain
at the 35%, 33% and 32% levels referenced in Section 3.1. Accordingly,
a Percentage Interest in any bloc shall always be deemed a Percentage
Interest in that bloc and shall always be voted in accordance with the
applicable Bloc Voting Agreement, notwithstanding the fact that all or
a portion of that Percentage Interest has been transferred in
accordance with this Agreement to another Partner or to any Person
substituted for an original Partner or any Additional Partner which is
admitted to the Partnership pursuant to Section 11. By operation of
this provision, it is
13
possible that a Partner's Percentage Interest may be divided among
more than one of the voting blocs. For that reason, reference in this
Agreement to a Partner's voting bloc shall be expressed in the
optional plural ("Partner's voting bloc(s)").
3.5 Restrictions On Control Of More Than One Bloc.
3.5.1 If any Partner, alone or in conjunction with its Affiliates,
owns or controls, directly or indirectly, sufficient
Percentage Interests in a bloc to unilaterally determine
(having regard to the Bloc Voting Agreement from time to time
governing the bloc) the manner in which such bloc shall be
required to vote on a given matter before the Management
Committee (the "Matter"), then such Partner shall be deemed
to be in control of that Bloc for the purposes of this
Section 3.5, insofar as regards such Matter; provided,
however, that the foregoing shall not apply to any Matter
requiring the unanimous vote of the Management Committee.
3.5.2 If, in respect of a Matter, a Partner is in control of any
bloc and if in respect of that Matter, such Partner also is
in control of an additional bloc (the "Additional Bloc") then
that portion and only that portion, of such Partner's or its
Affiliate's Percentage
14
Interest in the Additional Bloc which gives such Partner
control of the Additional Bloc in respect of such Matter
shall not be eligible for nor considered in a vote in the
Additional Bloc on such Matter.
3.5.3 For purposes of this Section 3.5, "unilateral determination"
shall mean the ability of a Partner and its Affiliates, by
the potential exercise of either a negative or an affirmative
vote by such Partner and its Affiliates, to determine,
without regard to the vote of other Partners, a negative or
an affirmative vote of a bloc on a given Matter.
For purposes of this Section 3.5, Additional Bloc shall mean,
as between the two blocs at issue, the bloc in which a
Partner or its Affiliates last acquired a Percentage
Interest.
4. Formation And Purpose Of The Limited Partnership.
4.1 Formation. The Partnership was formed by execution of the Limited
Partnership Agreement dated as of November 30, 1989 pursuant to the
Revised Uniform Limited Partnership Act of the State of Delaware, as
amended (the "Partnership Act"). The rights and liabilities of all
Partners currently existing or hereafter admitted shall be as provided
in the Partnership Act, except as herein otherwise expressly provided.
The
15
General Partners have executed and caused to be filed a Certificate of
Limited Partnership in accordance with the provisions of the
Partnership Act (which Certificate, among other things, identifies
each Limited Partner and indicates that such Limited Partner is a
limited, and not a general, partner of the Partnership), and shall
execute and cause to be filed, as appropriate, such further amendments
to such Certificate and other documents as are or become necessary or
advisable, as determined by the General Partners.
4.2 Name. The name of the Partnership shall be the Iroquois Gas
Transmission System, L.P., or such other name as the General Partners
may designate, upon written notice to the Partners, with such
variations thereof as may be necessary to comply with the laws of
other states, or Canadian provinces, within which the Partnership may
do business.
4.3 Purpose. The Partnership shall plan, design, construct, own and
operate the Facilities.
4.4 Regulatory Status. The Partners acknowledge that the Partnership will
be a "natural gas company" under the Natural Gas Act.
4.5 Representations And Warranties Concerning Formation Of The
Partnership.
16
4.5.1 General Representations And Warranties. Each Partner, at the
time of its admission to the Partnership, represents and
warrants that, the execution and delivery of this Agreement,
the formation or continuation of the Partnership, as the case
may be, and the performance of its obligations hereunder will
not contravene or conflict with any provision of law or of
the charter or bylaws of such Partner, or contravene,
conflict with or constitute a default under, any indenture,
mortgage, instrument or other agreement of such Partner or
any order, rule or regulation of any court, commission or
governmental agency applicable to such Partner. Each Partner
further represents, warrants and covenants that (a) it is,
and for so long as it is a Partner hereunder it will do or
cause to be done all things necessary to continue to be, a
corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation,
(b) it will not, without the prior consent of the Management
Committee, incur any indebtedness (direct or contingent) of
any kind (except indebtedness incurred to meet obligations
hereunder and owing to an Affiliate or incurred as a result
of being a Partner and except indebtedness of the
Partnership, for which such Partner, as a Partner, may be
17
deemed liable under applicable law), acquire any assets or
enter into or conduct any business or activity of any kind,
except to the extent necessary or appropriate in connection
with the performance by it of the terms of this Agreement or
incidental to its status as a Partner and (c) the execution
and delivery of this Agreement has been duly authorized, and
this Agreement, when executed and delivered by such Partner,
will be its valid and binding agreement, enforceable in
accordance with the terms hereof. In addition, CNG Iroquois
represents and warrants that it is an affiliate of a
registered public utility holding company and that its
performance of certain obligations under this Agreement may
be expressly conditioned upon the receipt by CNG Iroquois, or
the appropriate affiliate of CNG Iroquois, as necessary, of
authorizations from the Securities and Exchange Commission
under Sections 9(a)(1) and 10 and Rule 16 of the Public
Utility Holding Company Act of 1935.
4.5.2 Representations And Warranties Concerning The Public Utility
Holding Company Act Of 1935.
(a) All Partners, except CNG Iroquois, represent and warrant
that they are not holding companies, or subsidiaries or
affiliates of regulated holding companies, within the
18
meaning of the Public Utility Holding Company Act of
1935 and the rules and regulations promulgated
thereunder (the "Act").
(b) All Partners, including CNG Iroquois, represent and
warrant that no interests will be transferred and no
other actions will be taken which would result in 50% or
more of the Percentage Interests in the Partnership
being held by entities which are regulated holding
companies, or subsidiaries or affiliates of regulated
holding companies.
(c) CNG Iroquois represents and warrants that it will take
all actions necessary to assure that the Partnership
will not be subject to regulation, for any purpose,
under the Act, or lose the benefits of the exemption
under 17 C.F.R. 250.16 ("Rule 16"), as a result of its
ownership of its respective Percentage Interest; and
each of the other Partners represents and warrants that
it will in the future take all actions necessary to
assure that the Partnership will not be subject to
regulation for any purpose under the Act, or lose the
benefits of the exemption under Rule 16, as a result of
such Partner's ownership of its Percentage Interest. Any
breach of these representations and
19
warranties or any requirement under the Act or under
Rule 16 that any Partner dispose of its Percentage
Interest in the Partnership shall require the Partner
that is in breach or is subject to such requirement to
transfer its Percentage Interest (regardless of whether
such Percentage Interest is as a General or Limited
Partner) to the other Partners which are then General
Partners. Such Percentage Interest shall first be
offered to the General Partners within the transferor's
bloc and, if not fully subscribed within that bloc, to
all General Partners outside the transferor's bloc,
following the same procedures specified in Section
5.5.3.
4.6 Offices. The principal offices of the Partnership shall be at Xxx
Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxx 00000, or at such place as the
Management Committee may from time to time determine. Written notice
of any change in such offices shall be given to each Partner. The
registered office of the Partnership in the State of Delaware shall be
c/o Corporation Service Company, 0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxx
of Xxx Xxxxxx, Xxxxxxxx 00000 and the registered agent of the
Partnership for the service of process shall be Corporation Service
Company at the same address.
20
4.7 Qualification In Other Jurisdictions. The General Partners shall cause
the Partnership to be qualified or registered under assumed or
fictitious names or foreign limited partnership statutes or similar
laws, or take other appropriate action, in any jurisdiction in which
the Partnership owns property or transacts business if such
qualification, registration or other appropriate action is reasonably
necessary or reasonably anticipated to be necessary, or reasonably
requested by any Limited Partner, in order to protect the limited
liability of the Limited Partner(s), or to permit the Partnership
lawfully to own property or transact business in such jurisdiction.
The General Partners shall execute and cause to be filed and published
all such certificates, notices, statements or other instruments
reasonably necessary or reasonably anticipated to be necessary, or
reasonably requested by any Limited Partner, to permit the Partnership
to conduct business as a limited partnership in all jurisdictions
where the Partnership elects to do business and to maintain the
limited liability of the Limited Partner(s).
4.8 Incremental Expansion.
4.8.1 Any Partner or Partners (or the Operating Company) proposing
that the Partnership construct or acquire an Incremental
Expansion shall notify the other Partners and the Management
Committee of the amount of additional capacity requested and
21
the date on which such capacity is requested to be available,
and shall provide a detailed explanation of the reasons why
such capacity is being requested.
4.8.2 As soon as possible after providing such notice, the Partner
or Partners or the Operating Company proposing an Incremental
Expansion shall prepare and mail to each Partner:
(a) an estimate of the cost of the proposed Incremental
Expansion and, if available, the proposed financing
plan; and
(b) appropriate engineering data, flow diagrams and maps
describing such Incremental Expansion in such detail as
is required for filing as exhibits to the related
application to FERC for authorization to construct or
acquire and operate the proposed Incremental Expansion.
(c) The Partnership shall reimburse the Partner or Partners
proposing an Incremental Expansion for the cost of
preparing and mailing the above materials, if and when
the Management Committee votes to commit to construct or
acquire the Incremental Expansion or a modified version
thereof, pursuant to Section 4.9.
22
4.8.3 Within 60 days after the information described in Section
4.8.2 has been received by each Partner, the Management
Committee shall vote on whether to proceed with the
development of the proposed Incremental Expansion as set
forth in Section 4.8.2. Upon the vote of the Management
Committee to proceed with the development of the proposed
Incremental Expansion, which shall be the same vote required
in Section 4.9 to commit to construct or acquire an
Incremental Expansion, the Partnership shall proceed with
such development, including but not limited to the
acquisition of Additional Necessary Regulatory Approvals and
Financing Commitments. A vote to proceed with the development
of an Incremental Expansion shall be without prejudice to the
vote on whether the Partnership shall be committed to
construct or acquire such Incremental Expansion under Section
4.9.2.
4.9 Commitment To Construct Or Acquire An Incremental Expansion.
4.9.1 Except as provided in Section 5.2.1, the Partnership shall
not incur any material costs or obligations with respect to
an Incremental Expansion or be obligated under any Financing
Commitment relating to an Incremental Expansion (except for a
normal financing commitment fee) until (a) the Additional
23
Necessary Regulatory Approvals have been obtained, (b) such
Financing Commitments, if any, as may be required in the
opinion of the Management Committee for such Incremental
Expansion have been obtained, (c) gas transportation
contracts for the use of the capacity of the Incremental
Expansion have been executed by the Partnership and by one or
more shippers approved by the Management Committee, (d) the
Estimated Cost of an Incremental Expansion has been
determined and (e) the Management Committee has approved a
commitment to construct or acquire such Incremental Expansion
as provided in Section 4.9.2.
4.9.2 Immediately following the last to occur of the events
referred to in clauses (a), (b) and (d) of Section 4.9.1, and
the satisfaction of all conditions set forth in the precedent
agreements for execution of the gas transportation contracts
by the shippers which will utilize the capacity of the
Incremental Expansion (other than the vote of the Management
Committee to commit to construct or acquire the Incremental
Expansion), or at such time as determined by the Management
Committee, the Management Committee shall vote on whether the
Partnership shall be committed to construct or acquire the
Incremental
24
Expansion. The vote required for a commitment to construct or
acquire the Incremental Expansion or for a waiver of the
conditions precedent to a commitment vote shall be as
follows:
(a) Members of the Management Committee representing at
least one General Partner holding an interest in the
Canadian Bloc, at least one General Partner holding an
interest in the LDC Bloc and at least one General
Partner holding an interest in the U.S. Interstate Bloc,
must vote in favor of the commitment to construct or
acquire the Incremental Expansion, voting individually
and not as members of any bloc; and
(b) Members of the Management Committee representing 65% or
more of the Percentage Interests of the Partners, with
Partners voting individually and not as members of any
bloc, must vote in favor of the commitment to construct
or acquire the Incremental Expansion (which 65% or more
of the Percentage Interests shall include the votes of
the Partners referenced in Section 4.9.2(a) above).
4.10 Regulatory And Financing Decisions With Respect To Incremental
Expansions. All votes on regulatory and financial matters with respect
to
25
an Incremental Expansion, including without limitation the filing of
applications for Additional Necessary Regulatory Approvals or
amendments thereto, acceptance of all such approvals and amendments,
the filing of any tariff or tariff revisions relating to an
Incremental Expansion, and execution of financing agreements and
commitments related to an Incremental Expansion, shall be subject to
the same voting standard set forth in Section 4.9 for approval of the
commitment to construct or acquire; provided, however, that approval
of the Management Committee shall not be required in the case of the
acceptance by the Operator, pursuant to Section 3.1.2 of the Operating
Agreement, of Additional Necessary Regulatory Approvals and amendments
thereto if the terms of such approvals do not vary materially from the
authorizations sought in the related regulatory applications.
4.11 Notwithstanding Sections 4.8, 4.9 or 4.10, Management Committee
approval to develop or construct or acquire an Incremental Expansion
shall not be required in the case of Incremental Expansions or other
capital facilities which (i) do not exceed in any one instance a cost
of one million dollars ($1,000,000); (ii) will be constructed pursuant
to the Partnership's blanket certificate; and (iii) have been included
in the most recent budget approved by the Management Committee
pursuant to Section 5.2 of the Operating Agreement, and all regulatory
and
26
financing decisions with respect to the same shall be made by the
Operator without further approval of the Management Committee.
5. Capital Contributions.
5.1 Capital Accounts. As of the date hereof, each Partner's Capital
Account is proportionate to the Percentage Interest of such Partner
set forth on Schedule A to this Agreement. Unless otherwise agreed by
unanimous consent of the Partners, in the event of (a) the withdrawal
of a Partner or (b) a transfer of a Partner's interest or (c) payment
of a Capital Contribution as provided in Section 5.5.3, the Percentage
Interests set forth on Schedule A shall be adjusted so that the
Percentage Interest of each remaining General Partner shall be equal
to a fraction, the numerator of which is such General Partner's
Capital Account and the denominator of which is the total of all
remaining Partners' (General and Limited) Capital Accounts, rounded to
the nearest ten-thousandth of one percent; provided, however, that in
no event shall the adjustments referenced in this Section 5.1 modify
the requirement of Section 3.4 that the total Percentage Interests in
the three voting blocs always remain at 35%, 33% and 32%; and provided
further that in no event shall the adjustments referenced in this
Section 5.1 affect the Percentage Interest of a Limited Partner which
is not a Withdrawn Partner, other than in connection with a transfer
of such Interest as provided in Section 11.1.1.
27
The Percentage Interests set forth on Schedule A, as they may be
adjusted from time to time in accordance with the provisions of this
Agreement, shall govern the obligations to make Capital Contributions
as specified in this Section 5.
5.2 Additional Capital Contributions.
5.2.1 Whenever the Management Committee shall vote to proceed with
the development of a proposed Incremental Expansion as
provided in Section 4.8.3, the Management Committee shall
cause to be prepared and filed on behalf of the Partnership
appropriate applications for Additional Necessary Regulatory
Approvals. Each Partner shall make a cash Capital
Contribution to the Partnership, as provided in Section 5.3,
in an amount equal to its Percentage Interest of that
portion, if any, of the Estimated Cost of an Incremental
Expansion relating to the preparation and prosecution of the
application(s) for Additional Necessary Regulatory Approvals
and the acquisition of the Financing Commitments determined
from time to time by the Management Committee as being
required to be paid from Capital Contributions made by the
Partners prior to the Additional Commitment Date relating
thereto.
28
5.2.2 After any Additional Commitment Date relating to an
Incremental Expansion approved pursuant to Section 4.9, each
Partner shall make a cash Capital Contribution to the
Partnership, as provided in Section 5.3, in an amount, if
any, equal to its Percentage Interest of the Estimated Cost
of an Incremental Expansion, less (a) any amount previously
contributed by such Partner to the Cost of an Incremental
Expansion, (b) its Percentage Interest of the amount
committed under the Financing Commitments, if any, relating
to such Incremental Expansion and (c) its Percentage Interest
of the amount, if any, the Management Committee may determine
from time to time is available from the Partnership to
finance such Incremental Expansion.
5.2.3 In the event that, at any time or times, the Partnership
shall require additional capital for operations, other than
the capital provided for under Sections 5.2.1 and 5.2.2, each
Partner shall, as provided in Section 5.3, contribute to the
capital of the Partnership an amount equal to its Percentage
Interest multiplied by the aggregate amount of Capital
Contributions determined to be required for such purpose by
affirmative vote of members of the Management Committee
representing 65% or
29
more of the total Percentage Interests of the Partners if the
required Capital Contributions are Ten Million Dollars
($10,000,000) or less, and 75% or more of the total
Percentage Interests of the Partners if the required Capital
Contributions are more than Ten Million Dollars
($10,000,000).
5.3 Payment Of Capital Contributions.
5.3.1 The Management Committee shall issue or cause to be issued a
written request to each Partner for payment of each
installment of Capital Contributions to be made in accordance
with Section 5.2, at such times and in such amounts (a) in
the case of Capital Contributions to be made in accordance
with Section 5.2.2 as shall be consistent with the schedule
of Capital Contributions contained in the acquisition or
construction fund schedule most recently approved by
affirmative vote of members of the Management Committee as
provided in this Agreement, subject only to such variations
in timing of such payments as may be necessitated by the cash
requirements of the Partnership and (b) in the case of
Capital Contributions to be made in accordance with Sections
5.2.1 and 5.2.3, as the Management Committee shall approve as
provided in this Agreement. All amounts received by the
Partnership pursuant to this Section 5.3,
30
whether received prior to, on or after the date specified in
Section 5.3.2(d), shall be credited to the respective
Partner's Capital Account as of such specified date. All
amounts received from a Partner after the date specified in
Section 5.3.2(d) by the Partnership pursuant to this Section
5.3 shall be accompanied by interest on such overdue amounts,
which interest shall be payable to the Partnership and shall
accrue from and after such specified date at a rate equal to
the lesser of (x) 2% over the prime rate of Xxxxxx Guaranty
Bank from time to time in effect, or (y) the maximum interest
rate allowed for this purpose pursuant to the laws of the
State of New York. Any such interest paid with respect to a
Capital Contribution shall be credited to the respective
Capital Accounts of all the Partners, on a pro rata basis in
accordance with their respective Percentage Interests as of
the date such payment is made to the Partnership after giving
effect to the payment of the Capital Contribution with
respect to which such interest accrued.
5.3.2 Each written request issued pursuant to Section 5.3.1 shall
contain the following information:
(a) The total amount of Capital Contributions requested from
all Partners;
31
(b) The amount of Capital Contribution requested from the
Partner to whom the request is addressed, such amount to
be in accordance with the Percentage Interest of such
Partner;
(c) The purpose for which the funds are to be applied in
such reasonable detail as the Management Committee shall
direct; and
(d) The date on which payments of the Capital Contribution
shall be made (which date shall not be less than 30 days
following the date the request is given) and the method
of payment, provided that such date and method shall be
the same for each of the Partners.
5.3.3 Each Partner agrees that it shall make payments of its
respective Capital Contributions in accordance with requests
issued pursuant to Section 5.3.1.
5.3.4 (a) In the event a Partner shall default in the performance
of any of its obligations to make any Capital Contribution to
the Partnership in accordance with the terms of this
Agreement and such default shall continue uncured for a
period of 30 days after the giving of notice to all of the
Partners of such default by any
32
of the other Partners or for such extended cure period as may
be approved by affirmative vote of members of the Management
Committee representing 65% or more of the total Percentage
Interests of the Partners, then such Partner shall be deemed
to have withdrawn from the Partnership effective as of the
31st day after such notice or the day after expiration of the
extended cure period, as the case may be, and such Defaulting
Partner shall thereafter be a Withdrawn Partner. Subsequent
to any such event of default and unless and until such
default shall be cured as provided in Section 5.3.4(c), the
Defaulting Partner shall have no right to receive any
allocations which are attributable to its interest in the
Partnership and made in accordance with Section 6 and no
distribution shall be made to the Defaulting Partner under
Section 7. Notwithstanding the above, the allocation and
distributive share of a Defaulting Partner shall be retained
by the Partnership until such time as (i) the Defaulting
Partner has timely cured the relevant default, at which time
the Partnership shall distribute the retained funds, without
interest, or (ii) the Defaulting Partner has become a
Withdrawn Partner, at which time the funds so retained shall
remain Partnership property.
33
(b) After the receipt of such notice of default pursuant to
Section 5.3.4(a) and prior to the curing of any such
default as provided in Section 5.3.4(c) of this
Agreement or the withdrawal of the Defaulting Partner as
provided in Section 5.3.4(a), a Defaulting Partner shall
continue to be a Partner and shall continue to be
obligated to make all Capital Contributions as provided
in this Section 5.3; provided, however, that until such
default is cured, such Defaulting Partner's
Representative shall not have any vote in matters to be
acted upon by the Management Committee, and such
Defaulting Partner's Percentage Interest shall not be
considered in determining the total Percentage Interests
of the Partners for the purpose of any vote of the
Management Committee and shall not be considered in
determining the vote of the bloc(s) in which the
Defaulting Partner's Percentage Interest is included.
(c) A Defaulting Partner shall be deemed to have cured all
defaults under this Section 5.3 when it has fulfilled
its obligations to make all payments then due under
Section 5.3 prior to the end of the period for cure as
provided in Section 5.3.4(a).
34
(d) Notwithstanding any other provision hereof, the
obligation of a Partner to make any Capital Contribution
hereunder shall not be reduced as a result of the
Percentage Interest of such Partner being less than it
would otherwise have been because of the Partner's
previous failure to make any Capital Contribution. In
the case of a Partner who is in default pursuant to this
Section 5.3.4, the Percentage Interest of such Partner
shall be presumed for the purposes of Section 5.3.2 to
be the same as it would have been if such Partner had
not previously failed to make such Capital Contribution.
5.4 Voluntary Contributions. No Partner shall make any Capital
Contributions to the Partnership except pursuant to this Section 5.
5.5 Withdrawn Partner.
5.5.1 Consequences Of Withdrawal.
(a) A Withdrawn Partner which has involuntarily withdrawn
from the Partnership pursuant to Section 5.3.4 or
Section 12.3 shall be entitled to receive payment from
the Partnership, at a time or times when the Management
Committee determines in good faith that such payment
35
may be made without undue hardship to the Partnership or
any Partner, of an amount equal to its positive Capital
Account balance on the date of withdrawal (increased by
the amount of any liability paid by such Withdrawn
Partner after the date of withdrawal pursuant to Section
5.5.2), payable either in a lump sum or in installments
as determined by the Management Committee, in its sole
discretion. To the extent that the Management Committee
does not determine to make such a payment, a Withdrawn
Partner which has involuntarily withdrawn from the
Partnership in accordance with Section 5.3.4 or Section
12.3 shall be entitled only to such amounts as may be
distributed pursuant to Section 12.5. From and after the
date of its withdrawal, the former Capital Account
balance of such a Withdrawn Partner shall be recorded as
a contingent obligation of the Partnership, and not as a
Partner's Capital Account.
(b) The rights of a Withdrawn Partner set forth in Section
5.5.1(a) shall (i) be subordinate to the rights of any
other creditor of the Partnership, (ii) not impair in
any way the rights of continuing Partners to receive
distributions
36
pursuant to Section 7, (iii) not include any right on
the part of the Withdrawn Partner to receive any
interest or other amounts with respect thereto, (iv) not
be a personal obligation of any Partner and (v) be paid
as provided for in Section 12.5 in the event of
dissolution.
5.5.2 Further Effect. Any Partner that shall have (a) been deemed
to have withdrawn from the Partnership pursuant to Sections
5.3.4, 12.3 or 12.4 or (b) withdrawn in contravention of this
Agreement, shall have only those rights specifically set
forth in this Agreement and such Partner's status as a
Partner shall automatically terminate. Except as provided in
Sections 12.2.3 and 12.6, withdrawal by one or more General
Partners as described in the preceding sentence shall not
effect a dissolution of the Partnership. A Withdrawn Partner
shall remain obligated for all liabilities attributable to
its respective interest in the Partnership accruing prior to
the date of its withdrawal, including any such liabilities
maturing after such withdrawal but originating from actions
taken prior thereto.
5.5.3 Consequences Of Withdrawal To Remaining Partners. In the
event any Partner shall have withdrawn from the Partnership
or be deemed to have withdrawn from the Partnership pursuant
to
37
the provisions of this Agreement, if the Management Committee
determines that an amount equal to the whole or any portion
of the amount of Capital Contributions which such Withdrawn
Partner failed to pay when due or had been requested to pay
pursuant to Section 5.3.2 (which amount shall be herein
called the "Defaulted Contribution") should be contributed to
the Partnership by remaining General Partners in order to
meet the cash needs of the Partnership, it shall promptly
provide written notice of such determination to each
remaining General Partner, which notice shall state the
amount of the Defaulted Contribution. Each General Partner
continuing to hold Percentage Interests in the voting bloc(s)
of the Withdrawn Partner shall have the right to elect (by
written notice to the other Partners within ten days of the
date of the notice from the Management Committee of the
Defaulted Contribution) to contribute any percentage of the
Defaulted Contribution not in excess of the percentage
determined by dividing the Percentage Interest of such
remaining General Partner (including, in the case of any
General Partner which is also a Limited Partner, the
aggregate Percentage Interest held as both a General and a
Limited Partner) in the Withdrawn Partner's voting bloc(s) by
38
the sum of the Percentage Interests of all remaining General
Partners in the Withdrawn Partner's voting bloc(s) who so
elect to contribute a portion of the Defaulted Contribution
(any percentage so elected being determined on a bloc-by-bloc
basis and being hereafter called an "Elected Percentage");
provided, however, that (a) those General Partners who so
elect to satisfy a portion of the Defaulted Contribution may
unanimously agree to allocate the amounts of their
contributions among such General Partners in a manner other
than that provided for in this Section 5.5.3 and (b) the sum
of the Elected Percentages of the General Partners who so
elect to satisfy the Defaulted Contribution must be 100%. In
the event that such General Partners do not elect to
contribute an amount equal to 100% of the Defaulted
Contribution in accordance with the second sentence of this
Section 5.5.3 and the Management Committee does not alter its
determination that the cash needs of the Partnership should
be met by Capital Contributions, then within ten days of the
date of a written request therefor from the Management
Committee, any General Partner in any other bloc shall have
the right to elect (by written notice to the other Partners
within ten days of the Management Committee's
39
written request) to contribute any percentage of the
Defaulted Contribution not elected by the General Partners in
the Withdrawn Partner's bloc in accordance with the
procedures set forth in the second sentence of this Section
5.5.3; provided, however, that the effect of such elections
does not change the total Percentage Interests in each voting
bloc as specified in Section 3.4. In the event that the
General Partners do not elect to contribute an amount equal
to 100% of the Defaulted Contribution and the Management
Committee does not alter its determination that the cash
needs of the partnership should be met by Capital
Contributions, then within ten days of the date of a written
request therefor from the Management Committee, each General
Partner shall contribute to the Partnership an amount equal
to its pro rata share (based on the ratio of such General
Partner's Percentage Interest (including, in the case of any
General Partner which is also a Limited Partner, the
aggregate Percentage Interest held as both a General and a
Limited Partner) to the sum of the Percentage Interests of
all the remaining General Partners) of the Defaulted
Contribution not otherwise elected by the General Partners in
accordance with the procedures set forth herein; provided,
however, that
40
nothing herein shall be construed as preventing admission of
a new Partner or Partners to the Partnership in accordance
with Section 11 in order to meet the cash needs of the
Partnership resulting from the withdrawal of a Partner or
Partners. To the extent that any General Partner contributes
any portion of a Capital Contribution pursuant to this
Section 5.5.3, that General Partner's Percentage Interest as
a General Partner shall be adjusted to reflect the
contribution (due account being given to the contributions of
other General Partners and the termination of the Withdrawn
Partner's status as a Partner); provided, however, that such
adjustment shall not affect the total Percentage Interests
included in each voting bloc as specified in Section 3.4 even
if a Partner's adjusted Percentage Interest must be allocated
among more than one voting bloc to maintain that requirement;
and provided further that such adjustment shall not affect
the Percentage Interest of a Limited Partner which is not the
Withdrawn Partner.
6. Allocation Of Profits And Losses.
6.1 Agreed Allocations. Except as otherwise provided herein, all items of
revenue, income, profit, gain, expense, loss, deduction and credit of
the Partnership determined in accordance with Required Accounting
41
Practice shall be allocated to the Partners and credited to their
respective Capital Accounts in accordance with their respective
Percentage Interests as of the date of the allocation. Such
allocations shall be made for each calendar month based upon the
weighted average of each Partner's Percentage Interest during such
month. These allocations are subject to retroactive adjustments
resulting from any changes in Capital Accounts pursuant to FERC or
other governmental order.
6.2 Required Allocations.
6.2.1 Allocations of revenue, income, gains, profits, deductions,
credits, expenses, losses and tax preference items for
Federal income tax purposes shall be made in the manner set
forth in Section 6.1 for the division of income, expense,
profit and loss. Notwithstanding the preceding sentence, any
item of gain recognized by the Partnership upon a taxable
disposition of property of the Partnership which would be a
capital gain but for a provision of the Code which requires
that some or all of the gain be treated as ordinary income
because the realization of such gain is attributable to
deductions or credits, whether with respect to depreciation
or otherwise, previously allowed to the Partnership, shall be
allocated to the Partners to which the prior
42
deductions or credits were allocated in proportion to the
amounts so allocated previously.
6.2.2 Before allocating profits and losses in accordance with
Section 6.1, solely for tax purposes, profits and losses (and
items thereof) attributable to property contributed to the
Partnership by a Partner shall be allocated in accordance
with Section 704(c) of the Code so as to take account of any
variations between the tax bases of the Partnership's assets
and the fair market values of those assets at the time of
their contribution to the Partnership. The Partnership shall
use a reasonable method, as determined by the Tax Matters
Partner, of making Code Section 704(c) allocations as
described in Treasury Regulations Section 1.704-3.
6.2.3 Notwithstanding any other provision of this Agreement, (i) no
losses shall be allocated to a Limited Partner if such losses
would cause a deficit in such Limited Partner's Capital
Account (after reduction to reflect the items described in
Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5)
and (6)) that exceeds the sum of: (A) its share of
"Partnership minimum gain" within the meaning of Treasury
Regulations Section 1.704-2(g) and (B) its share of "Partner
nonrecourse debt minimum gain" within the
43
meaning of Treasury Regulations Section 1.704-2(i), (ii)
nonrecourse deductions of the Partnership within the meaning
of Treasury Regulations Section 1.704-2(b)(1), other than
partner nonrecourse deductions within the meaning of Treasury
Regulations Section 1.704-2(i)(1), shall be allocated among
the Partners in accordance with their respective Percentage
Interests, (iii) any partner nonrecourse deduction within the
meaning of Treasury Regulations Section 1.704-2(i)(1) shall
be allocated in accordance with that section, (iv) if there
is a net decrease in "Partnership minimum gain" within the
meaning of Treasury Regulations Section 1.704-2(d) for any
fiscal period of the Partnership, items of gain and income
shall be allocated among the Partners in accordance with
Treasury Regulations Section 1.704-2(f) and the ordering
rules contained in Treasury Regulations Section 1.704-2(j),
and (v) if there is a net decrease in "Partner nonrecourse
debt minimum gain" within the meaning of Treasury Regulations
Section 1.704-2(i) for any fiscal period of the Partnership,
items of gain and income shall be allocated among the
Partners in accordance with Treasury Regulations Section
1.704-2(i)(4) and the ordering rules contained in
44
Treasury Regulations Section 1.704-2(j). The Partners'
respective "interests in Partnership profits" for purposes of
determining such Partners' shares of the nonrecourse
liabilities of the Partnership within the meaning of Treasury
Regulations Section 1.752-3(a)(3) shall be equal to their
respective Percentage Interests.
6.2.4 If a Limited Partner receives in any fiscal period of the
Partnership an adjustment, allocation or distribution
described in subparagraphs (4), (5), or (6) of Treasury
Regulations Section 1.704-1(b)(2)(ii)(d) that causes or
increases a negative balance in such Partner's Capital
Account that exceeds the sum of (i) such Partner's share of
"Partnership minimum gain" within the meaning of Treasury
Regulations Section 1.704-2(g) and (ii) such Partner's share
of "Partner nonrecourse debt minimum gain" within the meaning
of Treasury Regulations Section 1.704-2(i), such Partner
shall be allocated specially for such fiscal period (and, if
necessary, later fiscal periods) items of income and gain in
an amount and manner sufficient to eliminate such negative
Capital Account balance as quickly as possible as provided in
Treasury Regulations Section 1.704-1(b)(2)(ii)(d).
45
6.3 Definition of Profits and Losses. "Profits" and "losses" shall be
determined in accordance with federal income tax accounting principles
as modified by Treasury Regulations Section 1.704-1(b)(2)(iv), except
the profits and losses shall not include items that are specially
allocated pursuant to Sections 6.2.2, 6.2.3 and 6.2.4.
6.4 Section 754 Adjustments. 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 Treasury Regulation
Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining
Capital Accounts, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases
such basis) and such gain or loss shall be specially allocated to the
Partners in a manner consistent with the manner in which their Capital
Accounts are required to be adjusted pursuant to such section of the
Treasury Regulations.
6.5 Curative Allocations. Notwithstanding any other provisions of this
Section 6 other than Section 6.2 (the "Required Allocations"), the
Required Allocations shall be taken into account in making the
allocations under Section 6.1 (the "Agreed Allocations") so that, to
the extent possible, the net amount of items of income, gain, loss and
deduction allotted to each Partner pursuant to the Required
Allocations
46
and the Agreed Allocations, together, shall be equal to the net amount
of such items that would have been allocated to each Partner under the
Agreed Allocations had the required Allocation and this curative
allocation not otherwise been provided in this Section 6.
6.6 Curative Amendments. It is the intent of the parties to this Agreement
that the chargeback provisions and the limitation on loss allocation
provisions provided herein satisfy the "allocation of nonrecourse
deduction" rules provided in Treasury Regulation Section 1.704-2 and
the requirements of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)
(relating to the alternate test for economic effect and qualified
income offset). It is further intended that the allocations under this
Agreement shall effect an allocation for federal income tax purposes
in a manner consistent with Section 704(b) of the Code and the
Treasury Regulations promulgated thereunder. If for any reason the
allocations contained in this Agreement shall conflict with the
Treasury Regulations promulgated under Section 704(b) of the Code, the
Management Committee may amend these provisions if it believes that
such an amendment is necessary to reflect allocations consistent with
such regulations.
7. Distributions. Distributions to the Partners shall be made only to all
Partners (other than a Defaulting Partner) simultaneously in proportion to
their
47
respective Percentage Interests (at the time the amounts of such
distributions are determined) and in such aggregate amounts and at such
times as shall be determined by the Management Committee; provided, however,
that if for any fiscal year the Partnership shall have earned a net profit,
as determined under Required Accounting Practice, then such net profit shall
be distributed out of available cash (to the extent that such cash is not
required for operations) within 60 days following the end of such fiscal
year (unless the Management Committee, by affirmative vote of members
representing 75% or more of the total Percentage Interests of the Partners,
determines otherwise or unless such distribution would violate, or result in
a default under any agreement of the Partnership or applicable law) to the
Partners in proportion to their respective Percentage Interests (at the time
the amount of such distribution is determined).
8. Accounting And Taxation.
8.1 Fiscal Year. The fiscal year of the Partnership shall be the calendar
year or such other annual period as is selected by the Management
Committee and approved (to the extent necessary) by requisite
governmental authorities for financial or tax reporting purposes.
8.2 Location Of Records. The books of account for the Partnership shall be
kept and maintained at the principal office of the Partnership or at
such other place as the Management Committee shall determine.
48
8.3 Books Of Account. The books of account for the Partnership shall be:
8.3.1 Maintained on an accrual basis in accordance with Required
Accounting Practice; and
8.3.2 Audited by the Certified Public Accountants at the end of
each fiscal year.
8.4 Annual Financial Statements And Tax Information. As soon as
practicable following the end of each fiscal year of the Partnership,
the Management Committee shall cause to be prepared and delivered to
each Partner:
8.4.1 A profit and loss statement and a statement of changes in
financial position for such fiscal year, a balance sheet and
a statement of each Partner's Capital Account as of the end
of such fiscal year, together with a report thereon of the
Certified Public Accountants; and
8.4.2 Such Federal, state and local income tax returns and such
other accounting, tax information and schedules as shall be
necessary for the preparation by each Partner on or before
three months plus fifteen days after the end of each fiscal
year of its income tax return for such fiscal year.
49
8.5 Interim Financial Statements. As soon as practicable after the end of
each calendar month, the Management Committee shall cause to be
prepared and delivered to each Partner, with an appropriate
certificate of the Person authorized to prepare the same:
8.5.1 A profit and loss statement and a statement of changes in
financial position for such month (including sufficient
information to permit the Partners to calculate their tax
accruals), for the portion of the fiscal year then ended and
for the twelve-month period then ended;
8.5.2 A balance sheet and a statement of each Partner's Capital
Account as of the end of such month; and
8.5.3 A statement comparing the actual financial status and results
of the Partnership as of the end of or for such month and the
portion of the fiscal year then ended with the budgeted or
forecasted status and results as of the end of or for such
respective periods.
8.6 Taxation. The Parties intend that the Partnership shall be treated as
a "partnership" for Federal and state tax purposes. The Partnership's
state and Federal income tax returns shall be approved by the
Management Committee and subject to review by the Certified Public
Accountants,
50
counsel or other Person or Persons designated by the Management
Committee for such purpose. All of the Partnership elections for state
and Federal income tax purposes shall be determined by affirmative
vote of members of the Management Committee representing 75% or more
of the total Percentage Interests of the Partners, except those
specifically reserved by the Code to be made by the individual
Partners. The Management Committee shall designate a tax matters
Partner, which Partner shall not be a Limited Partner, a Canadian
company or an Affiliate of a Canadian company.
8.7 Governmental Reports. Under the direction of the Management Committee,
the Partnership shall prepare and file, or cause to be prepared and
filed, all reports prescribed by the FERC and any other commission or
governmental agency having jurisdiction.
8.8 Inspection Of Facilities And Records. Each Partner shall have the
right at all reasonable times during usual business hours to inspect
the facilities of the Partnership and to audit, examine and make
copies of the books of account and other records of the Partnership.
Such right may be exercised through any agent or employee of such
Partner designated in writing by it or by an independent public
accountant, petroleum engineer, attorney or other consultant so
designated. The Partner
51
making the request shall bear all costs and expenses incurred in any
inspection, examination or audit made at such Partner's behest.
8.9 Deposit And Withdrawal Of Funds. Funds of the Partnership shall be
deposited in such banks or other depositories as shall be designated
from time to time by the Management Committee. All withdrawals from
any such depository shall be made only as authorized by the Management
Committee or by the Operator pursuant to the Operating Agreement and
shall be made only by check, wire transfer, debit memorandum or other
written instruction.
9. Management Of The Partnership.
9.1 General Management Structure.
9.1.1 The major policies of the Partnership shall be established by
the Management Committee, which, except as otherwise provided
in this Agreement, shall have exclusive authority with
respect to supervising the affairs of the Partnership,
including supervising the management of the affairs of the
Partnership by the Operator and reviewing the Operator's
performance of its management duties. No General Partner,
except as specified in the Operating Agreement, shall have
authority to act for, or assume any obligation or
responsibility on behalf of, the
52
Partnership without the prior written approval of the
Management Committee, and no Limited Partner shall have any
authority whatsoever to act for, or assume any obligation or
responsibility on behalf of, the Partnership.
9.1.2 The day to day management of the affairs of the Partnership,
including maintenance of the financial and other records and
books of account of the Partnership, supervision and
construction of the Facilities, and activities reasonably
related thereto, shall be the responsibility of the Operator,
whose performance of such duties shall be subject to
supervision and review by the Management Committee.
9.1.3 The Partnership is the sole shareholder of the share(s) of
the Operator. So long as the Partnership continues to be the
sole shareholder of the share(s) of the Operator, (i) each
Partner shall nominate one Director of the Operator and the
Partnership shall vote the share(s) of the Operator so as to
elect the Directors so nominated; (ii) the Chairman of the
Partnership Management Committee shall be the Chairman of the
Board of Directors of the Operator; (iii) in the event of the
resignation or removal of a Director nominated by a Partner,
the Partnership shall vote the share(s) of the Operator so as
to elect a new Director nominated
53
by such Partner; and (iv) the affirmative vote of Partners
representing 75% or more of the total Percentage Interests of
the Partners shall be required to vote the share(s) of the
Operator with respect to all other matters.
9.2 Management Committee.
9.2.1 The members of the Management Committee shall be one
Representative of each Partner designated from time to time
by such Partner by written notice to each other Partner and
the Partnership. By like notice, each Partner may designate
an Alternate Representative who shall have authority to act
in the absence of its Representative. Nothing shall preclude
two or more Partners from designating the same Representative
or Alternate Representative. Any Partner may at any time, by
written notice to all other Partners and to the Partnership,
remove its Representative or Alternate Representative on the
Management Committee and designate a new Representative or
Alternate Representative. Each Representative shall serve on
the Management Committee until his successor shall be duly
designated or until his death, resignation or removal by the
Partner or Partners which appointed him. Any action taken by
the Partnership in compliance with the direction of the
54
Management Committee pursuant to its authority hereunder
shall be binding on the Partnership and each Partner, whether
such direction was approved by the regular members of the
Management Committee in accordance with the provisions hereof
or one or more of the Alternate Representatives, and the
participation and acts (including the execution of any
documents) by any Alternate Representative of a Partner shall
be deemed to be the act of the Representative for which such
Alternate Representative is acting without, in the case of
any written document, any evidence of the absence or
unavailability of such Representative.
9.2.2 The Chairman of the Management Committee shall be a member of
the Management Committee and shall be elected by the
Management Committee annually. The Chairmanship shall be held
by Representatives holding interests in each of the three
blocs on a rotating basis. There shall be a Secretary of the
Management Committee who may or may not be a voting member
thereof. No Representative or Alternate Representative of a
Limited Partner may serve as either Chairman or Secretary of
the Management Committee.
55
9.2.3 The Chairman shall preside at all meetings of the Management
Committee, which shall meet quarterly subject to less
frequent meetings upon approval of the Management Committee
by affirmative vote of members representing 75% or more of
the total Percentage Interests of the Partners. Notice of and
an agenda for all Management Committee meetings shall be
provided by the Chairman to all Representatives at least ten
days prior to the date of such meetings. Special meetings of
the Management Committee may be called at such times and
places, and in such manner, as any Partner deems necessary.
Any Partner calling for any such special meeting or for any
other meeting of the Partnership shall notify the Chairman
who in turn shall notify all Representatives or Partners, as
appropriate, of the date and agenda for such meeting(s) at
least ten days prior to the date of such meetings. The
Chairman may shorten the ten day notice period only in
extraordinary circumstances. Written minutes of all meetings
shall be maintained.
9.2.3.1 Any action required or permitted to be taken by the
Management Committee may be taken without prior written
notice thereof, by written consent in lieu of meeting if
signed by the Representatives of all of the Partners. Any
action
56
required or permitted to be taken by the Management Committee
also may be taken, upon ten business days' written notice
thereof to each Partner, by written consent in lieu of
meeting if signed by the Representatives of Partners whose
Percentage Interests aggregate not less than the Percentage
Interests required for approval of such action under this
Agreement. If the action authorized by written consent has
not been taken within sixty days of the effective date set
forth in the written consent, such consent shall be deemed to
have expired. Written notice of the taking of an action
authorized by written consent shall be given to the
Representatives of all Partners within five business days of
such action being taken.
9.2.4 The Management Committee may, by affirmative vote of members
representing 75% or more of the total Percentage Interests of
the Partners, create such committees as it may deem necessary
or appropriate.
9.2.5 Except as otherwise provided by this Agreement, the
Management Committee shall Act upon the affirmative vote,
approval or consent of a majority of the Percentage Interests
of the Partners. Subject to Section 5.3.4, for this purpose
each Representative shall have a number of votes equal to the
57
Percentage Interest(s) of the Partner or Partners (s) he
represents at the time any such matters are voted on; and a
majority of such votes shall be the vote of a majority of the
Percentage Interests.
9.2.5 The approval of the Management Committee by affirmative vote
of members representing 65% or more of the Percentage
Interests of the Partners shall be necessary as provided in
this Agreement and before any of the following actions can be
taken on behalf of the Partnership:
(a) Approval of the operating budgets for the Facilities;
(b) Execution of interim financing agreements and
commitments relating to the Facilities and any
amendments thereto;
(c) Timing and amounts of Capital Contributions of Ten
Million Dollars ($10,000,000) or less to be made by the
Partners in accordance with the provisions of Section
5.2.3;
(d) Creation of a Financing Corporation related to interim
financing, determination of the state of incorporation
58
thereof and approval of the form and content of such
Financing Corporation's certificate or articles of
incorporation and bylaws;
(e) Selection and retention of counsel and the Certified
Public Accountants; provided, however, that the General
Counsel of the Operator shall, upon advice to the
Chairman of the Management Committee and without further
approval of the Management Committee, be authorized to
retain counsel for services to be performed at a cost of
no more than $50,000 annually;
(f) Admission of substitute Partners in accordance with
Section 11.3.2;
(g) Filing of the Partnership's Tariff or any amendment
thereto, relating to the Facilities with the FERC;
provided, however, that approval of the Management
Committee shall not be required in the case of (i)
tariff compliance filings filed by the Operator pursuant
to Section 3.1.2 of the Operating Agreement and (ii)
revisions to rates and fees which will not affect annual
revenues by more than $100,000 which are filed by the
59
Operator pursuant to Section 5.4 of the Operating
Agreement;
(h) Any change in the authority and responsibility of the
Operator for the management of the Partnership's affairs
pursuant to this Agreement;
(i) Selection of a successor Operator, if such becomes
necessary;
(j) Amendment or termination of any Gas Transportation
Contracts and the execution, amendment or termination of
any successor agreement thereto; provided, however, that
approval of the Management Committee shall not be
required in the case of Gas Transportation Contracts
executed by the Operator pursuant to Section 2.2 of the
Operating Agreement;
(k) Approval of the initial size, general design
requirements and location of the Facilities and any
material changes thereto (except as otherwise provided
in Section 4.9); and
(l) Any other action for which the approval of the
Management Committee by affirmative vote of members
60
representing 65% or more of the total Percentage
Interests of the Partners is expressly required by this
Agreement.
9.2.7 The approval of the Management Committee by affirmative vote
of members representing 75% or more of the Percentage
Interests of the Partners shall be necessary as provided in
this Agreement and before any of the following actions can be
taken on behalf of the Partnership:
(a) Execution of permanent financing agreements and
commitments relating to the Facilities and any
amendments thereto;
(b) Timing and amounts of distributions to Partners pursuant
to Section 7;
(c) Timing and amounts of Capital Contributions exceeding
Ten Million Dollars ($10,000,000) to be made by the
Partners in accordance with the provisions of Section
5.2.3;
(d) Payment by the Partnership of any amounts to a Withdrawn
Partner pursuant to this Agreement;
61
(e) Creation of a Financing Corporation related to permanent
financing, determination of the state of incorporation
thereof and approval of the form and content of such
Financing Corporation's certificate or articles of
incorporation and bylaws;
(f) Establishment of Partnership tax policies and
determination of Partnership tax elections and any
modifications thereof;
(g) Any change in the authority and responsibility delegated
in this Agreement to any committee; and
(h) Any other action for which the approval of the
Management Committee by affirmative vote of members
representing 75% or more of the total Percentage
Interests of the Partnership is expressly required by
this Agreement.
9.2.8 Without modification of its general authority under Section
9.1.1, the Management Committee is hereby specifically
authorized to cause to be initiated and made any eminent
domain takings permitted by state or Federal law and required
for the construction, acquisition, operation and maintenance
of the Facilities, and the Partners agree to join in any such
takings
62
to the extent permitted or required by Federal or state law;
provided, however, that a Limited Partner shall be entitled
to abstain from taking any action otherwise required under
this Section 9.2.8 in its sole discretion.
9.2.9 A Limited Partner may cause its Representative (or Alternate
Representative, as the case may be) on the Management
Committee (or any other committee provided for herein) to
abstain from voting on any issues before, or participating in
any other activities of, such committee, in such Limited
Partner's sole discretion. In the event of any abstention by
a Limited Partner pursuant to this Section 9.2.9, such
Limited Partner's Percentage Interest shall be allocated
among the General Partners in the Limited Partner's voting
bloc(s) for the purpose of any vote of the Management
Committee (or any other committee provided for herein) or in
determining the vote of the bloc(s) in which such Limited
Partner's Percentage Interest is included pursuant to the
terms of the applicable Bloc Voting Agreement.
63
9.3 Executive Committee.
9.3.1 An Executive Committee shall be formed which shall consist of
three members of the Management Committee and their
Alternates representing Partners holding interests in each of
the three voting blocs. The Chairman of the Management
Committee shall be the Chairman of the Executive Committee.
Decisions of the Executive Committee shall be by majority
vote of the members, provided that all members are present
and voting. Each member shall serve on the Committee for a
two year term, unless his successor shall earlier be duly
appointed or until his earlier death, ineligibility to serve,
resignation or removal by the Partner which appointed him.
9.3.2 The Executive Committee shall meet twice annually subject to
less frequent meetings upon the affirmative vote of members
of the Management Committee representing 75% or more of the
total Percentage Interests of the Partners, and at such other
times as called by its Chairman, or by any two members of the
Committee by notice to the Chairman. The Chairman shall
designate the time and place of all Executive Committee
meetings and shall provide notice of and an agenda for each
meeting at least five days prior to the date thereof, unless
such
64
notice is waived by all Committee members. Meetings shall be
conducted in accordance with the Terms of Reference of the
Executive Committee, as the same may be revised by the
Management Committee from time to time. Written minutes of
each meeting shall be maintained. Any member of the
Management Committee may attend any meeting of the Executive
Committee; provided, however, that there shall be no
requirement to provide notice of such meetings to any member
of the Management Committee who is not also a member of the
Executive Committee.
9.3.3 The Executive Committee shall, on behalf of the Partnership:
(a) Subject to such limitations as the Management Committee
may establish, review and authorize, if warranted,
proposed expenditures by the Operator not otherwise
permissible under the terms of the Operating Agreement
and which cannot be deferred until the next planned
Management Committee meeting;
(b) Review and recommend approval of proposals presented by
the Operator regarding financing, proposed
65
Incremental Expansions and other items of Partnership
business;
(c) Review with the Operator significant policy issues,
business plans, budgets and proposed acquisitions and/or
divestitures and make recommendations to the Management
Committee with respect to the same; and
(d) Perform such other responsibilities as are set forth in
the Terms of Reference for the Executive Committee, as
the same may be revised by the Management Committee from
time to time.
9.3.4 The Executive Committee shall report fully to the Management
Committee at each meeting of the Management Committee and at
such other times and places as the Management Committee deems
advisable.
9.4 Audit Committee.
9.4.1 An Audit Committee shall be formed which shall consist of not
less than three and not more than five members of the
Management Committee and their Alternates representing
Partners holding interests in not less than two of the three
66
voting blocs. The Management Committee shall designate one
member of the Audit Committee to serve as Chairman of the
Audit Committee; provided, however, that the Chairman of the
Audit Committee shall not be a Representative or Alternate
Representative of a Limited Partner. Decisions of the Audit
Committee shall be by majority vote of the members. Each
member shall serve on the Committee for a two year term,
unless his successor shall earlier be duly appointed or until
his earlier death, ineligibility to serve, resignation or
removal by the Partner which appointed him.
9.4.2 The Audit Committee shall meet twice annually subject to less
frequent meetings upon the affirmative vote of members of the
Management Committee representing 75% or more of the total
Percentage Interests of the Partners, and at such other times
as called by its Chairman, or by any two members of the
Committee by notice to the Chairman. The Chairman shall
designate the time and place of all Audit Committee meetings
and shall provide notice of and an agenda for each meeting at
least five days prior to the time fixed for such meeting,
unless such notice is waived by all committee members.
Meetings shall be conducted in accordance with the Terms of
Reference of the
67
Audit Committee, as the same may be revised by the Management
Committee from time to time. Written minutes of each meeting
shall be maintained.
9.4.3 The Audit Committee shall, on behalf of the Partnership:
(a) Consult with internal and external auditors;
(b) Review and monitor the internal audit coverage and plans
for coverage;
(c) Analyze and approve internal audit operating
philosophies and strategies;
(d) Review the results of all financial audits;
(e) Review the results of all recommendations for corrective
action; and
(f) Perform such other responsibilities as are set forth in
the Terms of Reference of the Audit Committee, as the
same may be revised by the Management Committee from
time to time.
9.4.4 The Audit Committee shall report fully to the Management
Committee at each meeting of the Management Committee and
68
at such other times and places as the Management Committee
deems advisable.
9.5 Finance Advisory Committee.
9.5.1 A Finance Advisory Committee shall be formed which shall
consist of a member and an alternate designated by each
Partner. The Management Committee shall designate one member
of the Finance Advisory Committee to serve as Chairman of the
Finance Advisory Committee; provided, however, that the
Chairman of the Finance Advisory Committee shall not be a
Representative or an Alternate Representative of a Limited
Partner. Decisions of the Finance Advisory Committee shall be
by majority vote of the members. Each member shall serve on
the Committee until his successor shall be duly appointed or
until his death, ineligibility to serve, resignation or
removal by the Partner which appointed him.
9.5.2 The Finance Advisory Committee shall meet twice annually
subject to less frequent meetings upon the affirmative vote
of members of the Management Committee representing 75% or
more of the total Percentage Interests of the Partners, and
at such other times as called by its Chairman. The Chairman
shall
69
designate the time, place and manner of all Finance Advisory
Committee meetings and shall provide notice of and an agenda
for each meeting at least five days prior to the date
thereof, unless such notice is waived by all Committee
members. Written minutes of each meeting shall be maintained.
9.5.3 The Finance Advisory Committee shall, on behalf of the
Partnership, review all financing proposals and make
recommendations to the Management Committee with respect to
the same.
9.5.4 The Finance Advisory Committee shall report fully to the
Management Committee at such times and places as the
Management Committee deems advisable.
9.6 Legal Advisory Committee.
9.6.1 A Legal Advisory Committee shall be formed which shall
consist of three members and three alternates, with one
member and one alternate appointed by each of the three
voting blocs. The Management Committee shall designate one
member of the Legal Advisory Committee to serve as Chairman
of the Legal Advisory Committee; provided, however, that the
Chairman of the Legal Advisory Committee shall not be a
Representative or
70
an Alternate Representative of a Limited Partner. Decisions
of the Legal Advisory Committee shall be by majority vote of
the members. Each member shall serve on the Committee until
his successor shall be duly appointed or until his death,
ineligibility to serve, resignation or removal by the Partner
which appointed him.
9.6.2 The Legal Advisory Committee shall meet twice annually
subject to less frequent meetings upon the affirmative vote
of members of the Management Committee representing 75% or
more of the total Percentage Interests of the Partners, and
at such other times as called by its Chairman. The Chairman
shall designate the time, place and manner of all Legal
Advisory Committee meetings and shall provide notice of and
an agenda for each meeting at least five days prior to the
date thereof, unless such notice is waived by all Committee
members. Written minutes of each meeting shall be maintained.
9.6.3 The Legal Advisory Committee shall, on behalf of the
Partnership:
(a) Consult with the General Counsel of the Operator;
71
(b) Review the status of current major litigation involving
the Partnership; and
(c) Review budgeted and actual outside legal expenditures.
9.6.4 The Legal Advisory Committee shall report fully to the
Management Committee at such times and places as the
Management Committee deems advisable.
9.7 Design And Construction Of The Facilities. The Partnership may enter
into such service contracts and other appropriate agreements as shall
be prepared and negotiated by the Operator, subject to review and
approval by the Management Committee, with any Person (including,
without limitation, any Partner or Affiliate of any Partner) for the
acquisition, planning, design and construction of the Facilities.
9.8 Operation Of The Facilities. The Operator shall perform its duties
under Section 9.1.2 of this Agreement pursuant to and in accordance
with the terms of the Operating Agreement. All of the terms and
provisions of the Operating Agreement, including, without limitation,
Sections 15.12 and 15.13 thereof, are approved, ratified and confirmed
by all the Partners. The Management Committee may, by affirmative vote
of members representing 65% or more of the total Percentage Interests
of the Partners, at any time agree to an amendment to the
72
Operating Agreement or, in the event that the Operating Agreement is
terminated pursuant to the terms thereof or the Operator is removed as
hereinafter provided, select a new Operator or Operators. The
Management Committee may remove the Operator, with or without cause,
by a 65% vote of all Partners; provided, however, that if the Operator
is a Partner or the Affiliate of a Partner, such removal must be made
unanimously by the Representatives of all Partners other than (i) the
Operator or its Affiliate and (ii) any Partner who is, or whose
Affiliate is, under contract with the Operator, voting individually
and not as members of any bloc. It is not intended that ownership of
the Operator by the Partnership shall cause any Partner to be deemed
to be an Affiliate of the Operator. A vote on removal of the Operator
may be held only after the Operator has been given reasonable notice
of, and an opportunity to be heard on, a call for its removal by one
or more Partners. Termination of the Operating Agreement pursuant to
the terms thereof shall also result in automatic removal of the
Operator. Any successor Operator selected pursuant to this Section 9.8
shall execute and be bound by an operating agreement substantially in
the form of the original Operating Agreement entered into by the
Partnership, unless the Management Committee otherwise provides for
amendment of such
73
form of Operating Agreement. No Limited Partner (or any Affiliate
thereof) shall be a successor Operator.
9.9 Limitation Of Authority. The several Partners, the Management
Committee, the committees appointed as provided in Sections 9.2.4,
9.3, 9.4, 9.5 and 9.6 and the Operator shall not have authority to
take any action inconsistent with the terms of this Agreement, the
Partnership Act or any other applicable law, rule or regulation.
9.10 Indemnification. The Partnership shall indemnify and save harmless the
members of the Management Committee and the members of any committee
appointed as provided in Sections 9.2.4, 9.3, 9.4, 9.5 and 9.6 against
all actions, claims, demands, costs and liabilities arising out of the
acts (or failure to act) of such Persons in good faith within the
scope of their authority in the course of the Partnership's business,
and such Persons shall not be liable for any obligations, liabilities
or commitments incurred by or on behalf of the Partnership as a result
of any such acts (or failure to act).
9.11 Other Positions Or Representations. Any member of the Management
Committee and the committees provided for in Sections 9.2.4, 9.3, 9.4,
9.5 and 9.6 may also be an officer, director or employee of a Partner
or one or more Affiliates of a Partner.
74
9.12 Adjustments. For purposes of determining adjustments to Partners'
Percentage Interests pursuant to Section 5.1, the latest monthly
statement of Capital Accounts delivered to the Partners shall be
controlling.
10. Limitation Of Liabilities.
10.1 Limitation On Liability Of Partners Generally. Subject to the
provisions of applicable law, no Partner shall be liable to third
Persons for Partnership losses, debts, liabilities or obligations,
except as otherwise expressly agreed to in writing by such Partner,
unless the assets of the Partnership shall first be exhausted.
10.2 Limitation On Liability Of Limited Partners. No Limited Partner shall
be liable for or subject to any obligations, losses, debts or
liabilities of the Partnership at any time in excess of the sum of (a)
the amount of such Limited Partner's Capital Account at such time in
addition to the amount of any unpaid installment of Capital
Contributions theretofore requested in writing by the Management
Committee in accordance with Section 5.3, plus accrued interest
thereon to the extent provided in said Section 5.3, (b) the amount of
any distributions made to such Limited Partner if, after such
distribution, the fair value of the remaining assets of the
Partnership are not sufficient to pay the Partnership's then
75
outstanding liabilities, exclusive of liabilities to Partners on
account of their Capital Contributions, (c) to the extent that cash
distributed to a Limited Partner constitutes a return of all or a
portion of such Limited Partner's Capital Contributions, such Limited
Partner will be liable to the Partnership, for one year after such
return, for the amount of such returned contributions, but only to the
extent necessary to discharge the Partnership's liability to creditors
who extended credit to the Partnership during the period such
contributions were held by the Partnership, and (d) to the extent that
a Limited Partner has received the return of any part of such
Partner's Capital Contributions in violation of this Agreement or the
Partnership Act, such Limited Partner will be liable to the
Partnership, for a period of three years after such return, for the
amount of such contributions wrongfully returned. Notwithstanding any
other provision of this Agreement, in no event shall any liability or
obligation of any Limited Partner to the Partnership or any other
Partner, or to any other Person or entity (together with the amount of
any and every previous such liability or obligation), (i) based upon
or in respect of any obligations, losses, debts or liabilities of the
Partnership, or (ii) otherwise arising under this Agreement or by
virtue of or in connection with the Partnership or its activities,
assets or liabilities, and whether pursuant to any indemnification
provisions of this Agreement,
76
pursuant to principles of contribution or otherwise, exceed in the
aggregate the sum of the amounts set forth in the preceding sentence.
In no event shall any Limited Partner or any Representative of any
Limited Partner be expected or required to take any action, directly
or indirectly, which, in the sole judgment of such Limited Partner,
may subject it to liability or potential liability aggregating in
excess of the sum of such amounts, under this Agreement or any other
agreement, or under the Partnership Act or any other applicable law,
rule or regulation.
10.3 Limitation Of Authority Of Partners. Except as specified in the
Operating Agreement, no Partner shall have the authority to act for,
or assume any obligation or responsibility on behalf of, any other
Partner, without the prior written approval of such other Partner. No
Limited Partner shall, in any event, have any authority whatsoever to
act for or assume any responsibility on behalf of the Partnership.
10.4 Cross-Indemnification. Each Partner (for purposes of this Section
10.4, the "indemnitor") shall indemnify and hold harmless each of the
other Partners (for purposes of this Section 10.4, the "indemnitee")
and the Affiliates, directors, officers, partners (other than the
Partners to this Agreement), employees, agents and representatives of
the indemnitee from and against any costs, losses, claims, damages and
liabilities arising out of any act of or any assumption of any
obligation or responsibility by
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the indemnitor or any of its Affiliates, directors, officers, partners
(other than the Partners to this Agreement), employees, agents or
representatives which act is performed or obligation is assumed in
connection with the indemnitor's status as a Partner in the
Partnership and (i) has the effect of binding the indemnitee, or (ii)
has the effect of making the indemnitee liable without its consent
(including, without limitation, sales or other acts entirely on its
part which may give rise to product liability claims); provided,
however, that this Section 10.4 shall have no application with respect
to any actions taken (a) on behalf of the Partnership by, or on behalf
of, the Management Committee in conformance with this Agreement, (b)
on behalf of one Partner by another Partner in conformance with this
Agreement or (c) by, or on behalf of, the Operator in conformance with
the Operating Agreement. Notwithstanding the foregoing, the liability
of any Limited Partner pursuant to this Section 10.4 shall not exceed
(i) the amount of such Limited Partner's Percentage Interest in the
Partnership, which liability shall be subject to satisfaction only out
of such Percentage Interest, and (ii) the amount of any unpaid
installment of Capital Contributions theretofore requested in writing
by the Management Committee in accordance with Section 5.3, plus
accrued interest thereon to the extent provided in said Section 5.3.
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11. Transfer Or Pledge Of Partnership Interests.
11.1 Limitation On Right To Transfer Partner's Interest.
11.1.1 Subject to (a) the right of first refusal herein provided,
(b) the prior approval of the Management Committee (which
shall not be unreasonably withheld) as set forth in this
Section 11.1.1 and (c) any applicable Federal or state
securities law requirements, a Partner (the "Transferring
Partner") may sell, assign or otherwise transfer all or any
part of its right, title or interest in the Partnership or
all or any part of its right, title or interest in any
evidence of indebtedness of the Partnership (the "Interest")
to any other Person which has made a valid and binding offer
in cash or cash equivalents to purchase the Interest (the
"Offeror"). The Management Committee's approval shall be
based upon a determination by affirmative vote of members
representing a majority of the total Percentage Interests of
the Partners that (x) the transfer of the Interest will
comply with the requirements of Section 11.1.2, (y) the
Offeror will assume by operation of law or by express
agreement with the Partnership (in form and substance
reasonably satisfactory to the Management Committee) all of
the obligations of the Transferring Partner under this
Agreement to the extent of the
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Interest transferred and (z) the transfer of the Interest
will not adversely affect the financial and operating
integrity of the Partnership. Forthwith after acceptance of
an offer from an Offeror to purchase the Interest
(conditioned on the satisfaction of the requirements of this
Section), the Transferring Partner shall give notice in
writing thereof to all of the other Partners enclosing a true
copy of the offer. The Partners in the same voting bloc(s) as
the Transferring Partner, other than the Limited Partner(s)
and the Transferring Partner, shall have a right of first
refusal, exercisable within 30 days of receipt of such
notice, to purchase the Interest on the same terms and
conditions as such offer on a pro rata basis (determined by
dividing each such Partner's Percentage Interest by the sum
of the Percentage Interests of all the Partners other than
the Transferring Partner and any Limited Partner(s) in the
same voting bloc(s) as the Transferring Partner). The
Partners which elect in the first election round to purchase
any portion of their respective pro rata shares of the
Interest may allocate the purchase of the Interest among such
Partners on a basis unanimously agreed to by such Partners,
provided that such Partners collectively agree to purchase
100% of the Interest. If
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any such Partner does not elect to purchase its full pro rata
share of the Interest in such election round, the Partners
which elected to purchase their respective full pro rata
shares in the election round ("fully-electing Partners")
shall have the right to elect to purchase the remaining
portion of the Interest on a pro rata basis (determined by
dividing each such fully electing Partner's Percentage
Interest by the sum of the Percentage Interests of all such
fully-electing Partners) which right must be exercised within
five days after the expiration of the election round. In the
event that the General Partner(s) in the same voting bloc(s)
as the Transferring Partner do not elect to purchase 100% of
the Interest, then the General Partner(s) in the other voting
bloc(s) shall have the right, within fifteen days of the
expiration of the election round, to purchase the portion of
the Interest not purchased by the Transferring Partner(s)
voting bloc(s), on a pro rata basis or on such other basis as
they may determine. If the Interest is not fully accepted by
Partners after compliance with the procedures specified above
in this Section 11.1.1 and if the Management Committee has
given its approval as specified in this Section 11.1.1, the
Transferring Partner shall thereafter be free to complete the
transfer of the
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Interest to the Offeror; provided, however, that such
transfer may not be effectuated unless it is strictly in
accordance with the terms and conditions of the offer of
which the other Partners were previously given notice as
provided herein and, in compliance with any applicable
Federal or state registration requirements or exemption(s)
therefrom. If the transfer of the Interest to the Offeror is
not consummated within 90 days after the expiration of the
last election round referred to above, no transfer by the
Transferring Partner to the Offeror or any other Person may
be made without again complying with this Section 11.1.1. A
transfer of any or all of the ownership of a Partner shall be
deemed to be a transfer of all of such Partner's interest in
the Partnership (including the indebtedness or equity
thereof) for purposes of this Section 11.1.1.
11.1.2 Additional Persons may become parties to this Agreement and
Additional Partners of the Partnership under this Section 11
only upon the following conditions:
(a) A Person may be admitted as a Partner to the Partnership
only under circumstances which, in the opinion of
counsel to the Partnership, will avoid a termination of
the Partnership under Section 708 of the Code;
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(b) Such admission shall be in compliance with any
agreements with security holders of the Partnership or
others that may require the consent of such security
holders or other parties to the admission of Additional
Partners;
(c) Such admission shall be in compliance with all
applicable requirements of law, including the Natural
Gas Act, the applicable rules and regulations of the
FERC and, any applicable Federal or state securities
laws, rules and regulations; and
(d) In the case of admission of a Limited Partner, such
Person's admission shall be subject to the prior written
approval of all Partner(s).
11.1.3 Notwithstanding anything herein to the contrary, the
foregoing provisions of Section 11.1 shall not be applicable
to transfers between or among Partners and/or their
Affiliates within a bloc which are governed by or otherwise
permissible under the Bloc Voting Agreements from time to
time governing the blocs identified in Section 3.
11.2 Legend On Evidences Of Indebtedness Held By Partners. As long as this
Agreement shall remain in effect, all evidences of indebtedness of the
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Partnership to any of the Partners or their Affiliates shall bear an
appropriate legend to indicate that it is held subject to, and may be
assigned or transferred only in accordance with, the terms and
conditions of this Agreement.
11.3 Permitted Transfers By Partners. Nothing herein (other than Section
11.5) shall prevent:
11.3.1 The transfer by any Partner of all or any part of its right,
title and interest in the Partnership (including indebtedness
thereof) and in this Agreement to another corporation which
is an Affiliate of the transferor, provided that (a) such
Affiliate assumes by operation of law or express agreement
with the Partnership (in form and substance reasonably
satisfactory to the Management Committee) all of the
obligations of the transferor under this Agreement to the
extent of the interest transferred and (b) no such transfer
(other than pursuant to a statutory merger or consolidation
wherein all obligations and liabilities of the Partner are
assumed by the successor corporation by operation of law)
shall relieve the transferor of its obligations under this
Agreement without the approval of the Management Committee.
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11.3.2 An assignment, pledge or other transfer creating a security
interest (and any transfer made in foreclosure or other
enforcement of such security interest) in all or any portion
of a Partner's right, title or interest in the Partnership
and in this Agreement, under any mortgage, indenture, deed of
trust or security agreement (the "Assigned Interest") created
by any Partner (the "Assigning Partner"); provided, however,
that (a) the assignment, pledge or other transfer relates to
the financing of the Facilities or the Assigning Partner's
financial participation in the Partnership; (b) the assignee,
pledgee, mortgagee, trustee or secured party shall hold the
same subject to all of the terms of this Agreement; (c) such
assignee, pledgee, mortgagee, trustee or secured party, or
any transferee of such Assigned Interest (the "Secured
Party)", shall not become a substitute Partner unless the
Management Committee shall have approved such substitution by
affirmative vote of members representing 65% or more of the
total Percentage Interests of the Partners; and (d) unless
and until such Secured Party becomes a substitute Partner in
accordance with the foregoing clause (c), it shall not have
any voice in the management of the Partnership as a result of
any
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such transfer and shall have no right to enforce any
provision of this Agreement against any Partner.
11.4 Effect of Permitted Transfers. No sale, assignment, pledge or other
transfer creating a security interest pursuant to Section 11 shall
give rise to a right in any Partner or Partners to dissolve the
Partnership. Except as provided in this Section 11.4, no such sale,
assignment, pledge or other transfer shall give rise to a right in any
transferee to become a Partner in the Partnership.
11.4.1 Upon any transfer permitted by Section 11.1.1 or 11.3.1, the
transferee shall be automatically admitted as a Partner in
substitution for, or in the case of a partial transfer, in
addition to, the transferor Partner, upon execution of a
counterpart of this Agreement. In the event of such a
transfer, the Percentage Interests of the transferee and
transferor Partners shall be modified in accordance with
Section 5.1.
11.5 Further Limitation on Transfers. Notwithstanding any other provision
of this Agreement, no interest in Partnership capital or profit and
losses may be transferred if, in the opinion of counsel for the
Partnership, such transfer would result in a termination of the
Partnership under Section 708 of the Code.
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11.6 Effect Of Prohibited Transfers. Any transfer of an interest in the
Partnership by a Partner in violation of the terms of this Agreement
shall be void and shall not be recognized by the Partnership. Any such
transfer shall not cause a dissolution of the Partnership but shall
result in the forfeiture of the transferor Partner's right to
participate in the management of the Partnership, and the voting
rights and requirements under this Agreement shall be appropriately
modified; provided, however, that nothing herein shall be deemed to
limit any right or remedies that the Partnership or any other Partner
may have against such transferor Partner.
11.7 Tax Election. In the event that the interest of a Partner is
transferred with the consent of the Management Committee, or otherwise
as permitted by Section 11, the Partnership may, at the request of the
transferee, make an election pursuant to Section 754 of the Code.
11.8 Pledge Of Interest. Except as permitted by the provisions of Section
11.3.2, no Partner shall be permitted to pledge or otherwise grant a
security interest in and to its Percentage Interest.
11.9 General Partner as a Limited Partner. A General Partner may also be a
Limited Partner to the extent that it becomes the transferee of all or
part of the Percentage Interest previously held by a Limited Partner.
A
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Partner which is both a General Partner and a Limited Partner shall
have the rights and powers, and shall be subject to the restrictions
and liabilities, of a General Partner under this Agreement and shall,
to the extent of the Percentage Interest held by such Partner as a
Limited Partner, have the rights and powers, and shall be subject to
the restrictions, of a Limited Partner under this Agreement; provided,
however, that no Partner which is both a General Partner and a Limited
Partner shall, as a General Partner, be subject to any restrictions
imposed on a Limited Partner set forth in Sections 8.6, 9.1.1, 9.2.2,
9.4.1, 9.5.1, 9.6.1, 9.8 or 10.4 of this Agreement. Notwithstanding
any other provision in this Agreement to the contrary, in the event a
General Partner owns a Percentage Interest in the Partnership as a
General Partner and as a Limited Partner, the obligation of such
Partner to the Partners and/or the Partnership, whether pursuant to
its obligations to make Capital Contributions, indemnification or
contribution available under applicable law, shall be measured by such
Partner's combined Percentage Interests in the Partnership as a
General and a Limited Partner, and not merely by its General Partner
Percentage Interest.
12. Termination And Right Of Withdrawal.
12.1 Term Of Partnership; Voluntary Dissolution. Subject to the other terms
and conditions of this Agreement, including, without limitation, the
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provisions of Section 12.2, the Partnership and this Agreement shall
continue in existence from the Limited Partnership Certificate Date
until October 31, 2089 and from year to year thereafter; provided,
however, that a Partner may elect to dissolve the Partnership and
terminate this Agreement as of October 31, 2089 or as of the end of
any succeeding extended annual period by giving the other Partners
written notice of such election not less than one year prior to the
date such dissolution is to take effect.
12.2 Automatic Dissolution. The Partnership shall be automatically and
without notice dissolved upon the happening of any of the following
events:
12.2.1 The sale or abandonment of all or substantially all of the
Partnership's business and assets; provided, however, that
any such sale or abandonment may only be made pursuant to the
written consent of Partners having 75% or more of the total
Percentage Interests of the Partners;
12.2.2 Any event which shall make it unlawful for the business of
the Partnership to be carried on; or
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12.2.3 Any event which, under the Partnership Act or any other
applicable law, rule or regulation, requires or results in
dissolution of the Partnership.
12.3 Automatic Withdrawal. In addition to those instances where withdrawal
is deemed to occur under Sections 5.3.4 or 12.4, a Partner, upon the
happening of any of the following events, shall be deemed to have
withdrawn from the Partnership and be entitled to receive payment only
as specified in Section 5.5 of this Agreement:
12.3.1 The entry by a court of competent jurisdiction of a decree or
order for relief, unstayed on appeal or otherwise and in
effect for 90 days, in respect of such Partner in an
involuntary case under the Federal bankruptcy laws, or any
such order adjudicating such Partner as bankrupt or insolvent
under any other applicable bankruptcy, insolvency or
liquidation law;
12.3.2 The entry by a court of competent jurisdiction of a decree or
order appointing a receiver, custodian, assignee, trustee,
liquidator, sequestrator or other similar official of such
Partner or of any substantial part of the property of such
Partner, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order
unstayed on appeal or
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otherwise and in effect for 90 days, or the commencement by
such Partner of a voluntary case under the Federal bankruptcy
laws, or under any other bankruptcy or insolvency law,
seeking reorganization, liquidation, arrangement, adjustment
or composition of such Partner under the bankruptcy laws or
any similar statute;
12.3.3 The making by such Partner of an assignment for the benefit
of creditors; or the failure of such Partner generally to pay
its debts as they become due; or the consenting by such
Partner to the appointment of or taking possession by a
receiver, assignee, custodian, trustee, liquidator,
sequestrator or other similar official of it or of any
substantial part of its property, or the taking of corporate
or partnership action by such Partner in furtherance of any
such action;
12.3.4 The filing by a Partner for dissolution under the laws of the
jurisdiction of its incorporation or the entering of a final
order dissolving that Partner by any court of competent
jurisdiction; or
12.3.5 Any event (other than an event of the nature specified in
Section 12.2.2) which shall make it unlawful (a) in the case
of a General
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Partner, for that General Partner to carry on the business of
the Partnership in the form of a partnership, or (b) in the
case of a Limited Partner, for that Limited Partner to
continue to hold an interest in the Partnership.
12.4 Other Withdrawals. Except as provided in Sections 5.3.4 and 12.3 of
this Agreement, or upon the admission of a substitute Partner in
accordance with the provisions of Section 11.4, no Partner shall be
entitled to withdraw from the Partnership.
12.5 Winding Up And Liquidation. After the Partnership shall be dissolved
pursuant to the provisions of Sections 12.1 or 12.2, the Management
Committee shall continue to exercise its powers under this Agreement
for the purpose of winding up the business of the Partnership and
liquidating its assets in an orderly manner, but the Partnership shall
engage in no new business during the period of such winding up.
12.5.1 The assets of the Partnership remaining after the payment, or
provision for payment, of all the liabilities of the
Partnership (other than any Special Contingent Obligations as
hereinafter defined) shall be distributed (a) if there is any
Partner who is deemed to have become a Withdrawn Partner
pursuant to Sections 5.3.4 or 12.3, to the Partners and any
such Withdrawn
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Partner(s) in the ratio that each Partner's Capital Account
(as of the date of dissolution) or such Withdrawn Partner's
Adjusted Capital Account (as hereinafter defined), bears to
the aggregate of (x) all Capital Accounts of the Partners (as
of the date of dissolution) and (y) all Adjusted Capital
Accounts of any such Withdrawn Partners, but only to the
extent of the positive balance of each Partner's Capital
Account (as of the date of dissolution) and each such
Withdrawn Partner's Adjusted Capital Account, or (b) if there
is no such Withdrawn Partner, to the Partners in the ratio
and to the extent of each Partner's positive Capital Account
balance and (c) finally, to the extent that there are any
assets of the Partnership remaining after the distributions
made pursuant to clause (a) or (b) above, to the Partners in
accordance with their respective positive Capital Account
balances as of the date immediately prior to any distribution
pursuant to this Section 12.5.1. As used in this Section
12.5.1, "Special Contingent Obligations" shall mean all
contingent obligations of the Partnership with respect to any
Withdrawn Partner's Adjusted Capital Accounts under Section
5.5. As used in this Section 12.5.1, a Withdrawn Partner's
"Adjusted Capital Account" shall be its former Capital
Account
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(as of the date immediately prior to its withdrawal),
increased by the amount of any liabilities of the Partnership
paid by such Withdrawn Partner after withdrawal pursuant to
Section 5.5.2, and decreased by all payments made to such
Withdrawn Partner after its withdrawal pursuant to Section
5.5.1.
For purposes of the preceding paragraph, the Capital Account
of each Partner shall be determined after all adjustments
made in accordance with Section 6 hereof resulting from
Partnership operations and from all sales and dispositions of
all or any part of the Partnership's assets. All
distributions pursuant to this Section 12.5.1 shall be made
by the end of the Partnership's taxable year in which the
liquidation occurs or 90 days after the liquidation,
whichever occurs later. To the extent deemed advisable by the
Management Committee (or the Trustee in Liquidation, if
applicable), appropriate arrangements (including the use of a
liquidating trust) may be made to assure that adequate funds
are available to pay any contingent debts or obligations. If
any General Partner has a deficit balance in its Capital
Account following the distributions pursuant to this Section
12.5.1, as determined after taking into account all Capital
Account adjustments for the tax year during which the
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Partnership terminates other than those made as a result of
contributions pursuant to this sentence, such General Partner
shall contribute to the Partnership cash equal to the amount
of such deficit balance by the end of such tax year, or 90
days after the date of such liquidation, whichever occurs
later, and such cash shall be paid to creditors of the
Partnership, if any, or distributed to the other Partners in
accordance with the preceding paragraph of this Section
12.5.1.
12.5.2 No termination or dissolution of the Partnership shall
relieve a Partner from any obligation accruing or accrued to
the date of such termination or dissolution; provided,
however, that a Limited Partner's liabilities for Partnership
obligations shall be solely as set forth in Section 10.2.
12.6 Continuance Of Partnership. Except as provided in Sections 12.1 and
12.2, it is understood and agreed by each of the Partners that the
relationship of partnership among them is intended to continue without
interruption until such relationship is either specifically dissolved
by consent of Partners having 75% or more of the total Percentage
Interests of the Partners or by the occurrence of any event specified
in Sections 12.1 or 12.2 as an event of dissolution, and each Partner
waives and releases, to the extent permitted by law, its right to
dissolve or obtain
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dissolution of the Partnership in any other manner or for any other
reason. In this connection, the Partners agree and intend that the
Partnership shall not be dissolved by the admission of a new Partner
pursuant to Section 11.4 or by the withdrawal of one or more General
Partners, provided that there is at least one remaining General
Partner in the Partnership. If, notwithstanding the foregoing
understanding, agreements and intentions of the Partners, the
Partnership may at any time or from time to time be deemed by
operation of law and otherwise than pursuant to Section 12.1 or 12.2
to be dissolved (for example, upon the bankruptcy or withdrawal of a
Partner), each of the Partners hereby covenants and agrees with the
other Partners as follows:
12.6.1 The business and affairs of the Partnership shall continue
without interruption and be carried out by a new partnership
(the "Successor Partnership");
12.6.2 The General Partners and Limited Partner(s) of the Successor
Partnership shall be the Persons who were General Partners
and Limited Partner(s), respectively, hereunder at the time
of such dissolution;
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12.6.3 The Successor Partnership and the Partners thereof shall be
governed by the terms of this Agreement as if the Successor
Partnership were the Partnership;
12.6.4 Each of the Partners covenants and agrees to execute such
further agreements, including (without limitation) notes,
novations and accommodations, as may be necessary to continue
the business of the Partnership and to protect and perfect
any lien or security interest granted by the Partnership;
12.6.5 Each of the Partners waives and releases, to the full extent
it may lawfully do so, all rights to a winding up or
liquidation of the business of the Partnership,
notwithstanding that the dissolution of the Partnership may
be caused wrongfully or otherwise in contravention of this
Agreement by such Partner or any other Partner, and further
notwithstanding that, at the time of such dissolution, such
Partner shall be, or be deemed to be or thereby become, a
Withdrawn Partner pursuant to this Agreement; and
12.6.6 As used in this Section 12.6, the term "Partnership," at any
point in time, shall mean the Partnership originally formed
pursuant to this Agreement or the Successor Partnership which
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at such time is continuing the business and affairs of the
Partnership originally so formed.
13. General.
13.1 Effect Of Agreement. From and after the Limited Partnership
Certificate Date, this Agreement reflects the whole and entire
agreement among the Partners and supersedes all prior agreements among
the Partners related to the subject matter hereof including, without
limitation, the Project Participation Memorandum Of Understanding, the
Iroquois Gas Transmission System general partnership formed by
agreement of the General Partners under the laws of the State of New
York on January 10, 1989, and all amendments thereto, and the Iroquois
Gas Transmission System Limited Partnership Agreement executed as of
November 30, 1989 and all amendments thereto. This Agreement can be
amended, restated or supplemented only by the vote and written
agreement of all Partners acting individually and not as members of
any bloc; provided, however, that any Additional Partner may be
admitted to the Partnership in accordance with the provisions of
Section 11.4 (and any appropriate adjustment in the Percentage
Interests of the Partners on Schedule A hereto as a result of such
admission may be effected) by the execution of a counterpart of this
Agreement by such Additional Partner.
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13.2 Notices. Notice to all Partners shall be deemed to be notice to the
Partnership. If any Partner receives a notice to or on behalf of the
Partnership, such Partner shall immediately transmit such notice to
all Partners. Any written notice or other communication shall be
sufficiently given or shall be deemed given on the fifth business day
following the date on which the same is mailed by registered or
certified mail, postage prepaid, addressed:
13.2.1 To each of the Partners at the address set forth in Section 1
of this Agreement or at such other address as may be
designated from time to time by any Partner by written notice
to each other Partner and the Partnership; and
13.2.2 To the Partnership at its principal office specified by the
Management Committee in accordance with Section 4.6 or such
other address as may be designated from time to time by
written notice to each of the Partners. Any Partner may
request that copies of notices be given to any Affiliate at
such address designated by such Partner by written notice to
each other Partner and to the Partnership, provided that any
failure to give such notice shall not affect the validity of
any notice given to any Partner or the Partnership in
accordance with this Section 13.2.
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Each of the Partners agrees to give such notice to any such
Affiliate.
13.3 Further Assurances. Each of the Partners and Withdrawn Partners agrees
to execute and deliver all such other and additional instruments and
documents and to do such other acts and things as may be reasonably
necessary more fully to effectuate this Partnership and carry on the
Partnership business in accordance with this Agreement.
13.4 Applicable Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware without regard to
the principles of conflicts of laws. In the event that any provision
of this Agreement shall be deemed to conflict with any provision of
the Partnership Act, the provisions of the Partnership Act shall to
the extent required by the Partnership Act, be controlling.
13.5 Counterparts. This Agreement may be executed in counterparts
(including counterparts provided for the execution by an Additional
Partner), each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.6 Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of
this Agreement.
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13.7 Waiver. No waiver by any Person of any default by any Partner or
Partners in the performance of any provision, condition or requirement
herein shall be deemed to be a waiver of, or in any manner release the
said Partner or Partners from performance of any other provision,
condition or requirement herein; nor shall such waiver be deemed to be
a waiver of, or in any manner a release of, said Partner or Partners
from future performance of the same provision, condition or
requirement. Any delay or omission of any Partner to exercise any
right hereunder shall not impair the exercise of any such right, or
any like right, accruing to it thereafter. No waiver of a right
created by this Agreement by one or more Partners shall constitute a
waiver of such right by the other Partners except as may otherwise be
required by law with respect to Persons not parties hereto. The
failure of one or more Partners to perform its or their obligations
hereunder shall not release the other Partners from the performance of
such obligations.
13.8 Partition. The Partners expressly waive and release any right to have
their interest, individually or collectively, in the Partnership
partitioned or sold for the purpose of dividing the proceeds of such
sale for the period during which the Partnership or any Successor
Partnership shall remain in existence.
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13.9 Laws And Regulatory Bodies. This Agreement and the obligations of the
Partners hereunder are subject to all applicable laws, rules, orders
and regulations of governmental authorities having jurisdiction and,
in the event of conflict, such laws, rules, orders and regulations of
governmental authorities having jurisdiction shall control.
13.10 Partnership Opportunity. Participation in the Partnership shall not in
any way restrain any Partner's officers, directors, shareholders,
employees or Affiliates in other present or future business
activities, whether or not any such activity is competitive with the
business of the Partnership, or in any way preclude or restrict any of
them from entering into a joint venture, partnership or other business
arrangement with the Partnership. None of any Partner's officers,
directors, shareholders, employees or Affiliates shall under any
circumstances be obligated or bound to offer or present to the
Partnership any business opportunity offered to such officers,
directors, shareholders, employees or Affiliates as a prerequisite to
the acquisition of or investment in such business opportunity by any
of them.
13.11 Section Numbers. Unless otherwise indicated, references to section
numbers are to sections of this Agreement.
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13.12 Confidentiality. Except as hereinafter provided, the Partnership and
each Partner shall treat as confidential, and not disclose to any
third party not authorized by the Management Committee to receive
confidential information, any information obtained either directly or
indirectly from any other Partner pursuant to this Agreement and
designated by such Partner as confidential, or other confidential
information developed or acquired by the Management Committee, or by
the Operator during performance of its obligations under the Operating
Agreement on behalf of the Partnership, unless such confidential
information (a) was already in the possession of the receiving
Partner, or an Affiliate thereof, at the time it obtained such
confidential information hereunder, (b) was or is published or
otherwise is or becomes generally available to the public through no
fault of such receiving Partner or its Affiliate, (c) was or is made
available to such partner or its Affiliate without restriction by any
Person or entity which is not bound by, and does not impose, an
obligation of confidentiality or use with respect thereto or (d) was
or is required to be disclosed by operation of law or regulation.
Further, neither the Partnership nor any Partner shall (a) use any
such confidential information (other than its own) for any purpose
other than in connection with the activities of the Partnership
pursuant to this Agreement or (b) disclose, reveal or otherwise make
any such
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confidential information (other than its own) available to any
unauthorized third party without the prior written consent of the
other Partners hereunder, unless such disclosure is required by
operation of law or regulation. The Partners and the Management
Committee shall establish and enforce reasonable procedures for the
protection of confidential information and shall restrict disclosure
of such information to as few as possible of the employees, officers,
agents and Affiliates of each Partner and the Partnership, and only to
those who need to know such information in connection with the
purposes of the Partnership as set forth herein. Each Partner and the
Management Committee shall take such reasonable and prudent steps and
precautionary measures as are required to ensure compliance with this
Section 13.12 by such of their employees, officers, agents, Affiliates
and other Persons as shall be given access to such confidential
information and shall be responsible for compliance by their
employees, officers, agents and Affiliates. The obligations of the
Partners and Withdrawn Partners pursuant to this Section 13.12 shall
survive the term of this Agreement for a period of five years. The
Partners agree that no adequate remedy at law exists for a material
breach or threatened material breach of any of the provisions of this
Section 13.12, the continuation of which unremedied will cause the
injured Partner to suffer irreparable harm. Accordingly, the Partners
104
agree that the injured party shall be entitled, in addition to other
remedies which may be available to it, to immediate injunctive relief
from any material breach of any of the provisions of this Section
13.12 and to specific performance of its rights hereunder, as well as
to any other remedies available at law or in equity. The Operating
Agreement shall include similar provisions for the protection of
confidential information.
13.13 References To Money. All references in this Agreement to, and
transactions hereunder in, money shall be to or in Dollars of the
United States of America.
13.14 Severability. Should any provision of this Agreement be deemed in
contradiction with the laws of any jurisdiction in which it is to be
performed or unenforceable for any reason, such provision shall be
deemed null and void, but this Agreement shall remain in force in all
other respects. Should any provision of this Agreement be or become
ineffective because of changes in applicable laws or interpretations
thereof, or should this Agreement fail to include a provision that is
required as a matter of law, the validity of the other provisions of
this Agreement shall not be affected thereby. If such circumstances
arise, the parties hereto shall negotiate in good faith appropriate
modifications to this Agreement to reflect those changes that are
required by law.
105
13.15 Third Persons. Except as expressly provided in this Agreement, nothing
herein expressed or implied is intended or shall be construed to
confer upon or to give any Person not a party hereto any rights or
remedies under or by reason of this Agreement.
106
IN WITNESS WHEREOF, the Partners have caused this Amended and Restated
Agreement, restated to incorporate the First, Second and Third Amendments and
further amended as set forth herein, to be executed by their respective duly
authorized officers as of February 28, 1997.
TRANSCANADA IROQUOIS LTD. ALENCO IROQUOIS PIPELINES INC.
By By
------------------------------ ------------------------------
By
------------------------------
NORTHEAST TRANSMISSION CO. TEN TRANSMISSION COMPANY
By By
------------------------------ ------------------------------
JMC-IROQUOIS, INC. NJNR PIPELINE COMPANY
By By
------------------------------ ------------------------------
LILCO ENERGY SYSTEMS, INC. ANR IROQUOIS, INC.
By By
------------------------------ ------------------------------
ANR NEW ENGLAND PIPELINE COMPANY CNG IROQUOIS, INC.
By By
------------------------------ ------------------------------
107
2/28/97
REVISED
SCHEDULE A
PERCENTAGE INTERESTS
Bloc Partner Percentage Interest
---- ------- -------------------
General Limited Total
------- ------- -----
Canadian TCIL 29.00 29.00
Alenco 6.00 6.00
----- -----
35.00 35.00
LDC NETCO 18.07 1.33 19.40
JMC-Iroquois 4.57 .36 4.93
TEN 4.46 .41 4.87
NJNR 2.80 2.80
LESCO 1.00 1.00
----- ---- -----
30.90 2.10 33.00
U.S. Interstate ANR/NEP 6.60 6.60
ANR Iroquois 9.40 9.40
CNG Iroquois 16.00 16.00
----- -----
32.00 32.00
