FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS |
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Section 1.1 Definitions |
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Section 1.2 Construction |
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25 |
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ARTICLE II ORGANIZATION |
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26 |
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Section 2.1 Formation |
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Section 2.2 Name |
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Section 2.3 Registered Office; Registered Agent; Principal Office; Other Offices |
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Section 2.4 Purpose and Business |
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Section 2.5 Powers |
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27 |
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Section 2.6 Power of Attorney |
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27 |
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Section 2.7 Term |
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28 |
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Section 2.8 Title to Partnership Assets |
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Section 2.9 Certain Undertakings Relating to the Separateness of the Partnership |
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29 |
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ARTICLE III RIGHTS OF LIMITED PARTNERS |
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Section 3.1 Limitation of Liability |
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Section 3.2 Management of Business |
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30 |
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Section 3.3 Outside Activities of the Limited Partners |
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Section 3.4 Rights of Limited Partners |
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30 |
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ARTICLE IV CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS; REDEMPTION OF PARTNERSHIP INTERESTS |
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Section 4.1 Certificates |
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Section 4.2 Mutilated, Destroyed, Lost or Stolen Certificates |
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32 |
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Section 4.3 Record Holders |
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33 |
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Section 4.4 Transfer Generally |
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33 |
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Section 4.5 Registration and Transfer of Limited Partner Interests |
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Section 4.6 Transfer of the General Partner’s General Partner Interest |
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35 |
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Section 4.7 Transfer of Incentive Distribution Rights |
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Section 4.8 Restrictions on Transfers |
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36 |
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Section 4.9 Tax Certifications; Ineligible Holders; Citizenship Certificates; Non-citizen Assignees |
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37 |
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Section 4.10 Redemption of Partnership Interests of Non-citizen and Ineligible Holders |
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39 |
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ARTICLE V CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS |
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Section 5.1 Organizational Contributions |
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Section 5.2 Contributions by the General Partner and its Affiliates |
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41 |
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Section 5.3 Contributions by Initial Limited Partners |
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41 |
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Section 5.4 Interest and Withdrawal of Capital Contributions |
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42 |
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Section 5.5 Capital Accounts |
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42 |
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Section 5.6 Issuances of Additional Partnership Securities |
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45 |
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Section 5.7 Conversion of Subordinated Units |
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46 |
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Section 5.8 Limited Preemptive Right |
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Section 5.9 Splits and Combinations |
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47 |
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Section 5.10 Fully Paid and Non-Assessable Nature of Limited Partner Interests |
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48 |
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Section 5.11 Issuance of Class B Units in Connection with Reset of Incentive Distribution Rights |
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48 |
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ARTICLE VI ALLOCATIONS AND DISTRIBUTIONS |
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Section 6.1 Allocations for Capital Account Purposes |
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Section 6.2 Allocations for Tax Purposes |
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59 |
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Section 6.3 Requirement and Characterization of Distributions; Distributions to Record Holders |
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61 |
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Section 6.4 Distributions of Available Cash from Operating Surplus |
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Section 6.5 Distributions of Available Cash from Capital Surplus |
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64 |
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Section 6.6 Adjustment of Minimum Quarterly Distribution and Target Distribution Levels |
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64 |
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Section 6.7 Special Provisions Relating to the Holders of Subordinated Units and Class B Units |
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Section 6.8 Special Provisions Relating to the Holders of Incentive Distribution Rights |
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66 |
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Section 6.9 Entity-Level Taxation |
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66 |
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ARTICLE VII MANAGEMENT AND OPERATION OF BUSINESS |
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Section 7.1 Management |
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Section 7.2 Certificate of Limited Partnership |
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Section 7.3 Restrictions on the General Partner’s Authority |
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Section 7.4 Reimbursement of the General Partner |
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70 |
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Section 7.5 Outside Activities |
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Section 7.6 Loans from the General Partner; Loans or Contributions from the Partnership or Group Members |
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Section 7.7 Indemnification |
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Section 7.8 Liability of Indemnitees |
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Section 7.9 Resolution of Conflicts of Interest; Standards of Conduct and Modification of Duties |
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Section 7.10 Other Matters Concerning the General Partner |
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77 |
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Section 7.11 Purchase or Sale of Partnership Securities |
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Section 7.12 Registration Rights of the General Partner and its Affiliates |
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Section 7.13 Reliance by Third Parties |
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81 |
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ARTICLE VIII BOOKS, RECORDS, ACCOUNTING AND REPORTS |
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Section 8.1 Records and Accounting |
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Section 8.2 Fiscal Year |
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Section 8.3 Reports |
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82 |
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ARTICLE IX TAX MATTERS |
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Section 9.1 Tax Returns and Information |
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Section 9.2 Tax Elections |
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Section 9.3 Tax Controversies |
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Section 9.4 Withholding |
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ARTICLE X ADMISSION OF PARTNERS |
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Section 10.1 Admission of Initial Limited Partners |
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Section 10.2 Admission of Substituted Limited Partners |
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Section 10.3 Admission of Successor General Partner |
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Section 10.4 Admission of Additional Limited Partners |
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Section 10.5 Amendment of Agreement and Certificate of Limited Partnership |
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86 |
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ARTICLE XI WITHDRAWAL OR REMOVAL OF PARTNERS |
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Section 11.1 Withdrawal of the General Partner |
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Section 11.2 Removal of the General Partner |
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Section 11.3 Interest of Departing General Partner and Successor General Partner |
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Section 11.4 Termination of Subordination Period, Conversion of Subordinated Units and Extinguishment of
Cumulative
Common Unit Arrearages |
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Section 11.5 Withdrawal of Limited Partners |
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ARTICLE XII DISSOLUTION AND LIQUIDATION |
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Section 12.1 Dissolution |
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Section 12.2 Continuation of the Business of the Partnership After Dissolution |
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Section 12.3 Liquidator |
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Section 12.4 Liquidation |
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Section 12.5 Cancellation of Certificate of Limited Partnership |
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Section 12.6 Return of Contributions |
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Section 12.7 Waiver of Partition |
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Section 12.8 Capital Account Restoration |
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ARTICLE XIII AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE |
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Section 13.1 Amendments to be Adopted Solely by the General Partner |
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Section 13.2 Amendment Procedures |
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Section 13.3 Amendment Requirements |
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Section 13.4 Special Meetings |
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Section 13.5 Notice of a Meeting |
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Section 13.6 Record Date |
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Section 13.7 Adjournment |
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Section 13.8 Waiver of Notice; Approval of Meeting; Approval of Minutes |
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Section 13.9 Quorum and Voting |
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Section 13.10 Conduct of a Meeting |
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Section 13.11 Action Without a Meeting |
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Section 13.12 Right to Vote and Related Matters |
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ARTICLE XIV MERGER, CONSOLIDATION OR CONVERSION |
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Section 14.1 Authority |
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Section 14.2 Procedure for Merger, Consolidation or Conversion |
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Section 14.3 Approval by Limited Partners |
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102 |
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Section 14.4 Certificate of Merger |
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Section 14.5 Effect of Merger, Consolidation or Conversion |
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103 |
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ARTICLE XV RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS |
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Section 15.1 Right to Acquire Limited Partner Interests |
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104 |
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ARTICLE XVI GENERAL PROVISIONS |
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Section 16.1 Addresses and Notices; Written Communications |
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105 |
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Section 16.2 Further Action |
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106 |
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Section 16.3 Binding Effect |
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106 |
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Section 16.4 Integration |
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106 |
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Section 16.5 Creditors |
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106 |
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Section 16.6 Waiver |
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106 |
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Section 16.7 Third-Party Beneficiaries |
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Section 16.8 Counterparts |
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107 |
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Section 16.9 Applicable Law |
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Section 16.10 Invalidity of Provisions |
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Section 16.11 Consent of Partners |
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Section 16.12 Facsimile Signatures |
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X-xx
THIS FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
EL PASO PIPELINE PARTNERS,
L.P. dated as of November 21, 2007, is entered into by and between El Paso Pipeline GP Company,
L.L.C., a
Delaware limited liability company, as the General Partner, and El Paso Pipeline LP
Holdings, L.L.C., a
Delaware limited liability company (the “
Organizational Limited Partner”),
together with any other Persons who become Partners in the Partnership or parties hereto as
provided herein. In consideration of the covenants, conditions and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.
The following definitions shall be for all purposes, unless otherwise clearly indicated to the
contrary, applied to the terms used in this Agreement.
“Acquisition” means any transaction in which any Group Member acquires (through an asset
acquisition, merger, stock acquisition or other form of investment) control over all or a portion
of the assets, properties or business of another Person for the purpose of increasing the long-term
operating capacity or asset base of the Partnership Group from the operating capacity or asset base
of the Partnership Group existing immediately prior to such transaction.
“Additional Book Basis” means the portion of any remaining Carrying Value of an Adjusted
Property that is attributable to positive adjustments made to such Carrying Value as a result of
Book-Up Events. For purposes of determining the extent that Carrying Value constitutes Additional
Book Basis:
(a) Any negative adjustment made to the Carrying Value of an Adjusted Property as a result of
either a Book-Down Event or a Book-Up Event shall first be deemed to offset or decrease that
portion of the Carrying Value of such Adjusted Property that is attributable to any prior positive
adjustments made thereto pursuant to a Book-Up Event or Book-Down Event.
(b) If Carrying Value that constitutes Additional Book Basis is reduced as a result of a
Book-Down Event and the Carrying Value of other property is increased as a result of such Book-Down
Event, an allocable portion of any such increase in Carrying Value shall be treated as Additional
Book Basis; provided, that the amount treated as Additional Book Basis pursuant hereto as a result
of such Book-Down Event shall not exceed the amount by which the Aggregate Remaining Net Positive
Adjustments after such Book-Down Event exceeds the remaining Additional Book Basis attributable to
all of the Partnership’s Adjusted Property after such Book-Down Event (determined without regard to
the application of this clause (b) to such Book-Down Event).
“Additional Book Basis Derivative Items” means any Book Basis Derivative Items that are
computed with reference to Additional Book Basis. To the extent that the Additional Book Basis
attributable to all of the Partnership’s Adjusted Property as of the beginning of any taxable
period exceeds the Aggregate Remaining Net Positive Adjustments as of the beginning of such period
(the “Excess Additional Book Basis”), the Additional Book Basis Derivative Items for such period
shall be reduced by the amount that bears the same ratio to the amount of Additional Book Basis
Derivative Items determined without regard to this sentence as the Excess Additional Book Basis
bears to the Additional Book Basis as of the beginning of such period.
“Additional Limited Partner” means a Person admitted to the Partnership as a Limited Partner
pursuant to Section 10.4 and who is shown as such on the books and records of the Partnership.
“Adjusted Capital Account” means the Capital Account maintained for each Partner as of the end
of each fiscal year of the Partnership, (a) increased by any amounts that such Partner is obligated
to restore under the standards set by Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is
deemed obligated to restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and
(b) decreased by (i) the amount of all losses and deductions that, as of the end of such fiscal
year, are reasonably expected to be allocated to such Partner in subsequent years under Sections
704(e)(2) and 706(d) of the Code and Treasury Regulation Section 1.751-1(b)(2)(ii), and (ii) the
amount of all distributions that, as of the end of such fiscal year, are reasonably expected to be
made to such Partner in subsequent years in accordance with the terms of this Agreement or
otherwise to the extent they exceed offsetting increases to such Partner’s Capital Account that are
reasonably expected to occur during (or prior to) the year in which such distributions are
reasonably expected to be made (other than increases as a result of a minimum gain chargeback
pursuant to Section 6.1(d)(i) or 6.1(d)(ii)). The foregoing definition of Adjusted Capital Account
is intended to comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith. The “Adjusted Capital Account” of a Partner in
respect of a General Partner Unit, a Common Unit, a Subordinated Unit, a Class B Unit or an
Incentive Distribution Right or any other Partnership Interest shall be the amount that such
Adjusted Capital Account would be if such General Partner Unit, Common Unit, Subordinated Unit,
Class B Unit, Incentive Distribution Right or other Partnership Interest were the only interest in
the Partnership held by such Partner from and after the date on which such General Partner Unit,
Common Unit, Class B Unit, Subordinated Unit, Incentive Distribution Right or other Partnership
Interest was first issued.
“Adjusted Operating Surplus” means, with respect to any period, (a) Operating Surplus
generated with respect to such period, less (b) (i) any net increase in Working Capital Borrowings
with respect to that period and (ii) any net decrease in cash reserves for Operating Expenditures
with respect to such period not relating to an Operating Expenditure made with respect to such
period, and plus (c) (i) any net decrease in Working Capital Borrowings with respect to that
period, (ii) any net decrease made in subsequent periods in cash reserves for Operating
Expenditures initially established with respect to such period to the extent such decrease results
in a reduction in Adjusted Operating Surplus in subsequent periods pursuant to clause (b)(ii) above
and (iii) any net increase in cash reserves for Operating Expenditures with respect to such period
required by any debt instrument for the repayment of principal, interest or
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premium. Adjusted Operating Surplus does not include that portion of Operating Surplus
included in clause (a)(i) of the definition of Operating Surplus.
“Adjusted Property” means any property the Carrying Value of which has been adjusted pursuant
to Section 5.5(d)(i) or 5.5(d)(ii).
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly
through one or more intermediaries controls, is controlled by or is under common control with, the
Person in question. As used herein, the term “control” means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.
“Aggregate Quantity of Class B Units” has the meaning assigned to such term in Section 5.11.
“Aggregate Remaining Net Positive Adjustments” means, as of the end of any taxable period, the
sum of the Remaining Net Positive Adjustments of all the Partners.
“Agreed Allocation” means any allocation, other than a Required Allocation, of an item of
income, gain, loss or deduction pursuant to the provisions of Section 6.1, including a Curative
Allocation (if appropriate to the context in which the term “Agreed Allocation” is used).
“Agreed Value” of any Contributed Property means the fair market value of such property or
other consideration at the time of contribution as determined by the General Partner. The General
Partner shall use such method as it determines to be appropriate to allocate the aggregate Agreed
Value of Contributed Properties contributed to the Partnership in a single or integrated
transaction among each separate property on a basis proportional to the fair market value of each
Contributed Property.
“
Agreement” means this First Amended and Restated Agreement of Limited Partnership of
El Paso
Pipeline Partners, L.P., as it may be amended, supplemented or restated from time to time.
“Assignee” means a Person to whom one or more Limited Partner Interests have been transferred
in a manner permitted under this Agreement and who has executed and delivered a Transfer
Application, including a Taxation Certification, as required by this Agreement, but who has not
been admitted as a Substituted Limited Partner.
“Associate” means, when used to indicate a relationship with any Person, (a) any corporation
or organization of which such Person is a director, officer or partner or is, directly or
indirectly, the owner of 20% or more of any class of voting stock or other voting interest; (b) any
trust or other estate in which such Person has at least a 20% beneficial interest or as to which
such Person serves as trustee or in a similar fiduciary capacity; and (c) any relative or spouse of
such Person, or any relative of such spouse, who has the same principal residence as such Person.
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“Available Cash” means, with respect to any Quarter ending prior to the Liquidation Date:
(a) the sum of (i) all cash and cash equivalents of the Partnership Group (or the
Partnership’s proportionate share of cash and cash equivalents in the case of Subsidiaries that are
not wholly owned) on hand at the end of such Quarter, (ii) all cash and cash equivalents on hand on
the date of determination of Available Cash resulting from cash distributions received after the
end of such Quarter with respect to the Partnership Group’s ownership interests in CIG, SNG and any
other Person in which the Partnership Group owns similarly structured ownership interests, which
distributions are paid in respect of operations conducted by CIG, SNG or such Person, as the case
may be, during such Quarter; and (iii) if the General Partner so determines, all or any portion of
additional cash and cash equivalents of the Partnership Group (or the Partnership’s proportionate
share of cash and cash equivalents in the case of Subsidiaries that are not wholly owned) on hand
on the date of determination of Available Cash with respect to such Quarter resulting from Working
Capital Borrowings made subsequent to the end of such Quarter, less
(b) the amount of any cash reserves (or the Partnership’s proportionate share of cash reserves
in the case of Subsidiaries that are not wholly owned) established by the General Partner to (i)
provide for the proper conduct of the business of the Partnership Group (including reserves for
future capital expenditures, for anticipated future credit needs of the Partnership Group and for
refunds of collected rates reasonably likely to be refunded as a result of a settlement or hearing
relating to FERC rate proceedings) subsequent to such Quarter, (ii) comply with applicable law or
any loan agreement, security agreement, mortgage, debt instrument or other agreement or obligation
to which any Group Member is a party or by which it is bound or its assets are subject or (iii)
provide funds for distributions under Section 6.4 or 6.5 in respect of any one or more of the next
four Quarters;
provided, however, that the General Partner may not establish cash reserves pursuant to (iii) above
if the effect of establishing such reserves would be that the Partnership is unable to distribute
the Minimum Quarterly Distribution on all Common Units, plus any Cumulative Common Unit Arrearage
on all Common Units, with respect to such Quarter; and, provided further, that disbursements made
by a Group Member or cash reserves established, increased or reduced after the end of such Quarter
but on or before the date of determination of Available Cash with respect to such Quarter shall be
deemed to have been made, established, increased or reduced, for purposes of determining Available
Cash, within such Quarter if the General Partner so determines.
Notwithstanding the foregoing, “Available Cash” with respect to the Quarter in which the
Liquidation Date occurs and any subsequent Quarter shall equal zero.
“Board of Directors” means the board of directors or managers of a corporation or limited
liability company or the board of directors or board of managers of the general partner of a
limited partnership, as applicable.
“Book Basis Derivative Items” means any item of income, deduction, gain or loss included in
the determination of Net Income or Net Loss that is computed with reference to the
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Carrying Value of an Adjusted Property (e.g., depreciation, depletion, or gain or loss with
respect to an Adjusted Property).
“Book-Down Event” means an event that triggers a negative adjustment to the Capital Accounts
of the Partners pursuant to Section 5.5(d).
“Book-Tax Disparity” means with respect to any item of Contributed Property or Adjusted
Property, as of the date of any determination, the difference between the Carrying Value of such
Contributed Property or Adjusted Property and the adjusted basis thereof for federal income tax
purposes as of such date. A Partner’s share of the Partnership’s Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the difference between such
Partner’s Capital Account balance as maintained pursuant to Section 5.5 and the hypothetical
balance of such Partner’s Capital Account computed as if it had been maintained strictly in
accordance with federal income tax accounting principles.
“Book-Up Event” means an event that triggers a positive adjustment to the Capital Accounts of
the Partners pursuant to Section 5.5(d).
“Business Day” means Monday through Friday of each week, except that a legal holiday
recognized as such by the government of the United States of America or the State of Texas shall
not be regarded as a Business Day.
“Capital Account” means the capital account maintained for a Partner pursuant to Section 5.5.
The “Capital Account” of a Partner in respect of a General Partner Unit, a Common Unit, a
Subordinated Unit, a Class B Unit, an Incentive Distribution Right or any other Partnership
Interest shall be the amount that such Capital Account would be if such General Partner Unit,
Common Unit, Subordinated Unit, Class B Unit, Incentive Distribution Right or other Partnership
Interest were the only interest in the Partnership held by such Partner from and after the date on
which such General Partner Unit, Common Unit, Class B Unit, Subordinated Unit, Incentive
Distribution Right or other Partnership Interest was first issued.
“Capital Contribution” means any cash, cash equivalents or the Net Agreed Value of Contributed
Property that a Partner contributes to the Partnership.
“Capital Improvement” means any (a) addition or improvement to the capital assets owned by any
Group Member, (b) the acquisition of existing, or the construction of new or replacement of
existing, capital assets or (c) capital contribution by a Group Member to a Person that is not a
Subsidiary in which a Group Member has, or after such capital contribution will have, an equity
interest to fund such Group Member’s pro rata share of the cost of the acquisition of existing, or
the construction of new or replacement of existing, capital assets by such Person, in each case if
and to the extent such addition, improvement, acquisition, construction or replacement is made to
increase the long-term operating capacity or asset base of the Partnership Group, in the case of
clauses (a) and (b), or such Person, in the case of clause (c), from the operating capacity or
asset base of the Partnership Group or such Person, as the case may be, existing immediately prior
to such addition, improvement, acquisition or construction; provided, however, that any such
addition, improvement, replacement, acquisition or construction that is made solely for investment
purposes shall not constitute a Capital Improvement under this
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Agreement. For the avoidance of doubt, capital contributions by a Group Member to CIG, SNG or
WYCO to fund such Group Member’s share of the cost of a capital improvement that is made to
increase the long-term operating capacity or asset base shall constitute amounts contributed to
fund a Capital Improvement for purposes of this Agreement.
“Capital Surplus” has the meaning assigned to such term in Section 6.3(a).
“Carrying Value” means (a) with respect to a Contributed Property, the Agreed Value of such
property reduced (but not below zero) by all depreciation, amortization and cost recovery
deductions charged to the Partners’ and Assignees’ Capital Accounts in respect of such Contributed
Property, and (b) with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination. The Carrying Value
of any property shall be adjusted from time to time in accordance with Sections 5.5(d)(i) and
5.5(d)(ii) and to reflect changes, additions or other adjustments to the Carrying Value for
dispositions and acquisitions of Partnership properties, as deemed appropriate by the General
Partner.
“Cause” means a court of competent jurisdiction has entered a final, non-appealable judgment
finding the General Partner liable for actual fraud or willful misconduct in its capacity as a
general partner of the Partnership.
“Certificate” means (a) a certificate (i) substantially in the form of Exhibit A to this
Agreement, (ii) issued in global form in accordance with the rules and regulations of the
Depositary or (iii) in such other form as may be adopted by the General Partner, issued by the
Partnership evidencing ownership of one or more Common Units or (b) a certificate, in such form as
may be adopted by the General Partner, issued by the Partnership evidencing ownership of one or
more other Partnership Securities.
“
Certificate of Limited Partnership” means the Certificate of Limited Partnership of the
Partnership filed with the Secretary of State of the State of
Delaware as referenced in
Section 7.2, as such Certificate of Limited Partnership may be amended, supplemented or restated
from time to time.
“
CIG” means Colorado Interstate Gas Company, a
Delaware general partnership.
“Citizenship Certification” means a properly completed certificate in such form as may be
specified by the General Partner by which an Assignee or a Limited Partner certifies that he (and
if he is a nominee holding for the account of another Person, that to the best of his knowledge
such other Person) is an Eligible Citizen.
“claim” (as used in Section 7.12(d)) has the meaning assigned to such term in Section 7.12(d).
“Class B Unit” means a Partnership Security representing a fractional part of the Partnership
Interests of all Limited Partners and Assignees, and having the rights and obligations specified
with respect to Class B Units in this Agreement. A Class B Unit that is convertible into a Common
Unit shall not constitute a Common Unit until such conversion occurs pursuant to the terms hereof.
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“Closing Date” means the first date on which Common Units are issued and sold by the
Partnership to the Underwriters pursuant to the provisions of the Underwriting Agreement.
“Closing Price” means, in respect of any class of Limited Partner Interests, as of the date of
determination, the last sale price on such day, regular way, or in case no such sale takes place on
such day, the average of the closing bid and asked prices on such day, regular way, as reported in
the principal consolidated transaction reporting system with respect to securities listed on the
principal National Securities Exchange (other than the Nasdaq Stock Market) on which the respective
Limited Partner Interests are listed or admitted to trading or, if such Limited Partner Interests
are not listed or admitted to trading on any National Securities Exchange (other than the Nasdaq
Stock Market), the last quoted price on such day or, if not so quoted, the average of the high bid
and low asked prices on such day in the over-the-counter market, as reported by the Nasdaq Stock
Market or such other system then in use, or, if on any such day such Limited Partner Interests of
such class are not quoted by any such organization, the average of the closing bid and asked prices
on such day as furnished by a professional market maker making a market in such Limited Partner
Interests of such class selected by the General Partner, or if on any such day no market maker is
making a market in such Limited Partner Interests of such class, the fair value of such Limited
Partner Interests on such day as determined by the General Partner.
“Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time.
Any reference herein to a specific section or sections of the Code shall be deemed to include a
reference to any corresponding provision of any successor law.
“Combined Interest” has the meaning assigned to such term in Section 11.3(a).
“Commences Commercial Service” and “Commencement of Commercial Service” shall mean the date a
Capital Improvement is first put into or commences commercial service following completion of
construction and testing.
“Commission” means the United States Securities and Exchange Commission.
“Commodity Hedge Contract” means any commodity exchange, swap, forward, cap, floor, collar or
other similar agreement or arrangement entered into for the purpose of hedging the Partnership
Group’s exposure to fluctuations in the price of hydrocarbons or other commodities in their
operations and not for speculative purposes.
“Common Unit” means a Partnership Security representing a fractional part of the Partnership
Interests of all Limited Partners and Assignees, and having the rights and obligations specified
with respect to Common Units in this Agreement. The term “Common Unit” does not include a
Subordinated Unit or Class B Unit prior to its conversion into a Common Unit pursuant to the terms
hereof.
“Common Unit Arrearage” means, with respect to any Common Unit, whenever issued, as to any
Quarter within the Subordination Period, the excess, if any, of (a) the Minimum Quarterly
Distribution with respect to a Common Unit in respect of such Quarter over (b) the sum of all
Available Cash distributed with respect to a Common Unit in respect of such Quarter pursuant to
Section 6.4(a)(i).
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“Conflicts Committee” means a committee of the Board of Directors of the General Partner
composed of two or more directors, each of whom (a) is not a security holder, officer or employee
of the General Partner, (b) is not an officer, director or employee of any Affiliate of the General
Partner, (c) is not a holder of any ownership interest in the Partnership Group other than Common
Units and awards that may be granted to such director under the Long Term Incentive Plan and (d)
meets the independence standards required of directors who serve on an audit committee of a board
of directors established by the Securities Exchange Act and the rules and regulations of the
Commission thereunder and by the National Securities Exchange on which the Common Units are listed
or admitted to trading.
“
Contributed Property” means each property or other asset, in such form as may be permitted by
the
Delaware Act, but excluding cash, contributed to the Partnership. Once the Carrying Value of a
Contributed Property is adjusted pursuant to Section 5.5(d), such property shall no longer
constitute a Contributed Property, but shall be deemed an Adjusted Property.
“Contribution Agreement” means that certain Contribution and Conveyance Agreement, dated as of
the Closing Date, among the General Partner, the Partnership, the Operating Company and certain
other parties, together with the additional conveyance documents and instruments contemplated or
referenced thereunder, as such may be amended, supplemented or restated from time to time.
“Converted Common Units” has the meaning assigned to such term in Section 6.1(d)(x)(B).
“Credit Agreement” means the Credit Agreement, dated as of November 21, 2007 among the
Operating Company, WIC, the Partnership, Bank of America, N.A. and the other lenders party thereto.
“Cumulative Common Unit Arrearage” means, with respect to any Common Unit, whenever issued,
and as of the end of any Quarter, the excess, if any, of (a) the sum resulting from adding together
the Common Unit Arrearage as to an Initial Common Unit for each of the Quarters within the
Subordination Period ending on or before the last day of such Quarter over (b) the sum of any
distributions theretofore made pursuant to Section 6.4(a)(ii) and the second sentence of Section
6.5 with respect to an Initial Common Unit (including any distributions to be made in respect of
the last of such Quarters).
“Curative Allocation” means any allocation of an item of income, gain, deduction, loss or
credit pursuant to the provisions of Section 6.1(d)(xi).
“Current Market Price” means, in respect of any class of Limited Partner Interests, as of the
date of determination, the average of the daily Closing Prices per Limited Partner Interest of such
class for the 20 consecutive Trading Days immediately prior to such date.
“
Delaware Act” means the
Delaware Revised Uniform Limited Partnership Act, 6 Del C. Section
17-101, et seq., as amended, supplemented or restated from time to time, and any successor to such
statute.
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“Departing General Partner” means a former general partner from and after the effective date
of any withdrawal or removal of such former general partner pursuant to Section 11.1 or Section
11.2.
“Depositary” means, with respect to any Units issued in global form, The Depository Trust
Company and its successors and permitted assigns.
“Economic Risk of Loss” has the meaning set forth in Treasury Regulation Section 1.752-2(a).
“Eligible Citizen” means a Person qualified to own interests in real property in jurisdictions
in which any Group Member does business or proposes to do business from time to time, and whose
status as a Limited Partner or Assignee the General Partner determines does not or would not
subject such Group Member to a significant risk of cancellation or forfeiture of any of its
properties or any interest therein.
“Eligible Holder” means a Person either (a) subject to United States federal income taxation
on the public utility income generated by the Partnership or (b) not subject to United States
federal taxation on the public utility income generated by the Partnership, but all of whose direct
or indirect beneficial owners are subject to United States federal taxation on the public utility
income generated by the Partnership. Schedule I to the Transfer Application provides examples of
Persons that are and Persons that are not Eligible Holders.
“
El Paso” means El Paso Corporation, a
Delaware corporation.
“Estimated Incremental Quarterly Tax Amount” has the meaning assigned to such term in Section
6.9.
“Event of Withdrawal” has the meaning assigned to such term in Section 11.1(a).
“Expansion Capital Expenditures” means cash expenditures for Acquisitions or Capital
Improvements, and shall not include Maintenance Capital Expenditures or Investment Capital
Expenditures. Expansion Capital Expenditures shall include interest (and related fees) on debt
incurred and distributions on equity issued, in each case, to finance the construction of a Capital
Improvement and paid in respect of the period beginning on the date that the Group Member enters
into a binding obligation to commence construction of a Capital Improvement and ending on the
earlier to occur of the date that such Capital Improvement Commences Commercial Service and the
date that such Capital Improvement is abandoned or disposed of. Debt incurred or equity issued to
fund such construction period interest payments or such construction period distributions on equity
paid during such period, shall also be deemed to be debt incurred or equity issued, as the case may
be, to finance the construction of a Capital Improvement. Expansion Capital Expenditures will
include cash contributed by a Group Member to an entity of which such Group Member is, or after
such contribution will be, directly or indirectly, an equity owner to be used by such entity for
expansion capital expenditures. For example, cash contributed by a Group Member to CIG, SNG or
WYCO to fund expansion capital expenditures of CIG, SNG or WYCO shall constitute Expansion Capital
Expenditures. Where capital expenditures are made in part for Expansion Capital Expenditures and
in part for other purposes, the General Partner, with the concurrence of the Conflicts Committee,
shall determine the
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allocation of such expenditures between Expansion Capital Expenditures and expenditures made
for other purposes.
“FERC” means the Federal Energy Regulatory Commission, or successor to powers thereof.
“Final Subordinated Units” has the meaning assigned to such term in Section 6.1(d)(x)(A).
“First Liquidation Target Amount” has the meaning assigned to such term in
Section 6.1(c)(i)(E).
“First Target Distribution” means $0.33063 per Unit per Quarter (or, with respect to the
period commencing on the Closing Date and ending on December 31, 2007, it means the product of
$0.33063 multiplied by a fraction of which the numerator is the number of days in such period, and
of which the denominator is 92), subject to adjustment in accordance with Sections 5.11, 6.6 and
6.9.
“Fully Diluted Basis” means, when calculating the number of Outstanding Units for any period,
a basis that includes, in addition to the Outstanding Units, all Partnership Securities and
options, rights, warrants and appreciation rights relating to an equity interest in the Partnership
(a) that are convertible into or exercisable or exchangeable for Units that are senior to or pari
passu with the Subordinated Units, (b) whose conversion, exercise or exchange price is less than
the Current Market Price on the date of such calculation, (c) that may be converted into or
exercised or exchanged for such Units prior to or during the Quarter immediately following the end
of the period for which the calculation is being made without the satisfaction of any contingency
beyond the control of the holder other than the payment of consideration and the compliance with
administrative mechanics applicable to such conversion, exercise or exchange and (d) that were not
converted into or exercised or exchanged for such Units during the period for which the calculation
is being made; provided, however, that for purposes of determining the number of Outstanding Units
on a Fully Diluted Basis when calculating whether the Subordination Period has ended or
Subordinated Units are entitled to convert into Common Units pursuant to Section 5.7, such
Partnership Securities, options, rights, warrants and appreciation rights shall be deemed to have
been Outstanding Units only for the four Quarters that comprise the last four Quarters of the
measurement period; provided, further, that if consideration will be paid to any Group Member in
connection with such conversion, exercise or exchange, the number of Units to be included in such
calculation shall be that number equal to the difference between (i) the number of Units issuable
upon such conversion, exercise or exchange and (ii) the number of Units that such consideration
would purchase at the Current Market Price.
“
General Partner” means El Paso Pipeline GP Company, L.L.C., a
Delaware limited liability
company, and its successors and permitted assigns that are admitted to the Partnership as general
partner of the Partnership, in its capacity as general partner of the Partnership (except as the
context otherwise requires).
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“General Partner Interest” means the ownership interest of the General Partner in the
Partnership (in its capacity as a general partner without reference to any Limited Partner Interest
held by it), which is evidenced by General Partner Units, and includes any and all benefits to
which the General Partner is entitled as provided in this Agreement, together with all obligations
of the General Partner to comply with the terms and provisions of this Agreement.
“General Partner Unit” means a fractional part of the General Partner Interest having the
rights and obligations specified with respect to the General Partner Interest. A General Partner
Unit is not a Unit.
“Group” means a Person that with or through any of its Affiliates or Associates has any
contract, arrangement, understanding or relationship for the purpose of acquiring, holding, voting
(except voting pursuant to a revocable proxy or consent given to such Person in response to a proxy
or consent solicitation made to 10 or more Persons), exercising investment power or disposing of
any Partnership Interests with any other Person that beneficially owns, or whose Affiliates or
Associates beneficially own, directly or indirectly, Partnership Interests.
“Group Member” means a member of the Partnership Group.
“Group Member Agreement” means the partnership agreement of any Group Member, other than the
Partnership, that is a limited or general partnership, the limited liability company agreement of
any Group Member that is a limited liability company, the certificate of incorporation and bylaws
or similar organizational documents of any Group Member that is a corporation, the joint venture
agreement or similar governing document of any Group Member that is a joint venture and the
governing or organizational or similar documents of any other Group Member that is a Person other
than a limited or general partnership, limited liability company, corporation or joint venture, as
such may be amended, supplemented or restated from time to time.
“Holder” as used in Section 7.12, has the meaning assigned to such term in Section 7.12(a).
“
Holdings” means El Paso Pipeline LP Holdings, L.L.C., a
Delaware limited liability company.
“IDR Reset Election” has the meaning assigned to such term in Section 5.11(a).
“Incentive Distribution Right” means a non-voting Limited Partner Interest issued to the
General Partner, which Limited Partner Interest will confer upon the holder thereof only the rights
and obligations specifically provided in this Agreement with respect to Incentive Distribution
Rights (and no other rights otherwise available to or other obligations of a holder of a
Partnership Interest). Notwithstanding anything in this Agreement to the contrary, the holder of an
Incentive Distribution Right shall not be entitled to vote such Incentive Distribution Right on any
Partnership matter except as may otherwise be required by law.
“Incentive Distributions” means any amount of cash distributed to the holders of the Incentive
Distribution Rights pursuant to Sections 6.4(a)(v), (vi) and (vii) and 6.4(b)(iii), (iv) and (v).
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“Incremental Income Taxes” has the meaning assigned to such term in Section 6.9.
“Indemnified Persons” has the meaning assigned to such term in Section 7.12(d).
“Indemnitee” means (a) the General Partner, (b) any Departing General Partner, (c) any Person
who is or was an Affiliate of the General Partner or any Departing General Partner, (d) any Person
who is or was a member, manager, partner, director, officer, fiduciary or trustee of any Group
Member (other than any Person who is or was a Limited Partner of the Partnership in such Person’s
capacity as such), the General Partner or any Departing General Partner or any Affiliate of any
Group Member, the General Partner or any Departing General Partner, (e) any Person who is or was
serving at the request of the General Partner or any Departing General Partner or any Affiliate of
the General Partner or any Departing General Partner as an officer, director, member, manager,
partner, fiduciary or trustee of another Person; provided that a Person shall not be an Indemnitee
by reason of providing, on a fee-for-services basis, trustee, fiduciary or custodial services, and
(f) any Person the General Partner designates as an “Indemnitee” for purposes of this Agreement.
“Ineligible Holder” means a Person whom the General Partner has determined is not an Eligible
Holder.
“Initial Common Units” means the Common Units sold in the Initial Offering.
“Initial Limited Partners” means the Organizational Limited Partner, Holdings and the General
Partner (with respect to the Common Units, Subordinated Units and Incentive Distribution Rights
received by them pursuant to Section 5.2) and the Underwriters, in each case upon being admitted to
the Partnership in accordance with Section 10.1.
“Initial Offering” means the initial offering and sale of Common Units to the public, as
described in the Registration Statement.
“Initial Unit Price” means (a) with respect to the Common Units and the Subordinated Units,
the initial public offering price per Common Unit at which the Underwriters offered the Common
Units to the public for sale as set forth on the cover page of the prospectus included as part of
the Registration Statement and first issued at or after the time the Registration Statement first
became effective or (b) with respect to any other class or series of Units, the price per Unit at
which such class or series of Units is initially sold by the Partnership, as determined by the
General Partner, in each case adjusted as the General Partner determines to be appropriate to give
effect to any distribution, subdivision or combination of Units.
“Interest Rate Hedge Contract” means any interest rate exchange, swap, forward, cap, floor
collar or other similar agreement or arrangement entered into for the purpose of reducing the
exposure of the Partnership Group to fluctuations in interest rates in their financing activities
and not for speculative purposes.
“Interim Capital Transactions” means the following transactions if they occur prior to the
Liquidation Date: (a) borrowings, refinancings or refundings of indebtedness (other than Working
Capital Borrowings and other than for items purchased on open account in the ordinary course of
business) by any Group Member and sales of debt securities of any Group Member;
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(b) sales of equity interests of any Group Member (including the Common Units sold to the
Underwriters pursuant to the exercise of the Over-Allotment Option); (c) sales or other voluntary
or involuntary dispositions of any assets of any Group Member other than (i) sales or other
dispositions of inventory, accounts receivable and other assets in the ordinary course of business,
and (ii) sales or other dispositions of assets as part of normal asset retirements or replacements;
(d) the termination of Commodity Hedge Contracts or Interest Rate Hedge Contracts prior to the
respective specified termination dates; (e) capital contributions received by a Group Member or, in
the case of capital contributions received by a Person that is not a Subsidiary of the Partnership
(such as CIG, SNG or WYCO), capital contributions received from the owner(s) or members of such
Person that is not a Group Member; or (f) corporate reorganizations or restructurings.
“Investment Capital Expenditures” means capital expenditures other than Maintenance Capital
Expenditures and Expansion Capital Expenditures. Investment Capital Expenditures will include cash
contributed by a Group Member to an entity of which such Group Member is, or after such
contribution will be directly or indirectly, an equity owner to be used by such entity for
Investment Capital Expenditures, for example, cash contributed by a Group Member to CIG, SNG or
WYCO to fund Investment Capital Expenditures of CIG, SNG or WYCO shall constitute Investment
Capital Expenditures.
“Issue Price” means the price at which a Unit is purchased from the Partnership, net of any
sales commission or underwriting discount charged to the Partnership.
“Limited Partner” means, unless the context otherwise requires, (a) the Organizational Limited
Partner prior to its withdrawal from the Partnership, each Initial Limited Partner, each
Substituted Limited Partner, each Additional Limited Partner and any Departing General Partner upon
the change of its status from General Partner to Limited Partner pursuant to Section 11.3, in each
case, in such Person’s capacity as (a) limited partner of the Partnership or (b) solely for
purposes of Articles V, VI, VII, IX and XII, each Assignee; provided, however, that when the term
“Limited Partner” is used herein in the context of any vote or other approval, including Articles
XIII and XIV, such term shall not, solely for such purpose, include any holder of an Incentive
Distribution Right (solely with respect to its Incentive Distribution Rights and not with respect
to any other Limited Partner Interest held by such Person) except as may be required by law.
“Limited Partner Interest” means the ownership interest of a Limited Partner or Assignee in
the Partnership, which may be evidenced by Common Units, Class B Units, Subordinated Units,
Incentive Distribution Rights or other Partnership Securities or a combination thereof or interest
therein, and includes any and all benefits to which such Limited Partner or Assignee is entitled as
provided in this Agreement, together with all obligations of such Limited Partner or Assignee to
comply with the terms and provisions of this Agreement; provided, however, that when the term
“Limited Partner Interest” is used herein in the context of any vote or other approval, including
Articles XIII and XIV, such term shall not, solely for such purpose, include any Incentive
Distribution Right except as may be required by law.
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“Limited Partner Unit” means each of the Common Units, Class B Units, Subordinated Units and
other Units representing fractional parts of the Partnership Interests of all Limited Partners and
Assignees.
“Liquidation Date” means (a) in the case of an event giving rise to the dissolution of the
Partnership of the type described in clauses (a) and (b) of the first sentence of Section 12.2, the
date on which the applicable time period during which the holders of Outstanding Units have the
right to elect to continue the business of the Partnership has expired without such an election
being made, and (b) in the case of any other event giving rise to the dissolution of the
Partnership, the date on which such event occurs.
“Liquidator” means one or more Persons selected by the General Partner to perform the
functions described in Section 12.4 as liquidating trustee of the Partnership within the meaning of
the Delaware Act.
“Long Term Incentive Plan” means the El Paso Pipeline GP Company, L.L.C. Long-Term Incentive
Plan, as may be amended, or any equity compensation plan successor thereto.
“Maintenance Capital Expenditures” means cash expenditures (including expenditures for the
addition or improvement to or the replacement of the capital assets owned by any Group Member or
for the acquisition of existing, or the construction or development of new, capital assets) if such
expenditures are made to maintain, including over the long term, the operating capacity or asset
base of the Partnership Group. Maintenance Capital Expenditures shall not include (a) Expansion
Capital Expenditures or (b) Investment Capital Expenditures. Maintenance Capital Expenditures will
include cash contributed by any Group Member to an entity of which such Group Member is, or after
such contribution will be, directly or indirectly, an equity owner to be used by such entity for
maintenance capital expenditures. For example, cash contributed by a Group Member to CIG, SNG or
WYCO to fund maintenance capital expenditures of CIG, SNG or WYCO shall constitute Maintenance
Capital Expenditures.
“Merger Agreement” has the meaning assigned to such term in Section 14.1.
“Minimum Quarterly Distribution” means $0.2875 per Unit per Quarter (or with respect to the
period commencing on the Closing Date and ending on December 31, 2007, it means the product of
$0.2875 multiplied by a fraction of which the numerator is the number of days in such period and of
which the denominator is 92), subject to adjustment in accordance with Sections 5.11, 6.6 and 6.9.
“National Securities Exchange” means an exchange registered with the Commission under Section
6(a) of the Securities Exchange Act and any successor to such statute.
“Net Agreed Value” means, (a) in the case of any Contributed Property, the Agreed Value of
such property reduced by any liabilities either assumed by the Partnership upon such contribution
or to which such property is subject when contributed, and (b) in the case of any property
distributed to a Partner or Assignee by the Partnership, the Partnership’s Carrying Value of such
property (as adjusted pursuant to Section 5.5(d)(ii)) at the time such property is distributed,
reduced by any indebtedness either assumed by such Partner or Assignee upon such distribution or to
which such property is subject at the time of distribution, in either case, as
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determined under Section 752 of the Code, and (c) in the case of a contribution of Common
Units by the General Partner to the Partnership as a Capital Contribution pursuant to
Section 5.2(b), an amount per Common Unit contributed equal to the Current Market Price per Common
Unit as of the date of the contribution.
“Net Income” means, for any taxable year, the excess, if any, of the Partnership’s items of
income and gain (other than those items taken into account in the computation of Net Termination
Gain or Net Termination Loss) for such taxable year over the Partnership’s items of loss and
deduction (other than those items taken into account in the computation of Net Termination Gain or
Net Termination Loss) for such taxable year. The items included in the calculation of Net Income
shall be determined in accordance with Section 5.5(b) and shall not include any items specially
allocated under Section 6.1(d); provided, that the determination of the items that have been
specially allocated under Section 6.1(d) shall be made as if Section 6.1(d)(xii) were not in this
Agreement.
“Net Loss” means, for any taxable year, the excess, if any, of the Partnership’s items of loss
and deduction (other than those items taken into account in the computation of Net Termination Gain
or Net Termination Loss) for such taxable year over the Partnership’s items of income and gain
(other than those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation of Net Loss shall
be determined in accordance with Section 5.5(b) and shall not include any items specially allocated
under Section 6.1(d); provided, that the determination of the items that have been specially
allocated under Section 6.1(d) shall be made as if Section 6.1(d)(xii) were not in this Agreement.
“Net Positive Adjustments” means, with respect to any Partner, the excess, if any, of the
total positive adjustments over the total negative adjustments made to the Capital Account of such
Partner pursuant to Book-Up Events and Book-Down Events.
“Net Termination Gain” means, for any taxable year, the sum, if positive, of all items of
income, gain, loss or deduction recognized by the Partnership after the Liquidation Date. The
items included in the determination of Net Termination Gain shall be determined in accordance with
Section 5.5(b) and shall not include any items of income, gain or loss specially allocated under
Section 6.1(d).
“Net Termination Loss” means, for any taxable year, the sum, if negative, of all items of
income, gain, loss or deduction recognized by the Partnership after the Liquidation Date. The
items included in the determination of Net Termination Loss shall be determined in accordance with
Section 5.5(b) and shall not include any items of income, gain or loss specially allocated under
Section 6.1(d).
“Non-citizen Assignee” means a Person whom the General Partner has determined does not
constitute an Eligible Citizen and as to whose Partnership Interest the General Partner has become
the Substituted Limited Partner, pursuant to Section 4.9.
“Nonrecourse Built-in Gain” means with respect to any Contributed Properties or Adjusted
Properties that are subject to a mortgage or pledge securing a Nonrecourse Liability,
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the amount of any taxable gain that would be allocated to the Partners pursuant to
Sections 6.2(b)(i)(A), 6.2(b)(ii)(A) and 6.2(b)(iii) if such properties were disposed of in a
taxable transaction in full satisfaction of such liabilities and for no other consideration.
“Nonrecourse Deductions” means any and all items of loss, deduction or expenditure (including
any expenditure described in Section 705(a)(2)(B) of the Code) that, in accordance with the
principles of Treasury Regulation Section 1.704-2(b), are attributable to a Nonrecourse Liability.
“Nonrecourse Liability” has the meaning set forth in Treasury Regulation
Section 1.752-1(a)(2).
“Notice of Election to Purchase” has the meaning assigned to such term in Section 15.1(b).
“Omnibus Agreement” means that certain Omnibus Agreement, dated as of the Closing Date, among
El Paso, Southern Natural Gas Company, Colorado Interstate Gas Company, the General Partner and the
Partnership, as such agreement may be amended, supplemented or restated from time to time.
“Operating Company” means El Paso Pipeline Partners Operating Company, L.L.C., a Delaware
limited liability company, and any successors thereto.
“Operating Expenditures” means all Partnership Group cash expenditures (or the Partnership’s
proportionate share of expenditures in the case of Subsidiaries that are not wholly owned),
including, but not limited to, taxes, reimbursements of the General Partner, interest payments,
payments made in the ordinary course of business under Interest Rate Hedge Contracts and Commodity
Hedge Contracts (provided that payments made in connection with the termination of any Interest
Rate Hedge Contract or Commodity Hedge Contract prior to the expiration of its stipulated
settlement or termination date shall be included in Operating Expenditures in equal quarterly
installments over the remaining scheduled life of such Interest Rate Hedge Contract or Commodity
Hedge Contract), Maintenance Capital Expenditures, director and officer compensation, repayment of
Working Capital Borrowings and non-Pro Rata repurchases of Units (other than those made with the
proceeds of an Interim Capital Transaction), subject to the following:
(a) deemed repayments of Working Capital Borrowings deducted from Operating Surplus pursuant
to clause (b)(iii) of the definition of “Operating Surplus” shall not constitute Operating
Expenditures when actually repaid;
(b) payments (including prepayments and prepayment penalties) of principal of and premium on
indebtedness other than Working Capital Borrowings shall not constitute Operating Expenditures when
actually repaid;
(c) Operating Expenditures shall not include (i) Expansion Capital Expenditures,
(ii) Investment Capital Expenditures, (iii) payment of transaction expenses (including taxes)
relating to Interim Capital Transactions, (iii) distributions to Partners or (iv) non-Pro Rata
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purchases of the Units of any class made with the proceeds of an Interim Capital Transaction;
and
(d) Where capital expenditures are made in part for Maintenance Capital Expenditures and in
part for other purposes, the General Partner, with the concurrence of the Conflicts Committee,
shall determine the allocation of such capital expenditures between Maintenance Capital
Expenditures and capital expenditures made for other purposes and, with respect to the part of such
capital expenditures consisting of Maintenance Capital Expenditures, the period over which
Maintenance Capital Expenditures will be deducted as an Operating Expenditure in calculating
Operating Surplus.
“Operating Surplus” means, with respect to any period ending prior to the Liquidation Date, on
a cumulative basis and without duplication,
(a) the sum of (i) $50 million; (ii) all cash receipts of the Partnership Group (or the
Partnership’s proportionate share of cash receipts in the case of Subsidiaries that are not wholly
owned) for the period beginning on the Closing Date and ending on the last day of such period, but
excluding cash receipts from Interim Capital Transactions (except to the extent specified in
Section 6.5 and provided that cash receipts from the termination of a Commodity Hedge Contract or
an Interest Rate Hedge Contract prior to its specified termination date shall be included in
Operating Surplus in equal quarterly installments over the remaining scheduled life of such
Commodity Hedge Contract or Interest Rate Hedge Contract) and excluding cash receipts to the extent
specified in the parenthetical of clause (a)(iii) below; (iii) all cash receipts of the Partnership
Group after the end of such period but on or before the date of determination constituting cash
distributions received on the Partnership Group’s ownership interests in CIG, SNG and any other
Person in which the Partnership Group owns similarly structured ownership interests (excluding any
such receipts to the extent constituting either (A) cash proceeds from the retirement of the notes
receivable outstanding as of the Closing Date under the cash management agreement between El Paso
and CIG, SNG or such other Person or (B) the proceeds of a transaction that would constitute an
Interim Capital Transaction if the Partnership had engaged in such transaction instead of CIG, SNG
or such other Person); provided, however, that at such time as CIG, SNG or such other Person
constitutes a Subsidiary and a member of the Partnership Group, this clause (a)(iii) shall cease to
apply to cash distributions from CIG, SNG or such Other Person, as the case may be; (iv) all cash
receipts of the Partnership Group (or the Partnership’s proportionate share of cash receipts in the
case of Subsidiaries that are not wholly owned) after the end of such period but on or before the
date of determination of Operating Surplus with respect to such period resulting from Working
Capital Borrowings; and (v) cash distributions paid on equity issued to finance all or a portion of
the construction, acquisition, development or improvement of a Capital Improvement or replacement
of a capital asset (such as equipment or facilities) in respect of the period beginning on the date
that the Group Member enters into a binding obligation to commence the construction, acquisition,
development or improvement of a Capital Improvement or replacement of a capital asset and ending on
the earlier to occur of the date the Capital Improvement or capital asset Commences Commercial
Service or the date that it is abandoned or disposed of (equity issued to fund construction,
acquisition, development or improvement period interest payments on debt incurred, or construction,
acquisition, development or improvement period distributions on equity issued, to finance the
construction, acquisition or development of a Capital Improvement or replacement of a capital asset
shall also
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be deemed to be equity issued to finance the construction, acquisition or development of a
Capital Improvement or replacement of a capital asset for purposes of this clause (v)); less
(b) the sum of (i) Operating Expenditures for the period beginning on the Closing Date and
ending on the last day of such period; (ii) the amount of cash reserves (or the Partnership’s
proportionate share of cash reserves in the case of Subsidiaries that are not wholly owned)
established by the General Partner to provide funds for future Operating Expenditures; and (iii)
all Working Capital Borrowings not repaid within twelve months after having been incurred;
provided, however, that disbursements made (including contributions to a Group Member or
disbursements on behalf of a Group Member) or cash reserves established, increased or reduced after
the end of such period but on or before the date of determination of Available Cash with respect to
such period shall be deemed to have been made, established, increased or reduced, for purposes of
determining Operating Surplus, within such period if the General Partner so determines.
Notwithstanding the foregoing, “Operating Surplus” with respect to the Quarter in which the
Liquidation Date occurs and any subsequent Quarter shall equal zero.
“Opinion of Counsel” means a written opinion of counsel (who may be regular counsel to the
Partnership or the General Partner or any of its Affiliates) acceptable to the General Partner.
“Option Closing Date” means the date or dates on which any Common Units are sold by the
Partnership to the Underwriters upon exercise of the Over-Allotment Option.
“Organizational Limited Partner” means Holdings in its capacity as the organizational limited
partner of the Partnership pursuant to this Agreement.
“Outstanding” means, with respect to Partnership Securities, all Partnership Securities that
are issued by the Partnership and reflected as outstanding on the Partnership’s books and records
as of the date of determination; provided, however, that if at any time any Person or Group (other
than the General Partner or its Affiliates) beneficially owns 20% or more of the Outstanding
Partnership Securities of any class then Outstanding, all Partnership Securities owned by such
Person or Group shall not be voted on any matter and shall not be considered to be Outstanding when
sending notices of a meeting of Limited Partners to vote on any matter (unless otherwise required
by law), calculating required votes, determining the presence of a quorum or for other similar
purposes under this Agreement, except that Units so owned shall be considered to be Outstanding for
purposes of Section 11.1(b)(iv) (such Units shall not, however, be treated as a separate class of
Partnership Securities for purposes of this Agreement or the Delaware Act); provided, further, that
the foregoing limitation shall not apply to (i) any Person or Group who acquired 20% or more of the
Outstanding Partnership Securities of any class then Outstanding directly from the General Partner
or its Affiliates, (ii) any Person or Group who acquired 20% or more of the Outstanding Partnership
Securities of any class then Outstanding directly or indirectly from a Person or Group described in
clause (i) provided that the General Partner shall have notified such Person or Group in writing
that such limitation shall not apply,
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or (iii) any Person or Group who acquired 20% or more of any Partnership Securities issued by
the Partnership with the prior approval of the Board of Directors of the General Partner.
“Over-Allotment Option” means the option granted to the Underwriters by the Partnership
pursuant to the Underwriting Agreement.
“Partner Nonrecourse Debt” has the meaning set forth in Treasury Regulation
Section 1.704-2(b)(4).
“Partner Nonrecourse Debt Minimum Gain” has the meaning set forth in Treasury Regulation
Section 1.704-2(i)(2).
“Partner Nonrecourse Deductions” means any and all items of loss, deduction or expenditure
(including any expenditure described in Section 705(a)(2)(B) of the Code) that, in accordance with
the principles of Treasury Regulation Section 1.704-2(i), are attributable to a Partner Nonrecourse
Debt.
“Partners” means the General Partner and the Limited Partners.
“Partnership Group” means the Partnership and its Subsidiaries treated as a single
consolidated entity.
“Partnership Interest” means an interest in the Partnership, which shall include the General
Partner Interest and Limited Partner Interests.
“Partnership Minimum Gain” means that amount determined in accordance with the principles of
Treasury Regulation Section 1.704-2(d).
“Partnership Security” means any class or series of equity interest in the Partnership (but
excluding any options, rights, warrants and appreciation rights relating to an equity interest in
the Partnership), including Common Units, Class B Units, Subordinated Units, General Partner Units
and Incentive Distribution Rights.
“Per Unit Capital Amount” means, as of any date of determination, the Capital Account, stated
on a per Unit basis, underlying any Unit held by a Person other than the General Partner or any
Affiliate of the General Partner who holds Units.
“Percentage Interest” means as of any date of determination (a) as to the General Partner with
respect to General Partner Units and as to any Unitholder or Assignee with respect to Units, the
product obtained by multiplying (i) 100% less the percentage applicable to clause (b) below by (ii)
the quotient obtained by dividing (A) the number of General Partner Units held by the General
Partner or the number of Units held by such Unitholder or Assignee, as the case may be, by (B) the
total number of all Outstanding Units and General Partner Units, and (b) as to the holders of other
Partnership Securities issued by the Partnership in accordance with Section 5.6, the percentage
established as a part of such issuance. The Percentage Interest with respect to an Incentive
Distribution Right shall at all times be zero.
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“Person” means an individual, a corporation, firm, limited liability company, partnership,
joint venture, trust, unincorporated organization, association, government agency or political
subdivision thereof or other entity.
“Plan of Conversion” has the meaning assigned to such term in Section 14.1.
“Pro Rata” means (a) when used with respect to Units or any class thereof, apportioned among
all designated Units in accordance with their relative Percentage Interests, (b) when used with
respect to Partners, Assignees and/or Record Holders, apportioned among all Partners, Assignees
and/or Record Holders in accordance with their relative Percentage Interests and (c) when used with
respect to holders of Incentive Distribution Rights, apportioned among all holders of Incentive
Distribution Rights in accordance with the relative number or percentage of Incentive Distribution
Rights held by each such holder.
“Purchase Date” means the date determined by the General Partner as the date for purchase of
all Outstanding Limited Partner Interests of a certain class (other than Limited Partner Interests
owned by the General Partner and its Affiliates) pursuant to Article XV.
“Quarter” means, unless the context requires otherwise, a fiscal quarter of the Partnership,
or, with respect to the fiscal quarter of the Partnership which includes the Closing Date, the
portion of such fiscal quarter after the Closing Date.
“Recapture Income” means any gain recognized by the Partnership (computed without regard to
any adjustment required by Section 734 or Section 743 of the Code) upon the disposition of any
property or asset of the Partnership, which gain is characterized as ordinary income because it
represents the recapture of deductions previously taken with respect to such property or asset.
“Record Date” means the date established by the General Partner or otherwise in accordance
with this Agreement for determining (a) the identity of the Record Holders entitled to notice of,
or to vote at, any meeting of Limited Partners or entitled to vote by ballot or give approval of
Partnership action in writing without a meeting or entitled to exercise rights in respect of any
lawful action of Limited Partners or (b) the identity of Record Holders entitled to receive any
report or distribution or to participate in any offer.
“Record Holder” means the Person in whose name a Common Unit is registered on the books of the
Transfer Agent as of the opening of business on a particular Business Day, or with respect to other
Partnership Interests, the Person in whose name any such other Partnership Interest is registered
on the books that the General Partner has caused to be kept as of the opening of business on such
Business Day.
“Redeemable Interests” means any Partnership Interests for which a redemption notice has been
given, and has not been withdrawn, pursuant to Section 4.10.
“Registration Statement” means the Registration Statement on Form S-1 (File No. 333-145835) as
it has been or as it may be amended or supplemented from time to time, filed by the Partnership
with the Commission under the Securities Act to register the offering and sale of the Common Units
in the Initial Offering.
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“Remaining Net Positive Adjustments” means as of the end of any taxable period, (i) with
respect to the Unitholders holding Common Units, Class B Units or Subordinated Units, the excess of
(a) the Net Positive Adjustments of the Unitholders holding Common Units, Class B Units or
Subordinated Units as of the end of such period over (b) the sum of those Partners’ Share of
Additional Book Basis Derivative Items for each prior taxable period, (ii) with respect to the
General Partner (as holder of the General Partner Units), the excess of (a) the Net Positive
Adjustments of the General Partner as of the end of such period over (b) the sum of the General
Partner’s Share of Additional Book Basis Derivative Items with respect to the General Partner Units
for each prior taxable period, and (iii) with respect to the holders of Incentive Distribution
Rights, the excess of (a) the Net Positive Adjustments of the holders of Incentive Distribution
Rights as of the end of such period over (b) the sum of the Share of Additional Book Basis
Derivative Items of the holders of the Incentive Distribution Rights for each prior taxable period.
“Required Allocations” means (a) any limitation imposed on any allocation of Net Losses or Net
Termination Losses under Section 6.1(b) or Section 6.1(c)(ii) and (b) any allocation of an item of
income, gain, loss or deduction pursuant to Section 6.1(d)(i), Section 6.1(d)(ii),
Section 6.1(d)(iv), Section 6.1(d)(vii) or Section 6.1(d)(ix).
“Reset MQD” has the meaning assigned to such term in Section 5.11(e).
“Reset Notice” has the meaning assigned to such term in Section 5.11(b).
“Residual Gain” or “Residual Loss” means any item of gain or loss, as the case may be, of the
Partnership recognized for federal income tax purposes resulting from a sale, exchange or other
disposition of a Contributed Property or Adjusted Property, to the extent such item of gain or loss
is not allocated pursuant to Section 6.2(b)(i)(A) or Section 6.2(b)(ii)(A), respectively, to
eliminate Book-Tax Disparities.
“Retained Converted Subordinated Unit” has the meaning assigned to such term in Section
5.5(c)(ii).
“Second Liquidation Target Amount” has the meaning assigned to such term in
Section 6.1(c)(i)(F).
“Second Target Distribution” means $0.35938 per Unit per Quarter (or, with respect to the
period commencing on the Closing Date and ending on December 31, 2007, it means the product of
$0.35938 multiplied by a fraction of which the numerator is equal to the number of days in such
period and of which the denominator is 92), subject to adjustment in accordance with Sections 5.11,
6.6 and 6.9.
“Securities Act” means the Securities Act of 1933, as amended, supplemented or restated from
time to time and any successor to such statute.
“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended, supplemented
or restated from time to time and any successor to such statute.
“Share of Additional Book Basis Derivative Items” means in connection with any allocation of
Additional Book Basis Derivative Items for any taxable period, (i) with respect to
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the Unitholders holding Common Units, Class B Units or Subordinated Units, the amount that
bears the same ratio to such Additional Book Basis Derivative Items as the Unitholders’ Remaining
Net Positive Adjustments as of the end of such period bears to the Aggregate Remaining Net Positive
Adjustments as of that time, (ii) with respect to the General Partner (as holder of the General
Partner Units), the amount that bears the same ratio to such Additional Book Basis Derivative Items
as the General Partner’s Remaining Net Positive Adjustments as of the end of such period bears to
the Aggregate Remaining Net Positive Adjustment as of that time, and (iii) with respect to the
Partners holding Incentive Distribution Rights, the amount that bears the same ratio to such
Additional Book Basis Derivative Items as the Remaining Net Positive Adjustments of the Partners
holding the Incentive Distribution Rights as of the end of such period bears to the Aggregate
Remaining Net Positive Adjustments as of that time.
“SNG” means Southern Natural Gas Company, a Delaware general partnership.
“Special Approval” means approval by a majority of the members of the Conflicts Committee
acting in good faith.
“Subordinated Unit” means a Partnership Security representing a fractional part of the
Partnership Interests of all Limited Partners and Assignees and having the rights and obligations
specified with respect to Subordinated Units in this Agreement. The term “Subordinated Unit” does
not include a Common Unit or a Class B Unit. A Subordinated Unit that is convertible into a Common
Unit shall not constitute a Common Unit until such conversion occurs.
“Subordination Period” means the period commencing on the Closing Date and ending on the first
to occur of the following dates:
(a) the first Business Day of any Quarter beginning after December 31, 2010 in respect of
which (i)(A) distributions of Available Cash from Operating Surplus on all of the Outstanding
Common Units, Subordinated Units, or any Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units, and the General Partner Units with respect to each of the
three consecutive, non-overlapping four-Quarter periods immediately preceding such date equaled or
exceeded the sum of the Minimum Quarterly Distribution on all Outstanding Common Units and
Subordinated Units and any other Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units and the General Partner Units during such periods and (B)
the Adjusted Operating Surplus for each of the three consecutive, non-overlapping four-Quarter
periods immediately preceding such date equaled or exceeded the sum of the Minimum Quarterly
Distribution on all of the Common Units, Subordinated Units and any other Units that are senior or
equal in right of distribution to the Subordinated Units and General Partner Units that were
Outstanding during such periods on a Fully Diluted Basis, and (ii) there are no Cumulative Common
Unit Arrearages;
(b) the first Business Day of any Quarter beginning after December 31, 2008 in respect of
which (i)(A) distributions of Available Cash from Operating Surplus on all of the Outstanding
Common Units, Subordinated Units, any other Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units, and the General Partner Units with respect to each of the
four consecutive non-overlapping Quarters immediately preceding such date equaled or exceeded 150%
of the sum of the Minimum Quarterly Distribution on all of the
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Outstanding Common Units and Subordinated Units and any other Outstanding Units that are
senior or equal in right of distribution to the Subordinated Units and the General Partner Units
during such periods, and (B) the Adjusted Operating Surplus for each of the four consecutive
non-overlapping Quarters immediately preceding such date equaled or exceeded 150% of the sum of the
Minimum Quarterly Distribution on the Common Units, Subordinated Units, other Units that are senior
or equal in right of distribution to the Subordinated Units and General Partner Units that were
Outstanding during such periods on a Fully Diluted Basis and (ii) there are no Cumulative Common
Units Arrearages;
(c) the first date on which there are no longer outstanding any Subordinated Units due to the
conversion of Subordinated Units into Common Units pursuant to Section 5.7 or otherwise; and
(d) the date on which the General Partner is removed as general partner of the Partnership
upon the requisite vote by holders of Outstanding Units under circumstances where Cause does not
exist and Units held by the General Partner and its Affiliates are not voted in favor of such
removal.
“Subsidiary” means, with respect to any Person, (a) a corporation of which more than 50% of
the voting power of shares entitled (without regard to the occurrence of any contingency) to vote
in the election of directors or other governing body of such corporation is owned, directly or
indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such
Person or a combination thereof, (b) a partnership (whether general or limited) in which such
Person or a Subsidiary of such Person is, at the date of determination, a general or limited
partner of such partnership, but only if more than 50% of the partnership interests of such
partnership (considering all of the partnership interests of the partnership as a single class) is
owned, directly or indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person (other than a
corporation or a partnership) in which such Person, one or more Subsidiaries of such Person, or a
combination thereof, directly or indirectly, at the date of determination, has (i) at least a
majority ownership interest or (ii) the power to elect or direct the election of a majority of the
directors or other governing body of such Person.
“Substituted Limited Partner” means a Person who is admitted as a Limited Partner to the
Partnership pursuant to Section 10.2 in place of and with all the rights of a Limited Partner and
who is shown as a Limited Partner on the books and records of the Partnership.
“Surviving Business Entity” has the meaning assigned to such term in Section 14.2(b).
“Target Distributions” means, collectively, the First Target Distribution, Second Target
Distribution and Third Target Distribution.
“Taxation Certification” means a properly completed certificate in such form or forms as may
be specified by the General Partner by which a Limited Partner or Assignee certifies that he (and
if he is a nominee holding for the account of another Person, that to the best of his knowledge
such other Person) is an Eligible Holder and includes a Transfer Application containing such a
certification.
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“Third Liquidation Target Amount” has the meaning assigned to such term in
Section 6.1(c)(i)(G).
“Third Target Distribution” means $0.43125 per Unit per Quarter (or, with respect to the
period commencing on the Closing Date and ending on December 31, 2007, it means the product of
$0.43125 multiplied by a fraction of which the numerator is equal to the number of days in such
period and of which the denominator is 92), subject to adjustment in accordance with Sections 5.11,
6.6 and 6.9.
“Trading Day” means, for the purpose of determining the Current Market Price of any class of
Limited Partner Interests, a day on which the principal National Securities Exchange on which such
Limited Partner Interests are listed is open for the transaction of business or, if Limited Partner
Interests of a class are not listed on any National Securities Exchange, a day on which banking
institutions in New York City generally are open.
“transfer” has the meaning assigned to such term in Section 4.4(a).
“Transfer Agent” means such bank, trust company or other Person (including the General Partner
or one of its Affiliates) as shall be appointed from time to time by the General Partner to act as
registrar and transfer agent for the Common Units; provided, that if no Transfer Agent is
specifically designated for any other Partnership Securities, the General Partner shall act in such
capacity.
“Transfer Application” means an application and agreement for transfer of Units in the form
set forth on the back of a Certificate or in a form substantially to the same effect in a separate
instrument.
“Underwriter” means each Person named as an underwriter in Schedule I to the Underwriting
Agreement who purchases Common Units pursuant thereto.
“Underwriting Agreement” means that certain Underwriting Agreement dated as of November 15,
2007 among the Underwriters, the Partnership, the General Partner and the other parties thereto,
providing for the purchase of Common Units by the Underwriters.
“Unit” means a Partnership Security that is designated as a “Unit” and shall include Common
Units, Class B Units and Subordinated Units but shall not include (i) General Partner Units (or the
General Partner Interest represented thereby) or (ii) Incentive Distribution Rights.
“Unit Majority” means (i) during the Subordination Period, at least a majority of the
Outstanding Common Units (excluding Common Units owned by the General Partner and its Affiliates),
voting as a class, and at least a majority of the Outstanding Subordinated Units, voting as a
class, and (ii) after the end of the Subordination Period, at least a majority of the Outstanding
Common Units and Class B Units, if any, voting as a single class.
“Unitholders” means the holders of Units.
“Unpaid MQD” has the meaning assigned to such term in Section 6.1(c)(i)(B).
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“Unrealized Gain” attributable to any item of Partnership property means, as of any date of
determination, the excess, if any, of (a) the fair market value of such property as of such date
(as determined under Section 5.5(d)) over (b) the Carrying Value of such property as of such date
(prior to any adjustment to be made pursuant to Section 5.5(d) as of such date).
“Unrealized Loss” attributable to any item of Partnership property means, as of any date of
determination, the excess, if any, of (a) the Carrying Value of such property as of such date
(prior to any adjustment to be made pursuant to Section 5.5(d) as of such date) over (b) the fair
market value of such property as of such date (as determined under Section 5.5(d)).
“Unrecovered Initial Unit Price” means at any time, with respect to a Unit, the Initial Unit
Price less the sum of all distributions constituting Capital Surplus theretofore made in respect of
an Initial Common Unit and any distributions of cash (or the Net Agreed Value of any distributions
in kind) in connection with the dissolution and liquidation of the Partnership theretofore made in
respect of an Initial Common Unit, adjusted as the General Partner determines to be appropriate to
give effect to any distribution, subdivision or combination of such Units.
“U.S. GAAP” means United States generally accepted accounting principles consistently applied.
“WIC” means Wyoming Interstate Company, Ltd., a Colorado limited partnership.
“Withdrawal Opinion of Counsel” has the meaning assigned to such term in Section 11.1(b).
“Working Capital Borrowings” means borrowings used solely for working capital purposes or to
pay distributions to Partners made pursuant to a credit facility, commercial paper facility or
other similar financing arrangements, provided that when such borrowings are incurred it is the
intent of the borrower to repay such borrowings within 12 months from other than Working Capital
Borrowings.
“WYCO” means WYCO Development LLC, a Delaware limited liability company.
Section 1.2 Construction.
Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include
the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and
verbs shall include the plural and vice versa; (b) references to Articles and Sections refer to
Articles and Sections of this Agreement; (c) the terms “include”, “includes”, “including” or words
of like import shall be deemed to be followed by the words “without limitation”; and (d) the terms
“hereof”, “herein” or “hereunder” refer to this Agreement as a whole and not to any particular
provision of this Agreement. The and headings contained in this Agreement are for reference
purposes only, and shall not affect in any way the meaning or interpretation of this Agreement.
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ARTICLE II
ORGANIZATION
Section 2.1 Formation.
The General Partner and the Organizational Limited Partner have previously formed the
Partnership as a limited partnership pursuant to the provisions of the Delaware Act and hereby
amend and restate the original Agreement of Limited Partnership of
El Paso Pipeline Partners, L.P.
in its entirety. This amendment and restatement shall become effective on the date of this
Agreement. Except as expressly provided to the contrary in this Agreement, the rights, duties
(including fiduciary duties), liabilities and obligations of the Partners and the administration,
dissolution and termination of the Partnership shall be governed by the Delaware Act. All
Partnership Interests shall constitute personal property of the owner thereof for all purposes.
Section 2.2 Name.
The name of the Partnership shall be “
El Paso Pipeline Partners, L.P.” The Partnership’s
business may be conducted under any other name or names as determined by the General Partner,
including the name of the General Partner. The words “Limited Partnership,” “LP,” “Ltd.” or
similar words or letters shall be included in the Partnership’s name where necessary for the
purpose of complying with the laws of any jurisdiction that so requires. The General Partner may
change the name of the Partnership at any time and from time to time and shall notify the Limited
Partners of such change in the next regular communication to the Limited Partners.
Section 2.3 Registered Office; Registered Agent; Principal Office; Other Offices.
Unless and until changed by the General Partner, the registered office of the Partnership in
the State of Delaware shall be located at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx,
Xxxxxxxx 00000, and the registered agent for service of process on the Partnership in the State of
Delaware at such registered office shall be The Corporation Trust Company. The principal office of
the Partnership shall be located at 0000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000, or such other
place as the General Partner may from time to time designate by notice to the Limited Partners.
The Partnership may maintain offices at such other place or places within or outside the State of
Delaware as the General Partner shall determine necessary or appropriate. The address of the
General Partner shall be 0000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000, or such other place as the
General Partner may from time to time designate by notice to the Limited Partners.
Section 2.4 Purpose and Business.
The purpose and nature of the business to be conducted by the Partnership shall be to
(a) engage directly in, or enter into or form, hold and dispose of any corporation, partnership,
joint venture, limited liability company or other arrangement to engage indirectly in, any business
activity that is approved by the General Partner and that lawfully may be conducted by a limited
partnership organized pursuant to the Delaware Act and, in connection therewith, to exercise all of
the rights and powers conferred upon the Partnership pursuant to the agreements relating to such
business activity, and (b) do anything necessary or appropriate to the foregoing,
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including the
making of capital contributions or loans to a Group Member; provided, however, that the General
Partner shall not cause the Partnership to engage, directly or indirectly, in any business activity
that the General Partner determines would cause the Partnership to be treated as an association
taxable as a corporation or otherwise taxable as an entity for federal income tax purposes. To the
fullest extent permitted by law, the General Partner shall have no duty or obligation to propose or
approve, and may decline to propose or approve, the conduct by the Partnership of any business free
of any fiduciary duty or obligation whatsoever to the Partnership, any Limited Partner or any
Assignee and, in declining to so propose or approve, shall not be required to act in good faith or
pursuant to any other standard imposed by this Agreement, any Group Member Agreement, any other
agreement contemplated hereby or under the Delaware Act or any other law, rule or regulation or at
equity.
Section 2.5 Powers.
The Partnership shall be empowered to do any and all acts and things necessary or appropriate
for the furtherance and accomplishment of the purposes and business described in Section 2.4 and
for the protection and benefit of the Partnership.
Section 2.6 Power of Attorney.
(a) Each Limited Partner and each Assignee hereby constitutes and appoints the General Partner
and, if a Liquidator shall have been selected pursuant to Section 12.3, the Liquidator (and any
successor to the Liquidator by merger, transfer, assignment, election or otherwise) and each of
their authorized officers and attorneys-in-fact, as the case may be, with full power of
substitution, as his true and lawful agent and attorney-in-fact, with full power and authority in
his name, place and xxxxx, to:
(i) execute, swear to, acknowledge, deliver, file and record in the appropriate public offices
(A) all certificates, documents and other instruments (including this Agreement and the Certificate
of Limited Partnership and all amendments or restatements hereof or thereof) that the General
Partner or the Liquidator determines to be necessary or appropriate to form, qualify or continue
the existence or qualification of the Partnership as a limited partnership (or a partnership in
which the limited partners have limited liability) in the State of Delaware and in all other
jurisdictions in which the Partnership may conduct business or own property; (B) all certificates,
documents and other instruments that the General Partner or the Liquidator determines to be
necessary or appropriate to reflect, in accordance with its terms, any
amendment, change, modification or restatement of this Agreement; (C) all certificates,
documents and other instruments (including conveyances and a certificate of cancellation) that the
General Partner or the Liquidator determines to be necessary or appropriate to reflect the
dissolution and liquidation of the Partnership pursuant to the terms of this Agreement; (D) all
certificates, documents and other instruments relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to, or other events described in, Article IV, Article X,
Article XI or Article XII; (E) all certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of any class or series of Partnership
Securities issued pursuant to Section 5.6; and (F) all certificates, documents and other
instruments (including agreements and a certificate of merger or conversion) relating to a merger,
consolidation or conversion of the Partnership pursuant to Article XIV; and
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(ii) execute, swear to, acknowledge, deliver, file and record all ballots, consents,
approvals, waivers, certificates, documents and other instruments that the General Partner or the
Liquidator determines to be necessary or appropriate to (A) make, evidence, give, confirm or ratify
any vote, consent, approval, agreement or other action that is made or given by the Partners
hereunder or is consistent with the terms of this Agreement or (B) effectuate the terms or intent
of this Agreement; provided, that when required by Section 13.3 or any other provision of this
Agreement that establishes a percentage of the Limited Partners or of the Limited Partners of any
class or series required to take any action, the General Partner and the Liquidator may exercise
the power of attorney made in this Section 2.6(a)(ii) only after the necessary vote, consent or
approval of the Limited Partners or of the Limited Partners of such class or series, as applicable.
Nothing contained in this Section 2.6(a) shall be construed as authorizing the General Partner
to amend this Agreement except in accordance with Article XIII or as may be otherwise expressly
provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be irrevocable and a power coupled
with an interest, and it shall survive and, to the maximum extent permitted by law, not be affected
by, the subsequent death, incompetency, disability, incapacity, dissolution, bankruptcy or
termination of any Limited Partner or Assignee and the transfer of all or any portion of such
Limited Partner’s or Assignee’s Partnership Interest and shall extend to such Limited Partner’s or
Assignee’s heirs, successors, assigns and personal representatives. Each such Limited Partner or
Assignee hereby agrees to be bound by any representation made by the General Partner or the
Liquidator acting in good faith pursuant to such power of attorney; and each such Limited Partner
or Assignee, to the maximum extent permitted by law, hereby waives any and all defenses that may be
available to contest, negate or disaffirm the action of the General Partner or the Liquidator taken
in good faith under such power of attorney. Each Limited Partner or Assignee shall execute and
deliver to the General Partner or the Liquidator, within 15 days after receipt of the request
therefor, such further designation, powers of attorney and other instruments as the General Partner
or the Liquidator may request in order to effectuate this Agreement and the purposes of the
Partnership.
Section 2.7 Term.
The term of the Partnership commenced upon the filing of the Certificate of Limited
Partnership in accordance with the Delaware Act and shall continue in existence until the
dissolution of the Partnership in accordance with the provisions of Article XII. The existence of
the Partnership as a separate legal entity shall continue until the cancellation of the Certificate
of Limited Partnership as provided in the Delaware Act.
Section 2.8 Title to Partnership Assets.
Title to Partnership assets, whether real, personal or mixed and whether tangible or
intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner or
Assignee, individually or collectively, shall have any ownership interest in such Partnership
assets or any portion thereof. Title to any or all of the Partnership assets may be held in the
name of the Partnership, the General Partner, one or more of its Affiliates or one or more
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nominees, as the General Partner may determine. The General Partner hereby declares and warrants
that any Partnership assets for which record title is held in the name of the General Partner or
one or more of its Affiliates or one or more nominees shall be held by the General Partner or such
Affiliate or nominee for the use and benefit of the Partnership in accordance with the provisions
of this Agreement; provided, however, that the General Partner shall use reasonable efforts to
cause record title to such assets (other than those assets in respect of which the General Partner
determines that the expense and difficulty of conveyancing makes transfer of record title to the
Partnership impracticable) to be vested in the Partnership as soon as reasonably practicable;
provided, further, that, prior to the withdrawal or removal of the General Partner or as soon
thereafter as practicable, the General Partner shall use reasonable efforts to effect the transfer
of record title to the Partnership and, prior to any such transfer, will provide for the use of
such assets in a manner satisfactory to the General Partner. All Partnership assets shall be
recorded as the property of the Partnership in its books and records, irrespective of the name in
which record title to such Partnership assets is held.
Section 2.9 Certain Undertakings Relating to the Separateness of the Partnership.
(a) The Partnership shall conduct its business and operations separate and apart from those of
any other Person (other than the General Partner) in accordance with this Section 2.9.
(b) The Partnership shall maintain (i) its books and records, (ii) its accounts, and (iii) its
financial statements, separate from those of any other Person, except its consolidated
Subsidiaries.
(c) The Partnership shall not commingle or pool its funds or other assets with those of any
other Person, except its consolidated Subsidiaries, and shall maintain its assets in a manner that
is not costly or difficult to segregate, ascertain or otherwise identify as separate from those of
any other Person.
(d) The Partnership (i) shall observe all partnership formalities and other formalities
required by its organizational documents, the laws of the jurisdiction of its formation, or other
laws, rules, regulations and orders of governmental authorities exercising jurisdiction over
it, (ii) may engage in transactions with the General Partner and its Affiliates (other than another
Group Member) in conformity with the requirements of Section 7.9 or otherwise in accordance with
applicable law) and (iii) promptly pay, form its own funds, and on a current basis, its allocable
share of general and administrative expenses, capital expenditures and costs for shared services
performed by Affiliates of the General Partner (other than another Group Member). Each material
contract between the Partnership or another Group Member, on the one hand, and the Affiliates of
the General Partner (other than a Group Member), on the other hand, shall be in writing.
(e) Failure by the General Partner or the Partnership to comply with any of the obligations
set forth in this Section 2.9 shall not affect the status of the Partnership as a separate legal
entity, with its separate assets and separate liabilities. The General Partner and the Partnership
may be consolidated for financial reporting purposes with El Paso Corporation and its subsidiaries;
provided, however, that such consolidation shall not affect the status of the Partnership as a
separate legal entity with its separate assets and separate liabilities.
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ARTICLE III
RIGHTS OF LIMITED PARTNERS
Section 3.1 Limitation of Liability.
The Limited Partners and the Assignees shall have no liability under this Agreement except as
expressly provided in this Agreement or the Delaware Act.
Section 3.2 Management of Business.
No Limited Partner or Assignee, in its capacity as such, shall participate in the operation,
management or control (within the meaning of the Delaware Act) of the Partnership’s business,
transact any business in the Partnership’s name or have the power to sign documents for or
otherwise bind the Partnership. Any action taken by any Affiliate of the General Partner or any
officer, director, employee, manager, member, general partner, agent or trustee of the General
Partner or any of its Affiliates, or any officer, director, employee, manager, member, general
partner, agent or trustee of a Group Member, in its capacity as such, shall not be deemed to be
participation in the control of the business of the Partnership by a limited partner of the
Partnership (within the meaning of Section 17-303(a) of the Delaware Act) and shall not affect,
impair or eliminate the limitations on the liability of the Limited Partners or Assignees under
this Agreement.
Section 3.3 Outside Activities of the Limited Partners.
Subject to the provisions of Section 7.5, any Limited Partner or Assignee shall be entitled to
and may have business interests and engage in business activities in addition to those relating to
the Partnership, including business interests and activities in direct competition with the
Partnership Group. Neither the Partnership nor any of the other Partners or Assignees shall have
any rights by virtue of this Agreement in any business ventures of any Limited Partner or Assignee.
Section 3.4 Rights of Limited Partners.
(a) In addition to other rights provided by this Agreement or by applicable law, and except as
limited by Section 3.4(b), each Limited Partner shall have the right, for a purpose reasonably
related to such Limited Partner’s interest as a Limited Partner in the Partnership, upon reasonable
written demand stating the purpose of such demand, and at such Limited Partner’s own expense:
(i) to obtain true and full information regarding the status of the business and financial
condition of the Partnership;
(ii) promptly after its becoming available, to obtain a copy of the Partnership’s federal,
state and local income tax returns for each year;
(iii) to obtain a current list of the name and last known business, residence or mailing
address of each Partner;
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(iv) to obtain a copy of this Agreement and the Certificate of Limited Partnership and all
amendments thereto, together with copies of the executed copies of all powers of attorney pursuant
to which this Agreement, the Certificate of Limited Partnership and all amendments thereto have
been executed;
(v) to obtain true and full information regarding the amount of cash and a description and
statement of the Net Agreed Value of any other Capital Contribution by each Partner and that each
Partner has agreed to contribute in the future, and the date on which each became a Partner; and
(vi) to obtain such other information regarding the affairs of the Partnership as is just and
reasonable.
(b) The General Partner may keep confidential from the Limited Partners and Assignees, for
such period of time as the General Partner deems reasonable, (i) any information that the General
Partner reasonably believes to be in the nature of trade secrets or (ii) other information the
disclosure of which the General Partner in good faith believes (A) is not in the best interests of
the Partnership Group, (B) could damage the Partnership Group or its business or (C) that any Group
Member is required by law or by agreement with any third party to keep confidential (other than
agreements with Affiliates of the Partnership the primary purpose of which is to circumvent the
obligations set forth in this Section 3.4).
ARTICLE IV
CERTIFICATES; RECORD HOLDERS; TRANSFER OF
PARTNERSHIP INTERESTS; REDEMPTION OF PARTNERSHIP INTERESTS
Section 4.1 Certificates.
Upon the Partnership’s issuance of Common Units, Subordinated Units or Class B Units to any
Person, the Partnership shall issue, upon the request of such Person, one or more Certificates in
the name of such Person (or, if issued in global form, in the name of the Depositary or its
nominee) evidencing the number of such Units being so issued. In addition, (a) upon the General
Partner’s request, the Partnership shall issue to it one or more Certificates in the name of the
General Partner evidencing its General Partner Units and (b) upon the request of any Person owning
Incentive Distribution Rights or any other Partnership Securities other than Common Units,
Subordinated Units or Class B Units, the Partnership shall issue to such Person one or more
certificates evidencing such Incentive Distribution Rights or other Partnership Securities other
than Common Units, Subordinated Units or Class B Units. Certificates shall be executed on behalf
of the Partnership by the Chairman of the Board, Chief Executive Officer, President, Chief
Financial Officer or any Vice President and the Secretary, any Assistant Secretary, or other
authorized officer or director of the General Partner. No Common Unit Certificate shall be valid
for any purpose until it has been countersigned by the Transfer Agent; provided, however, that,
notwithstanding any provision to the contrary in this Section 4.1 or elsewhere in this Agreement,
Units may be certificated or uncertificated as provided in the Delaware Act; provided, further,
that if the General Partner elects to issue Common Units in global form, the Common Unit
Certificates shall be valid upon receipt of a certificate from the
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Transfer Agent certifying that
the Common Units have been duly registered in accordance with the directions of the Partnership.
Subject to the requirements of Section 6.7(b) and Section 6.7(c), the Partners holding Certificates
evidencing Subordinated Units may exchange such Certificates for Certificates evidencing Common
Units on or after the date on which such Subordinated Units are converted into Common Units
pursuant to the terms of Section 5.7. Subject to the requirements of Section 6.7(e), the Partners
holding Certificates evidencing Class B Units may exchange such Certificates for Certificates
evidencing Common Units on or after the period set forth in Section 5.11(f) pursuant to the terms
of Section 5.11.
Section 4.2 Mutilated, Destroyed, Lost or Stolen Certificates.
(a) If any mutilated Certificate is surrendered to the Transfer Agent (for Common Units) or
the General Partner (for Partnership Securities other than Common Units), the appropriate officers
of the General Partner on behalf of the Partnership shall execute, and the Transfer Agent (for
Common Units) or the General Partner (for Partnership Securities other than Common Units) shall
countersign and deliver in exchange therefor, a new Certificate evidencing the same number and type
of Partnership Securities as the Certificate so surrendered.
(b) The appropriate officers of the General Partner on behalf of the Partnership shall execute
and deliver, and the Transfer Agent (for Common Units) shall countersign, a new Certificate in
place of any Certificate previously issued, or issue uncertificated Common Units, if the Record
Holder of the Certificate:
(i) makes proof by affidavit, in form and substance satisfactory to the General Partner, that
a previously issued Certificate has been lost, destroyed or stolen;
(ii) requests the issuance of a new Certificate or the issuance of uncertificated Units before
the General Partner has notice that the Certificate has been acquired by a purchaser for value in
good faith and without notice of an adverse claim;
(iii) if requested by the General Partner, delivers to the General Partner a bond, in form and
substance satisfactory to the General Partner, with surety or sureties and with fixed or open
penalty as the General Partner may direct to indemnify the Partnership, the Partners, the General
Partner and the Transfer Agent against any claim that may be made on account of the alleged loss,
destruction or theft of the Certificate; and
(iv) satisfies any other reasonable requirements imposed by the General Partner.
If a Limited Partner or Assignee fails to notify the General Partner within a reasonable
period of time after he has notice of the loss, destruction or theft of a Certificate, and a
transfer of the Limited Partner Interests represented by the Certificate is registered before the
Partnership, the General Partner or the Transfer Agent receives such notification, the Limited
Partner or Assignee shall be precluded from making any claim against the Partnership, the General
Partner or the Transfer Agent for such transfer or for a new Certificate or uncertificated Units.
(c) As a condition to the issuance of any new Certificate or uncertificated Units under this
Section 4.2, the General Partner may require the payment of a sum sufficient to cover any
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tax or
other governmental charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Transfer Agent) reasonably connected therewith.
Section 4.3 Record Holders.
The Partnership shall be entitled to recognize the Record Holder as the Partner or Assignee
with respect to any Partnership Interest and, accordingly, shall not be bound to recognize any
equitable or other claim to, or interest in, such Partnership Interest on the part of any other
Person, regardless of whether the Partnership shall have actual or other notice thereof, except as
otherwise provided by law or any applicable rule, regulation, guideline or requirement of any
National Securities Exchange on which such Partnership Interests are listed or admitted to trading.
Without limiting the foregoing, when a Person (such as a broker, dealer, bank, trust company or
clearing corporation or an agent of any of the foregoing) is acting as nominee, agent or in some
other representative capacity for another Person in acquiring and/or holding Partnership Interests,
as between the Partnership on the one hand, and such other Persons on the other, such
representative Person (a) shall be the Partner or Assignee (as the case may be) of
record and beneficially, and (b) shall be bound by this Agreement and shall have the rights
and obligations of a Partner or Assignee (as the case may be) hereunder and as, and to the extent,
provided for herein.
Section 4.4 Transfer Generally.
(a) The term “transfer,” when used in this Agreement with respect to a Partnership Interest,
shall be deemed to refer to a transaction (i) by which the General Partner assigns its General
Partner Units to another Person or by which a holder of Incentive Distribution Rights assigns its
Incentive Distribution Rights to another Person, and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other disposition by law or otherwise or (ii)
by which the holder of a Limited Partner Interest (other than an Incentive Distribution Right)
assigns such Limited Partner Interest to another Person who is or becomes a Limited Partner or an
Assignee, and includes a sale, assignment, gift, exchange or any other disposition by law or
otherwise, excluding a pledge, encumbrance, hypothecation or mortgage but including any transfer
upon foreclosure of any pledge, encumbrance, hypothecation or mortgage.
(b) No Partnership Interest shall be transferred, in whole or in part, except in accordance
with the terms and conditions set forth in this Article IV. Any transfer or purported transfer of a
Partnership Interest not made in accordance with this Article IV shall be, to the fullest extent
permitted by law, null and void.
(c) Nothing contained in this Agreement shall be construed to prevent a disposition by any
stockholder, member, partner or other owner of the General Partner of any or all of the shares of
stock, membership or limited liability company interests, partnership interests or other ownership
interests in the General Partner.
Section 4.5 Registration and Transfer of Limited Partner Interests.
(a) The General Partner shall keep or cause to be kept on behalf of the Partnership a register
in which, subject to such reasonable regulations as it may prescribe and subject to the
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provisions
of Section 4.5(b), the Partnership will provide for the registration and transfer of Limited
Partner Interests. The Transfer Agent is hereby appointed registrar and transfer agent for the
purpose of registering Common Units and transfers of such Common Units as herein provided. The
Partnership shall not recognize transfers of Certificates evidencing Limited Partner Interests
unless such transfers are effected in the manner described in this Section 4.5. Upon surrender of
a Certificate for registration of transfer of any Limited Partner Interests evidenced by a
Certificate, and subject to the provisions of Section 4.5(b), the appropriate officers of the
General Partner on behalf of the Partnership shall execute and deliver, and in the case of Common
Units, the Transfer Agent shall countersign and deliver, in the name of the holder or the
designated transferee or transferees, as required pursuant to the holder’s instructions, one or
more new Certificates, or evidence of the issuance of uncertificated Common
Units, evidencing the same aggregate number and type of Limited Partner Interests as was
evidenced by the Certificate so surrendered.
(b) Except as otherwise provided in Section 4.9, the General Partner shall not recognize any
transfer of Limited Partner Interests until the Certificates evidencing such Limited Partner
Interests, or other evidence of uncertificated Limited Partner Interests, are surrendered for
registration of transfer and such Certificates are accompanied by a Transfer Application, properly
completed and including a Taxation Certification, duly executed by the transferee (or the
transferee’s attorney-in-fact duly authorized in writing). No charge shall be imposed by the
General Partner for such transfer; provided, that as a condition to the issuance of any new
Certificate, or uncertificated issuance of Units, under this Section 4.5, the General Partner may
require the payment of a sum sufficient to cover any tax or other governmental charge that may be
imposed with respect thereto. No distributions or allocations will be made in respect of the
Limited Partner Interests until a properly completed Transfer Application has been delivered with
respect to such Limited Partner Interests.
(c) Upon the receipt of proper transfer instructions from the registered owner of
uncertificated Common Units, such uncertificated Common Units shall be cancelled, issuance of new
equivalent uncertificated Common Units or Certificates shall be made to the holder of Common Units
entitled thereto and the transaction shall be recorded upon the books of the Partnership.
(d) Limited Partner Interests may be transferred only in the manner described in this Section
4.5. The transfer of any Limited Partner Interests and the admission of any new Limited Partner
shall not constitute an amendment to this Agreement.
(e) Until admitted as a Substituted Limited Partner pursuant to Section 10.2, the Record
Holder of a Limited Partner Interest shall be an Assignee in respect of such Limited Partner
Interest. Limited Partners may include custodians, nominees or any other individual or entity in
its own or any representative capacity.
(f) A transferee of a Limited Partner Interest who has completed and delivered a Transfer
Application shall be deemed to have (i) requested admission as a Substituted Limited Partner, (ii)
agreed to comply with and be bound by and to have executed this Agreement, (iii) represented and
warranted that such transferee has the right, power and authority and, if an individual, the
capacity to enter into this Agreement, (iv) granted the powers of attorney set forth
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in this
Agreement, and (v) given the consents and approvals and made the waivers contained in this
Agreement.
(g) The General Partner and its Affiliates shall have the right at any time to transfer their
Subordinated Units, Class B Units and Common Units (whether issued upon conversion of the
Subordinated Units or otherwise) to one or more Persons.
Section 4.6 Transfer of the General Partner’s General Partner Interest.
(a) Subject to Section 4.6(c) below, prior to December 31, 2017, the General Partner shall not
transfer all or any part of its General Partner Interest (represented by General Partner Units) to
a Person unless such transfer (i) has been approved by the prior written consent or vote of the
holders of at least a majority of the Outstanding Common Units (excluding Common Units held by the
General Partner and its Affiliates) or (ii) is of all, but not less than all, of its General
Partner Interest to (A) an Affiliate of the General Partner (other than an individual) or
(B) another Person (other than an individual) in connection with the merger or consolidation of the
General Partner with or into such other Person or the transfer by the General Partner of all or
substantially all of its assets to such other Person.
(b) Subject to Section 4.6(c) below, on or after December 31, 2017, the General Partner may
transfer all or any of its General Partner Interest without Unitholder approval.
(c) Notwithstanding anything herein to the contrary, no transfer by the General Partner of all
or any part of its General Partner Interest to another Person shall be permitted unless (i) the
transferee agrees to assume the rights and duties of the General Partner under this Agreement and
to be bound by the provisions of this Agreement, (ii) the Partnership receives an Opinion of
Counsel that such transfer would not result in the loss of limited liability of any Limited Partner
under the Delaware Act or cause the Partnership to be treated as an association taxable as a
corporation or otherwise to be taxed as an entity for federal income tax purposes (to the extent
not already so treated or taxed) and (iii) such transferee also agrees to purchase all (or the
appropriate portion thereof, if applicable) of the partnership or membership interest of the
General Partner as the general partner or managing member, if any, of each other Group Member. In
the case of a transfer pursuant to and in compliance with this Section 4.6, the transferee or
successor (as the case may be) shall, subject to compliance with the terms of Section 10.3, be
admitted to the Partnership as the General Partner immediately prior to the transfer of the General
Partner Interest, and the business of the Partnership shall continue without dissolution.
Section 4.7 Transfer of Incentive Distribution Rights.
Prior to December 31, 2017, a holder of Incentive Distribution Rights may transfer any or all
of the Incentive Distribution Rights held by such holder without any consent of the Unitholders to
(a) an Affiliate of such holder (other than an individual) or (b) another Person (other than an
individual) in connection with (i) the merger or consolidation of such holder of Incentive
Distribution Rights with or into such other Person, (ii) the transfer by such holder of all or
substantially all of its assets to such other Person or (iii) the sale of all the ownership
interests in such holder. Any other transfer of the Incentive Distribution Rights prior to December
31,
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2017 shall require the prior approval of holders of at least a majority of the Outstanding
Common Units (excluding Common Units held by the General Partner and its Affiliates). On or after
December 31, 2017, the General Partner or any other holder of Incentive Distribution Rights may
transfer any or all of its Incentive Distribution Rights without Unitholder approval.
Notwithstanding anything herein to the contrary, (i) the transfer of Class B Units issued pursuant
to Section 5.11, or the transfer of Common Units issued upon conversion of the Class B Units, shall
not be treated as a transfer of all or any part of the Incentive Distribution Rights and (ii) no
transfer of Incentive Distribution Rights to another Person shall be permitted unless the
transferee agrees to be bound by the provisions of this Agreement.
Section 4.8 Restrictions on Transfers.
(a) Except as provided in Section 4.8(e) below, and notwithstanding the other provisions of
this Article IV, no transfer of any Partnership Interests shall be made if such transfer would (i)
violate the then applicable federal or state securities laws or rules and regulations of the
Commission, any state securities commission or any other governmental authority with jurisdiction
over such transfer, (ii) terminate the existence or qualification of the Partnership under the laws
of the jurisdiction of its formation, or (iii) cause the Partnership to be treated as an
association taxable as a corporation or otherwise to be taxed as an entity for federal income tax
purposes (to the extent not already so treated or taxed).
(b) The General Partner may impose restrictions on the transfer of Partnership Interests if it
receives an Opinion of Counsel that such restrictions are necessary to avoid a significant risk of
the Partnership becoming taxable as a corporation or otherwise becoming taxable as an entity for
federal income tax purposes. The General Partner may impose such restrictions by amending this
Agreement; provided, however, that any amendment that would result in the delisting or suspension
of trading of any class of Limited Partner Interests on the principal National Securities Exchange
on which such class of Limited Partner Interests is then listed or admitted to trading must be
approved, prior to such amendment being effected, by the holders of at least a majority of the
Outstanding Limited Partner Interests of such class.
(c) The transfer of a Subordinated Unit that has converted into a Common Unit shall be subject
to the restrictions imposed by Section 6.7(c).
(d) The transfer of a Class B Unit that has converted into a Common Unit shall be subject to
the restrictions imposed by Section 6.7(e).
(e) Nothing contained in this Article IV, or elsewhere in this Agreement, shall preclude the
settlement of any transactions involving Partnership Interests entered into through the facilities
of any National Securities Exchange on which such Partnership Interests are listed or admitted to
trading.
(f) Each certificate evidencing Partnership Interests shall bear a conspicuous legend in
substantially the following form:
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RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IF SUCH TRANSFER WOULD (A)
VIOLATE THE THEN APPLICABLE FEDERAL OR STATE SECURITIES LAWS OR
RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION, ANY
STATE SECURITIES
COMMISSION OR ANY OTHER GOVERNMENTAL AUTHORITY WITH JURISDICTION
OVER SUCH TRANSFER, (B) TERMINATE THE EXISTENCE OR QUALIFICATION OF
EL PASO PIPELINE PARTNERS, L.P. UNDER THE LAWS OF THE STATE OF
DELAWARE, OR (C) CAUSE
EL PASO PIPELINE PARTNERS, L.P. TO BE TREATED
AS AN ASSOCIATION TAXABLE AS A CORPORATION OR OTHERWISE TO BE TAXED
AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES (TO THE EXTENT NOT
ALREADY SO TREATED OR TAXED). EL PASO PIPELINE PARTNERS GP COMPANY,
L.L.C., THE GENERAL PARTNER OF EL PASO PIPELINE PARTNERS, L.P., MAY
IMPOSE ADDITIONAL RESTRICTIONS ON THE TRANSFER OF THIS SECURITY IF
IT RECEIVES AN OPINION OF COUNSEL THAT SUCH RESTRICTIONS ARE
NECESSARY TO AVOID A SIGNIFICANT RISK OF EL PASO PIPELINE PARTNERS,
L.P. BECOMING TAXABLE AS A CORPORATION OR OTHERWISE BECOMING TAXABLE
AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES. THE RESTRICTIONS SET
FORTH ABOVE SHALL NOT PRECLUDE THE SETTLEMENT OF ANY TRANSACTIONS
INVOLVING THIS SECURITY ENTERED INTO THROUGH THE FACILITIES OF ANY
NATIONAL SECURITIES EXCHANGE ON WHICH THIS SECURITY IS LISTED OR
ADMITTED TO TRADING.
Section 4.9 Tax Certifications; Ineligible Holders; Citizenship Certificates; Non-citizen
Assignees.
(a) If a transferee of a Limited Partner Interest fails to furnish a properly completed
Taxation Certification in a Transfer Application or if, upon receipt of such Taxation Certification
or otherwise, the General Partner determines that such transferee is not an Eligible Holder, the
Limited Partner Interests owned by such transferee shall be subject to redemption in accordance
with the provisions of Section 4.10.
(b) The General Partner may request any Limited Partner or Assignee to furnish to the General
Partner, within 30 days after receipt of such request, an executed Taxation Certification or such
other information concerning his federal income tax status with respect to the income and loss
generated by the Partnership (or, if the Limited Partner or Assignee is a nominee holding for the
account of another Person, the federal income tax status of such Person) as the General Partner may
request. If a Limited Partner or Assignee fails to furnish to the General Partner within the
aforementioned 30-day period such Taxation Certification or other
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requested information or if upon
receipt of such Taxation Certification or other requested information the General Partner
determines that a Limited Partner or Assignee is not an Eligible Holder, the Limited Partner
Interests owned by such Limited Partner or Assignee shall be subject
to redemption in accordance with the provisions of Section 4.10. In addition, the General
Partner may require that the status of any such Limited Partner or Assignee be changed to that of
an Ineligible Holder and, thereupon, such Non-citizen Assignee shall cease to be a Partner and
shall have no voting rights in respect of his Limited Partner Interests. The General Partner shall
be substituted for such Ineligible Holder as the Limited Partner or Assignee in respect of the
Ineligible Holder’s Limited Partner Interests and shall vote such Limited Partner Interests in
accordance with Section 4.9(d).
(c) If any Group Member is or becomes subject to any federal, state or local law or regulation
that the General Partner determines would create a substantial risk of cancellation or forfeiture
of any property in which the Group Member has an interest based on the nationality, citizenship or
other related status of a Limited Partner or Assignee, the General Partner may request any Limited
Partner or Assignee to furnish to the General Partner, within 30 days after receipt of such
request, an executed Citizenship Certification or such other information concerning his
nationality, citizenship or other related status (or, if the Limited Partner or Assignee is a
nominee holding for the account of another Person, the nationality, citizenship or other related
status of such Person) as the General Partner may request. If a Limited Partner or Assignee fails
to furnish to the General Partner within the aforementioned 30-day period such Citizenship
Certification or other requested information or if upon receipt of such Citizenship Certification
or other requested information the General Partner determines that a Limited Partner or Assignee is
not an Eligible Citizen, the Limited Partner Interests owned by such Limited Partner or Assignee
shall be subject to redemption in accordance with the provisions of Section 4.10. In addition, the
General Partner may require that the status of any such Limited Partner or Assignee be changed to
that of a Non-citizen Assignee and, thereupon, the General Partner shall be substituted for such
Non-citizen Assignee as the Limited Partner in respect of the Non-citizen Assignee’s Limited
Partner Interests.
(d) The General Partner shall, in exercising voting rights in respect of Limited Partner
Interests held by it on behalf of Non-citizen Assignees or Ineligible Holders, distribute the votes
in the same ratios as the votes of Partners (including the General Partner) in respect of Limited
Partner Interests other than those of Non-citizen Assignees or Ineligible Holders are cast, either
for, against or abstaining as to the matter.
(e) Upon dissolution of the Partnership, a Non-citizen Assignee or Ineligible Holder shall
have no right to receive a distribution in kind pursuant to Section 12.4 but shall be entitled to
the cash equivalent thereof, and the Partnership shall provide cash in exchange for an assignment
of the Non-citizen Assignee’s or Ineligible Holder’s share of any distribution in kind. Such
payment and assignment shall be treated for Partnership purposes as a purchase by the Partnership
from the Non-citizen Assignee or Ineligible Holder of his Limited Partner Interest (representing
his right to receive his share of such distribution in kind).
(f) At any time after an Ineligible Holder can and does certify that it has become an Eligible
Holder, such Ineligible Holder may, upon application to the General Partner, request admission as a
Substituted Limited Partner with respect to any Limited Partner Interests of such
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Ineligible Holder
not redeemed pursuant to Section 4.10, and upon admission of such Ineligible Holder pursuant to
Section 10.2, the General Partner shall cease to be deemed to be the Limited Partner in respect of
such Ineligible Holder’s Limited Partner Interests.
(g) At any time after he can and does certify that he has become an Eligible Citizen, a
Non-citizen Assignee may, upon application to the General Partner, request admission as a
Substituted Limited Partner with respect to any Limited Partner Interests of such Non-citizen
Assignee not redeemed pursuant to Section 4.10, and upon admission of such Non-citizen Assignee
pursuant to Section 10.2, the General Partner shall cease to be deemed to be the Limited Partner in
respect of the Non-citizen Assignee’s Limited Partner Interests.
Section 4.10 Redemption of Partnership Interests of Non-citizen and Ineligible Holders.
(a) If at any time a Limited Partner, Assignee or transferee fails to furnish a Citizenship
Certification, Taxation Certification or other information requested within the 30-day period
specified in Section 4.9(b) or 4.9(c) or in a Transfer Application, or if upon receipt of such
Citizenship Certification, Taxation Certification, Transfer Application or other information the
General Partner determines, with the advice of counsel, that a Limited Partner, Assignee or
transferee is not an Eligible Citizen or Eligible Holder, as the case may be, the Partnership may,
unless the Limited Partner, Assignee or transferee establishes to the satisfaction of the General
Partner that such Limited Partner, Assignee or transferee is an Eligible Citizen or Eligible
Holder, as the case may be, or has transferred his Partnership Interests to a Person who is an
Eligible Citizen or Eligible Holder, as the case may be, and who furnishes a Citizenship
Certification or Taxation Certificate, as the case may be, to the General Partner prior to the date
fixed for redemption as provided below, redeem the Limited Partner Interest of such Limited
Partner, Assignee or transferee as follows:
(i) The General Partner shall, not later than the 30th day before the date fixed for
redemption, give notice of redemption to the Limited Partner, Assignee or transferee, at his last
address designated on the records of the Partnership or the Transfer Agent, by registered or
certified mail, postage prepaid. The notice shall be deemed to have been given when so mailed.
The notice shall specify the Redeemable Interests or, if uncertificated, upon receipt of evidence
satisfactory to the General Partner of the ownership of the Redeemable Interests, the date fixed
for redemption, the place of payment, that payment of the redemption price will be made upon
surrender of the Certificate evidencing the Redeemable Interests and that on and after the date
fixed for redemption no further allocations or distributions to which such person would otherwise
be entitled in respect of the Redeemable Interests will accrue or be made.
(ii) The aggregate redemption price for Redeemable Interests shall be an amount equal to the
lesser of (i) the Current Market Price (the date of determination of which shall be the date fixed
for redemption) of Limited Partner Interests of the class to be so redeemed and (ii) the price paid
for such Limited Partner Interests by the Limited Partner, Assignee or transferee. The redemption
price shall be paid, as determined by the General Partner, in cash or by delivery of a promissory
note of the Partnership in the principal amount of the redemption price, bearing interest at the
rate of 5% annually and payable in three equal annual installments of principal together with
accrued interest, commencing one year after the redemption date.
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(iii) Upon surrender by or on behalf of the Limited Partner, Assignee or transferee, at the
place specified in the notice of redemption, of (x) if certificated, the Certificate evidencing the
Redeemable Interests, duly endorsed in blank or accompanied by an assignment duly executed in
blank, or (y) if uncertificated, upon receipt of evidence satisfactory to the General Partner of
the ownership of the Redeemable Interests, the Limited Partner, Assignee or transferee or his duly
authorized representative shall be entitled to receive the payment therefor.
(iv) After the redemption date, Redeemable Interests shall no longer constitute issued and
Outstanding Limited Partner Interests.
(b) The provisions of this Section 4.10 shall also be applicable to Limited Partner Interests
held by a Limited Partner or Assignee as nominee of a Person determined to be other than an
Eligible Citizen or Eligible Holder, as the case may be.
(c) Nothing in this Section 4.10 shall prevent the recipient of a notice of redemption from
transferring his Limited Partner Interest before the redemption date if such transfer is otherwise
permitted under this Agreement. Upon receipt of notice of such a transfer, the General Partner
shall withdraw the notice of redemption, provided the transferee of such Limited Partner Interest
certifies to the satisfaction of the General Partner that he is an Eligible Citizen or Eligible
Holder, as the case may be. If the transferee fails to make such certification, such redemption
shall be effected from the transferee on the original redemption date.
ARTICLE V
CAPITAL CONTRIBUTIONS AND
ISSUANCE OF PARTNERSHIP INTERESTS
Section 5.1 Organizational Contributions.
In connection with the formation of the Partnership under the Delaware Act, the General
Partner made an initial Capital Contribution to the Partnership in the amount of $20.00, for a 2%
General Partner Interest in the Partnership and has been admitted as the General Partner of the
Partnership, and the Organizational Limited Partner made an initial Capital Contribution to the
Partnership in the amount of $980.00 for a 98% Limited Partner Interest in the Partnership and has
been admitted as a Limited Partner of the Partnership. As of the Closing Date and effective with
the admission of another Limited Partner to the Partnership, the interest of the Organizational
Limited Partner, or its successor, shall be redeemed as provided in the Contribution Agreement; and
the initial Capital Contribution of the Organizational Limited Partner, or its successor, shall
thereupon be refunded. Ninety-eight percent of any interest or other profit that may have resulted
from the investment or other use of such initial Capital Contribution shall be allocated and
distributed to the Organizational Limited Partner, or its successor, and the balance thereof shall
be allocated and distributed to the General Partner.
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Section 5.2 Contributions by the General Partner and its Affiliates.
(a) On the Closing Date and pursuant to the Contribution Agreement:
(i) the General Partner shall contribute to the Partnership, as a Capital Contribution, a
portion of its ownership interests in WIC Holdings Company, L.L.C. and El Paso Wyoming Gas Supply
Company, L.L.C. in exchange for 1,732,963 General Partner Units representing a continuation of its
2% General Partner Interest, subject to all of the rights, privileges and duties of the General
Partner under this Agreement, and the remaining portion of its ownership interests in WIC Holdings
Company, L.L.C. and El Paso Wyoming Gas Supply Company, L.L.C. for (A) 121,698 Common Units and
27,727,411 Subordinated Units that the General Partner shall distribute to its sole member and
thereafter shall be contributed to Holdings as provided in the Contribution Agreement, (B) the
Incentive Distribution Rights, and (C) the right to receive a cash distribution of $665 million in
part as reimbursement for certain capital expenditures in accordance with the Contribution
Agreement; and
(ii) Holdings shall contribute to the Partnership, as a Capital Contribution, all of its
interest in EPPP SNG GP Holdings, L.L.C. and EPPP CIG GP Holdings, L.L.C., in exchange for
32,066,088 Common Units.
(b) Upon the issuance of any additional Limited Partner Interests by the Partnership (other
than the Common Units issued in the Initial Offering, the Common Units issued pursuant to the
Over-Allotment Option, the Common Units and Subordinated Units issued pursuant to Section 5.2(a),
any Class B Units issued pursuant to Section 5.11 and any Common Units issued upon conversion of
Class B Units), the General Partner may, in exchange for a proportionate number of General Partner
Units, make additional Capital Contributions in an amount equal to the product obtained by
multiplying (i) the quotient determined by dividing (A) the General Partner’s Percentage Interest
immediately prior to the issuance of such additional Limited Partner Interests by the Partnership
by (B) 100 less the General Partner’s Percentage Interest immediately prior to the issuance of such
additional Limited Partner Interests by the Partnership times (ii) the amount contributed to the
Partnership by the Limited Partners in exchange for such additional Limited Partner Interests.
Except as set forth in Article XII, the General Partner shall not be obligated to make any
additional Capital Contributions to the Partnership.
Section 5.3 Contributions by Initial Limited Partners.
(a) On the Closing Date and pursuant to the Underwriting Agreement, each Underwriter shall
contribute to the Partnership cash in an amount equal to the Issue Price per Initial Common Unit,
multiplied by the number of Common Units specified in the Underwriting Agreement to be purchased by
such Underwriter at the Closing Date. In exchange for such Capital Contributions by the
Underwriters, the Partnership shall issue Common Units to each Underwriter on whose behalf such
Capital Contribution is made in an amount equal to the quotient obtained by dividing (i) the cash
contribution to the Partnership by or on behalf of such Underwriter by (ii) the Issue Price per
Initial Common Unit.
(b) Upon the exercise of the Over-Allotment Option, each Underwriter shall contribute to the
Partnership cash in an amount equal to the Issue Price per Initial Common Xxxx,
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multiplied by the number of Common Units to be purchased by such Underwriter at the Option
Closing Date. In exchange for such Capital Contributions by the Underwriters, the Partnership shall
issue Common Units to each Underwriter on whose behalf such Capital Contribution is made in an
amount equal to the quotient obtained by dividing (i) the cash contributions to the Partnership by
or on behalf of such Underwriter by (ii) the Issue Price per Initial Common Unit. Upon receipt by
the Partnership of the Capital Contributions from the Underwriters as provided in this Section
5.3(b), the Partnership shall use such cash to purchase from Holdings that number of Common Units
issued to the Underwriters as provided in this Section 5.3(b).
(c) No Limited Partner Interests will be issued or issuable as of or at the Closing Date other
than (i) the Common Units issuable pursuant to subparagraph (a) hereof in aggregate number equal to
25,000,000, (ii) the “Option Units” as such term is used in the Underwriting Agreement in an
aggregate number up to 3,750,000 issuable upon exercise of the Over-Allotment Option pursuant to
subparagraph (b) hereof, (iii) the 32,187,786 Common Units and 27,727,411 Subordinated Units
issuable pursuant to Section 5.2(a) hereof, (iv) the Incentive Distribution Rights and (v) any
Common Units issuable, or to satisfy the obligations of the Partnership or any of its Affiliates,
under the Long-Term Incentive Plan.
Section 5.4 Interest and Withdrawal of Capital Contributions.
No interest shall be paid by the Partnership on Capital Contributions. No Partner or Assignee
shall be entitled to the withdrawal or return of its Capital Contribution, except to the extent, if
any, that distributions made pursuant to this Agreement or upon dissolution of the Partnership may
be considered as such by law and then only to the extent provided for in this Agreement. Except to
the extent expressly provided in this Agreement, no Partner or Assignee shall have priority over
any other Partner or Assignee either as to the return of Capital Contributions or as to profits,
losses or distributions. Any such return shall be a compromise to which all Partners or Assignees
agree within the meaning of Section 17-502(b) of the Delaware Act.
Section 5.5 Capital Accounts.
(a) The Partnership shall maintain for each Partner (or a beneficial owner of Partnership
Interests held by a nominee in any case in which the nominee has furnished the identity of such
owner to the Partnership in accordance with Section 6031(c) of the Code or any other method
acceptable to the General Partner) owning a Partnership Interest a separate Capital Account with
respect to such Partnership Interest in accordance with the rules of Treasury Regulation Section
1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i) the amount of all Capital
Contributions made to the Partnership with respect to such Partnership Interest and (ii) all items
of Partnership income and gain (including income and gain exempt from tax) computed in accordance
with Section 5.5(b) and allocated with respect to such Partnership Interest pursuant to Section
6.1, and decreased by (x) the amount of cash or Net Agreed Value of all actual and deemed
distributions of cash or property made with respect to such Partnership
Interest and (y) all items of Partnership deduction and loss computed in accordance with
Section 5.5(b) and allocated with respect to such Partnership Interest pursuant to Section 6.1.
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(b) For purposes of computing the amount of any item of income, gain, loss or deduction which
is to be allocated pursuant to Article VI and is to be reflected in the Partners’ Capital Accounts,
the determination, recognition and classification of any such item shall be the same as its
determination, recognition and classification for federal income tax purposes (including any method
of depreciation, cost recovery or amortization used for that purpose), provided, that:
(i) Solely for purposes of this Section 5.5, the Partnership shall be treated as owning
directly its proportionate share (as determined by the General Partner based upon the provisions of
the applicable Group Member Agreement or governing, organizational or similar documents) of all
property owned by (x) any other Group Member that is classified as a partnership for federal income
tax purposes and (y) any other partnership, limited liability company, unincorporated business or
other entity classified as a partnership for federal income tax purposes of which a Group Member
is, directly or indirectly, a partner.
(ii) All fees and other expenses incurred by the Partnership to promote the sale of (or to
sell) a Partnership Interest that can neither be deducted nor amortized under Section 709 of the
Code, if any, shall, for purposes of Capital Account maintenance, be treated as an item of
deduction at the time such fees and other expenses are incurred and shall be allocated among the
Partners pursuant to Section 6.1.
(iii) Except as otherwise provided in Treasury Regulation Section 1.704-1(b)(2)(iv)(m), the
computation of all items of income, gain, loss and deduction shall be made without regard to any
election under Section 754 of the Code which may be made by the Partnership and, as to those items
described in Section 705(a)(1)(B) or 705(a)(2)(B) of the Code, without regard to the fact that such
items are not includable in gross income or are neither currently deductible nor capitalized for
federal income tax purposes. To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Section 734(b) or 743(b) of the Code 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 in the Capital Accounts shall be treated as an item of gain
or loss.
(iv) Any income, gain or loss attributable to the taxable disposition of any Partnership
property shall be determined as if the adjusted basis of such property as of such date of
disposition were equal in amount to the Partnership’s Carrying Value with respect to such property
as of such date.
(v) In accordance with the requirements of Section 704(b) of the Code, any deductions for
depreciation, cost recovery or amortization attributable to any Contributed Property shall be
determined as if the adjusted basis of such property on the date it was acquired by the Partnership
were equal to the Agreed Value of such property. Upon an adjustment pursuant to Section 5.5(d) to
the Carrying Value of any Partnership property subject to depreciation, cost recovery or
amortization, any further deductions for such depreciation, cost recovery or amortization
attributable to such property shall be determined as if the adjusted basis
of such property were equal to the Carrying Value of such property immediately following such
adjustment.
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(vi) If the Partnership’s adjusted basis in a depreciable or cost recovery property is reduced
for federal income tax purposes pursuant to Section 48(q)(1) or 48(q)(3) of the Code, the amount of
such reduction shall, solely for purposes hereof, be deemed to be an additional depreciation or
cost recovery deduction in the year such property is placed in service and shall be allocated among
the Partners pursuant to Section 6.1. Any restoration of such basis pursuant to Section 48(q)(2) of
the Code shall, to the extent possible, be allocated in the same manner to the Partners to whom
such deemed deduction was allocated.
(c) (i) A transferee of a Partnership Interest shall succeed to a Pro Rata portion of the
Capital Account of the transferor relating to the Partnership Interest so transferred.
(ii) Subject to Section 6.7(c), immediately prior to the transfer of a Subordinated Unit or of
a Subordinated Unit that has converted into a Common Unit pursuant to Section 5.7 by a holder
thereof (other than a transfer to an Affiliate unless the General Partner elects to have this
subparagraph 5.5(c)(ii) apply), the Capital Account maintained for such Person with respect to its
Subordinated Units or converted Subordinated Units will (A) first, be allocated to the Subordinated
Units or converted Subordinated Units to be transferred in an amount equal to the product of (x)
the number of such Subordinated Units or converted Subordinated Units to be transferred and (y) the
Per Unit Capital Amount for a Common Unit, and (B) second, any remaining balance in such Capital
Account will be retained by the transferor, regardless of whether it has retained any Subordinated
Units or converted Subordinated Units (“Retained Converted Subordinated Units”). Following any such
allocation, the transferor’s Capital Account, if any, maintained with respect to the retained
Subordinated Units or Retained Converted Subordinated Units, if any, will have a balance equal to
the amount allocated under clause (B) hereinabove, and the transferee’s Capital Account established
with respect to the transferred Subordinated Units or converted Subordinated Units will have a
balance equal to the amount allocated under clause (A) hereinabove.
(d) (i) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), on an issuance of
additional Partnership Interests for cash or Contributed Property, the issuance of Partnership
Interests as consideration for the provision of services or the conversion of the General Partner’s
Combined Interest to Common Units pursuant to Section 11.3(b), the Capital Account of each Partner
and the Carrying Value of each Partnership property immediately prior to such issuance shall be
adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to such
Partnership property, as if such Unrealized Gain or Unrealized Loss had been recognized on an
actual sale of each such property immediately prior to such issuance and had been allocated to the
Partners at such time pursuant to Section 6.1(c) in the same manner as any item of gain or loss
actually recognized during such period would have been allocated. In determining such Unrealized
Gain or Unrealized Loss, the aggregate cash amount and fair market value of all Partnership assets
(including cash or cash equivalents) immediately prior to the issuance of additional Partnership
Interests shall be determined by the General Partner using such method of valuation as it may
adopt; provided, however, that the General Partner, in arriving at such valuation, must take fully
into account the fair market value of the Partnership Interests of all Partners at such time. The
General Partner shall allocate such
aggregate value among the assets of the Partnership (in such manner as it determines) to
arrive at a fair market value for individual properties.
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(ii) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), immediately prior to
any actual or deemed distribution to a Partner of any Partnership property (other than a
distribution of cash that is not in redemption or retirement of a Partnership Interest), the
Capital Accounts of all Partners and the Carrying Value of all Partnership property shall be
adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to such
Partnership property, as if such Unrealized Gain or Unrealized Loss had been recognized in a sale
of such property immediately prior to such distribution for an amount equal to its fair market
value, and had been allocated to the Partners, at such time, pursuant to Section 6.1(c) in the same
manner as any item of gain or loss actually recognized during such period would have been
allocated. In determining such Unrealized Gain or Unrealized Loss the aggregate cash amount and
fair market value of all Partnership assets (including cash or cash equivalents) immediately prior
to a distribution shall (A) in the case of an actual distribution that is not made pursuant to
Section 12.4 or in the case of a deemed distribution, be determined and allocated in the same
manner as that provided in Section 5.5(d)(i) or (B) in the case of a liquidating distribution
pursuant to Section 12.4, be determined and allocated by the Liquidator using such method of
valuation as it may adopt.
Section 5.6 Issuances of Additional Partnership Securities.
(a) The Partnership may issue additional Partnership Securities and options, rights, warrants
and appreciation rights relating to the Partnership Securities (including pursuant to Section
7.4(c)) for any Partnership purpose at any time and from time to time to such Persons for such
consideration and on such terms and conditions as the General Partner shall determine, all without
the approval of any Limited Partners.
(b) Each additional Partnership Security authorized to be issued by the Partnership pursuant
to Section 5.6(a) or security authorized to be issued pursuant to Section 7.4(c) may be issued in
one or more classes, or one or more series of any such classes, with such designations,
preferences, rights, powers and duties (which may be senior to existing classes and series of
Partnership Securities), as shall be fixed by the General Partner, including (i) the right to share
in Partnership profits and losses or items thereof; (ii) the right to share in Partnership
distributions; (iii) the rights upon dissolution and liquidation of the Partnership; (iv) whether,
and the terms and conditions upon which, the Partnership may or shall be required to redeem the
Partnership Security or other security; (v) whether such Partnership Security or other security is
issued with the privilege of conversion or exchange and, if so, the terms and conditions of such
conversion or exchange; (vi) the terms and conditions upon which each Partnership Security or other
security will be issued, evidenced by certificates and assigned or transferred; (vii) the method
for determining the Percentage Interest as to such Partnership Security; and (viii) the right, if
any, of each such Partnership Security to vote on Partnership matters, including matters relating
to the relative rights, preferences and privileges of such Partnership Security.
(c) The General Partner shall take all actions that it determines to be necessary or
appropriate in connection with (i) each issuance of Partnership Securities and options, rights,
warrants and appreciation rights relating to Partnership Securities pursuant to this Section 5.6 or
Section 7.4(c), (ii) the conversion of the General Partner Interest (represented by General Partner
Units) or any Incentive Distribution Rights into Units pursuant to the terms of this Agreement,
(iii) the issuance of Class B Units pursuant to Section 5.11 and the conversion of Class B Units
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into Common Units pursuant to the terms of this Agreement, (iv) the admission of Additional Limited
Partners and (v) all additional issuances of Partnership Securities. The General Partner shall
determine the relative rights, powers and duties of the holders of the Units or other Partnership
Securities being so issued. The General Partner shall do all things necessary to comply with the
Delaware Act and is authorized and directed to do all things that it determines to be necessary or
appropriate in connection with any future issuance of Partnership Securities or in connection with
the conversion of the General Partner Interest or any Incentive Distribution Rights into Units
pursuant to the terms of this Agreement, including compliance with any statute, rule, regulation or
guideline of any federal, state or other governmental agency or any National Securities Exchange on
which the Units or other Partnership Securities are listed or admitted to trading.
(d) No fractional Units shall be issued by the Partnership.
Section 5.7 Conversion of Subordinated Units.
(a) The Subordination Period will terminate and all of the Outstanding Subordinated Units
shall convert into Common Units on a one-for-one basis on the first Business Day of any Quarter
beginning after December 31, 2010 in respect of which:
(i) distributions of Available Cash from Operating Surplus on all of (I) the Outstanding
Common Units and Subordinated Units and any other Outstanding Units that are senior or equal in
right of distribution to the Subordinated Units, and (II) the General Partner Units, with respect
to each of the three consecutive, non-overlapping four-Quarter periods immediately preceding such
date equaled or exceeded the sum of the Minimum Quarterly Distribution on all Outstanding Common
Units and Subordinated Units and any other Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units during such periods;
(ii) the Adjusted Operating Surplus generated during each of the three consecutive,
non-overlapping four-Quarter periods immediately preceding such date equaled or exceeded the sum of
the Minimum Quarterly Distribution on all of (I) the Common Units and Subordinated Units and any
other Outstanding Units that are senior or equal in right of distribution to the Subordinated Units
and (II) the General Partner Units, that were Outstanding during such periods on a Fully Diluted
Basis; and
(iii) there are no Cumulative Common Unit Arrearages.
(b) Notwithstanding Section 5.7(a), the Subordination Period shall terminate and all
Outstanding Subordinated Units shall convert into Common Units on a one-for-one basis on the
first Business Day of any Quarter following the distribution of Available Cash to Partners
pursuant to Section 6.3(a) in respect of any Quarter ending on or after December 31, 2008 in
respect of which:
(i) distributions of Available Cash from Operating Surplus under Section 6.4(a) on all of (I)
the Outstanding Common Units and Subordinated Units and any other Outstanding Units that are senior
or equal in right of distribution to the Subordinated Units and (II) the General Partner Units,
with respect to each of the four consecutive non-overlapping
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Quarters immediately preceding such
date equaled or exceeded 150% of the sum of the Minimum Quarterly Distribution on all of the
Outstanding Common Units and Subordinated Units and any other Outstanding Units and General Partner
Units that are senior or equal in right of distribution to the Subordinated Units during such
periods;
(ii) the Adjusted Operating Surplus generated during each of the four consecutive
non-overlapping Quarters immediately preceding such date equaled or exceeded 150% of the sum of the
Minimum Quarterly Distribution on all of (I) the Common Units and Subordinated Units and any other
Outstanding Units that are senior or equal in right of distribution to the Subordinated Units and
(II) the General Partner Units, that were Outstanding during such periods on a Fully Diluted Basis;
and
(iii) there are no Cumulative Common Unit Arrearages.
(c) Notwithstanding any other provision of this Agreement, all the then Outstanding
Subordinated Units will automatically convert into Common Units on a one-for-one basis as set forth
in, and pursuant to the terms of, Section 11.4.
(d) A Subordinated Unit that has converted into a Common Unit shall be subject to the
provisions of Section 6.7(b) and Section 6.7(c).
Section 5.8 Limited Preemptive Right.
Except as provided in this Section 5.8 and in Section 5.2, no Person shall have any
preemptive, preferential or other similar right with respect to the issuance of any Partnership
Security, whether unissued, held in the treasury or hereafter created. The General Partner shall
have the right, which it may from time to time assign in whole or in part to any of its Affiliates,
to purchase Partnership Securities from the Partnership whenever, and on the same terms that, the
Partnership issues Partnership Securities to Persons other than the General Partner and its
Affiliates, to the extent necessary to maintain the Percentage Interests of the General Partner and
its Affiliates equal to any or all of those Percentage Interests that existed immediately prior to
the issuance of such Partnership Securities. Any determination by the General Partner whether or
not to exercise its right pursuant to the immediately preceding sentence shall be a determination
made in its individual capacity as the general partner of the Partnership, and such determination
may be made in accordance with Section 7.9(c).
Section 5.9 Splits and Combinations.
(a) Subject to Section 5.9(d), Section 6.6 and Section 6.9 (dealing with adjustments of
distribution levels), the Partnership may make a Pro Rata distribution of Partnership Securities to
all Record Holders or may effect a subdivision or combination of Partnership Securities so long as,
after any such event, each Partner shall have the same Percentage Interest in the Partnership as
before such event, and any amounts calculated on a per Unit basis (including any Common Unit
Arrearage or Cumulative Common Unit Arrearage) or stated as a number of Units (including the number
of Subordinated Units that may convert prior to the end of the Subordination Period) are
proportionately adjusted.
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(b) Whenever such a Pro Rata distribution, subdivision or combination of Partnership
Securities is declared, the General Partner shall select a Record Date as of which the
distribution, subdivision or combination shall be effective and shall send notice thereof at least
20 days prior to such Record Date to each Record Holder as of a date not less than 10 days prior to
the date of such notice. The General Partner also may cause a firm of independent public
accountants selected by it to calculate the number of Partnership Securities to be held by each
Record Holder after giving effect to such distribution, subdivision or combination. The General
Partner shall be entitled to rely on any certificate provided by such firm as conclusive evidence
of the accuracy of such calculation.
(c) If a Pro Rata distribution of Partnership Securities, or a subdivision or combination of
Partnership Securities, is made as contemplated in this Section 5.9, the number of General Partner
Units constituting the Percentage Interest of the General Partner (as determined immediately prior
to the Record Date for such distribution, subdivision or combination), shall be appropriately
adjusted as of the effective date for payment of such distribution, subdivision or combination.
(d) Promptly following any such distribution, subdivision or combination, the Partnership may
issue Certificates or uncertificated Partnership Securities to the Record Holders of Partnership
Securities as of the applicable Record Date representing the new number of Partnership Securities
held by such Record Holders, or the General Partner may adopt such other procedures that it
determines to be necessary or appropriate to reflect such changes. If any such combination results
in a smaller total number of Partnership Securities Outstanding, the Partnership shall require, as
a condition to the delivery to a Record Holder of such new Certificate or uncertificated
Partnership Securities, the surrender of any Certificate held by such Record Holder immediately
prior to such Record Date.
(e) The Partnership shall not issue fractional Units or General Partner Units upon any
distribution, subdivision or combination of Units. If a distribution, subdivision or combination of
Units would result in the issuance of fractional Units or General Partner Units but for the
provisions of this Section 5.9(d), each fractional Unit or General Partner Unit shall be rounded to
the nearest whole Unit or General Partner Unit (and a 0.5 Unit or General Partner Unit shall be
rounded to the next higher Unit or General Partner Unit).
Section 5.10 Fully Paid and Non-Assessable Nature of Limited Partner Interests.
All Limited Partner Interests issued pursuant to, and in accordance with the requirements of,
this Article V shall be fully paid and non-assessable Limited Partner Interests in the Partnership,
except as such non-assessability may be affected by Sections 17-607 and 17-804 of the Delaware Act.
Section 5.11 Issuance of Class B Units in Connection with Reset of Incentive Distribution
Rights.
(a) Subject to the provisions of this Section 5.11, the holder of the Incentive Distribution
Rights (or, if there is more than one holder of the Incentive Distribution Rights, the holders of a
majority in interest of the Incentive Distribution Rights) shall have the right,
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exercisable at its
option at any time when there are no Subordinated Units outstanding and the Partnership has made a
distribution pursuant to Section 6.4(b)(v) for each of the four most recently completed Quarters
and the amount of each such distribution did not exceed Adjusted Operating Surplus for such
Quarter, to make an election (the “IDR Reset Election”) to cause the Minimum Quarterly Distribution
and the Target Distributions to be reset in accordance with the provisions of Section 5.11(e) and,
in connection therewith, the holder or holders of the Incentive Distribution Rights will become
entitled to receive their respective proportionate share of a number of Class B Units derived by
dividing (i) the average amount of cash distributions made by the Partnership for the two full
Quarters immediately preceding the giving of the Reset Notice (as defined in Section 5.11(b)) in
respect of the Incentive Distribution Rights by (ii) the average of the cash distributions made by
the Partnership in respect of each Common Unit for the two full Quarters immediately preceding the
giving of the Reset Notice (the number of Class B Units determined by such quotient is referred to
herein as the “Aggregate Quantity of Class B Units”). Upon the issuance of such Class B Units, the
Partnership will issue to the General Partner that number of additional General Partner Units equal
to the product of (x) the quotient obtained by dividing (A) the Percentage Interest of the General
Partner immediately prior to such issuance by (B) a percentage equal to 100% less such Percentage
Interest by (y) the number of such Class B Units, and the General Partner shall not be obligated to
make any additional Capital Contribution to the Partnership in exchange for such issuance. The
making of the IDR Reset Election in the manner specified in Section 5.11(b) shall cause the Minimum
Quarterly Distribution and the Target Distributions to be reset in accordance with the provisions
of Section 5.11(e) and, in connection therewith, the holder or holders of the Incentive
Distribution Rights will become entitled to receive Class B Units and General Partner Units on the
basis specified above, without any further approval required by the General Partner or the
Unitholders, at the time specified in Section 5.11(c) unless the IDR Reset Election is rescinded
pursuant to Section 5.11(d).
(b) To exercise the right specified in Section 5.11(a), the holder of the Incentive
Distribution Rights (or, if there is more than one holder of the Incentive Distribution Rights, the
holders of a majority in interest of the Incentive Distribution Rights) shall deliver a written
notice (the “Reset Notice”) to the Partnership. Within 10 Business Days after the receipt by the
Partnership of such Reset Notice, as the case may be, the Partnership shall deliver a written
notice to the holder or holders of the Incentive Distribution Rights of the Partnership’s
determination of the aggregate number of Class B Units that each holder of Incentive Distribution
Rights will be entitled to receive.
(c) The holder or holders of the Incentive Distribution Rights will be entitled to receive the
Aggregate Quantity of Class B Units and related additional General Partner Units on the fifteenth
Business Day after receipt by the Partnership of the Reset Notice, and the Partnership shall issue
Certificates for the Class B Units to the holder or holders of the Incentive Distribution Rights;
provided, however, that the issuance of Class B Units to the holder or holders of the Incentive
Distribution Rights shall not occur prior to the approval of the listing or admission for trading
of the Common Units into which the Class B Units are convertible pursuant to Section 5.11(f) by the
principal National Securities Exchange upon which the Common Units are then listed or admitted for
trading if any such approval is required pursuant to the rules and regulations of such National
Securities Exchange.
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(d) If the principal National Securities Exchange upon which the Common Units are then traded
have not approved the listing or admission for trading of the Common Units into which the Class B
Units are convertible pursuant to Section 5.11(f) on or before the 30th calendar day following the
Partnership’s receipt of the Reset Notice and such approval is required by the rules and
regulations of such National Securities Exchange, then the holder of the Incentive Distribution
Rights (or, if there is more than one holder of the Incentive Distribution Rights, the holders of a
majority in interest of the Incentive Distribution Rights) shall have the right to either rescind
the IDR Reset Election or elect to receive other Partnership Securities having such terms as the
General Partner may approve, with the approval of the Conflicts Committee, that will provide (i)
the same economic value, in the aggregate, as the Aggregate Quantity of Class B Units would have
had at the time of the Partnership’s receipt of the Reset Notice, as determined by the General
Partner, and (ii) for the subsequent conversion (on terms acceptable to the National Securities
Exchange upon which the Common Units are then traded) of such Partnership Securities into Common
Units within not more than 12 months following the Partnership’s receipt of the Reset Notice upon
the satisfaction of one or more conditions that are reasonably acceptable to the holder of the
Incentive Distribution Rights (or, if there is more than one holder of the Incentive Distribution
Rights, the holders of a majority in interest of the Incentive Distribution Rights).
(e) The Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution
and Third Target Distribution shall be adjusted at the time of the issuance of Common Units or
other Partnership Securities pursuant to this Section 5.11 such that (i) the Minimum Quarterly
Distribution shall be reset to equal to the average cash distribution amount per Common Unit for
the two Quarters immediately prior to the Partnership’s receipt of the Reset Notice (the “Reset
MQD”), (ii) the First Target Distribution shall be reset to equal 115% of the Reset MQD, (iii) the
Second Target Distribution shall be reset to equal to 125% of the Reset MQD and (iv) the Third
Target Distribution shall be reset to equal 150% of the Reset MQD.
(f) Any holder of Class B Units shall have the right to elect, by giving written notice to the
General Partner, to convert all or a portion of the Class B Units held by such holder, at any
time following the first anniversary of the issuance of such Class B Units, into Common Units
on a one-for-one basis, such conversion to be effective on the second Business Day following the
General Partner’s receipt of such written notice.
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
Section 6.1 Allocations for Capital Account Purposes.
For purposes of maintaining the Capital Accounts and in determining the rights of the Partners
among themselves, the Partnership’s items of income, gain, loss and deduction (computed in
accordance with Section 5.5(b)) shall be allocated among the Partners in each taxable year (or
portion thereof) as provided herein below.
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(a) Net Income. After giving effect to the special allocations set forth in
Section 6.1(d), Net Income for each taxable year and all items of income, gain, loss and deduction
taken into account in computing Net Income for such taxable year shall be allocated as follows:
(i) First, 100% to the General Partner, in an amount equal to the aggregate Net Losses
allocated to the General Partner pursuant to Section 6.1(b)(iii) for all previous taxable years
until the aggregate Net Income allocated to the General Partner pursuant to this Section 6.1(a)(i)
for the current taxable year and all previous taxable years is equal to the aggregate Net Losses
allocated to the General Partner pursuant to Section 6.1(b)(iii) for all previous taxable years;
(ii) Second, 100% to the General Partner and the Unitholders, in accordance with their
respective Percentage Interests, until the aggregate Net Income allocated to such Partners pursuant
to this Section 6.1(a)(ii) for the current taxable year and all previous taxable years is equal to
the aggregate Net Losses allocated to such Partners pursuant to Section 6.1(b)(ii) for all previous
taxable years; and
(iii) Third, the balance, if any, 100% to the General Partner and the Unitholders, in
accordance with their respective Percentage Interests;
provided, however, Unitholders holding Class B Units will not be allocated any items of income,
gain, loss or deduction pursuant to this Section 6.1(a) with respect to their Class B Units until
the Adjusted Capital Account of each Common Unit or comparable fraction thereof and each Class B
Unit or comparable fraction thereof are equal.
(b) Net Losses. After giving effect to the special allocations set forth in
Section 6.1(d), Net Losses for each taxable period and all items of income, gain, loss and
deduction taken into account in computing Net Losses for such taxable period shall be allocated as
follows:
(i) First, 100% to the General Partner and the Unitholders, in accordance with their
respective Percentage Interests, until the aggregate Net Losses allocated pursuant to this Section
6.1(b)(i) for the current taxable year and all previous taxable years is equal to the aggregate Net
Income allocated to such Partners pursuant to Section 6.1(a)(iii) for all previous taxable years,
provided that the Net Losses shall not be allocated pursuant to this Section 6.1(b)(i) to the
extent that such allocation would cause any Unitholder to have a deficit balance in its Adjusted
Capital Account at the end of such taxable year (or increase any existing deficit balance in its
Adjusted Capital Account);
(ii) Second, 100% to the General Partner and the Unitholders, in accordance with their
respective Percentage Interests; provided, that Net Losses shall not be allocated pursuant to this
Section 6.1(b)(ii) to the extent that such allocation would cause any Unitholder to have a deficit
balance in its Adjusted Capital Account at the end of such taxable year (or increase any existing
deficit balance in its Adjusted Capital Account); and
(iii) Third, the balance, if any, 100% to the General Partner;
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provided, however, Unitholders holding Class B Units will not be allocated any items of income,
gain, loss or deduction pursuant to this Section 6.1(b) with respect to their Class B Units until
the Adjusted Capital Account of each Common Unit or comparable fraction thereof and each Class B
Unit or comparable fraction thereof are equal.
(c) Net Termination Gains and Losses. After giving effect to the special allocations
set forth in Section 6.1(d), all items of income, gain, loss and deduction taken into account in
computing Net Termination Gain or Net Termination Loss for such taxable period shall be allocated
in the same manner as such Net Termination Gain or Net Termination Loss is allocated hereunder. All
allocations under this Section 6.1(c) shall be made after Capital Account balances have been
adjusted by all other allocations provided under this Section 6.1 and after all distributions of
Available Cash provided under Section 6.4 and Section 6.5 have been made; provided, however, that
solely for purposes of this Section 6.1(c), Capital Accounts shall not be adjusted for
distributions made pursuant to Section 12.4.
(i) If a Net Termination Gain is recognized (or deemed recognized pursuant to Section 5.5(d)),
such Net Termination Gain shall be allocated among the Partners in the following manner (and the
Capital Accounts of the Partners shall be increased by the amount so allocated in each of the
following subclauses, in the order listed, before an allocation is made pursuant to the next
succeeding subclause):
(A) First, to each Partner having a deficit balance in its Capital Account, in the proportion
that such deficit balance bears to the total deficit balances in the Capital Accounts of all
Partners, until each such Partner has been allocated Net Termination Gain equal to any such deficit
balance in its Capital Account;
(B) Second, (x) to the General Partner in accordance with its Percentage Interest and (y) to
all Unitholders holding Common Units, Pro Rata, a percentage equal to 100% less the percentage
applicable to subclause (x) of this clause (B), until the Capital Account in respect of each Common
Unit then Outstanding is equal to the sum of (1) its
Unrecovered Initial Unit Price, (2) the Minimum Quarterly Distribution for the Quarter during
which the Liquidation Date occurs, reduced by any distribution pursuant to Section 6.4(a)(i) or
Section 6.4(b)(i) with respect to such Common Unit for such Quarter (the amount determined pursuant
to this clause (2) is hereinafter defined as the “Unpaid MQD”) and (3) any then existing Cumulative
Common Unit Arrearage;
(C) Third, if the Adjusted Capital Account of a Common Unit or comparable fraction thereof and
a Class B Unit (or converted Class B Unit) or comparable fraction thereof are not identical, to (x)
the Unitholders holding the class of Units with the lower Adjusted Capital Account Pro Rata, a
percentage equal to 100% less the percentage applicable to subclause (y) of this clause (C) and (y)
the General Partner, in accordance with its Percentage Interest, until the Adjusted Capital Account
of each Common Unit or comparable fraction thereof and each Class B Unit (or converted Class B
Unit) or comparable fraction thereof are equal;
(D) Fourth, if such Net Termination Gain is recognized (or is deemed to be recognized) prior
to the conversion of the last Outstanding Subordinated Unit, (x) to the
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General Partner in
accordance with its Percentage Interest and (y) to all Unitholders holding Subordinated Units, Pro
Rata, a percentage equal to 100% less the percentage applicable to subclause (x) of this clause
(D), until the Capital Account in respect of each Subordinated Unit then Outstanding equals the sum
of (1) its Unrecovered Initial Unit Price, determined for the taxable year (or portion thereof) to
which this allocation of gain relates, and (2) the Minimum Quarterly Distribution for the Quarter
during which the Liquidation Date occurs, reduced by any distribution pursuant to Section
6.4(a)(iii) with respect to such Subordinated Unit for such Quarter;
(E) Fifth, 100% to the General Partner and all Unitholders in accordance with their respective
Percentage Interests, until the Capital Account in respect of each Common Unit then Outstanding is
equal to the sum of (1) its Unrecovered Initial Unit Price, (2) the Unpaid MQD, (3) any then
existing Cumulative Common Unit Arrearage, and (4) the excess of (aa) the First Target Distribution
less the Minimum Quarterly Distribution for each Quarter of the Partnership’s existence over (bb)
the cumulative per Unit amount of any distributions of Available Cash that is deemed to be
Operating Surplus made pursuant to Section 6.4(a)(iv) and Section 6.4(b)(ii) (the sum of (1), (2),
(3) and (4) is hereinafter defined as the “First Liquidation Target Amount”);
(F) Sixth, (x) to the General Partner in accordance with its Percentage Interest, (y) 13% to
the holders of the Incentive Distribution Rights, Pro Rata, and (z) to all Unitholders, Pro Rata, a
percentage equal to 100% less the sum of the percentages applicable to subclause (x) and (y) of
this clause (F), until the Capital Account in respect of each Common Unit then Outstanding is equal
to the sum of (1) the First Liquidation Target Amount, and (2) the excess of (aa) the Second Target
Distribution less the First Target Distribution for each Quarter of the Partnership’s existence
over (bb) the cumulative per Unit amount of any distributions of Available Cash that is deemed to
be Operating Surplus made pursuant to Section 6.4(a)(v) and Section 6.4(b)(iii) (the sum of (1) and
(2) is hereinafter defined as the “Second Liquidation Target Amount”);
(G) Seventh, (x) to the General Partner in accordance with its Percentage Interest, (y) 23% to
the holders of the Incentive Distribution Rights, Pro Rata, and (z) to all Unitholders, Pro Rata, a
percentage equal to 100% less the sum of the percentages applicable to subclause (x) and (y) of
this clause (G), until the Capital Account in respect of each Common Unit then Outstanding is equal
to the sum of (1) the Second Liquidation Target Amount, and (2) the excess of (aa) the Third Target
Distribution less the Second Target Distribution for each Quarter of the Partnership’s existence
over (bb) the cumulative per Unit amount of any distributions of Available Cash that is deemed to
be Operating Surplus made pursuant to Section 6.4(a)(vi) and Section 6.4(b)(iv) (the sum of (1) and
(2) is hereinafter defined as the “Third Liquidation Target Amount”); and
(H) Finally, (x) to the General Partner in accordance with its Percentage Interest, (y) 48% to
the holders of the Incentive Distribution Rights, Pro Rata, and (z) to all Unitholders, Pro Rata, a
percentage equal to 100% less the sum of the percentages applicable to subclause (x) and (y) of
this clause (H).
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(ii) If a Net Termination Loss is recognized (or deemed recognized pursuant to Section
5.5(d)), such Net Termination Loss shall be allocated among the Partners in the following manner:
(A) First, if such Net Termination Loss is recognized (or is deemed to be recognized) prior to
the conversion of the last Outstanding Subordinated Unit, (x) to the General Partner in accordance
with its Percentage Interest and (y) to all Unitholders holding Subordinated Units, Pro Rata, a
percentage equal to 100% less the percentage applicable to subclause (x) of this clause (A), until
the Capital Account in respect of each Subordinated Unit then Outstanding has been reduced to zero;
(B) Second, if the Adjusted Capital Account of a Common Unit or comparable fraction thereof
and a Class B Unit (or converted Class B Unit) or comparable fraction thereof are not identical, to
(x) the Unitholders holding the class of Units with the higher Adjusted Capital Account, Pro Rata,
a percentage equal to 100% less the percentage applicable to subclause (y) of this clause (B) and
(y) the General Partner in accordance with its Percentage Interest, until the Adjusted Capital
Account of each Common Unit or comparable fraction thereof and each Class B Unit (or converted
Class B Unit) or comparable fraction thereof are equal;
(C) Third, (x) to the General Partner in accordance with its Percentage Interest and (y) to
all Unitholders, Pro Rata, a percentage equal to 100% less the percentage applicable to subclause
(x) of this clause (C) until the Capital Account in respect of each Unit then Outstanding has been
reduced to zero; and
(D) Fourth, the balance, if any, 100% to the General Partner.
(d) Special Allocations. Notwithstanding any other provision of this Section 6.1, the
following special allocations shall be made for such taxable period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding any other provision of this Section
6.1, if there is a net decrease in Partnership Minimum Gain during any
Partnership taxable period, each Partner shall be allocated items of Partnership income and
gain for such period (and, if necessary, subsequent periods) in the manner and amounts provided in
Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and 1.704-2(j)(2)(i), or any successor
provision. For purposes of this Section 6.1(d), each Partner’s Adjusted Capital Account balance
shall be determined, and the allocation of income or gain required hereunder shall be effected,
prior to the application of any other allocations pursuant to this Section 6.1(d) with respect to
such taxable period (other than an allocation pursuant to Section 6.1(d)(vi) and
Section 6.1(d)(vii)). This Section 6.1(d)(i) is intended to comply with the Partnership Minimum
Gain chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall be interpreted
consistently therewith.
(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain. Notwithstanding the other
provisions of this Section 6.1 (other than Section 6.1(d)(i)), except as provided in Treasury
Regulation Section 1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse Debt Minimum
Gain during any Partnership taxable period, any Partner with a
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share of Partner Nonrecourse Debt
Minimum Gain at the beginning of such taxable period shall be allocated items of Partnership income
and gain for such period (and, if necessary, subsequent periods) in the manner and amounts provided
in Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii), or any successor provisions.
For purposes of this Section 6.1(d), each Partner’s Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required hereunder shall be effected, prior to the
application of any other allocations pursuant to this Section 6.1(d), other than Section 6.1(d)(i)
and other than an allocation pursuant to Section 6.1(d)(vi) and Section 6.1(d)(vii), with respect
to such taxable period. This Section 6.1(d)(ii) is intended to comply with the chargeback of items
of income and gain requirement in Treasury Regulation Section 1.704-2(i)(4) and shall be
interpreted consistently therewith.
(iii) Priority Allocations.
(A) If the amount of cash or the Net Agreed Value of any property distributed (except cash or
property distributed pursuant to Section 12.4) to any Unitholder with respect to its Units for a
taxable year is greater (on a per Unit basis) than the amount of cash or the Net Agreed Value of
property distributed to the other Unitholders with respect to their Units (on a per Unit basis),
then (1) there shall be allocated income and gain to each Unitholder receiving such greater cash or
property distribution until the aggregate amount of such items allocated pursuant to this Section
6.1(d)(iii)(A) for the current taxable year and all previous taxable years is equal to the product
of (aa) the amount by which the distribution (on a per Unit basis) to such Unitholder exceeds the
distribution (on a per Unit basis) to the Unitholders receiving the smallest distribution and (bb)
the number of Units owned by the Unitholder receiving the greater distribution; and (2) the General
Partner shall be allocated income and gain in an aggregate amount equal to the product obtained by
multiplying (aa) the quotient determined by dividing (x) the General Partner’s Percentage Interest
at the time in which the greater cash or property distribution occurs by (y) the sum of 100 less
the General Partner’s Percentage Interest at the time in which the greater cash or property
distribution occurs times (bb) the sum of the amounts allocated in clause (1) above.
(B) After the application of Section 6.1(d)(iii)(A), all or any portion of the remaining items
of Partnership income or gain for the taxable period, if any, shall be allocated (1) to the holders
of Incentive Distribution Rights, Pro Rata, until the aggregate amount of such items allocated to
the holders of Incentive Distribution Rights pursuant to this Section 6.1(d)(iii)(B) for the
current taxable year and all previous taxable years is equal to the cumulative amount of all
Incentive Distributions made to the holders of Incentive Distribution Rights from the Closing Date
to a date 45 days after the end of the current taxable year; and (2) to the General Partner an
amount equal to the product of (aa) an amount equal to the quotient determined by dividing (x) the
General Partner’s Percentage Interest by (y) the sum of 100 less the General Partner’s Percentage
Interest times (bb) the sum of the amounts allocated in clause (1) above.
(C) After the application of Section 6.1(d)(iii)(A) and Section 6.1(d)(iii)(B), all or any
portion of the remaining items of Partnership income or gain for the taxable period, if any, shall
be allocated (1) to the Unitholders holding Class B Units, Pro Rata, until the aggregate amount of
such items allocated to the holders of Class B Units pursuant
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to this Section 6.1(d)(iii)(C) for
the current taxable year and all previous taxable years is equal to the cumulative amount of all
distributions of Available Cash made to the holders of Class B Units during the periods such
holders of Class B Units are not allocated any items of income, gain, loss or deduction pursuant to
Section 6.1(a) or Section 6.1(b) with respect to their Class B Units; and (2) to the General
Partner an amount equal to the product of (aa) an amount equal to the quotient determined by
dividing (x) the General Partner’s Percentage Interest by (y) the sum of 100 less the General
Partner’s Percentage Interest times (bb) the sum of the amounts allocated in clause (1) above.
(iv) Qualified Income Offset. In the event any Partner unexpectedly receives any adjustments,
allocations or distributions described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be
specially allocated to such Partner in an amount and manner sufficient to eliminate, to the extent
required by the Treasury Regulations promulgated under Section 704(b) of the Code, the deficit
balance, if any, in its Adjusted Capital Account created by such adjustments, allocations or
distributions as quickly as possible unless such deficit balance is otherwise eliminated pursuant
to Section 6.1(d)(i) or Section 6.1(d)(ii).
(v) Gross Income Allocations. In the event any Partner has a deficit balance in its Capital
Account at the end of any Partnership taxable period in excess of the sum of (A) the amount such
Partner is required to restore pursuant to the provisions of this Agreement and (B) the amount such
Partner is deemed obligated to restore pursuant to Treasury Regulation Sections 1.704-2(g) and
1.704-2(i)(5), such Partner shall be specially allocated items of Partnership income and gain in
the amount of such excess as quickly as possible; provided, that an allocation pursuant to this
Section 6.1(d)(v) shall be made only if and to the extent that such Partner would have a deficit
balance in its Capital Account as adjusted after all other allocations provided for in this Section
6.1 have been tentatively made as if this Section 6.1(d)(v) were not in this Agreement.
(vi) Nonrecourse Deductions. Nonrecourse Deductions for any taxable period shall be allocated
to the Partners in accordance with their respective Percentage Interests. If the
General Partner determines that the Partnership’s Nonrecourse Deductions should be allocated
in a different ratio to satisfy the safe harbor requirements of the Treasury Regulations
promulgated under Section 704(b) of the Code, the General Partner is authorized, upon notice to the
other Partners, to revise the prescribed ratio to the numerically closest ratio that does satisfy
such requirements.
(vii) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any taxable period
shall be allocated 100% to the Partner that bears the Economic Risk of Loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable in
accordance with Treasury Regulation Section 1.704-2(i). If more than one Partner bears the Economic
Risk of Loss with respect to a Partner Nonrecourse Debt, such Partner Nonrecourse Deductions
attributable thereto shall be allocated between or among such Partners in accordance with the
ratios in which they share such Economic Risk of Loss.
(viii) Nonrecourse Liabilities. For purposes of Treasury Regulation Section 1.752-3(a)(3),
the Partners agree that Nonrecourse Liabilities of the Partnership in excess
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of the sum of (A) the
amount of Partnership Minimum Gain and (B) the total amount of Nonrecourse Built-in Gain shall be
allocated among the Partners in accordance with their respective Percentage Interests.
(ix) Code Section 754 Adjustments. To the extent an adjustment to the adjusted tax basis of
any Partnership asset pursuant to Section 734(b) or 743(b) of the Code 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 item of 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.
(x) Economic Uniformity.
(A) At the election of the General Partner with respect to any taxable period ending upon, or
after, the termination of the Subordination Period, all or a portion of the remaining items of
Partnership income or gain for such taxable period, after taking into account allocations pursuant
to Section 6.1(d)(iii), shall be allocated 100% to each Partner holding Subordinated Units that are
Outstanding as of the termination of the Subordination Period (“Final Subordinated Units”) in the
proportion of the number of Final Subordinated Units held by such Partner to the total number of
Final Subordinated Units then Outstanding, until each such Partner has been allocated an amount of
income or gain that increases the Capital Account maintained with respect to such Final
Subordinated Units to an amount equal to the product of (A) the number of Final Subordinated Units
held by such Partner and (B) the Per Unit Capital Amount for a Common Unit. The purpose of this
allocation is to establish uniformity between the Capital Accounts underlying Final Subordinated
Units and the Capital Accounts underlying Common Units held by Persons other than the General
Partner and its Affiliates immediately prior to the conversion of such Final Subordinated Units
into Common Units. This allocation method for establishing such economic uniformity will be
available to the General Partner only if the method for allocating the Capital Account maintained
with respect to the Subordinated Units
between the transferred and retained Subordinated Units pursuant to Section 5.5(c)(ii) does
not otherwise provide such economic uniformity to the Final Subordinated Units.
(B) At the election of the General Partner with respect to any taxable period ending upon, or
after, the conversion of the Class B Units pursuant to Section 5.11(f), all or a portion of the
remaining items of Partnership income or gain for such taxable period, after taking into account
allocations pursuant to Section 6.1(d)(iii) and Section 6.1(d)(x)(A), shall be allocated 100% to
the holder or holders of the Common Units resulting from the conversion pursuant to Section 5.11(f)
(“Converted Common Units”) in the proportion of the number of the Converted Common Units held by
such holder or holders to the total number of Converted Common Units then Outstanding, until each
such holder has been allocated an amount of income or gain that increases the Capital Account
maintained with respect to such Converted Common Units to an amount equal to the product of (A) the
number of Converted Common Units held by such holder and (B) the Per Unit Capital Amount for a
Common Unit. The purpose of this allocation is to establish uniformity between the Capital
Accounts underlying Converted Common Units and the Capital Accounts underlying Common Units held by
Persons other than
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the General Partner and its Affiliates immediately prior to the receipt of
Common Units pursuant to Section 5.11(f).
(xi) Curative Allocation.
(A) Notwithstanding any other provision of this Section 6.1, other than the Required
Allocations, the Required Allocations shall be taken into account in making the Agreed Allocations
so that, to the extent possible, the net amount of items of income, gain, loss and deduction
allocated to each Partner pursuant to the Required Allocations and the Agreed Allocations,
together, shall be equal to the net amount of such items that would have been allocated to each
such Partner under the Agreed Allocations had the Required Allocations and the related Curative
Allocation not otherwise been provided in this Section 6.1. Notwithstanding the preceding
sentence, Required Allocations relating to (1) Nonrecourse Deductions shall not be taken into
account except to the extent that there has been a decrease in Partnership Minimum Gain and (2)
Partner Nonrecourse Deductions shall not be taken into account except to the extent that there has
been a decrease in Partner Nonrecourse Debt Minimum Gain. Allocations pursuant to this Section
6.1(d)(xi)(A) shall only be made with respect to Required Allocations to the extent the General
Partner determines that such allocations will otherwise be inconsistent with the economic agreement
among the Partners. Further, allocations pursuant to this Section 6.1(d)(xi)(A) shall be deferred
with respect to allocations pursuant to clauses (1) and (2) hereof to the extent the General
Partner determines that such allocations are likely to be offset by subsequent Required
Allocations.
(B) The General Partner shall, with respect to each taxable period, (1) apply the provisions
of Section 6.1(d)(xi)(A) in whatever order is most likely to minimize the economic distortions that
might otherwise result from the Required Allocations, and (2) divide all allocations pursuant to
Section 6.1(d)(xi)(A) among the Partners in a manner that is likely to minimize such economic
distortions.
(xii) Corrective Allocations. In the event of any allocation of Additional Book Basis
Derivative Items or any Book-Down Event or any recognition of a Net Termination Loss, the following
rules shall apply:
(A) In the case of any allocation of Additional Book Basis Derivative Items (other than an
allocation of Unrealized Gain or Unrealized Loss under Section 5.5(d) hereof), the General Partner
shall allocate additional items of income and gain away from the holders of Incentive Distribution
Rights to the Unitholders and the General Partner, or additional items of deduction and loss away
from the Unitholders and the General Partner to the holders of Incentive Distribution Rights, to
the extent that the Additional Book Basis Derivative Items allocated to the Unitholders or the
General Partner exceed their Share of Additional Book Basis Derivative Items. For this purpose,
the Unitholders and the General Partner shall be treated as being allocated Additional Book Basis
Derivative Items to the extent that such Additional Book Basis Derivative Items have reduced the
amount of income that would otherwise have been allocated to the Unitholders or the General Partner
under the Partnership Agreement (e.g., Additional Book Basis Derivative Items taken into account in
computing cost of goods sold would reduce the amount of book income otherwise available for
allocation among the Partners). Any allocation made pursuant to this Section 6.1(d)(xii)(A) shall
be made after all of the other
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Agreed Allocations have been made as if this Section 6.1(d)(xii)
were not in this Agreement and, to the extent necessary, shall require the reallocation of items
that have been allocated pursuant to such other Agreed Allocations.
(B) In the case of any negative adjustments to the Capital Accounts of the Partners resulting
from a Book-Down Event or from the recognition of a Net Termination Loss, such negative adjustment
(1) shall first be allocated, to the extent of the Aggregate Remaining Net Positive Adjustments, in
such a manner, as determined by the General Partner, that to the extent possible the aggregate
Capital Accounts of the Partners will equal the amount that would have been the Capital Account
balance of the Partners if no prior Book-Up Events had occurred, and (2) any negative adjustment in
excess of the Aggregate Remaining Net Positive Adjustments shall be allocated pursuant to Section
6.1(c) hereof.
(C) In making the allocations required under this Section 6.1(d)(xii), the General Partner may
apply whatever conventions or other methodology it determines will satisfy the purpose of this
Section 6.1(d)(xii).
Section 6.2 Allocations for Tax Purposes.
(a) Except as otherwise provided herein, for federal income tax purposes, each item of income,
gain, loss and deduction shall be allocated among the Partners in the same manner as its
correlative item of “book” income, gain, loss or deduction is allocated pursuant to Section 6.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable to a Contributed Property or
Adjusted Property, items of income, gain, loss, depreciation, amortization and cost recovery
deductions shall be allocated for federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items attributable thereto shall be
allocated among the Partners in the manner provided under Section 704(c) of the Code that takes
into account the variation between the Agreed Value of such property and its adjusted basis at the
time of contribution; and (B) any item of Residual Gain or Residual Loss attributable to a
Contributed Property shall be allocated among the Partners in the same manner as its correlative
item of “book” gain or loss is allocated pursuant to Section 6.1.
(ii) (A) In the case of an Adjusted Property, such items shall (1) first, be allocated among
the Partners in a manner consistent with the principles of Section 704(c) of the Code to take into
account the Unrealized Gain or Unrealized Loss attributable to such property and the allocations
thereof pursuant to Section 5.5(d)(i) or Section 5.5(d)(ii), and (2) second, in the event such
property was originally a Contributed Property, be allocated among the Partners in a manner
consistent with Section 6.2(b)(i)(A); and (B) any item of Residual Gain or Residual Loss
attributable to an Adjusted Property shall be allocated among the Partners in the same manner as
its correlative item of “book” gain or loss is allocated pursuant to Section 6.1.
(iii) The General Partner shall apply the principles of Treasury Regulation Section 1.704-3(d)
to eliminate Book-Tax Disparities.
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(c) For the proper administration of the Partnership and for the preservation of uniformity of
the Limited Partner Interests (or any class or classes thereof), the General Partner shall (i)
adopt such conventions as it deems appropriate in determining the amount of depreciation,
amortization and cost recovery deductions; (ii) make special allocations for federal income tax
purposes of income (including gross income) or deductions; and (iii) amend the provisions of this
Agreement as appropriate (x) to reflect the proposal or promulgation of Treasury Regulations under
Section 704(b) or Section 704(c) of the Code or (y) otherwise to preserve or achieve uniformity of
the Limited Partner Interests (or any class or classes thereof). The General Partner may adopt such
conventions, make such allocations and make such amendments to this Agreement as provided in this
Section 6.2(c) only if such conventions, allocations or amendments would not have a material
adverse effect on the Partners, the holders of any class or classes of Limited Partner Interests
issued and Outstanding or the Partnership, and if such allocations are consistent with the
principles of Section 704 of the Code.
(d) The General Partner may determine to depreciate or amortize the portion of an adjustment
under Section 743(b) of the Code attributable to unrealized appreciation in any Adjusted Property
(to the extent of the unamortized Book-Tax Disparity) using a predetermined rate derived from the
depreciation or amortization method and useful life applied to the Partnership’s common basis of
such property, despite any inconsistency of such approach with Treasury Regulation Section
1.167(c)-l(a)(6) or any successor regulations thereto. If the General Partner determines that such
reporting position cannot reasonably be taken, the General Partner may adopt depreciation and
amortization conventions under which all purchasers acquiring Limited Partner Interests in the same
month would receive depreciation and amortization deductions, based upon the same applicable rate
as if they had purchased a direct interest in the Partnership’s property. If the General Partner
chooses not to utilize such aggregate method, the General Partner may use any other depreciation
and amortization conventions to preserve the uniformity of the intrinsic tax characteristics of any
Limited Partner Interests, so long as such
conventions would not have a material adverse effect on the Limited Partners or the Record
Holders of any class or classes of Limited Partner Interests.
(e) In accordance with Treasury Regulation Section 1.1245-1(e), any gain allocated to the
Partners upon the sale or other taxable disposition of any Partnership asset shall, to the extent
possible, after taking into account other required allocations of gain pursuant to this Section
6.2, be characterized as Recapture Income in the same proportions and to the same extent as such
Partners (or their predecessors in interest) have been allocated any deductions directly or
indirectly giving rise to the treatment of such gains as Recapture Income.
(f) All items of income, gain, loss, deduction and credit recognized by the Partnership for
federal income tax purposes and allocated to the Partners in accordance with the provisions hereof
shall be determined without regard to any election under Section 754 of the Code that may be made
by the Partnership; provided, however, that such allocations, once made, shall be adjusted (in the
manner determined by the General Partner) to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
(g) Each item of Partnership income, gain, loss and deduction, for federal income tax
purposes, shall be determined on an annual basis and prorated on a monthly basis and shall be
allocated to the Partners as of the opening of the National Securities Exchange on which the
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Common
Units may then be listed or admitted to trading on the first Business Day of each month; provided,
however, such items for the period beginning on the Closing Date and ending on the last day of the
month in which the Option Closing Date or the expiration of the Over-Allotment Option occurs shall
be allocated to the Partners as of the opening of the National Securities Exchange on which the
Common Units may then be listed or admitted to trading on the first Business Day of the next
succeeding month; and provided, further, that gain or loss on a sale or other disposition of any
assets of the Partnership or any other extraordinary item of income or loss realized and recognized
other than in the ordinary course of business, as determined by the General Partner, shall be
allocated to the Partners as of the opening of the National Securities Exchange on which the Common
Units may then be listed or admitted to trading on the first Business Day of the month in which
such gain or loss is recognized for federal income tax purposes. The General Partner may revise,
alter or otherwise modify such methods of allocation to the extent permitted or required by Section
706 of the Code and the regulations or rulings promulgated thereunder.
(h) Allocations that would otherwise be made to a Limited Partner under the provisions of this
Article VI shall instead be made to the beneficial owner of Limited Partner Interests held by a
nominee in any case in which the nominee has furnished the identity of such owner to the
Partnership in accordance with Section 6031(c) of the Code or any other method determined by the
General Partner.
Section 6.3 Requirement and Characterization of Distributions; Distributions to Record
Holders.
(a) Except as described in Section 6.3(b) or Section 6.3(c), within 45 days following the end
of each Quarter commencing with the Quarter ending on December 31, 2007, an amount equal to 100% of
Available Cash with respect to such Quarter shall, subject to Section 17-607 of the Delaware Act,
be distributed in accordance with this Article VI by the Partnership to the Partners as of the
Record Date selected by the General Partner. All amounts of Available Cash distributed by the
Partnership on any date from any source shall be deemed to be Operating Surplus until the sum of
all amounts of Available Cash theretofore distributed by the Partnership to the Partners pursuant
to Section 6.4 equals the Operating Surplus from the Closing Date through the close of the
immediately preceding Quarter. Any remaining amounts of Available Cash distributed by the
Partnership on such date shall, except as otherwise provided in Section 6.5, be deemed to be
“Capital Surplus.” Notwithstanding any provision to the contrary contained in this Agreement, the
Partnership shall not make a distribution to any Partner on account of its interest in the
Partnership if such distribution would violate the Delaware Act or any other applicable law.
(b) Notwithstanding Section 6.3(a), in the event of the dissolution and liquidation of the
Partnership, all receipts received during or after the Quarter in which the Liquidation Date occurs
shall be applied and distributed solely in accordance with, and subject to the terms and conditions
of, Section 12.4.
(c) The General Partner may treat taxes paid by the Partnership on behalf of, or amounts
withheld with respect to, all or less than all of the Partners, as a distribution of Available Cash
to such Partners.
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(d) Each distribution in respect of a Partnership Interest shall be paid by the Partnership,
directly or through the Transfer Agent or through any other Person or agent, only to the Record
Holder of such Partnership Interest as of the Record Date set for such distribution. Such payment
shall constitute full payment and satisfaction of the Partnership’s liability in respect of such
payment, regardless of any claim of any Person who may have an interest in such payment by reason
of an assignment or otherwise.
Section 6.4 Distributions of Available Cash from Operating Surplus.
(a) During Subordination Period. Available Cash with respect to any Quarter within the
Subordination Period that is deemed to be Operating Surplus pursuant to the provisions of Section
6.3 or 6.5 shall, subject to Section 17-607 of the Delaware Act, be distributed as follows, except
as otherwise contemplated by Section 5.6 in respect of other Partnership Securities issued pursuant
thereto:
(i) First, (x) to the General Partner in accordance with its Percentage Interest and (y) to
the Unitholders holding Common Units, Pro Rata, a percentage equal to 100% less the General
Partner’s Percentage Interest until there has been distributed in respect of each Common Unit then
Outstanding an amount equal to the Minimum Quarterly Distribution for such Quarter;
(ii) Second, (x) to the General Partner in accordance with its Percentage Interest and (y) to
the Unitholders holding Common Units, Pro Rata, a percentage equal to 100%
less the General Partner’s Percentage Interest until there has been distributed in respect of
each Common Unit then Outstanding an amount equal to the Cumulative Common Unit Arrearage existing
with respect to such Quarter;
(iii) Third, (x) to the General Partner in accordance with its Percentage Interest and (y) to
the Unitholders holding Subordinated Units, Pro Rata, a percentage equal to 100% less the General
Partner’s Percentage Interest until there has been distributed in respect of each Subordinated Unit
then Outstanding an amount equal to the Minimum Quarterly Distribution for such Quarter;
(iv) Fourth, to the General Partner and all Unitholders, in accordance with their respective
Percentage Interests, until there has been distributed in respect of each Unit then Outstanding an
amount equal to the excess of the First Target Distribution over the Minimum Quarterly Distribution
for such Quarter;
(v) Fifth, (A) to the General Partner in accordance with its Percentage Interest; (B) 13% to
the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all Unitholders, Pro Rata, a
percentage equal to 100% less the sum of the percentages applicable to subclauses (A) and (B) of
this clause (v) until there has been distributed in respect of each Unit then Outstanding an amount
equal to the excess of the Second Target Distribution over the First Target Distribution for such
Quarter;
(vi) Sixth, (A) to the General Partner in accordance with its Percentage Interest; (B) 23% to
the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all Unitholders, Pro Rata, a
percentage equal to 100% less the sum of the percentages applicable to subclauses (A) and (B) of
this subclause (vi), until there has been distributed in respect of each
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Unit then Outstanding an
amount equal to the excess of the Third Target Distribution over the Second Target Distribution for
such Quarter; and
(vii) Thereafter, (A) to the General Partner in accordance with its Percentage Interest; (B)
48% to the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all Unitholders, Pro
Rata, a percentage equal to 100% less the sum of the percentages applicable to subclauses (A) and
(B) of this clause (vii);
provided, however, that if the Minimum Quarterly Distribution, the First Target Distribution, the
Second Target Distribution and the Third Target Distribution have been reduced to zero pursuant to
the second sentence of Section 6.6(a), the distribution of Available Cash that is deemed to be
Operating Surplus with respect to any Quarter will be made solely in accordance with
Section 6.4(a)(vii).
(b) After Subordination Period. Available Cash with respect to any Quarter after the
Subordination Period that is deemed to be Operating Surplus pursuant to the provisions of Section
6.3 or Section 6.5, subject to Section 17-607 of the Delaware Act, shall be distributed as follows,
except as otherwise required by Section 5.6(b) in respect of additional Partnership Securities
issued pursuant thereto:
(i) First, 100% to the General Partner and the Unitholders in accordance with their respective
Percentage Interests, until there has been distributed in respect of each Unit then Outstanding an
amount equal to the Minimum Quarterly Distribution for such Quarter;
(ii) Second, 100% to the General Partner and the Unitholders in accordance with their
respective Percentage Interests, until there has been distributed in respect of each Unit then
Outstanding an amount equal to the excess of the First Target Distribution over the Minimum
Quarterly Distribution for such Quarter;
(iii) Third, (A) to the General Partner in accordance with its Percentage Interest; (B) 13% to
the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all Unitholders, Pro Rata, a
percentage equal to 100% less the sum of the percentages applicable to subclauses (A) and (B) of
this clause (iii), until there has been distributed in respect of each Unit then Outstanding an
amount equal to the excess of the Second Target Distribution over the First Target Distribution for
such Quarter;
(iv) Fourth, (A) to the General Partner in accordance with its Percentage Interest; (B) 23% to
the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all Unitholders, Pro Rata, a
percentage equal to 100% less the sum of the percentages applicable to subclause (A) and (B) of
this clause (iv), until there has been distributed in respect of each Unit then Outstanding an
amount equal to the excess of the Third Target Distribution over the Second Target Distribution for
such Quarter; and
(v) Thereafter, (A) to the General Partner in accordance with its Percentage Interest; (B) 48%
to the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all Unitholders, Pro
Rata, a percentage equal to 100% less the sum of the percentages applicable to subclauses (A) and
(B) of this clause (v);
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provided, however, that if the Minimum Quarterly Distribution, the First Target Distribution, the
Second Target Distribution and the Third Target Distribution have been reduced to zero pursuant to
the second sentence of Section 6.6(a), the distribution of Available Cash that is deemed to be
Operating Surplus with respect to any Quarter will be made solely in accordance with
Section 6.4(b)(v).
Section 6.5 Distributions of Available Cash from Capital Surplus.
Available Cash that is deemed to be Capital Surplus pursuant to the provisions of
Section 6.3(a) shall, subject to Section 17-607 of the Delaware Act, be distributed, unless the
provisions of Section 6.3 require otherwise, 100% to the General Partner and the Unitholders in
accordance with their respective Percentage Interests, until a hypothetical holder of a Common Unit
acquired in the Initial Offering has received with respect to such Common Unit, during the period
since the Closing Date through such date, distributions of Available Cash that are deemed to be
Capital Surplus in an aggregate amount equal to the Initial Unit Price. Available Cash that is
deemed to be Capital Surplus shall then be distributed (A) to the General Partner in accordance
with its Percentage Interest and (B) to all Unitholders holding Common Units, Pro Rata, a
percentage equal to 100% less the General Partner’s Percentage Interest until there has been
distributed in respect of each Common Unit then Outstanding an amount equal to the Cumulative
Common Unit Arrearage. Thereafter, all Available Cash shall be distributed as if it were Operating
Surplus and shall be distributed in accordance with Section 6.4.
Section 6.6 Adjustment of Minimum Quarterly Distribution and Target Distribution Levels.
(a) The Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution,
Third Target Distribution, Common Unit Arrearages and Cumulative Common Unit Arrearages shall be
proportionately adjusted in the event of any distribution, combination or subdivision (whether
effected by a distribution payable in Units or otherwise) of Units or other Partnership Securities
in accordance with Section 5.9. In the event of a distribution of Available Cash that is deemed to
be from Capital Surplus, the then applicable Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target Distribution, shall be adjusted
proportionately downward to equal the product obtained by multiplying the otherwise applicable
Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution and Third
Target Distribution, as the case may be, by a fraction of which the numerator is the Unrecovered
Initial Unit Price of the Common Units immediately after giving effect to such distribution and of
which the denominator is the Unrecovered Initial Unit Price of the Common Units immediately prior
to giving effect to such distribution.
(b) The Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution
and Third Target Distribution, shall also be subject to adjustment pursuant to Section 5.11 and
Section 6.9.
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Section 6.7 Special Provisions Relating to the Holders of Subordinated Units and Class B
Units.
(a) Except with respect to the right to vote on or approve matters requiring the vote or
approval of a percentage of the holders of Outstanding Common Units and the right to participate in
allocations of income, gain, loss and deduction and distributions made with respect to Common
Units, the holder of a Subordinated Unit shall have all of the rights and obligations of a
Unitholder holding Common Units hereunder; provided, however, that immediately upon the conversion
of Subordinated Units into Common Units pursuant to Section 5.7, the Unitholder holding a
Subordinated Unit shall possess all of the rights and obligations of a Unitholder holding Common
Units hereunder, including the right to vote as a Common Unitholder and the right to participate in
allocations of income, gain, loss and deduction and distributions made with respect to Common
Units; provided, however, that such converted Subordinated Units shall remain subject to the
provisions of Sections 5.5(c)(ii), 6.1(d)(x)(A), 6.7(b) and 6.7(c).
(b) A Unitholder shall not be permitted to transfer a Subordinated Unit or a Subordinated Unit
that has converted into a Common Unit pursuant to Section 5.7 (other than a transfer to an
Affiliate) if the remaining balance in the transferring Unitholder’s Capital Account
with respect to the retained Subordinated Units or Retained Converted Subordinated Units would
be negative after giving effect to the allocation under Section 5.5(c)(ii)(B).
(c) The Unitholder holding a Common Unit that has resulted from the conversion of a
Subordinated Unit pursuant to Section 5.7 shall not be issued a Common Unit Certificate pursuant to
Section 4.1, and shall not be permitted to transfer such Common Unit to a Person that is not an
Affiliate of the holder until such time as the General Partner determines, based on advice of
counsel, that each such Common Unit should have, as a substantive matter, like intrinsic economic
and federal income tax characteristics, in all material respects, to the intrinsic economic and
federal income tax characteristics of an Initial Common Unit. In connection with the condition
imposed by this Section 6.7(c), the General Partner may take whatever steps are required to provide
economic uniformity to such Common Units in preparation for a transfer of such Common Units,
including the application of Sections 5.5(c)(ii), 6.1(d)(x) and 6.7(b); provided, however, that no
such steps may be taken that would have a material adverse effect on the Unitholders holding Common
Units represented by Common Unit Certificates.
(d) Except with respect to the right to vote on or approve matters requiring the vote or
approval of a percentage of the holders of Outstanding Common Units and the right to participate in
allocations of income, gain, loss and deduction and distributions made with respect to Common
Units, the holders of Class B Units shall have all the rights and obligations of a Unitholder
holding Common Units; provided, however, that immediately upon the conversion of Class B Units into
Common Units pursuant to Section 5.11, the Unitholders holding a Class B Unit shall possess all the
rights and obligations of a Unitholder holding Common Units hereunder, including the right to vote
as a Common Unitholder and the right to participate in allocations of income, gain, loss and
deduction and distributions made with respect to Common Units; provided, however, that such
converted Class B Units shall remain subject to the provisions of Sections 6.1(a), 6.1(b),
6.1(d)(iii), 6.1(d)(x)(B) and 6.7(e).
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(e) The holder or holders of Common Units resulting from the conversion pursuant to Section
5.11(f) of any Class B Units pursuant to Section 5.11 shall not be issued a Common Unit Certificate
pursuant to Section 4.1, and shall not be permitted to transfer such Common Units until such time
as the General Partner determines, based on advice of counsel, that each such Common Unit should
have, as a substantive matter, like intrinsic economic and federal income tax characteristics, in
all material respects, to the intrinsic economic and federal income tax characteristics of an
Initial Common Unit. In connection with the condition imposed by this Section 6.7(d), the General
Partner may take whatever steps are required to provide economic uniformity to such Common Units,
including the application of Section 6.1(d)(x)(B); provided, however, that no such steps may be
taken that would have a material adverse effect on the Unitholders holding Common Units represented
by Common Unit Certificates (for this purpose the allocation of items of income, gain, loss or
deduction with respect to Class B Units or with respect to Common Units will be deemed not to have
a material adverse effect on the Common Units).
Section 6.8 Special Provisions Relating to the Holders of Incentive Distribution Rights.
Notwithstanding anything to the contrary set forth in this Agreement, the holders of the
Incentive Distribution Rights (a) shall (i) possess the rights and obligations provided in this
Agreement with respect to a Limited Partner pursuant to Article III and Article VII and (ii) have a
Capital Account as a Partner pursuant to Section 5.5 and all other provisions related thereto and
(b) shall not (i) be entitled to vote on any matters requiring the approval or vote of the holders
of Outstanding Units, except as provided by law, (ii) be entitled to any distributions other than
as provided in Sections 6.4(a)(v), (vi) and (vii), Section 6.4(b)(iii), (iv) and (v), and Section
12.4 or (iii) be allocated items of income, gain, loss or deduction other than as specified in this
Article VI.
Section 6.9 Entity-Level Taxation.
If legislation is enacted or the interpretation of existing language is modified by a
governmental authority so that a Group Member is treated as an association taxable as a corporation
or is otherwise subject to an entity-level tax for federal, state or local income tax purposes,
then the General Partner may reduce the Minimum Quarterly Distribution, the First Target
Distribution, the Second Target Distribution and the Third Target Distribution by the amount of
income taxes that are payable by reason of any such new legislation or interpretation (the
“Incremental Income Taxes”), or any portion thereof selected by the General Partner, in the manner
provided in this Section 6.9. If the General Partner elects to reduce the Minimum Quarterly
Distribution, the First Target Distribution, the Second Target Distribution and the Third Target
Distribution for any Quarter with respect to all or a portion of any Incremental Income Taxes, the
General Partner shall estimate for such Quarter the Partnership Group’s aggregate liability (the
“Estimated Incremental Quarterly Tax Amount”) for all (or the relevant portion of) such Incremental
Income Taxes; provided that any difference between such estimate and the actual tax liability for
Incremental Income Taxes (or the relevant portion thereof) for such Quarter may, to the extent
determined by the General Partner be taken into account in determining the Estimated Incremental
Quarterly Tax Amount with respect to each Quarter in which any such difference can be determined.
For each such Quarter, the Minimum Quarterly
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Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution, shall be the product obtained by multiplying (a) the
amounts therefor that are set out herein prior to the application of this Section 6.9 times (b) the
quotient obtained by dividing (i) Available Cash with respect to such Quarter by (ii) the sum of
Available Cash with respect to such Quarter and the Estimated Incremental Quarterly Tax Amount for
such Quarter, as determined by the General Partner. For purposes of the foregoing, Available Cash
with respect to a Quarter will be deemed reduced by the Estimated Incremental Quarterly Tax Amount
for that Quarter.
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
Section 7.1 Management.
(a) The General Partner shall conduct, direct and manage all activities of the Partnership.
Except as otherwise expressly provided in this Agreement, all management powers over the business
and affairs of the Partnership shall be exclusively vested in the General Partner, and no Limited
Partner or Assignee shall have any management power over the business and affairs of the
Partnership. In addition to the powers now or hereafter granted a general partner of a limited
partnership under applicable law or that are granted to the General Partner under any other
provision of this Agreement, the General Partner, subject to Section 7.3, shall have full power and
authority to do all things and on such terms as it determines to be necessary or appropriate to
conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 and to
effectuate the purposes set forth in Section 2.4, including the following:
(i) the making of any expenditures, the lending or borrowing of money, the assumption or
guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of
evidences of indebtedness, including indebtedness that is convertible into Partnership Securities,
and the incurring of any other obligations;
(ii) the making of tax, regulatory and other filings, or rendering of periodic or other
reports to governmental or other agencies having jurisdiction over the business or assets of the
Partnership;
(iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange
of any or all of the assets of the Partnership or the merger or other combination of the
Partnership with or into another Person (the matters described in this clause (iii) being subject,
however, to any prior approval that may be required by Section 7.3 and Article XIV);
(iv) the use of the assets of the Partnership (including cash on hand) for any purpose
consistent with the terms of this Agreement, including the financing of the conduct of the
operations of the Partnership Group; subject to Section 7.6(a), the lending of funds to other
Persons (including other Group Members); the repayment or guarantee of obligations of any Group
Member; and the making of capital contributions to any Group Member;
(v) the negotiation, execution and performance of any contracts, conveyances or other
instruments (including instruments that limit the liability of the Partnership under
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contractual
arrangements to all or particular assets of the Partnership, with the other party to the contract
to have no recourse against the General Partner or its assets other than its interest in the
Partnership, even if same results in the terms of the transaction being less favorable to the
Partnership than would otherwise be the case);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees (including employees having titles such as
“president,” “vice president,” “secretary” and “treasurer”) and agents, outside attorneys,
accountants, consultants and contractors and the determination of their compensation and other
terms of employment or hiring;
(viii) the maintenance of insurance for the benefit of the Partnership Group, the Partners and
Indemnitees;
(ix) the formation of, or acquisition of an interest in, and the contribution of property and
the making of loans to, any further limited or general partnerships, joint ventures, corporations,
limited liability companies or other Persons (including the acquisition of interests in, and the
contributions of property to, any Group Member from time to time) subject to the restrictions set
forth in Section 2.4;
(x) the control of any matters affecting the rights and obligations of the Partnership,
including the bringing and defending of actions at law or in equity and otherwise engaging in the
conduct of litigation, arbitration or mediation and the incurring of legal expense and the
settlement of claims and litigation;
(xi) the indemnification of any Person against liabilities and contingencies to the extent
permitted by law;
(xii) the entering into of listing agreements with any National Securities Exchange and the
delisting of some or all of the Limited Partner Interests from, or requesting that trading be
suspended on, any such exchange (subject to any prior approval that may be required under Section
4.8);
(xiii) the purchase, sale or other acquisition or disposition of Partnership Securities, or
the issuance of options, rights, warrants, appreciation rights and tracking and phantom interests
relating to Partnership Securities;
(xiv) the undertaking of any action in connection with the Partnership’s participation in any
Group Member; and
(xv) the entering into of agreements with any of its Affiliates to render services to a Group
Member or to itself in the discharge of its duties as General Partner of the Partnership.
(b) Notwithstanding any other provision of this Agreement, any Group Member Agreement, the
Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and
each other Person who may acquire an interest in Partnership Securities
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hereby (i) approves,
ratifies and confirms the execution, delivery and performance by the parties thereto of this
Agreement and the Group Member Agreement of each other Group Member, the Underwriting Agreement,
the Omnibus Agreement, the Contribution Agreement, the Credit Agreement and the other agreements
described in or filed as exhibits to the Registration Statement that are related to the
transactions contemplated by the Registration Statement; (ii) agrees that the General Partner (on
its own or through any officer of the Partnership) is authorized to execute, deliver and perform
the agreements referred to in clause (i) of this sentence and the other agreements, acts,
transactions and matters described in or contemplated by the Registration Statement on behalf of
the Partnership without any further act, approval or vote of the Partners or the Assignees or the
other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the
execution, delivery or performance by the General Partner, any Group Member or any Affiliate of any
of them of this Agreement or any agreement authorized or permitted under this Agreement (including
the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded
pursuant to Article XV) shall not
constitute a breach by the General Partner of any duty that the General Partner may owe the
Partnership or the Limited Partners or any other Persons that are bound by this Agreement (or any
other agreements) or of any duty otherwise existing at law, in equity or otherwise.
Section 7.2 Certificate of Limited Partnership.
The General Partner has caused the Certificate of Limited Partnership to be filed with the
Secretary of State of the State of Delaware as required by the Delaware Act. The General Partner
shall use all reasonable efforts to cause to be filed such other certificates or documents that the
General Partner determines to be necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware or any other state in which the
Partnership may elect to do business or own property. To the extent the General Partner determines
such action to be necessary or appropriate, the General Partner shall file amendments to and
restatements of the Certificate of Limited Partnership and do all things to maintain the
Partnership as a limited partnership (or a partnership or other entity in which the limited
partners have limited liability) under the laws of the State of Delaware or of any other state in
which the Partnership may elect to do business or own property. Subject to the terms of Section
3.4(a), the General Partner shall not be required, before or after filing, to deliver or mail a
copy of the Certificate of Limited Partnership, any qualification document or any amendment thereto
to any Limited Partner.
Section 7.3 Restrictions on the General Partner’s Authority.
Except as provided in Article XII and Article XIV, the General Partner may not sell, exchange
or otherwise dispose of all or substantially all of the assets of the Partnership Group, taken as a
whole, in a single transaction or a series of related transactions (including by way of merger,
consolidation, other combination or sale of ownership interests of the Partnership’s Subsidiaries)
without the approval of holders of a Unit Majority; provided, however, that this provision shall
not preclude or limit the General Partner’s ability to mortgage, pledge, hypothecate or grant a
security interest in all or substantially all of the assets of the Partnership Group and shall not
apply to any forced sale of any or all of the assets of the Partnership Group pursuant to the
foreclosure of, or other realization upon, any such encumbrance. Without the
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approval of holders
of a Unit Majority, the General Partner shall not, on behalf of the Partnership, except as
permitted under Section 4.6, Section 11.1, Section 11.2 or Section 12.1(a), elect or cause the
Partnership to elect a successor general partner of the Partnership.
Section 7.4 Reimbursement of the General Partner.
(a) Except as provided in this Section 7.4 and elsewhere in this Agreement, the General
Partner shall not be compensated for its services as a general partner or managing member of any
Group Member.
(b) The General Partner shall be reimbursed on a monthly basis, or such other basis as the
General Partner may determine, for (i) all direct and indirect expenses it incurs or payments it
makes on behalf of the Partnership Group (including salary, bonus, incentive compensation and other
amounts paid to any Person, including Affiliates of the General Partner to perform services for the
Partnership Group or for the General Partner in the discharge of its duties to the Partnership
Group and including certain expenses allocated to the Partnership by Affiliates of the General
Partner), and (ii) all other expenses allocable to the Partnership Group or otherwise incurred by
the General Partner in connection with operating the Partnership Group’s business (including
expenses allocated to the General Partner by its Affiliates). The General Partner shall determine
the expenses that are allocable to the Partnership Group. Reimbursements pursuant to this
Section 7.4 shall be in addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 7.7. Any allocation of expenses to the Partnership by
Affiliates of the General Partner in a manner consistent with then-applicable accounting and
allocation methodologies generally permitted by FERC for rate-making purposes (or in the absence of
then-applicable methodologies permitted by FERC, consistent with the most-recently applicable
methodologies) and past business practices shall be deemed to be fair and reasonable to the
Partnership.
(c) The General Partner, without the approval of the Limited Partners (who shall have no right
to vote in respect thereof), may propose and adopt on behalf of the Partnership employee benefit
plans, employee programs and employee practices (including the Long Term Incentive Plan and other
plans, programs and practices involving the issuance of Partnership Securities or options to
purchase or rights, warrants or appreciation rights or phantom or tracking interests relating to
Partnership Securities), or cause the Partnership to issue Partnership Securities in connection
with, or pursuant to, any employee benefit plan, employee program or employee practice maintained
or sponsored by the General Partner, Group Member or any Affiliates in each case for the benefit of
employees and directors of the General Partner or any of its Affiliates, in respect of services
performed, directly or indirectly, for the benefit of the Partnership Group. The Partnership
agrees to issue and sell to the General Partner or any of its Affiliates any Partnership Securities
that the General Partner or such Affiliates are obligated to provide to any employees and directors
pursuant to any such employee benefit plans, employee programs or employee practices. Expenses
incurred by the General Partner in connection with any such plans, programs and practices
(including the net cost to the General Partner or such Affiliates of Partnership Securities
purchased by the General Partner or such Affiliates from the Partnership to fulfill options or
awards under such plans, programs and practices) shall be reimbursed in accordance with Section
7.4(b). Any and all obligations of the General Partner under any employee benefit plans, employee
programs or employee practices adopted by the
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General Partner as permitted by this Section 7.4(c)
shall constitute obligations of the General Partner hereunder and shall be assumed by any successor
General Partner approved pursuant to Section 11.1 or Section 11.2 or the transferee of or successor
to all of the General Partner’s General Partner Interest (represented by General Partner Units)
pursuant to Section 4.6.
Section 7.5 Outside Activities.
(a) After the Closing Date, the General Partner, for so long as it is the General Partner of
the Partnership (i) agrees that its sole business will be to act as a general partner or managing
member, as the case may be, of the Partnership and any other partnership or limited liability
company of which the Partnership is, directly or indirectly, a partner or member and to undertake
activities that are ancillary or related thereto (including being a limited partner in the
Partnership) and (ii) shall not engage in any business or activity or incur any debts or
liabilities except in connection with or incidental to (A) its performance as general partner or
managing member, if any, of one or more Group Members or as described in or contemplated by the
Registration Statement, (B) the acquiring, owning or disposing of debt or equity securities in any
Group Member or (C) the guarantee of any indebtedness of El Paso Corporation or any of its
successors or permitted assigns.
(b) Each Indemnitee (other than the General Partner) shall have the right to engage in
businesses of every type and description and other activities for profit and to engage in and
possess an interest in other business ventures of any and every type or description, whether in
businesses engaged in or anticipated to be engaged in by any Group Member, independently or with
others, including business interests and activities in direct competition with the business and
activities of any Group Member, and none of the same shall constitute a breach of this Agreement or
any duty otherwise existing at law, in equity or otherwise to any Group Member or any Partner or
Assignee. None of any Group Member, any Limited Partner or any other Person shall have any rights
by virtue of this Agreement, any Group Member Agreement, or the partnership relationship
established hereby in any business ventures of any Indemnitee.
(c) Notwithstanding anything to the contrary in this Agreement or any duty existing at law, in
equity or otherwise, but subject to the proviso set forth in the last sentence of this Section
7.5(c), (i) the engaging in competitive activities by any Indemnitees (other than the General
Partner) in accordance with the provisions of this Section 7.5 is hereby approved by the
Partnership and all Partners, (ii) it shall not be deemed to be a breach of any fiduciary duty or
any other obligation of any type whatsoever of any Indemnitee for the Indemnitees (other than the
General Partner) to engage in such business interests and activities in preference to or to the
exclusion of the Partnership and (iii) the Indemnitees shall have no obligation hereunder or as a
result of any duty otherwise existing at law, in equity or otherwise, to present business
opportunities to the Partnership. Notwithstanding anything to the contrary in this Agreement, the
doctrine of corporate opportunity, or any analogous doctrine, shall not apply to any Indemnitee
(including the General Partner). No Indemnitee (including the General Partner) who acquires
knowledge of a potential transaction, agreement, arrangement or other matter that may be an
opportunity for the Partnership, shall have any duty to communicate or offer such opportunity to
the Partnership, and such Indemnitee (including the General Partner) shall not be liable to the
Partnership, to any Limited Partner or any other Person for breach of any fiduciary or other duty
by reason of the fact that such Indemnitee (including the General Partner) pursues or acquires for
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itself, directs such opportunity to another Person or does not communicate such opportunity or
information to the Partnership; provided such Indemnitee does not engage in such business or
activity as a result of or using confidential or proprietary information provided by or on behalf
of the Partnership to such Indemnitee.
(d) The General Partner and each of its Affiliates may acquire Units or other Partnership
Securities in addition to those acquired on the Closing Date and, except as otherwise
provided in this Agreement, shall be entitled to exercise, at their option, all rights
relating to all Units or other Partnership Securities acquired by them. The term “Affiliates” when
used in this Section 7.5(d) with respect to the General Partner shall not include any Group Member.
(e) Notwithstanding anything to the contrary in this Agreement, to the extent that any
provision of this Agreement purports or is interpreted to have the effect of restricting the
fiduciary duties that might otherwise, as a result of Delaware or other applicable law, be owed by
the General Partner to the Partnership and its Limited Partners, or to constitute a waiver or
consent by the Limited Partners to any such restriction, such provisions shall be deemed to have
been approved by the Partners.
Section 7.6 Loans from the General Partner; Loans or Contributions from the Partnership or
Group Members.
(a) The General Partner or any of its Affiliates may lend to any Group Member, and any Group
Member may borrow from the General Partner or any of its Affiliates, funds needed or desired by the
Group Member for such periods of time and in such amounts as the General Partner may determine;
provided, however, that in any such case the lending party may not charge the borrowing party
interest at a rate greater than the rate that would be charged the borrowing party or impose terms
less favorable to the borrowing party than would be charged or imposed on the borrowing party by
unrelated lenders on comparable loans made on an arm’s-length basis (without reference to the
lending party’s financial abilities or guarantees), all as determined by the General Partner. The
borrowing party shall reimburse the lending party for any costs (other than any additional interest
costs) incurred by the lending party in connection with the borrowing of such funds. For purposes
of this Section 7.6(a) and Section 7.6(b), the term “Group Member” shall include any Affiliate of a
Group Member that is controlled by the Group Member.
(b) The Partnership may lend or contribute to any Group Member, and any Group Member may
borrow from the Partnership, funds on terms and conditions determined by the General Partner. No
Group Member may lend funds to the General Partner or any of its Affiliates (other than another
Group Member).
(c) No borrowing by any Group Member or the approval thereof by the General Partner shall be
deemed to constitute a breach of any duty hereunder or otherwise existing at law, in equity or
otherwise, of the General Partner or its Affiliates to the Partnership or the Limited Partners
existing hereunder, or existing at law, in equity or otherwise by reason of the fact that the
purpose or effect of such borrowing is directly or indirectly to (i) enable distributions to the
General Partner or its Affiliates (including in their capacities as Limited Partners) to exceed the
General Partner’s Percentage Interest of the total amount distributed to all Partners or (ii)
hasten
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the expiration of the Subordination Period or the conversion of any Subordinated Units into
Common Units.
Section 7.7 Indemnification.
(a) To the fullest extent permitted by law but subject to the limitations expressly provided
in this Agreement, all Indemnitees shall be indemnified and held harmless by the Partnership from
and against any and all losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts
arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, in which any Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise, by reason of its status as an Indemnitee; provided, that the
Indemnitee shall not be indemnified and held harmless if there has been a final and non-appealable
judgment entered by a court of competent jurisdiction determining that, in respect of the matter
for which the Indemnitee is seeking indemnification pursuant to this Section 7.7, the Indemnitee
acted in bad faith or engaged in fraud, willful misconduct or, in the case of a criminal matter,
acted with knowledge that the Indemnitee’s conduct was unlawful; provided, further, no
indemnification pursuant to this Section 7.7 shall be available to the General Partner or its
Affiliates (other than a Group Member) with respect to its or their obligations incurred pursuant
to the Underwriting Agreement, the Omnibus Agreement or the Contribution Agreement (other than
obligations incurred by the General Partner on behalf of the Partnership). Any indemnification
pursuant to this Section 7.7 shall be made only out of the assets of the Partnership, it being
agreed that the General Partner shall not be personally liable for such indemnification and shall
have no obligation to contribute or loan any monies or property to the Partnership to enable it to
effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including legal fees and expenses)
incurred by an Indemnitee who is indemnified pursuant to Section 7.7(a) in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the Partnership prior
to a determination that the Indemnitee is not entitled to be indemnified upon receipt by the
Partnership of any undertaking by or on behalf of the Indemnitee to repay such amount if it shall
be determined that the Indemnitee is not entitled to be indemnified as authorized in this Section
7.7.
(c) The indemnification provided by this Section 7.7 shall be in addition to any other rights
to which an Indemnitee may be entitled under any agreement, pursuant to any vote of the holders of
Outstanding Limited Partner Interests, as a matter of law or otherwise, both as to actions in the
Indemnitee’s capacity as an Indemnitee and as to actions in any other capacity (including any
capacity under the Underwriting Agreement), and shall continue as to an Indemnitee who has ceased
to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and
administrators of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the General Partner or its
Affiliates for the cost of) insurance, on behalf of the General Partner, its Affiliates and such
other Persons as the General Partner shall determine, against any liability that may be asserted
against, or expense that may be incurred by, such Person in connection with the Partnership’s
activities or such Person’s activities on behalf of the Partnership, regardless of whether the
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Partnership would have the power to indemnify such Person against such liability under the
provisions of this Agreement.
(e) For purposes of this Section 7.7, the Partnership shall be deemed to have requested an
Indemnitee to serve as fiduciary of an employee benefit plan whenever the
performance by it of its duties to the Partnership also imposes duties on, or otherwise
involves services by, it to the plan or participants or beneficiaries of the plan; excise taxes
assessed on an Indemnitee with respect to an employee benefit plan pursuant to applicable law shall
constitute “fines” within the meaning of Section 7.7(a); and action taken or omitted by it with
respect to any employee benefit plan in the performance of its duties for a purpose reasonably
believed by it to be in the best interest of the participants and beneficiaries of the plan shall
be deemed to be for a purpose that is in the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to personal liability by reason
of the indemnification provisions set forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in part under this Section
7.7 because the Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 7.7 are for the benefit of the Indemnitees, their heirs,
successors, assigns and administrators and shall not be deemed to create any rights for the benefit
of any other Persons.
(i) No amendment, modification or repeal of this Section 7.7 or any provision hereof shall in
any manner terminate, reduce or impair the right of any past, present or future Indemnitee to be
indemnified by the Partnership, nor the obligations of the Partnership to indemnify any such
Indemnitee under and in accordance with the provisions of this Section 7.7 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising from or relating to
matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless
of when such claims may arise or be asserted.
Section 7.8 Liability of Indemnitees.
(a) Notwithstanding anything to the contrary set forth in this Agreement, no Indemnitee shall
be liable for monetary damages to the Partnership, the Limited Partners, the Assignees or any other
Persons who have acquired interests in the Partnership Securities, for losses sustained or
liabilities incurred as a result of any act or omission of an Indemnitee unless there has been a
final and non-appealable judgment entered by a court of competent jurisdiction determining that, in
respect of the matter in question, the Indemnitee acted in bad faith or engaged in fraud, willful
misconduct or, in the case of a criminal matter, acted with knowledge that the Indemnitee’s conduct
was criminal.
(b) Subject to its obligations and duties as General Partner set forth in Section 7.1(a), the
General Partner may exercise any of the powers granted to it by this Agreement and perform any of
the duties imposed upon it hereunder either directly or by or through its agents, and the
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General
Partner shall not be responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.
(c) To the extent that, at law or in equity, an Indemnitee has duties (including fiduciary
duties) and liabilities relating thereto to the Partnership or to the Partners, the General Partner
and any other Indemnitee acting in connection with the Partnership’s business or affairs shall not
be liable to the Partnership or to any Partner for its good faith reliance on the provisions of
this Agreement.
(d) Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be
prospective only and shall not in any way affect the limitations on the liability of the
Indemnitees under this Section 7.8 as in effect immediately prior to such amendment, modification
or repeal with respect to claims arising from or relating to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
Section 7.9 Resolution of Conflicts of Interest; Standards of Conduct and Modification of
Duties.
(a) Unless otherwise expressly provided in this Agreement or any Group Member Agreement,
whenever a potential conflict of interest exists or arises between the General Partner or any of
its Affiliates, on the one hand, and the Partnership, any Group Member, any Partner or any
Assignee, on the other, any resolution or course of action by the General Partner or its Affiliates
in respect of such conflict of interest shall be permitted and deemed approved by all Partners, and
shall not constitute a breach of this Agreement, of any Group Member Agreement, of any agreement
contemplated herein or therein, or of any duty stated or implied by law or equity, if the
resolution or course of action in respect of such conflict of interest is (i) approved by Special
Approval, (ii) approved by the vote of a majority of the Outstanding Common Units (excluding Common
Units owned by the General Partner and its Affiliates), (iii) on terms no less favorable to the
Partnership than those generally being provided to or available from unrelated third parties or
(iv) fair and reasonable to the Partnership, taking into account the totality of the relationships
between the parties involved (including other transactions that may be particularly favorable or
advantageous to the Partnership). The General Partner shall be authorized but not required in
connection with its resolution of such conflict of interest to seek Special Approval of such
resolution, and the General Partner may also adopt a resolution or course of action that has not
received Special Approval. If Special Approval is sought, then it shall be presumed that, in making
its decision, the Conflicts Committee acted in good faith, and if Special Approval is not sought
and the Board of Directors of the General Partner determines that the resolution or course of
action taken with respect to a conflict of interest satisfies either of the standards set forth in
clauses (iii) or (iv) above, then it shall be presumed that, in making its decision, the Board of
Directors of the General Partner acted in good faith, and in either case, in any proceeding brought
by any Limited Partner or Assignee or by or on behalf of such Limited Partner or Assignee or any
other Limited Partner or Assignee or the Partnership challenging such approval, the Person bringing
or prosecuting such proceeding shall have the burden of overcoming such presumption.
Notwithstanding anything to the contrary in this Agreement or any duty otherwise existing at law or
equity, the existence of the conflicts of interest described in the Registration
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Statement are
hereby approved by all Partners and shall not constitute a breach of this Agreement or any duty
otherwise existing at law, in equity or otherwise.
(b) Whenever the General Partner makes a determination or takes or declines to take any other
action, or any of its Affiliates causes it to do so, in its capacity as the general partner of the
Partnership as opposed to in its individual capacity, whether under this Agreement, any Group
Member Agreement or any other agreement contemplated hereby or otherwise, then, unless another
express standard is provided for in this Agreement, the General Partner, or such Affiliates causing
it to do so, shall make such determination or take or decline to take such other action in good
faith and shall not be subject to any other or different standards (including fiduciary standards)
imposed by this Agreement, any Group Member Agreement, any other agreement contemplated hereby or
under the Delaware Act or any other law, rule or regulation or at equity. Whenever the Conflicts
Committee makes a determination or takes or declines to take any other action, it shall make such
determination or take or decline to take such other action in good faith and shall not be subject
to any other or different standards (including fiduciary standards) imposed by this Agreement, any
Group Member Agreement, any other agreement contemplated hereby or under the Delaware Act or any
other law, rule or regulation or at equity. In order for a determination or other action to be in
“good faith” for purposes of this Agreement, the Person or Persons making such determination or
taking or declining to take such other action must believe that the determination or other action
is in the best interests of the Partnership.
(c) Whenever the General Partner makes a determination or takes or declines to take any other
action, or any of its Affiliates causes it to do so, in its individual capacity as opposed to in
its capacity as the general partner of the Partnership, whether under this Agreement, any Group
Member Agreement or any other agreement contemplated hereby or otherwise, then the General Partner,
or such Affiliates causing it to do so, are entitled, to the fullest extent permitted by law, to
make such determination or to take or decline to take such other action free of any duty (including
any fiduciary duty) or obligation whatsoever to the Partnership, any Limited Partner or Assignee,
any other Person bound by this Agreement and the General Partner, or such Affiliates causing it to
do so, shall not, to the fullest extent permitted by law, be required to act in good faith or
pursuant to any other standard imposed by this Agreement, any Group Member Agreement, any other
agreement contemplated hereby or under the Delaware Act or any other law, rule or regulation or at
equity. By way of illustration and not of limitation, whenever the phrase, “at the option of the
General Partner,” or some variation of that phrase, is used in this Agreement, it indicates that
the General Partner is acting in its individual capacity. For the avoidance of doubt, but subject
to Sections 4.6 and 4.7, whenever the General Partner transfers its Partnership Interests, or
refrains from voting or transferring its Partnership Interests, it shall be acting in its
individual capacity. The General Partner’s organizational documents may provide that
determinations to take or decline to take any action in its individual, rather than representative,
capacity may or shall be determined by its members, if the General Partner is a limited liability
company, stockholders, if the General Partner is a corporation, or the members or stockholders of
the General Partner’s general partner, if the General Partner is a partnership.
(d) Notwithstanding anything to the contrary in this Agreement, the General Partner and its
Affiliates shall have no duty or obligation, express or implied, to (i) sell or otherwise dispose
of any asset of the Partnership Group other than in the ordinary course of business or (ii) permit
any Group Member to use any facilities or assets of the General Partner and its
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Affiliates, except
as may be provided in contracts entered into from time to time specifically dealing with such use.
Any determination by the General Partner or any of its Affiliates to enter into such contracts
shall be at its option.
(e) Except as expressly set forth in this Agreement, neither the General Partner nor any other
Indemnitee shall have any duties or liabilities, including fiduciary duties, to the Partnership or
any Limited Partner or Assignee and the provisions of this Agreement, to the extent that they
restrict, eliminate or otherwise modify the duties and liabilities, including fiduciary duties, of
the General Partner or any other Indemnitee otherwise existing at law or in equity, are agreed by
the Partners to replace such other duties and liabilities of the General Partner or such other
Indemnitee.
(f) The Unitholders hereby authorize the General Partner, on behalf of the Partnership as a
partner or member of a Group Member, to approve of actions by the general partner or managing
member of such Group Member similar to those actions permitted to be taken by the General Partner
pursuant to this Section 7.9.
Section 7.10 Other Matters Concerning the General Partner.
(a) The General Partner may rely and shall be protected in acting or refraining from acting
upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties.
(b) The General Partner may consult with legal counsel, accountants, appraisers, management
consultants, investment bankers and other consultants and advisers selected by it, and any act
taken or omitted to be taken in reliance upon the opinion (including an Opinion of Counsel) of such
Persons as to matters that the General Partner reasonably believes to be within such Person’s
professional or expert competence shall be conclusively presumed to have been done or omitted in
good faith and in accordance with such opinion.
(c) The General Partner shall have the right, in respect of any of its powers or obligations
hereunder, to act through any of its duly authorized officers, a duly appointed attorney or
attorneys-in-fact or the duly authorized officers of the Partnership or any Group Member.
Section 7.11 Purchase or Sale of Partnership Securities.
The General Partner may cause the Partnership to purchase or otherwise acquire Partnership
Securities; provided that, except as permitted pursuant to Section 4.10, the General Partner may
not cause any Group Member to purchase Subordinated Units during the Subordination Period. Such
Partnership Securities shall be held by the Partnership as treasury securities unless they are
expressly cancelled by action of an appropriate officer of the General Partner. As long as
Partnership Securities are held by any Group Member, such Partnership Securities shall not be
considered Outstanding for any purpose, except as otherwise provided herein. The General Partner
or any Affiliate of the General Partner may also purchase or otherwise acquire and sell or
otherwise dispose of Partnership Securities for its own account, subject to the provisions of
Articles IV and X.
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Section 7.12 Registration Rights of the General Partner and its Affiliates.
(a) If (i) the General Partner or any Affiliate of the General Partner (including for purposes
of this Section 7.12, any Person that is an Affiliate of the General Partner at the date hereof
notwithstanding that it may later cease to be an Affiliate of the General Partner, but excluding
any individual who is an Affiliate of the General Partner based on such individual’s status as an
officer, director or employee of the General Partner or an Affiliate of the General Partner) holds
Partnership Securities that it desires to sell and (ii) Rule 144 of the Securities Act (or any
successor rule or regulation to Rule 144) or another exemption from registration is not available
to enable such holder of Partnership Securities (the “Holder”) to dispose of the number of
Partnership Securities it desires to sell at the time it desires to do so without registration
under the Securities Act, then at the option and upon the request of the Holder, the Partnership
shall file with the Commission as promptly as practicable after receiving such request, and use
commercially reasonable efforts to cause to become effective and remain effective for a period of
not less than six months following its effective date or such shorter period as shall terminate
when all Partnership Securities covered by such registration statement have been sold, a
registration statement under the Securities Act registering the offering and sale of the number of
Partnership Securities specified by the Holder; provided, however, that the Partnership shall not
be required to effect more than three registrations pursuant to this Section 7.12(a) and
Section 7.12(b); and provided further, however, that if the Conflicts Committee determines in good
faith that the requested registration would be materially detrimental to the Partnership and its
Partners because such registration would (x) materially interfere with a significant acquisition,
reorganization or other similar transaction involving the Partnership, (y) require premature
disclosure of material information that the Partnership has a bona fide business purpose for
preserving as confidential or (z) render the Partnership unable to comply with requirements under
applicable securities laws, then the Partnership shall have the right to postpone such requested
registration for a period of not more than six months after receipt of the Holder’s request, such
right pursuant to this Section 7.12(a) or Section 7.12(b) not to be utilized more than once in any
twelve-month period. In connection with any registration pursuant to the first sentence of this
Section 7.12(a), the Partnership shall (i) promptly prepare and file (A) such documents as may be
necessary to register or qualify the securities subject to such registration under the securities
laws of such states as the Holder shall reasonably request; provided, however, that no such
qualification shall be required in any jurisdiction where, as a result thereof, the Partnership
would become subject to general service of process or to taxation or qualification to do business
as a foreign corporation or partnership doing business in such jurisdiction solely as a result of
such registration, and (B) such documents as may be necessary to apply for listing or to list the
Partnership Securities subject to such registration on such National Securities Exchange as the
Holder shall reasonably request, and (ii) do any and all other acts and things that may be
necessary or appropriate to enable the Holder to consummate a public sale of such Partnership
Securities in such states. Except as set forth in Section 7.12(d), all costs and expenses of any
such registration and offering (other than the underwriting discounts and commissions) shall be
paid by the Partnership, without reimbursement by the Holder.
(b) If any Holder holds Partnership Securities that it desires to sell and Rule 144 of the
Securities Act (or any successor rule or regulation to Rule 144) or another exemption from
registration is not available to enable such Holder to dispose of the number of Partnership
Securities it desires to sell at the time it desires to do so without registration under the
Securities
X-00
Xxx, then at the option and upon the request of the Holder, the Partnership shall file
with the Commission as promptly as practicable after receiving such request, and use commercially
reasonable efforts to cause to become effective and remain effective for a period of not less than
six months following its effective date or such shorter period as shall terminate when all
Partnership Securities covered by such shelf registration statement have been sold, a “shelf”
registration statement covering the Partnership Securities specified by the Holder on an
appropriate form under Rule 415 under the Securities Act, or any similar rule that may be adopted
by the Commission;
provided, however, that the Partnership shall not be required to effect more than three
registrations pursuant to Section 7.12(a) and this Section 7.12(b); and provided further, however,
that if the Conflicts Committee determines in good faith that any offering under, or the use of any
prospectus forming a part of, the shelf registration statement would be materially detrimental to
the Partnership and its Partners because such offering or use would (x) materially interfere with a
significant acquisition, reorganization or other similar transaction involving the Partnership, (y)
require premature disclosure of material information that the Partnership has a bona fide business
purpose for preserving as confidential or (z) render the Partnership unable to comply with
requirements under applicable securities laws, then the Partnership shall have the right to suspend
such offering or use for a period of not more than six months after receipt of the Holder’s
request, such right pursuant to Section 7.12(a) or this Section 7.12(b) not to be utilized more
than once in any twelve-month period. In connection with any shelf registration pursuant to this
Section 7.12(b), the Partnership shall (i) promptly prepare and file (A) such documents as may be
necessary to register or qualify the securities subject to such shelf registration under the
securities laws of such states as the Holder shall reasonably request; provided, however, that no
such qualification shall be required in any jurisdiction where, as a result thereof, the
Partnership would become subject to general service of process or to taxation or qualification to
do business as a foreign corporation or partnership doing business in such jurisdiction solely as a
result of such shelf registration, and (B) such documents as may be necessary to apply for listing
or to list the Partnership Securities subject to such shelf registration on such National
Securities Exchange as the Holder shall reasonably request, and (ii) do any and all other acts and
things that may be necessary or appropriate to enable the Holder to consummate a public sale of
such Partnership Securities in such states. Except as set forth in Section 7.12(d), all costs and
expenses of any such shelf registration and offering (other than the underwriting discounts and
commissions) shall be paid by the Partnership, without reimbursement by the Holder.
(c) If the Partnership shall at any time propose to file a registration statement under the
Securities Act for an offering of equity securities of the Partnership for cash (other than an
offering relating solely to an employee benefit plan), the Partnership shall notify all Holders of
such proposal and use all reasonable efforts to include such number or amount of securities held by
the Holder in such registration statement as the Holder shall request; provided, that the
Partnership is not required to make any effort or take any action to so include the securities of
the Holder once the registration statement is declared effective by the Commission or otherwise
becomes effective, including any registration statement providing for the offering from time to
time of securities pursuant to Rule 415 of the Securities Act. If the proposed offering pursuant to
this Section 7.12(c) shall be an underwritten offering, then, in the event that the managing
underwriter or managing underwriters of such offering advise the Partnership and the Holder in
writing that in their opinion the inclusion of all or some of the Holder’s Partnership Securities
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would adversely and materially affect the success of the offering, the Partnership shall include in
such offering only that number or amount, if any, of securities held by the Holder that, in the
opinion of the managing underwriter or managing underwriters, will not so adversely and materially
affect the offering. Except as set forth in Section 7.12(d), all costs and expenses of any such
registration and offering (other than the underwriting discounts and commissions) shall be paid by
the Partnership, without reimbursement by the Holder.
(d) If underwriters are engaged in connection with any registration referred to in this
Section 7.12, the Partnership shall provide indemnification, representations, covenants, opinions
and other assurance to the underwriters in form and substance reasonably satisfactory to such
underwriters. Further, in addition to and not in limitation of the Partnership’s obligation under
Section 7.7, the Partnership shall, to the fullest extent permitted by law, indemnify and hold
harmless the Holder, its officers, directors and each Person who controls the Holder (within the
meaning of the Securities Act) and any agent thereof (collectively, “Indemnified Persons”) from and
against any and all losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts
arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, in which any Indemnified Person may be involved, or is threatened
to be involved, as a party or otherwise, under the Securities Act or otherwise (hereinafter
referred to in this Section 7.12(d) as a “claim” and in the plural as “claims”) based upon, arising
out of or resulting from any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which any Partnership Securities were registered
under the Securities Act or any state securities or Blue Sky laws, in any preliminary prospectus
(if used prior to the effective date of such registration statement), or in any summary or final
prospectus or any free writing prospectus or in any amendment or supplement thereto (if used during
the period the Partnership is required to keep the registration statement current), or arising out
of, based upon or resulting from the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements made therein not misleading;
provided, however, that the Partnership shall not be liable to any Indemnified Person to the extent
that any such claim arises out of, is based upon or results from an untrue statement or alleged
untrue statement or omission or alleged omission made in such registration statement, such
preliminary, summary or final prospectus or any free writing prospectus or such amendment or
supplement, in reliance upon and in conformity with written information furnished to the
Partnership by or on behalf of such Indemnified Person specifically for use in the preparation
thereof.
(e) The provisions of Section 7.12(a), Section 7.12(b) and Section 7.12(c) shall continue to
be applicable with respect to the General Partner (and any of the General Partner’s Affiliates)
after it ceases to be a general partner of the Partnership, during a period of two years subsequent
to the effective date of such cessation and for so long thereafter as is required for the Holder to
sell all of the Partnership Securities with respect to which it has requested during such two-year
period inclusion in a registration statement otherwise filed or that a registration statement be
filed; provided, however, that the Partnership shall not be required to file successive
registration statements covering the same Partnership Securities for which registration was
demanded during such two-year period. The provisions of Section 7.12(d) shall continue in
effect thereafter.
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(f) The rights to cause the Partnership to register Partnership Securities pursuant to this
Section 7.12 may be assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such Partnership Securities, provided (i) the Partnership is, within a reasonable time
after such transfer, furnished with written notice of the name and address of such transferee or
assignee and the Partnership Securities with respect to which such registration rights are being
assigned; and (ii) such transferee or assignee agrees in writing to be bound by and subject to the
terms set forth in this Section 7.12.
(g) Any request to register Partnership Securities pursuant to this Section 7.12 shall (i)
specify the Partnership Securities intended to be offered and sold by the Person making the
request, (ii) express such Person’s present intent to offer such Partnership Securities for
distribution, (iii) describe the nature or method of the proposed offer and sale of Partnership
Securities, and (iv) contain the undertaking of such Person to provide all such information and
materials and take all action as may be required in order to permit the Partnership to comply with
all applicable requirements in connection with the registration of such Partnership Securities.
Section 7.13 Reliance by Third Parties.
Notwithstanding anything to the contrary in this Agreement, any Person dealing with the
Partnership shall be entitled to assume that the General Partner and any officer of the General
Partner authorized by the General Partner to act on behalf of and in the name of the Partnership
has full power and authority to encumber, sell or otherwise use in any manner any and all assets of
the Partnership and to enter into any authorized contracts on behalf of the Partnership, and such
Person shall be entitled to deal with the General Partner or any such officer as if it were the
Partnership’s sole party in interest, both legally and beneficially. Each Limited Partner hereby
waives, to the fullest extent permitted by law, any and all defenses or other remedies that may be
available against such Person to contest, negate or disaffirm any action of the General Partner or
any such officer in connection with any such dealing. In no event shall any Person dealing with
the General Partner or any such officer or its representatives be obligated to ascertain that the
terms of this Agreement have been complied with or to inquire into the necessity or expedience of
any act or action of the General Partner or any such officer or its representatives. Each and
every certificate, document or other instrument executed on behalf of the Partnership by the
General Partner or its representatives shall be conclusive evidence in favor of any and every
Person relying thereon or claiming thereunder that (a) at the time of the execution and delivery of
such certificate, document or instrument, this Agreement was in full force and effect, (b) the
Person executing and delivering such certificate, document or instrument was duly authorized and
empowered to do so for and on behalf of the Partnership and (c) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.
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ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 8.1 Records and Accounting.
The General Partner shall keep or cause to be kept at the principal office of the Partnership
appropriate books and records with respect to the Partnership’s business, including all books and
records necessary to provide to the Limited Partners any information required to be provided
pursuant to Section 3.4(a). Any books and records maintained by or on behalf of the Partnership in
the regular course of its business, including the record of the Record Holders and Assignees of
Units or other Partnership Securities, books of account and records of Partnership proceedings, may
be kept on, or be in the form of, computer disks, hard drives, punch cards, magnetic tape,
photographs, micrographics or any other information storage device; provided, that the books and
records so maintained are convertible into clearly legible written form within a reasonable period
of time. The books of the Partnership shall be maintained, for financial reporting purposes, on an
accrual basis in accordance with U.S. GAAP.
Section 8.2 Fiscal Year.
The fiscal year of the Partnership shall be a fiscal year ending December 31.
Section 8.3 Reports.
(a) As soon as practicable, but in no event later than 120 days after the close of each fiscal
year of the Partnership, the General Partner shall cause to be mailed or made available, by any
reasonable means (including posting on or accessible through the Partnership’s or the SEC’s
website) to each Record Holder of a Unit as of a date selected by the General Partner, an annual
report containing financial statements of the Partnership for such fiscal year of the Partnership,
presented in accordance with U.S. GAAP, including a balance sheet and statements of operations,
Partnership equity and cash flows, such statements to be audited by a firm of independent public
accountants selected by the General Partner.
(b) As soon as practicable, but in no event later than 90 days after the close of each Quarter
except the last Quarter of each fiscal year, the General Partner shall cause to be mailed or made
available, by any reasonable means (including posting on or accessible through the Partnership’s or
the SEC’s website) to each Record Holder of a Unit, as of a date selected by the General Partner, a
report containing unaudited financial statements of the Partnership and such other information as
may be required by applicable law, regulation or rule of any National Securities Exchange on which
the Units are listed or admitted to trading, or as the General Partner determines to be necessary
or appropriate.
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ARTICLE IX
TAX MATTERS
Section 9.1 Tax Returns and Information.
The Partnership shall timely file all returns of the Partnership that are required for
federal, state and local income tax purposes on the basis of the accrual method and the taxable
year or years that it is required by law to adopt, from time to time, as determined by the General
Partner. In the event the Partnership is required to use a taxable year other than a year ending
on December 31, the General Partner shall use reasonable efforts to change the taxable year of the
Partnership to a year ending on December 31. The tax information reasonably required by Record
Holders for federal and state income tax reporting purposes with respect to a taxable year shall be
furnished to them within 90 days of the close of the calendar year in which the Partnership’s
taxable year ends. The classification, realization and recognition of income, gain, losses and
deductions and other items shall be on the accrual method of accounting for federal income tax
purposes.
Section 9.2 Tax Elections.
(a) The Partnership shall make the election under Section 754 of the Code in accordance with
applicable regulations thereunder, subject to the reservation of the right to seek to revoke any
such election upon the General Partner’s determination that such revocation is in the best
interests of the Limited Partners. Notwithstanding any other provision herein contained, for the
purposes of computing the adjustments under Section 743(b) of the Code, the General Partner shall
be authorized (but not required) to adopt a convention whereby the price paid by a transferee of a
Limited Partner Interest will be deemed to be the lowest quoted closing price of the Limited
Partner Interests on any National Securities Exchange on which such Limited Partner Interests are
listed or admitted to trading during the calendar month in which such transfer is deemed to occur
pursuant to Section 6.2(g) without regard to the actual price paid by such transferee.
(b) Except as otherwise provided herein, the General Partner shall determine whether the
Partnership should make any other elections permitted by the Code.
Section 9.3 Tax Controversies.
Subject to the provisions hereof, the General Partner is designated as the Tax Matters Partner
(as defined in the Code) and is authorized and required to represent the Partnership (at the
Partnership’s expense) in connection with all examinations of the Partnership’s affairs by tax
authorities, including resulting administrative and judicial proceedings, and to expend Partnership
funds for professional services and costs associated therewith. Each Partner agrees
to cooperate with the General Partner and to do or refrain from doing any or all things
reasonably required by the General Partner to conduct such proceedings.
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Section 9.4 Withholding.
Notwithstanding any other provision of this Agreement, the General Partner is authorized to
take any action that may be required to cause the Partnership and other Group Members to comply
with any withholding requirements established under the Code or any other federal, state or local
law including pursuant to Sections 1441, 1442, 1445 and 1446 of the Code. To the extent that the
Partnership is required or elects to withhold and pay over to any taxing authority any amount
resulting from the allocation or distribution of income to any Partner or Assignee (including by
reason of Section 1446 of the Code), the General Partner may treat the amount withheld as a
distribution of cash pursuant to Section 6.3 in the amount of such withholding from such Partner.
ARTICLE X
ADMISSION OF PARTNERS
Section 10.1 Admission of Initial Limited Partners.
Upon the issuance by the Partnership of Common Units, Subordinated Units and Incentive
Distribution Rights to the General Partner, Holdings and the Underwriters as described in Article V
in connection with the Initial Offering, the General Partner shall admit such parties to the
Partnership as Initial Limited Partners in respect of the Common Units, Subordinated Units or
Incentive Distribution Rights issued to them.
Section 10.2 Admission of Substituted Limited Partners.
By transfer of a Limited Partner Interest in accordance with Article IV, the transferor shall
be deemed to have given the transferee the right to seek admission as a Substituted Limited Partner
subject to the conditions of, and in the manner permitted under, this Agreement. A transferor of a
Certificate representing a Limited Partner Interest shall, however, only have the authority to
convey to a purchaser or other transferee who does not execute and deliver a Transfer Application
(a) the right to negotiate such Certificate to a purchaser or other transferee and (b) the right to
transfer the right to request admission as a Substituted Limited Partner to such purchaser or other
transferee in respect of the transferred Limited Partner Interests. No transferor of a Limited
Partner Interest or other Person shall have any obligation or responsibility to provide a Transfer
Application or Taxation Certification to a transferee or assist or participate in any way with
respect to the completion or delivery thereof. Each transferee of a Limited Partner Interest
(including any nominee holder or an agent acquiring such Limited Partner Interest for the account
of another Person) who executes and delivers a properly completed
Transfer Application, containing a Taxation Certification, shall, by virtue of such execution
and delivery, be an Assignee. Such Assignee shall automatically be admitted to the Partnership as a
Substituted Limited Partner with respect to the Limited Partner Interests so transferred to such
Person at such time as such transfer is recorded in the books and records of
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the Partnership, and
until so recorded, such transferee shall be an Assignee. The General Partner shall periodically,
but no less frequently than on the first Business Day of each calendar quarter, cause any
unrecorded transfers of Limited Partner Interests with respect to which a properly completed, duly
executed Transfer Application has been received to be recorded in the books and records of the
Partnership. An Assignee shall have an interest in the Partnership equivalent to that of a Limited
Partner with respect to allocations and distributions, including liquidating distributions, of the
Partnership, but a transferee of a Limited Partner Interest who has not become an Assignee shall
not be entitled to any allocations or distributions, including liquidating distributions of the
Partnership. With respect to voting rights attributable to Limited Partner Interests that are held
by Assignees, the General Partner shall be deemed to be the Limited Partner with respect thereto
and shall, in exercising the voting rights in respect of such Limited Partner Interests on any
matter, vote such Limited Partner Interests at the written direction of the Assignee who is the
Record Holder of such Limited Partner Interests. If no such written direction is received, such
Limited Partner Interests will not be voted. An Assignee shall have no other rights of a Limited
Partner.
Section 10.3 Admission of Successor General Partner.
A successor General Partner approved pursuant to Section 11.1 or Section 11.2 or the
transferee of or successor to all of the General Partner Interest (represented by General Partner
Units) pursuant to Section 4.6 who is proposed to be admitted as a successor General Partner shall
be admitted to the Partnership as the General Partner, effective immediately prior to the
withdrawal or removal of the predecessor or transferring General Partner, pursuant to Section 11.1
or 11.2 or the transfer of the General Partner Interest (represented by General Partner Units)
pursuant to Section 4.6, provided, however, that no such successor shall be admitted to the
Partnership until compliance with the terms of Section 4.6 has occurred and such successor has
executed and delivered such other documents or instruments as may be required to effect such
admission. Any such successor shall, subject to the terms hereof, carry on the business of the
members of the Partnership Group without dissolution.
Section 10.4 Admission of Additional Limited Partners.
(a) A Person (other than the General Partner, an Initial Limited Partner or a Substituted
Limited Partner) who makes a Capital Contribution to the Partnership in accordance with this
Agreement shall be admitted to the Partnership as an Additional Limited Partner only upon
furnishing to the General Partner:
(i) evidence of acceptance in form satisfactory to the General Partner of all of the terms and
conditions of this Agreement, including the power of attorney granted in Section 2.6,
(ii) a properly completed Taxation Certification; and
(iii) such other documents or instruments as may be required by the General Partner to effect
such Person’s admission as an Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section 10.4, no Person shall be admitted
as an Additional Limited Partner without the consent of the General Partner. The admission of any
Person as an Additional Limited Partner shall become effective on the date upon which the name of
such Person is recorded as such in the books and records of the Partnership, following the consent
of the General Partner to such admission.
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Section 10.5 Amendment of Agreement and Certificate of Limited Partnership.
To effect the admission to the Partnership of any Partner, the General Partner shall take all
steps necessary or appropriate under the Delaware Act to amend the records of the Partnership to
reflect such admission and, if necessary, to prepare as soon as practicable an amendment to this
Agreement and, if required by law, the General Partner shall prepare and file an amendment to the
Certificate of Limited Partnership, and the General Partner may for this purpose, among others,
exercise the power of attorney granted pursuant to Section 2.6.
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
Section 11.1 Withdrawal of the General Partner.
(a) The General Partner shall be deemed to have withdrawn from the Partnership upon the
occurrence of any one of the following events (each such event herein referred to as an “Event of
Withdrawal”);
(i) The General Partner voluntarily withdraws from the Partnership by giving written notice to
the other Partners;
(ii) The General Partner transfers all of its General Partner Interest pursuant to Section
4.6;
(iii) The General Partner is removed pursuant to Section 11.2;
(iv) The General Partner (A) makes a general assignment for the benefit of creditors; (B)
files a voluntary bankruptcy petition for relief under Chapter 7 of the United States
Bankruptcy Code; (C) files a petition or answer seeking for itself a liquidation, dissolution
or similar relief (but not a reorganization) under any law; (D) files an answer or other pleading
admitting or failing to contest the material allegations of a petition filed against the General
Partner in a proceeding of the type described in clauses (A)-(C) of this Section 11.1(a)(iv); or
(E) seeks, consents to or acquiesces in the appointment of a trustee (but not a
debtor-in-possession), receiver or liquidator of the General Partner or of all or any substantial
part of its properties;
(v) A final and non-appealable order of relief under Chapter 7 of the United States Bankruptcy
Code is entered by a court with appropriate jurisdiction pursuant to a voluntary or involuntary
petition by or against the General Partner; or
(vi) (A) in the event the General Partner is a corporation, a certificate of dissolution or
its equivalent is filed for the General Partner, or 90 days expire after the date of notice to the
General Partner of revocation of its charter without a reinstatement of its charter, under the laws
of its state of incorporation; (B) in the event the General Partner is a partnership or a limited
liability company, the dissolution and commencement of winding up of the General Partner; (C) in
the event the General Partner is acting in such capacity by virtue of being a trustee of a trust,
the termination of the trust; (D) in the event the General Partner is a natural person, his
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death
or adjudication of incompetency; and (E) otherwise in the event of the termination of the General
Partner.
If an Event of Withdrawal specified in Section 11.1(a)(iv), (v) or (vi)(A), (B), (C) or (E)
occurs, the withdrawing General Partner shall give notice to the Limited Partners within 30 days
after such occurrence. The Partners hereby agree that only the Events of Withdrawal described in
this Section 11.1 shall result in the withdrawal of the General Partner from the Partnership.
(b) Withdrawal of the General Partner from the Partnership upon the occurrence of an Event of
Withdrawal shall not constitute a breach of this Agreement under the following circumstances: (i)
at any time during the period beginning on the Closing Date and ending at 12:00 midnight, Central
Time, on December 31, 2017, the General Partner voluntarily withdraws by giving at least 90 days’
advance notice of its intention to withdraw to the Limited Partners; provided, that prior to the
effective date of such withdrawal, the withdrawal is approved by Unitholders holding at least a
majority of the Outstanding Common Units (excluding Common Units held by the General Partner and
its Affiliates) and the General Partner delivers to the Partnership an Opinion of Counsel
(“Withdrawal Opinion of Counsel”) that such withdrawal (following the selection of the successor
General Partner) would not result in the loss of the limited liability of any Limited Partner or
any Group Member or cause any Group Member to be treated as an association taxable as a corporation
or otherwise to be taxed as an entity for federal income tax purposes (to the extent not already so
treated or taxed); (ii) at any time after 12:00 midnight, Central Time, on December 31, 2017, the
General Partner voluntarily withdraws by giving at least 90 days’ advance notice to the
Unitholders, such withdrawal to take effect on the date specified in such notice; (iii) at any time
that the General Partner ceases to be the General Partner pursuant to Section 11.1(a)(ii) or is
removed pursuant to Section 11.2; or (iv) notwithstanding clause (i) of this sentence, at any time
that the General Partner voluntarily withdraws by giving at least 90 days’ advance notice of its
intention to withdraw to the Limited Partners, such withdrawal to take effect on the date specified
in the notice, if at the time such
notice is given one Person and its Affiliates (other than the General Partner and its
Affiliates) own beneficially or of record or control at least 50% of the Outstanding Units. The
withdrawal of the General Partner from the Partnership upon the occurrence of an Event of
Withdrawal shall also constitute the withdrawal of the General Partner as general partner or
managing member, if any, to the extent applicable, of the other Group Members. If the General
Partner gives a notice of withdrawal pursuant to Section 11.1(a)(i), the holders of a Unit
Majority, may, prior to the effective date of such withdrawal, elect a successor General Partner.
The Person so elected as successor General Partner shall automatically become the successor general
partner or managing member, to the extent applicable, of the other Group Members of which the
General Partner is a general partner or a managing member, and is hereby authorized to, and shall,
continue the business of the Partnership and, to the extent applicable, the other Group Members
without dissolution. If, prior to the effective date of the General Partner’s withdrawal pursuant
to Section 11.1(a)(i), a successor is not selected by the Unitholders as provided herein or the
Partnership does not receive a Withdrawal Opinion of Counsel, the Partnership shall be dissolved in
accordance with and subject to Section 12.1. Any successor General Partner elected in accordance
with the terms of this Section 11.1 shall be subject to the provisions of Section 10.3.
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Section 11.2 Removal of the General Partner.
The General Partner may be removed if such removal is approved by the Unitholders holding at
least
662/3% of the Outstanding Units (including Units held by the General Partner and its
Affiliates) voting as a single class. Any such action by such holders for removal of the General
Partner must also provide for the election of a successor General Partner by the Unitholders
holding a majority of the outstanding Common Units and Class B Units, if any, voting as a single
class and a majority of the outstanding Subordinated Units (if any Subordinated Units are then
Outstanding) voting as a class (including, in each case, Units held by the General Partner and its
Affiliates). Such removal shall be effective immediately following the admission of a successor
General Partner pursuant to Section 10.3. The removal of the General Partner shall also
automatically constitute the removal of the General Partner as general partner or managing member,
to the extent applicable, of the other Group Members of which the General Partner is a general
partner or a managing member. If a Person is elected as a successor General Partner in accordance
with the terms of this Section 11.2, such Person shall, upon admission pursuant to Section 10.3,
automatically become a successor general partner or managing member, to the extent applicable, of
the other Group Members of which the General Partner is a general partner or a managing member, and
is hereby authorized to, and shall, continue the business of the Partnership and, to the extent
applicable, the other Group Members without dissolution. The right of the holders of Outstanding
Units to remove the General Partner shall not exist or be exercised unless the Partnership has
received an opinion opining as to the matters covered by a Withdrawal Opinion of Counsel. Any
successor General Partner elected in accordance with the terms of this Section 11.2 shall be
subject to the provisions of Section 10.3.
Section 11.3 Interest of Departing General Partner and Successor General Partner.
(a) In the event of (i) withdrawal of the General Partner under circumstances where such
withdrawal does not violate this Agreement or (ii) removal of the General Partner by the holders of
Outstanding Units under circumstances where Cause does not exist, if the successor General Partner
is elected in accordance with the terms of Section 11.1 or Section 11.2, the Departing General
Partner shall have the option, exercisable prior to the effective date of the withdrawal or removal
of such Departing General Partner, to require its successor to purchase its General Partner
Interest (represented by General Partner Units) and its general partner interest (or equivalent
interest), if any, in the other Group Members and all of its Incentive Distribution Rights
(collectively, the “Combined Interest”) in exchange for an amount in cash equal to the fair market
value of such Combined Interest, such amount to be determined and payable as of the effective date
of its withdrawal or removal. If the General Partner is removed by the Unitholders under
circumstances where Cause exists or if the General Partner withdraws under circumstances where such
withdrawal violates this Agreement, and if a successor General Partner is elected in accordance
with the terms of Section 11.1 or Section 11.2 (or if the business of the Partnership is continued
pursuant to Section 12.2 and the successor General Partner is not the former General Partner), such
successor shall have the option, exercisable prior to the effective date of the withdrawal or
removal of such Departing General Partner (or, in the event the business of the Partnership is
continued, prior to the date the business of the Partnership is continued), to purchase the
Combined Interest for such fair market value of such Combined Interest of the Departing General
Partner. In either event, the Departing General Partner shall be entitled to receive all
reimbursements due such Departing General Partner pursuant to Section 7.4,
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including any
employee-related liabilities (including severance liabilities), incurred in connection with the
termination of any employees employed by the Departing General Partner or its Affiliates (other
than any Group Member) for the benefit of the Partnership or the other Group Members.
For purposes of this Section 11.3(a), the fair market value of the Departing General Partner’s
Combined Interest shall be determined by agreement between the Departing General Partner and its
successor or, failing agreement within 30 days after the effective date of such Departing General
Partner’s withdrawal or removal, by an independent investment banking firm or other independent
expert selected by the Departing General Partner and its successor, which, in turn, may rely on
other experts, and the determination of which shall be conclusive as to such matter. If such
parties cannot agree upon one independent investment banking firm or other independent expert
within 45 days after the effective date of such departure, then the Departing General Partner shall
designate an independent investment banking firm or other independent expert, the Departing General
Partner’s successor shall designate an independent investment banking firm or other independent
expert, and such firms or experts shall mutually select a third independent investment banking firm
or independent expert, which third independent investment banking firm or other independent expert
shall determine the fair market value of the Combined Interest of the Departing General Partner. In
making its determination, such third independent investment banking firm or other independent
expert may consider the then current trading price of Units on any National Securities Exchange on
which Units are then listed or admitted to trading, the value of the Partnership’s assets, the
rights and obligations of the Departing General Partner and other factors it may deem relevant.
(b) If the Combined Interest is not purchased in the manner set forth in Section 11.3(a), the
Departing General Partner (or its transferee) shall become a Limited Partner
and its Combined Interest shall be converted into Common Units pursuant to a valuation made by
an investment banking firm or other independent expert selected pursuant to Section 11.3(a),
without reduction in such Partnership Interest (but subject to proportionate dilution by reason of
the admission of its successor). Any successor General Partner shall indemnify the Departing
General Partner (or its transferee) as to all debts and liabilities of the Partnership arising on
or after the date on which the Departing General Partner (or its transferee) becomes a Limited
Partner. For purposes of this Agreement, conversion of the Combined Interest of the Departing
General Partner to Common Units will be characterized as if the Departing General Partner (or its
transferee) contributed its Combined Interest to the Partnership in exchange for the newly issued
Common Units.
(c) If a successor General Partner is elected in accordance with the terms of Section 11.1 or
Section 11.2 (or if the business of the Partnership is continued pursuant to Section 12.2 and the
successor General Partner is not the former General Partner) and the option described in Section
11.3(a) is not exercised by the party entitled to do so, the successor General Partner shall, at
the effective date of its admission to the Partnership, contribute to the Partnership cash in the
amount equal to the product of the (x) quotient obtained by dividing (A) the Percentage Interest of
the General Partner Interest of the Departing General Partner by (B) a percentage equal to 100%
less the Percentage Interest of the General Partner Interest of the Departing General Partner and
(y) the Net Agreed Value of the Partnership’s assets on such date. In such event, such successor
General Partner shall, subject to the following sentence, be entitled
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to its Percentage Interest of
all Partnership allocations and distributions to which the Departing General Partner was entitled
in respect of its General Partner Interest. In addition, the successor General Partner shall cause
this Agreement to be amended to reflect that, from and after the date of such successor General
Partner’s admission, the successor General Partner’s interest in all Partnership distributions and
allocations shall be its Percentage Interest.
Section 11.4 Termination of Subordination Period, Conversion of Subordinated Units and
Extinguishment of Cumulative Common Unit Arrearages.
Notwithstanding any provision of this Agreement, if the General Partner is removed as general
partner of the Partnership under circumstances where Cause does not exist and Units held by the
General Partner and its Affiliates are not voted in favor of such removal, (i) the Subordination
Period will end and all Outstanding Subordinated Units will immediately and automatically convert
into Common Units on a one-for-one basis (provided, however, that such converted Subordinated Units
shall remain subject to the provisions of Sections 5.5(c)(ii), 6.1(d)(x) and 6.7(c)), (ii) all
Cumulative Common Unit Arrearages on the Common Units will be extinguished and (iii) the General
Partner will have the right to convert its General Partner Interest (represented by General Partner
Units) and its Incentive Distribution Rights into Common Units or to receive cash in exchange
therefor in accordance with Section 11.3.
Section 11.5 Withdrawal of Limited Partners.
No Limited Partner shall have any right to withdraw from the Partnership; provided, however,
that when a transferee of a Limited Partner’s Limited Partner Interest becomes a Record Holder of
the Limited Partner Interest so transferred, such transferring Limited Partner shall cease to be a
Limited Partner with respect to the Limited Partner Interest so transferred.
ARTICLE XII
DISSOLUTION AND LIQUIDATION
Section 12.1 Dissolution.
The Partnership shall not be dissolved by the admission of Substituted Limited Partners or
Additional Limited Partners or by the admission of a successor General Partner in accordance with
the terms of this Agreement. Upon the removal or other event of withdrawal of the General Partner,
if a successor General Partner is elected pursuant to Section 10.2, Section 11.1, Section 11.2 or
Section 12.2, the Partnership shall not be dissolved and such successor General Partner shall
continue the business of the Partnership. Subject to Section 12.2, the Partnership shall dissolve,
and its affairs shall be wound up, upon:
(a) an Event of Withdrawal of the General Partner as provided in Section 11.1(a) (other than
Section 11.1(a)(ii)), unless a successor is elected and such successor is admitted to the
Partnership pursuant to Section 10.3;
(b) an election to dissolve the Partnership by the General Partner that is approved by the
holders of a Unit Majority;
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(c) the entry of a decree of judicial dissolution of the Partnership pursuant to the
provisions of the Delaware Act; or
(d) at any time there are no Limited Partners, unless the Partnership is continued without
dissolution in accordance with the Delaware Act.
Section 12.2 Continuation of the Business of the Partnership After Dissolution.
Upon an Event of Withdrawal caused by (a) the withdrawal or removal of the General Partner as
provided in Section 11.1(a)(i) or (iii) and the failure of the Partners to select a successor to
such Departing General Partner pursuant to Section 11.1 or Section 11.2, then within 90 days
thereafter, or (b) an event constituting an Event of Withdrawal as defined in Section 11.1(a)(iv),
(v) or (vi), then, to the maximum extent permitted by law, within 180 days thereafter, the holders
of a Unit Majority may elect to continue the business of the Partnership on the same terms and
conditions set forth in this Agreement by appointing as a successor General Partner a Person
approved by the holders of a Unit Majority. Unless such an election is made within the applicable
time period as set forth above, the Partnership shall dissolve and conduct only activities
necessary to wind up its affairs. If such an election is so made, then:
(i) the Partnership shall continue without dissolution unless earlier dissolved in accordance
with this Article XII;
(ii) if the successor General Partner is not the former General Partner, then the interest of
the former General Partner shall be treated in the manner provided in Section 11.3; and
(iii) the successor General Partner shall be admitted to the Partnership as General Partner,
effective as of the Event of Withdrawal, by agreeing in writing to be bound by this Agreement;
provided, that the right of the holders of a Unit Majority to approve a successor General Partner
and to continue the business of the Partnership shall not exist and may not be exercised unless the
Partnership has received an Opinion of Counsel that (x) the exercise of the right would not result
in the loss of limited liability of any Limited Partner and (y) neither the Partnership nor any
Group Member would be treated as an association taxable as a corporation or otherwise be taxable as
an entity for federal income tax purposes upon the exercise of such right to continue (to the
extent not already so treated or taxed).
Section 12.3 Liquidator.
Upon dissolution of the Partnership, the General Partner shall select one or more Persons to
act as Liquidator. The Liquidator (if other than the General Partner) shall be entitled to receive
such compensation for its services as may be approved by holders of at least a majority of the
Outstanding Common Units, Subordinated Units and Class B Units, if any, voting as a single class.
The Liquidator (if other than the General Partner) shall agree not to resign at any time without 15
days’ prior notice and may be removed at any time, with or without cause, by notice of removal
approved by holders of at least a majority of the Outstanding Common Units, Subordinated Units and
Class B Units (if any), voting as a single class. Upon dissolution,
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removal or resignation of the
Liquidator, a successor and substitute Liquidator (who shall have and succeed to all rights, powers
and duties of the original Liquidator) shall within 30 days thereafter be approved by holders of at
least a majority of the Outstanding Common Units, Subordinated Units and Class B Units (if any),
voting as a single class. The right to approve a successor or substitute Liquidator in the manner
provided herein shall be deemed to refer also to any such successor or substitute Liquidator
approved in the manner herein provided. Except as expressly provided in this Article XII, the
Liquidator approved in the manner provided herein shall have and may exercise, without further
authorization or consent of any of the parties hereto, all of the powers conferred upon the General
Partner under the terms of this Agreement (but subject to all of the applicable limitations,
contractual and otherwise, upon the exercise of such powers, other than the limitation on sale set
forth in Section 7.3) necessary or appropriate to carry out the duties and functions of the
Liquidator hereunder for and during the period of time required to complete the winding up and
liquidation of the Partnership as provided for herein.
Section 12.4 Liquidation.
The Liquidator shall proceed to dispose of the assets of the Partnership, discharge its
liabilities, and otherwise wind up its affairs in such manner and over such period as determined by
the Liquidator, subject to Section 17-804 of the Delaware Act and the following:
(a) The assets may be disposed of by public or private sale or by distribution in kind to one
or more Partners on such terms as the Liquidator and such Partner or Partners may agree. If any
property is distributed in kind, the Partner receiving the property shall be deemed for purposes of
Section 12.4(c) to have received cash equal to its fair market value; and contemporaneously
therewith, appropriate cash distributions must be made to the other Partners. The Liquidator may
defer liquidation or distribution of the Partnership’s assets for a reasonable time if it
determines that an immediate sale or distribution of all or some of the Partnership’s assets would
be impractical or would cause undue loss to the Partners. The Liquidator may distribute the
Partnership’s assets, in whole or in part, in kind if it determines that a sale would be
impractical or would cause undue loss to the Partners.
(b) Liabilities of the Partnership include amounts owed to the Liquidator as compensation for
serving in such capacity (subject to the terms of Section 12.3) and amounts to Partners otherwise
than in respect of their distribution rights under Article VI. With respect to any liability that
is contingent, conditional or unmatured or is otherwise not yet due and payable, the Liquidator
shall either settle such claim for such amount as it thinks appropriate or establish a reserve of
cash or other assets to provide for its payment. When paid, any unused portion of the reserve
shall be distributed as additional liquidation proceeds.
(c) All property and all cash in excess of that required to discharge liabilities as provided
in Section 12.4(b) shall be distributed to the Partners in accordance with, and to the extent of,
the positive balances in their respective Capital Accounts, as determined after taking into account
all Capital Account adjustments (other than those made by reason of distributions pursuant to this
Section 12.4(c)) for the taxable year of the Partnership during which the liquidation of the
Partnership occurs (with such date of occurrence being determined pursuant to Treasury Regulation
Section 1.704-1(b)(2)(ii)(g)), and such distribution shall be made by the end of such taxable year
(or, if later, within 90 days after said date of such occurrence).
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Section 12.5 Cancellation of Certificate of Limited Partnership.
Upon the completion of the distribution of Partnership cash and property as provided in
Section 12.4 in connection with the liquidation of the Partnership, the Certificate of Limited
Partnership and all qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware shall be canceled and such other actions as may be
necessary to terminate the Partnership shall be taken.
Section 12.6 Return of Contributions.
The General Partner shall not be personally liable for, and shall have no obligation to
contribute or loan any monies or property to the Partnership to enable it to effectuate, the return
of the Capital Contributions of the Limited Partners or Unitholders, or any portion thereof,
it being expressly understood that any such return shall be made solely from Partnership assets.
Section 12.7 Waiver of Partition.
To the maximum extent permitted by law, each Partner hereby waives any right to partition of
the Partnership property.
Section 12.8 Capital Account Restoration.
No Limited Partner shall have any obligation to restore any negative balance in its Capital
Account upon liquidation of the Partnership. The General Partner shall be obligated to restore any
negative balance in its Capital Account upon liquidation of its interest in the Partnership by the
end of the taxable year of the Partnership during which such liquidation occurs, or, if later,
within 90 days after the date of such liquidation.
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT;
MEETINGS; RECORD DATE
Section 13.1 Amendments to be Adopted Solely by the General Partner.
Each Partner agrees that the General Partner, without the approval of any Partner or Assignee,
may amend any provision of this Agreement and execute, swear to, acknowledge, deliver, file and
record whatever documents may be required in connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the principal place of business
of the Partnership, the registered agent of the Partnership or the registered office of the
Partnership;
(b) admission, substitution, withdrawal or removal of Partners in accordance with this
Agreement;
(c) a change that the General Partner determines to be necessary or appropriate to qualify or
continue the qualification of the Partnership as a limited partnership or a partnership in
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which
the Limited Partners have limited liability under the laws of any state or to ensure that the Group
Members will not be treated as associations taxable as corporations or otherwise taxed as entities
for federal income tax purposes;
(d) a change that the General Partner determines, (i) does not adversely affect in any
material respect the Limited Partners considered as a whole or any particular class of Partnership
Interests as compared to other classes of Partnership Interests, (ii) to be necessary or
appropriate to (A) satisfy any requirements, conditions or guidelines contained in any opinion,
directive, order, ruling or regulation of any federal or state agency or judicial authority or
contained in any federal or state statute (including the Delaware Act) or (B) facilitate the
trading of the Units (including the division of any class or classes of Outstanding Units into
different classes to facilitate uniformity of tax consequences within such classes of Units) or
comply with any rule, regulation, guideline or requirement of any National Securities Exchange on
which the Units are or will be listed or admitted to trading, (iii) to be necessary or appropriate
in connection with action taken by the General Partner pursuant to Section 5.9 or (iv) is required
to effect the intent expressed in the Registration Statement or the intent of the provisions of
this Agreement or is otherwise contemplated by this Agreement;
(e) a change in the fiscal year or taxable year of the Partnership and any other changes that
the General Partner determines to be necessary or appropriate as a result of a change in the fiscal
year or taxable year of the Partnership including, if the General Partner shall so determine, a
change in the definition of “Quarter” and the dates on which distributions are to be made by the
Partnership;
(f) an amendment that is necessary, in the Opinion of Counsel, to prevent the Partnership, or
the General Partner or its directors, officers, trustees or agents from in any manner being
subjected to the provisions of the Investment Company Act of 1940, as amended, the Investment
Advisers Act of 1940, as amended, or “plan asset” regulations adopted under the Employee Retirement
Income Security Act of 1974, as amended, regardless of whether such are substantially similar to
plan asset regulations currently applied or proposed by the United States Department of Labor;
(g) an amendment that the General Partner determines to be necessary or appropriate in
connection with the authorization of issuance of any class or series of Partnership Securities
pursuant to Section 5.6, including any amendment that the General Partner determines is necessary
or appropriate in connection with (i) the adjustments of the Minimum Quarterly Distribution, First
Target Distribution, Second Target Distribution and Third Target Distribution pursuant to the
provisions of Section 5.11, (ii) the implementation of the provisions of Section 5.11 or (iii) any
modifications to the Incentive Distribution Rights made in connection with the issuance of
Partnership Securities pursuant to Section 5.6, provided that, with respect to this clause (iii),
the modifications to the Incentive Distribution Rights and the related issuance of Partnership
Securities have received Special Approval;
(h) any amendment expressly permitted in this Agreement to be made by the General Partner
acting alone;
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(i) an amendment effected, necessitated or contemplated by a Merger Agreement approved in
accordance with Section 14.3;
(j) an amendment that the General Partner determines to be necessary or appropriate to reflect
and account for the formation by the Partnership of, or investment by the Partnership in, any
corporation, partnership, joint venture, limited liability company or other entity, in
connection with the conduct by the Partnership of activities permitted by the terms of Section
2.4 or Section 7.1(a);
(k) a merger, conveyance or conversion pursuant to Section 14.3(d); or
(l) any other amendments substantially similar to the foregoing.
Section 13.2 Amendment Procedures.
Except as provided in Section 13.1 and Section 13.3, all amendments to this Agreement shall be
made in accordance with the requirements contained in this Section 13.2. Amendments to this
Agreement may be proposed only by the General Partner; provided, however, to the full extent
permitted by law, that the General Partner shall have no duty or obligation to propose any
amendment to this Agreement and may decline to do so free of any duty (including any fiduciary
duty) or obligation whatsoever to the Partnership, any Limited Partner or Assignee, or any other
Person bound by this Agreement and, in declining to propose an amendment, to the fullest extent
permitted by law shall not be required to act in good faith or pursuant to any other standard
imposed by this Agreement, any Group Member Agreement, any other agreement contemplated hereby or
under the Delaware Act or any other law, rule or regulation or at equity. A proposed amendment
shall be effective upon its approval by the General Partner and the holders of a Unit Majority,
unless a greater or different percentage is required under this Agreement or by Delaware law. Each
proposed amendment that requires the approval of the holders of a specified percentage of
Outstanding Units shall be set forth in a writing that contains the text of the proposed amendment.
If such an amendment is proposed, the General Partner shall seek the written approval of the
requisite percentage of Outstanding Units or call a meeting of the Unitholders to consider and vote
on such proposed amendment, in each case in accordance with the other provisions of this Article
XIII. The General Partner shall notify all Record Holders upon final adoption of any such proposed
amendments.
Section 13.3 Amendment Requirements.
(a) Notwithstanding the provisions of Section 13.1 and Section 13.2, no provision of this
Agreement that establishes a percentage of Outstanding Units (including Units deemed owned by the
General Partner) required to take any action shall be amended, altered, changed, repealed or
rescinded in any respect that would have the effect of reducing such voting percentage unless such
amendment is approved by the written consent or the affirmative vote of holders of Outstanding
Units whose aggregate Outstanding Units constitute not less than the voting requirement sought to
be reduced.
(b) Notwithstanding the provisions of Section 13.1 and Section 13.2, no amendment to this
Agreement may (i) enlarge the obligations of any Limited Partner without its consent, unless such
shall be deemed to have occurred as a result of an amendment approved pursuant to
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Section 13.3(c),
or (ii) enlarge the obligations of, restrict in any way any action by or rights of, or reduce in
any way the amounts distributable, reimbursable or otherwise payable to, the General
Partner or any of its Affiliates without its consent, which consent may be given or withheld
at its option.
(c) Except as provided in Section 14.3, and without limitation of the General Partner’s
authority to adopt amendments to this Agreement without the approval of any Partners or Assignees
as contemplated in Section 13.1, any amendment that would have a material adverse effect on the
rights or preferences of any class of Partnership Interests in relation to other classes of
Partnership Interests must be approved by the holders of not less than a majority of the
Outstanding Partnership Interests of the class affected.
(d) Notwithstanding any other provision of this Agreement, except for amendments pursuant to
Section 13.1 and except as otherwise provided by Section 14.3(b), no amendments shall become
effective without the approval of the holders of at least 90% of the Outstanding Units voting as a
single class unless the Partnership obtains an Opinion of Counsel to the effect that such amendment
will not affect the limited liability of any Limited Partner under applicable law.
(e) Except as provided in Section 13.1, this Section 13.3 shall only be amended with the
approval of the holders of at least 90% of the Outstanding Units.
Section 13.4 Special Meetings.
All acts of Limited Partners to be taken pursuant to this Agreement shall be taken in the
manner provided in this Article XIII. Special meetings of the Limited Partners may be called by the
General Partner or by Limited Partners owning 20% or more of the Outstanding Units of the class or
classes for which a meeting is proposed. Limited Partners shall call a special meeting by
delivering to the General Partner one or more requests in writing stating that the signing Limited
Partners wish to call a special meeting and indicating the general or specific purposes for which
the special meeting is to be called. Within 60 days after receipt of such a call from Limited
Partners or within such greater time as may be reasonably necessary for the Partnership to comply
with any statutes, rules, regulations, listing agreements or similar requirements governing the
holding of a meeting or the solicitation of proxies for use at such a meeting, the General Partner
shall send a notice of the meeting to the Limited Partners either directly or indirectly through
the Transfer Agent. A meeting shall be held at a time and place determined by the General Partner
on a date not less than 10 days nor more than 60 days after the time notice of the meeting is given
as provided in Section 16.1. Limited Partners shall not vote on matters that would cause the
Limited Partners to be deemed to be taking part in the management and control of the business and
affairs of the Partnership so as to jeopardize the Limited Partners’ limited liability under the
Delaware Act or the law of any other state in which the Partnership is qualified to do business.
Section 13.5 Notice of a Meeting.
Notice of a meeting called pursuant to Section 13.4 shall be given to the Record Holders of
the class or classes of Units for which a meeting is proposed in writing by mail or other means
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of
written communication in accordance with Section 16.1 at least 10 days in advance of such meeting.
The notice shall be deemed to have been given at the time when deposited in the mail or sent by
other means of written communication.
Section 13.6 Record Date.
For purposes of determining the Limited Partners entitled to notice of or to vote at a meeting
of the Limited Partners or to give approvals without a meeting as provided in Section 13.11 the
General Partner may set a Record Date, which shall not be less than 10 nor more than 60 days before
(a) the date of the meeting (unless such requirement conflicts with any rule, regulation, guideline
or requirement of any National Securities Exchange on which the Units are listed or admitted to
trading, in which case the rule, regulation, guideline or requirement of such National Securities
Exchange shall govern) or (b) in the event that approvals are sought without a meeting, the date by
which Limited Partners are requested in writing by the General Partner to give such approvals. If
the General Partner does not set a Record Date, then (a) the Record Date for determining the
Limited Partners entitled to notice of or to vote at a meeting of the Limited Partners shall be the
close of business on the day next preceding the day on which notice is given, and (b) the Record
Date for determining the Limited Partners entitled to give approvals without a meeting shall be the
date the first written approval is deposited with the Partnership in care of the General Partner in
accordance with Section 13.11.
Section 13.7 Adjournment.
When a meeting is adjourned to another time or place, notice need not be given of the
adjourned meeting and a new Record Date need not be fixed, if the time and place thereof are
announced at the meeting at which the adjournment is taken, unless such adjournment shall be for
more than 45 days. At the adjourned meeting, the Partnership may transact any business which might
have been transacted at the original meeting. If the adjournment is for more than 45 days or if a
new Record Date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given in accordance with this Article XIII.
Section 13.8 Waiver of Notice; Approval of Meeting; Approval of Minutes.
The transactions of any meeting of Limited Partners, however called and noticed, and whenever
held, shall be as valid as if it had occurred at a meeting duly held after regular call and notice,
if a quorum is present either in person or by proxy. Attendance of a Limited Partner at a meeting
shall constitute a waiver of notice of the meeting, except when the Limited Partner attends the
meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction
of any business because the meeting is not lawfully called or convened; and except that attendance
at a meeting is not a waiver of any right to disapprove the consideration of
matters required to be included in the notice of the meeting, but not so included, if the
disapproval is expressly made at the meeting.
Section 13.9 Quorum and Voting.
The holders of a majority of the Outstanding Units of the class or classes for which a meeting
has been called (including Outstanding Units deemed owned by the General Partner) represented in
person or by proxy shall constitute a quorum at a meeting of Limited Partners of
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such class or
classes unless any such action by the Limited Partners requires approval by holders of a greater
percentage of such Units, in which case the quorum shall be such greater percentage. At any meeting
of the Limited Partners duly called and held in accordance with this Agreement at which a quorum is
present, the act of Limited Partners holding Outstanding Units that in the aggregate represent a
majority of the Outstanding Units entitled to vote and be present in person or by proxy at such
meeting shall be deemed to constitute the act of all Limited Partners, unless a greater or
different percentage is required with respect to such action under the provisions of this
Agreement, in which case the act of the Limited Partners holding Outstanding Units that in the
aggregate represent at least such greater or different percentage shall be required. The Limited
Partners present at a duly called or held meeting at which a quorum is present may continue to
transact business until adjournment, notwithstanding the withdrawal of enough Limited Partners to
leave less than a quorum, if any action taken (other than adjournment) is approved by the required
percentage of Outstanding Units specified in this Agreement (including Outstanding Units deemed
owned by the General Partner). In the absence of a quorum any meeting of Limited Partners may be
adjourned from time to time by the affirmative vote of holders of at least a majority of the
Outstanding Units entitled to vote at such meeting (including Outstanding Units deemed owned by the
General Partner) represented either in person or by proxy, but no other business may be transacted,
except as provided in Section 13.7.
Section 13.10 Conduct of a Meeting.
The General Partner shall have full power and authority concerning the manner of conducting
any meeting of the Limited Partners or solicitation of approvals in writing, including the
determination of Persons entitled to vote, the existence of a quorum, the satisfaction of the
requirements of Section 13.4, the conduct of voting, the validity and effect of any proxies and the
determination of any controversies, votes or challenges arising in connection with or during the
meeting or voting. The General Partner shall designate a Person to serve as chairman of any meeting
and shall further designate a Person to take the minutes of any meeting. All minutes shall be kept
with the records of the Partnership maintained by the General Partner. The General Partner may
make such other regulations consistent with applicable law and this Agreement as it may deem
advisable concerning the conduct of any meeting of the Limited Partners or solicitation of
approvals in writing, including regulations in regard to the appointment of proxies, the
appointment and duties of inspectors of votes and approvals, the submission and examination of
proxies and other evidence of the right to vote, and the revocation of approvals in writing.
Section 13.11 Action Without a Meeting.
If authorized by the General Partner, any action that may be taken at a meeting of the Limited
Partners may be taken without a meeting, without a vote and without prior notice, if an approval in
writing setting forth the action so taken is signed by Limited Partners owning not less than the
minimum percentage of the Outstanding Units (including Units deemed owned by the General Partner)
that would be necessary to authorize or take such action at a meeting at which all the Limited
Partners were present and voted (unless such provision conflicts with any rule, regulation,
guideline or requirement of any National Securities Exchange on which the Units are listed or
admitted to trading, in which case the rule, regulation, guideline or requirement of such National
Securities Exchange shall govern). Prompt notice of the taking of action without a meeting shall be
given to the Limited Partners who have not approved in writing. The General
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Partner may specify
that any written ballot submitted to Limited Partners for the purpose of taking any action without
a meeting shall be returned to the Partnership within the time period, which shall be not less than
20 days, specified by the General Partner. If a ballot returned to the Partnership does not vote
all of the Units held by the Limited Partners, the Partnership shall be deemed to have failed to
receive a ballot for the Units that were not voted. If approval of the taking of any action by the
Limited Partners is solicited by any Person other than by or on behalf of the General Partner, the
written approvals shall have no force and effect unless and until (a) they are deposited with the
Partnership in care of the General Partner, (b) approvals sufficient to take the action proposed
are dated as of a date not more than 90 days prior to the date sufficient approvals are deposited
with the Partnership and (c) an Opinion of Counsel is delivered to the General Partner to the
effect that the exercise of such right and the action proposed to be taken with respect to any
particular matter (i) will not cause the Limited Partners to be deemed to be taking part in the
management and control of the business and affairs of the Partnership so as to jeopardize the
Limited Partners’ limited liability, and (ii) is otherwise permissible under the state statutes
then governing the rights, duties and liabilities of the Partnership and the Partners. Nothing
contained in this Section 13.11 shall be deemed to require the General Partner to solicit all
Limited Partners in connection with a matter approved by the holders of the percentage of Units by
written consent without a meeting.
Section 13.12 Right to Vote and Related Matters.
(a) Only those Record Holders of the Outstanding Units on the Record Date set pursuant to
Section 13.6 (and also subject to the limitations contained in the definition of “Outstanding”)
shall be entitled to notice of, and to vote at, a meeting of Limited Partners or to act with
respect to matters as to which the holders of the Outstanding Units have the right to vote or to
act. All references in this Agreement to votes of, or other acts that may be taken by, the
Outstanding Units shall be deemed to be references to the votes or acts of the Record Holders of
such Outstanding Units.
(b) With respect to Units that are held for a Person’s account by another Person (such as a
broker, dealer, bank, trust company or clearing corporation, or an agent of any of the
foregoing), in whose name such Units are registered, such other Person shall, in exercising
the voting rights in respect of such Units on any matter, and unless the arrangement between such
Persons provides otherwise, vote such Units in favor of, and at the direction of, the Person who is
the beneficial owner, and the Partnership shall be entitled to assume it is so acting without
further inquiry. The provisions of this Section 13.12(b) (as well as all other provisions of this
Agreement) are subject to the provisions of Section 4.3.
ARTICLE XIV
MERGER, CONSOLIDATION OR CONVERSION
Section 14.1 Authority.
The Partnership may merge or consolidate with or into one or more corporations, limited
liability companies, statutory trusts or associations, real estate investment trusts, common law
trusts or unincorporated businesses, including a partnership (whether general or limited
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(including
a limited liability partnership)) or convert into any such entity, whether such entity is formed
under the laws of the State of Delaware or any other state of the United States of America,
pursuant to a written plan of merger or consolidation (“Merger Agreement”) or a written plan of
conversion (“Plan of Conversion”), as the case may be, in accordance with this Article XIV.
Section 14.2 Procedure for Merger, Consolidation or Conversion.
(a) Merger, consolidation or conversion of the Partnership pursuant to this Article XIV
requires the prior consent of the General Partner, provided, however, that, to the fullest extent
permitted by law, the General Partner shall have no duty or obligation to consent to any merger,
consolidation or conversion of the Partnership and may decline to do so free of any fiduciary duty
or obligation whatsoever to the Partnership, any Limited Partner or Assignee and, in declining to
consent to a merger, consolidation or conversion, shall not be required to act in good faith or
pursuant to any other standard imposed by this Agreement, any other agreement contemplated hereby
or under the Delaware Act or any other law, rule or regulation or at equity.
(b) If the General Partner shall determine to consent to the merger or consolidation, the
General Partner shall approve the Merger Agreement, which shall set forth:
(i) name and jurisdiction of formation or organization of each of the business entities
proposing to merge or consolidate;
(ii) the name and jurisdiction of formation or organization of the business entity that is to
survive the proposed merger or consolidation (the “Surviving Business Entity”);
(iii) the terms and conditions of the proposed merger or consolidation;
(iv) the manner and basis of exchanging or converting the equity securities of each
constituent business entity for, or into, cash, property or interests, rights, securities or
obligations of the Surviving Business Entity; and (i) if any general or limited partner interests,
securities or rights of any constituent business entity are not to be exchanged or converted solely
for, or into, cash, property or general or limited partner interests, rights, securities or
obligations of the Surviving Business Entity, the cash, property or interests, rights, securities
or obligations of any general or limited partnership, corporation, trust, limited liability
company, unincorporated business or other entity (other than the Surviving Business Entity) which
the holders of such general or limited partner interests, securities or rights are to receive in
exchange for, or upon conversion of their interests, securities or rights, and (ii) in the case of
securities represented by certificates, upon the surrender of such certificates, which cash,
property or general or limited partner interests, rights, securities or obligations of the
Surviving Business Entity or any general or limited partnership, corporation, trust, limited
liability company, unincorporated business or other entity (other than the Surviving Business
Entity), or evidences thereof, are to be delivered;
(v) a statement of any changes in the constituent documents or the adoption of new constituent
documents (the articles or certificate of incorporation, articles of trust, declaration of trust,
certificate or agreement of limited partnership, certificate of formation or
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limited liability
company agreement, operating agreement or other similar charter or governing document) of the
Surviving Business Entity to be effected by such merger or consolidation;
(vi) the effective time of the merger, which may be the date of the filing of the certificate
of merger pursuant to Section 14.4 or a later date specified in or determinable in accordance with
the Merger Agreement (provided, that if the effective time of the merger is to be later than the
date of the filing of such certificate of merger, the effective time shall be fixed at a date or
time certain at or prior to the time of the filing of such certificate of merger and stated
therein); and
(vii) such other provisions with respect to the proposed merger or consolidation that the
General Partner determines to be necessary or appropriate.
(c) If the General Partner shall determine to consent to the conversion, the General Partner
shall approve the Plan of Conversion, which shall set forth:
(i) the name of the converting entity and the converted entity;
(ii) a statement that the Partnership is continuing its existence in the organizational form
of the converted entity;
(iii) a statement as to the type of entity that the converted entity is to be and the state or
country under the laws of which the converted entity is to be incorporated, formed or organized;
(iv) the manner and basis of exchanging or converting the equity securities of each
constituent business entity for, or into, cash, property or interests, rights, securities or
obligations of the converted entity or another entity, or for the cancellation of such equity
securities;
(v) in an attachment or exhibit, the certificate of limited partnership of the Partnership;
and
(vi) in an attachment or exhibit, the certificate of limited partnership, articles of
incorporation, or other organizational documents of the converted entity;
(vii) the effective time of the conversion, which may be the date of the filing of the
articles of conversion or a later date specified in or determinable in accordance with the Plan of
Conversion (provided, that if the effective time of the conversion is to be later than the date of
the filing of such articles of conversion, the effective time shall be fixed at a date or time
certain at or prior to the time of the filing of such articles of conversion and stated therein);
and
(viii) such other provisions with respect to the proposed conversion that the General Partner
determines to be necessary or appropriate.
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Section 14.3 Approval by Limited Partners.
(a) Except as provided in Sections 14.3(d) and 14.3(c), the General Partner, upon its approval
of the Merger Agreement or the Plan of Conversion, as the case may be, shall direct that the Merger
Agreement or the Plan of Conversion and the merger, consolidation or conversion contemplated
thereby, as applicable, be submitted to a vote of Limited Partners, whether at a special meeting or
by written consent, in either case in accordance with the requirements of Article XIII. A copy or a
summary of the Merger Agreement or the Plan of Conversion, as the case may be, shall be included in
or enclosed with the notice of a special meeting or the written consent.
(b) Except as provided in Sections 14.3(d) and 14.3(e), the Merger Agreement or Plan of
Conversion, as the case may be, shall be approved upon receiving the affirmative vote or consent of
the holders of a Unit Majority.
(c) Except as provided in Sections 14.3(d) and 14.3(e), after such approval by vote or consent
of the Limited Partners, and at any time prior to the filing of the certificate of merger or
certificate of conversion pursuant to Section 14.4, the merger, consolidation or conversion may be
abandoned pursuant to provisions therefor, if any, set forth in the Merger Agreement or Plan of
Conversion, as the case may be.
(d) Notwithstanding anything else contained in this Article XIV or in this Agreement, the
General Partner is permitted, without Limited Partner approval, to convert the Partnership or any
Group Member into a new limited liability entity, to merge the Partnership or any Group Member
into, or convey all of the Partnership’s assets to, another limited liability entity that shall be
newly formed and shall have no assets, liabilities or operations at the time of such conversion,
merger or conveyance other than those it receives from the Partnership or other Group Member if (i)
the General Partner has received an Opinion of Counsel that the conversion, merger or conveyance,
as the case may be, would not result in the loss of the limited liability of any Limited Partner or
cause the Partnership to be treated as an association taxable as a corporation or otherwise to be
taxed as an entity for federal income tax purposes (to the extent not previously
treated as such), (ii) the sole purpose of such conversion, merger, or conveyance is to effect
a mere change in the legal form of the Partnership into another limited liability entity and (iii)
the governing instruments of the new entity provide the Limited Partners and the General Partner
with the same rights and obligations as are herein contained.
(e) Additionally, notwithstanding anything else contained in this Article XIV or in this
Agreement, the General Partner is permitted, without Limited Partner approval, to merge or
consolidate the Partnership with or into another entity if (A) the General Partner has received an
Opinion of Counsel that the merger or consolidation, as the case may be, would not result in the
loss of the limited liability of any Limited Partner or cause the Partnership to be treated as an
association taxable as a corporation or otherwise to be taxed as an entity for federal income tax
purposes (to the extent not previously treated as such), (B) the merger or consolidation would not
result in an amendment to the Partnership Agreement, other than any amendments that could be
adopted pursuant to Section 13.1, (C) the Partnership is the Surviving Business Entity in such
merger or consolidation, (D) each Unit outstanding immediately prior to the effective date of the
merger or consolidation is to be an identical Unit of the Partnership after the effective date of
the
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merger or consolidation, and (E) the number of Partnership Securities to be issued by the
Partnership in such merger or consolidation do not exceed 20% of the Partnership Securities
Outstanding immediately prior to the effective date of such merger or consolidation.
(f) Pursuant to Section 17-211(g) of the Delaware Act, an agreement of merger or consolidation
approved in accordance with this Article XIV may (a) effect any amendment to this Agreement or (b)
effect the adoption of a new partnership agreement for the Partnership if it is the Surviving
Business Entity. Any such amendment or adoption made pursuant to this Section 14.3 shall be
effective at the effective time or date of the merger or consolidation.
Section 14.4 Certificate of Merger.
Upon the required approval by the General Partner and the Unitholders of a Merger Agreement or
the Plan of Conversion, as the case may be, a certificate of merger or certificate of conversion,
as applicable, shall be executed and filed with the Secretary of State of the State of Delaware in
conformity with the requirements of the Delaware Act.
Section 14.5 Effect of Merger, Consolidation or Conversion.
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the business entities that has merged
or consolidated, and all property, real, personal and mixed, and all debts due to any of those
business entities and all other things and causes of action belonging to each of those business
entities, shall be vested in the Surviving Business Entity and after the merger or consolidation
shall be the property of the Surviving Business Entity to the extent they were of each constituent
business entity;
(ii) the title to any real property vested by deed or otherwise in any of those constituent
business entities shall not revert and is not in any way impaired because of the merger or
consolidation;
(iii) all rights of creditors and all liens on or security interests in property of any of
those constituent business entities shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent business entities shall attach to
the Surviving Business Entity and may be enforced against it to the same extent as if the debts,
liabilities and duties had been incurred or contracted by it.
(b) At the effective time of the certificate of conversion, for all purposes of the laws of
the State of Delaware:
(i) the Partnership shall continue to exist, without interruption, but in the organizational
form of the converted entity rather than in its prior organizational form;
(ii) all rights, title, and interests to all real estate and other property owned by the
Partnership shall remain vested in the converted entity in its new organizational form without
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reversion or impairment, without further act or deed, and without any transfer or assignment having
occurred, but subject to any existing liens or other encumbrances thereon;
(iii) all liabilities and obligations of the Partnership shall continue to be liabilities and
obligations of the converted entity in its new organizational form without impairment or diminution
by reason of the conversion;
(iv) all rights of creditors or other parties with respect to or against the prior interest
holders or other owners of the Partnership in their capacities as such in existence as of the
effective time of the conversion will continue in existence as to those liabilities and obligations
and are enforceable against the converted entity by such creditors and obligees to the same extent
as if the liabilities and obligations had originally been incurred or contracted by the converted
entity;
(v) the Partnership Interests that are to be converted into partnership interests, shares,
evidences of ownership, or other rights or securities in the converted entity or cash as provided
in the plan of conversion shall be so converted, and Partners shall be entitled only to the rights
provided in the Plan of Conversion.
ARTICLE XV
RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
Section 15.1 Right to Acquire Limited Partner Interests.
(a) Notwithstanding any other provision of this Agreement, if at any time the General Partner
and its Affiliates hold more than 75% of the total Limited Partner Interests of any class
then Outstanding, the General Partner shall then have the right, which right it may assign and
transfer in whole or in part to the Partnership or any Affiliate of the General Partner,
exercisable at its option, to purchase all, but not less than all, of such Limited Partner
Interests of such class then Outstanding held by Persons other than the General Partner and its
Affiliates, at the greater of (x) the Current Market Price as of the date three days prior to the
date that the notice described in Section 15.1(b) is mailed and (y) the highest price paid by the
General Partner or any of its Affiliates for any such Limited Partner Interest of such class
purchased during the 90-day period preceding the date that the notice described in Section 15.1(b)
is mailed.
(b) If the General Partner, any Affiliate of the General Partner or the Partnership elects to
exercise the right to purchase Limited Partner Interests granted pursuant to Section 15.1(a), the
General Partner shall deliver to the Transfer Agent notice of such election to purchase (the
“Notice of Election to Purchase”) and shall cause the Transfer Agent to mail a copy of such Notice
of Election to Purchase to the Record Holders of Limited Partner Interests of such class or classes
(as of a Record Date selected by the General Partner) at least 10, but not more than 60, days prior
to the Purchase Date. Such Notice of Election to Purchase shall also be published for a period of
at least three consecutive days in at least two daily newspapers of general circulation printed in
the English language and published in the Borough of Manhattan, New York. The Notice of Election to
Purchase shall specify the Purchase Date and the price (determined in accordance with Section
15.1(a)) at which Limited Partner Interests will be
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purchased and state that the General Partner,
its Affiliate or the Partnership, as the case may be, elects to purchase such Limited Partner
Interests, upon surrender of Certificates representing such Limited Partner Interests in exchange
for payment, at such office or offices of the Transfer Agent as the Transfer Agent may specify, or
as may be required by any National Securities Exchange on which such Limited Partner Interests are
listed. Any such Notice of Election to Purchase mailed to a Record Holder of Limited Partner
Interests at his address as reflected in the records of the Transfer Agent shall be conclusively
presumed to have been given regardless of whether the owner receives such notice. On or prior to
the Purchase Date, the General Partner, its Affiliate or the Partnership, as the case may be, shall
deposit with the Transfer Agent cash in an amount sufficient to pay the aggregate purchase price of
all of such Limited Partner Interests to be purchased in accordance with this Section 15.1. If the
Notice of Election to Purchase shall have been duly given as aforesaid at least 10 days prior to
the Purchase Date, and if on or prior to the Purchase Date the deposit described in the preceding
sentence has been made for the benefit of the holders of Limited Partner Interests subject to
purchase as provided herein, then from and after the Purchase Date, notwithstanding that any
Certificate shall not have been surrendered for purchase, all rights of the holders of such Limited
Partner Interests (including any rights pursuant to Article IV, Article V, Article VI, and Article
XII) shall thereupon cease, except the right to receive the purchase price (determined in
accordance with Section 15.1(a)) for Limited Partner Interests therefor, without interest, upon
surrender to the Transfer Agent of the Certificates representing such Limited Partner Interests,
and such Limited Partner Interests shall thereupon be deemed to be transferred to the General
Partner, its Affiliate or the Partnership, as the case may be, on the record books of the Transfer
Agent and the Partnership, and the General Partner or any Affiliate of the General Partner, or the
Partnership, as the case may be, shall be deemed to be the owner of all such Limited Partner
Interests from and after the Purchase Date and shall have all rights as the owner of such Limited
Partner Interests (including all rights as owner of such Limited Partner Interests pursuant to
Article IV, Article V, Article VI and Article XII).
(c) At any time from and after the Purchase Date, a holder of an Outstanding Limited Partner
Interest subject to purchase as provided in this Section 15.1 may surrender his Certificate
evidencing such Limited Partner Interest to the Transfer Agent in exchange for payment of the
amount described in Section 15.1(a), therefor, without interest thereon.
ARTICLE XVI
GENERAL PROVISIONS
Section 16.1 Addresses and Notices; Written Communications.
(a) Any notice, demand, request, report or proxy materials required or permitted to be given
or made to a Partner or Assignee under this Agreement shall be in writing and shall be deemed given
or made when delivered in person or when sent by first class United States mail or by other means
of written communication to the Partner or Assignee at the address described below. Any notice,
payment or report to be given or made to a Partner or Assignee hereunder shall be deemed
conclusively to have been given or made, and the obligation to give such notice or report or to
make such payment shall be deemed conclusively to have been fully satisfied, upon sending of such
notice, payment or report to the Record Holder of such Partnership Securities at his address as
shown on the records of the Transfer Agent or as otherwise shown on
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the records of the Partnership,
regardless of any claim of any Person who may have an interest in such Partnership Securities by
reason of any assignment or otherwise. An affidavit or certificate of making of any notice,
payment or report in accordance with the provisions of this Section 16.1 executed by the General
Partner, the Transfer Agent or the mailing organization shall be prima facie evidence of the giving
or making of such notice, payment or report. If any notice, payment or report addressed to a Record
Holder at the address of such Record Holder appearing on the books and records of the Transfer
Agent or the Partnership is returned by the United States Postal Service marked to indicate that
the United States Postal Service is unable to deliver it, such notice, payment or report and any
subsequent notices, payments and reports shall be deemed to have been duly given or made without
further mailing (until such time as such Record Holder or another Person notifies the Transfer
Agent or the Partnership of a change in his address) if they are available for the Partner or
Assignee at the principal office of the Partnership for a period of one year from the date of the
giving or making of such notice, payment or report to the other Partners and Assignees. Any notice
to the Partnership shall be deemed given if received by the General Partner at the principal office
of the Partnership designated pursuant to Section 2.3. The General Partner may rely and shall be
protected in relying on any notice or other document from a Partner, Assignee or other Person if
believed by it to be genuine.
(b) The terms “in writing”, “written communications,” “written notice” and words of similar
import shall be deemed satisfied under this Agreement by use of e-mail and other forms of
electronic communication.
Section 16.2 Further Action.
The parties shall execute and deliver all documents, provide all information and take or
refrain from taking action as may be necessary or appropriate to achieve the purposes of this
Agreement.
Section 16.3 Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the parties hereto and their
heirs, executors, administrators, successors, legal representatives and permitted assigns.
Section 16.4 Integration.
This Agreement constitutes the entire agreement among the parties hereto pertaining to the
subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.
Section 16.5 Creditors.
None of the provisions of this Agreement shall be for the benefit of, or shall be enforceable
by, any creditor of the Partnership.
Section 16.6 Waiver.
No failure by any party to insist upon the strict performance of any covenant, duty, agreement
or condition of this Agreement or to exercise any right or remedy consequent upon a
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breach thereof
shall constitute waiver of any such breach of any other covenant, duty, agreement or condition.
Section 16.7 Third-Party Beneficiaries.
Each Partner agrees that any Indemnitee shall be entitled to assert rights and remedies
hereunder as a third-party beneficiary hereto with respect to those provisions of this Agreement
affording a right, benefit or privilege to such Indemnitee.
Section 16.8 Counterparts.
This Agreement may be executed in counterparts, all of which together shall constitute an
agreement binding on all the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto or, in the case of a Person acquiring a
Unit, upon accepting the certificate evidencing such Unit or executing and delivering a Transfer
Application as herein described, independently of the signature of any other party.
Section 16.9 Applicable Law.
This Agreement shall be construed in accordance with and governed by the laws of the State of
Delaware, without regard to the principles of conflicts of law.
Section 16.10 Invalidity of Provisions.
If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions contained herein
shall not be affected thereby.
Section 16.11 Consent of Partners.
Each Partner hereby expressly consents and agrees that, whenever in this Agreement it is
specified that an action may be taken upon the affirmative vote or consent of less than all of the
Partners, such action may be so taken upon the concurrence of less than all of the Partners and
each Partner shall be bound by the results of such action.
Section 16.12 Facsimile Signatures.
The use of facsimile signatures affixed in the name and on behalf of the transfer agent and
registrar of the Partnership on certificates representing Common Units is expressly permitted by
this Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.
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GENERAL PARTNER
EL PASO PIPELINE GP COMPANY, L.L.C.
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By: |
/s/ Xxxxxx X. Xxxxx
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Name: |
Xxxxxx X. Xxxxx |
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Title: |
Executive Vice President and General
Counsel |
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ORGANIZATIONAL LIMITED PARTNER
EL PASO PIPELINE LP HOLDINGS, L.L.C.
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By: |
/s/ Xxxxxxxxxx Xxxxx-Xxxxxxx
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Name: |
Xxxxxxxxxx Xxxxx-Xxxxxxx |
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Title: |
President and Chief Executive Officer
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LIMITED PARTNERS:
All Limited Partners now and hereafter admitted as
Limited Partners of the Partnership, pursuant to
powers of attorney now and hereafter executed in
favor of, and granted and delivered to the General
Partner.
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EL PASO PIPELINE GP COMPANY, L.L.C.
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By: |
/s/ Xxxxxx X. Xxxxx
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Name: |
Xxxxxx X. Xxxxx |
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Title: |
Executive Vice President and General
Counsel |
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[Signature Page — First Amended & Restated Agreement
of Limited Partnership of El Paso Pipeline Partners, L.P.]
EXHIBIT A
to the First Amended and Restated
Agreement of Limited Partnership of
El Paso Pipeline Partners, L.P.
Certificate Evidencing Common Units
Representing Limited Partner Interests in
El Paso Pipeline Partners, L.P.
In accordance with Section 4.1 of the First Amended and Restated Agreement of Limited
Partnership of El Paso Pipeline Partners, L.P., as amended, supplemented or restated from time to
time (the “Partnership Agreement”), El Paso Pipeline Partners, L.P., a Delaware limited partnership
(the “Partnership”), hereby certifies that (the “Holder”) is the
registered owner of Common Units representing limited partner interests in the Partnership (the
“Common Units”) transferable on the books of the Partnership, in person or by duly authorized
attorney, upon surrender of this Certificate properly endorsed and accompanied by a properly
executed application for transfer of the Common Units represented by this Certificate. The rights,
preferences and limitations of the Common Units are set forth in, and this Certificate and the
Common Units represented hereby are issued and shall in all respects be subject to the terms and
provisions of, the Partnership Agreement. Copies of the Partnership Agreement are on file at, and
will be furnished without charge on delivery of written request to the Partnership at, the
principal office of the Partnership located at 0000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000.
Capitalized terms used herein but not defined shall have the meanings given them in the Partnership
Agreement.
The Holder, by accepting this Certificate, is deemed to have (i) requested admission as, and
agreed to become, a Limited Partner and to have agreed to comply with and be bound by and to have
executed the Partnership Agreement, (ii) represented and warranted that the Holder has all right,
power and authority and, if an individual, the capacity necessary to enter into the Partnership
Agreement, (iii) granted the powers of attorney provided for in the Partnership Agreement and
(iv) made the waivers and given the consents and approvals contained in the Partnership Agreement.
THE HOLDER OF THIS SECURITY ACKNOWLEDGES FOR THE BENEFIT OF EL PASO PIPELINE PARTNERS, L.P.
THAT THIS SECURITY MAY NOT BE SOLD, OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IF SUCH
TRANSFER WOULD (A) VIOLATE THE THEN APPLICABLE FEDERAL OR STATE SECURITIES LAWS OR RULES AND
REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER
GOVERNMENTAL AUTHORITY WITH JURISDICTION OVER SUCH TRANSFER, (B) TERMINATE THE EXISTENCE OR
QUALIFICATION OF EL PASO PIPELINE PARTNERS, L.P. UNDER THE LAWS OF THE STATE OF DELAWARE, OR
(C) CAUSE EL PASO PIPELINE PARTNERS, L.P. TO BE TREATED AS AN ASSOCIATION TAXABLE AS A CORPORATION
OR OTHERWISE TO BE TAXED AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES (TO THE EXTENT NOT ALREADY
A-1
SO
TREATED
OR TAXED). EL PASO PIPELINE GP COMPANY, L.L.C., THE GENERAL PARTNER OF EL PASO PIPELINE
PARTNERS, L.P., MAY IMPOSE ADDITIONAL RESTRICTIONS ON THE TRANSFER OF THIS SECURITY IF IT RECEIVES
AN OPINION OF COUNSEL THAT SUCH RESTRICTIONS ARE NECESSARY TO AVOID A SIGNIFICANT RISK OF EL PASO
PIPELINE PARTNERS, L.P. BECOMING TAXABLE AS A CORPORATION OR OTHERWISE BECOMING TAXABLE AS AN
ENTITY FOR FEDERAL INCOME TAX PURPOSES. THE RESTRICTIONS SET FORTH ABOVE SHALL NOT PRECLUDE THE
SETTLEMENT OF ANY TRANSACTIONS INVOLVING THIS SECURITY ENTERED INTO THROUGH THE FACILITIES OF ANY
NATIONAL SECURITIES EXCHANGE ON WHICH THIS SECURITY IS LISTED OR ADMITTED TO TRADING.
This Certificate shall not be valid for any purpose unless it has been countersigned and
registered by the Transfer Agent and Registrar. The Certificate shall be governed by and construed
in accordance with the laws of the State of Delaware.
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Dated: |
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El Paso Pipeline Partners, L.P. |
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Countersigned and Registered by: |
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By: El Paso Pipeline GP Company, L.L.C.,
its General Partner |
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By: |
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as Transfer Agent and Registrar |
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Name: |
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By:
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By: |
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Authorized Signature
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Secretary |
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ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Certificate,
shall be construed as follows according to applicable laws or regulations:
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TEN COM - |
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as tenants in common |
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UNIF GIFT/TRANSFERS MIN ACT |
TEN ENT -
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as tenants by the entireties
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Custodian |
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JT TEN -
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as joint tenants with right of
survivorship and not
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(Cust)
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(Minor) |
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as tenants in common |
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under Uniform Gifts/Transfers
to CD Minors Act (State) |
Additional abbreviations, though not in the above list, may also be used.
FOR VALUE RECEIVED, hereby assigns, conveys, sells and
transfers unto
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(Please print or typewrite name and
address of Assignee)
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(Please insert Social Security or
other identifying number of
Assignee) |
Common Units representing limited partner interests evidenced by this Certificate, subject to
the Partnership Agreement, and does hereby irrevocably constitute and appoint
as its attorney-in-fact with full power of substitution to transfer
the same on the books of El Paso Pipeline Partners, L.P.
Date:
THE SIGNATURE(S) MUST BE
GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS
WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION
PROGRAM), PURSUANT TO S.E.C.
RULE 17Ad-15
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NOTE:
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The signature to any endorsement
hereon must correspond with the name as
written upon the face of this
Certificate in every particular, without
alteration, enlargement or change. |
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(Signature) |
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(Signature) |
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No transfer of the Common Units evidenced hereby will be registered on the books of the
Partnership, unless the Certificate evidencing the Common Units to be transferred is surrendered
for registration or transfer and an Application for Transfer of Common Units has been properly
completed and executed by a transferee either (a) on the form set forth below or (b) on a separate
application that the Partnership will furnish on request without charge. A transferor of the
Common Units shall have no duty to the transferee with respect to execution of the Application for
Transfer of Common Units in order for such transferee to obtain registration of the transfer of the
Common Units.
A-4
APPLICATION FOR TRANSFER OF COMMON UNITS
Transferees of Common Units must execute and deliver this application to El Paso Pipeline
Partners, L.P., c/o El Paso Pipeline GP Company, L.L.C., 0000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx
00000; Attn: CFO, to be admitted as limited partners to El Paso Pipeline Partners, L.P.
The undersigned (“Assignee”) hereby applies for transfer to the name of the Assignee of the
Common Units evidenced hereby and hereby certifies to El Paso Pipeline Partners, L.P. (the
“Partnership”) that the Assignee (including to the best of Assignee’s knowledge, any person for
whom the Assignee will hold the Common Units) is an Eligible Holder.1
The Assignee (a) requests admission as a Substituted Limited Partner and agrees to comply with
and be bound by, and hereby executes, the First Amended and Restated Agreement of Limited
Partnership of El Paso Pipeline Partners, L.P., as amended, supplemented or restated to the date
hereof (the “Partnership Agreement”), (b) represents and warrants that the Assignee has all right,
power and authority and, if an individual, the capacity necessary to enter into the Partnership
Agreement, (c) appoints the General Partner of the Partnership and, if a Liquidator shall be
appointed, the Liquidator of the Partnership as the Assignee’s attorney-in-fact to execute, swear
to, acknowledge and file any document, including the Partnership Agreement and any amendment
thereto and the Certificate of Limited Partnership of the Partnership and any amendment thereto,
necessary or appropriate for the Assignee’s admission as a Substituted Limited Partner and as a
party to the Partnership Agreement, (d) gives the powers of attorney provided for in the
Partnership Agreement, and (e) makes the waivers and gives the consents and approvals contained in
the Partnership Agreement. Capitalized terms not defined herein have the meanings assigned to such
terms in the Partnership Agreement. This application constitutes a Taxation Certification, as
defined in the Partnership Agreement.
Date:
Social Security or other identifying number
Signature of Assignee
Purchase Price including commissions, if any
Name and Address of Assignee
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1 |
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The Term “Eligible Holder” means (a) an individual or
entity subject to United States federal income taxation on the public utility
income generated by the Partnership; or (b) an entity not subject to United
States federal taxation on the public utility income generated by the
Partnership, so long as all of the entity’s owners are subject to United States
federal taxation on the public utility income generated by the Partnership.
Individuals or entities are subject to United States federal taxation, in the
context of defining an Eligible Holder, to the extent they are taxable on the
items of income and gain allocated by the Partnership or would be taxable on
the items of income and gain allocated by the Partnership if they had no
offsetting deductions or tax credits unrelated to the ownership of the Common
Units. Schedule I below contains a list of various types of investors that are
categorized and identified as either “Eligible Holders” or “Non-Eligible
Holders.” |
A-5
Type of Entity (check one):
o Individual o Partnership o Corporation
o Trust o Other (specify)
If not an Individual (check one):
o the entity is subject to United States federal income taxation on the income generated by the
Partnership;
o the entity is not subject to United States federal income taxation, but it is a pass-through
entity and all of its beneficial owners are subject to United States federal income tax on the
income generated by the Partnership;
o the entity is not subject to United States federal income taxation and it is (a) not a
pass-through entity or (b) a pass-through entity, but not all of its beneficial owners are subject
to United States federal income taxation on the income generated by the Partnership. Important Note
— by checking this box, the Assignee is contradicting its certification that it is an Eligible
Holder.
Nationality (check one):
o U.S. Citizen, Resident or Domestic Entity o Non-resident Alien
o Foreign Corporation
If the U.S. Citizen, Resident or Domestic Entity box is checked, the following certification
must be completed.
Under Section 1445(e) of the Internal Revenue Code of 1986, as amended (the “Code”), the
Partnership must withhold tax with respect to certain transfers of property if a holder of an
interest in the Partnership is a foreign person. To inform the Partnership that no withholding is
required with respect to the undersigned interestholder’s interest in it, the undersigned hereby
certifies the following (or, if applicable, certifies the following on behalf of the
interestholder).
Complete Either A or B:
A. Individual Interestholder
1. I am not a non-resident alien for purposes of U.S. income taxation.
2. My U.S. taxpayer identification number (Social Security Number) is .
3. My home address is
.
A-6
B. Partnership, Corporation or Other Interestholder
1.
is not a foreign corporation, foreign partnership,
foreign trust (Name of Interestholder) or foreign estate (as those terms are defined in the Code
and Treasury Regulations).
2. The interestholder’s U.S. employer identification number is .
3. The interestholder’s office address and place of incorporation (if applicable) is
.
The interestholder agrees to notify the Partnership within sixty (60) days of the date the
interestholder becomes a foreign person.
The interestholder understands that this certificate may be disclosed to the Internal Revenue
Service and the Federal Energy Regulatory Commission by the Partnership and that any false
statement contained herein could be punishable by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined this certification and, to the best
of my knowledge and belief, it is true, correct and complete and, if applicable, I further declare
that I have authority to sign this document on behalf of:
Name of Interestholder
Signature and Date
Title (if applicable)
Note: If the Assignee is a broker, dealer, bank, trust company, clearing corporation, other
nominee holder or an agent of any of the foregoing, and is holding for the account of any other
person, this application should be completed by an officer thereof or, in the case of a broker or
dealer, by a registered representative who is a member of a registered national securities exchange
or a member of the National Association of Securities Dealers, Inc., or, in the case of any other
nominee holder, a person performing a similar function. If the Assignee is a broker, dealer, bank,
trust company, clearing corporation, other nominee owner or an agent of any of the foregoing, the
above certification as to any person for whom the Assignee will hold the Common Units shall be made
to the best of the Assignee’s knowledge.
A-7
SCHEDULE I
Eligible Holders
The following are considered Eligible Holders:
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Individuals (U.S. or non-U.S.) |
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C corporations (U.S. or non-U.S.) |
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Tax exempt organizations subject to tax on unrelated business taxable income or
“UBTI,” including IRAs, 401(k) plans and Xxxxxx accounts |
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S corporations with shareholders that are individuals, trusts or tax exempt
organizations subject to tax on UBTI |
Potentially Eligible Holders
The following are considered Eligible Holders, unless the information in parenthesis applies:
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S corporations (unless they have ESOP shareholders*) |
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Partnerships (unless their partners include mutual funds, real estate investment
trusts or “REITs,” governmental entities and agencies, S corporations with ESOP
shareholders* or other partnerships with such partners) |
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Trusts (unless beneficiaries are not subject to tax) |
Non-Eligible Holders
The following are not considered Eligible Holders:
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Mutual Funds |
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REITs |
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Governmental entities and agencies |
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S corporations with ESOP shareholders* |
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* |
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“S corporations with ESOP shareholders” are S
corporations with shareholders that include employee stock ownership plans. |
X-0
Xxxxxxxx X
APPLICATION FOR TRANSFER OF COMMON UNITS
Transferees of Common Units must execute and deliver this application to El Paso Pipeline
Partners, L.P., c/o El Paso Pipeline GP Company, L.L.C., 0000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx,
00000; Attn: CFO, to be admitted as limited partners to El Paso Pipeline Partners, L.P.
The undersigned (“Assignee”) hereby applies for transfer to the name of the Assignee of the
Common Units evidenced hereby and hereby certifies to El Paso Pipeline Partners, L.P. (the
“Partnership”) that the Assignee (including to the best of Assignee’s knowledge, any person for
whom the Assignee will hold the Common Units) is an Eligible Holder.*
The Assignee (a) requests admission as a Substituted Limited Partner and agrees to comply with
and be bound by, and hereby executes, the First Amended and Restated Agreement of Limited
Partnership of El Paso Pipeline Partners, L.P., as amended, supplemented or restated to the date
hereof (the “Partnership Agreement”), (b) represents and warrants that the Assignee has all right,
power and authority and, if an individual, the capacity necessary to enter into the Partnership
Agreement, (c) appoints the General Partner of the Partnership and, if a Liquidator shall be
appointed, the Liquidator of the Partnership as the Assignee’s attorney-in-fact to execute, swear
to, acknowledge and file any document, including the Partnership Agreement and any amendment
thereto and the Certificate of Limited Partnership of the Partnership and any amendment thereto,
necessary or appropriate for the Assignee’s admission as a Substituted Limited Partner and as a
party to the Partnership Agreement, (d) gives the powers of attorney provided for in the
Partnership Agreement, and (e) makes the waivers and gives the consents and approvals contained in
the Partnership Agreement. Capitalized terms not defined herein have the meanings assigned to such
terms in the Partnership Agreement. This application constitutes a Taxation Certification, as
defined in the Partnership Agreement.
Date:
Social Security or other identifying number of Assignee
Signature of Assignee
Purchase Price including commissions, if any Name and Address of Assignee
|
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* |
|
The Term “Eligible Holder” means (a) an individual or
entity subject to United States federal income taxation on the public utility
income generated by the Partnership; or (b) an entity not subject to United
States federal taxation on the income generated by the Partnership, so long as
all of the entity’s owners are subject to United States federal taxation on the
public utility income generated by the Partnership. Individuals or entities are
subject to United States federal taxation, in the context of defining an
Eligible Holder, to the extent they are taxable on the items of income and gain
allocated by the Partnership or would be taxable on the items of income and
gain allocated by the Partnership if they had no offsetting deductions or tax
credits unrelated to the ownership of the Common Units. Schedule I hereto
contains a list of various types of investors that are categorized and
identified as either “Eligible Holders” or “Non-Eligible Holders.” |
B-1
Type of Entity (check one):
o Individual o Partnership o Corporation
o Trust o Other (specify)
If not an Individual (check one):
o the entity is subject to United States federal income taxation on the income generated by the
Partnership;
o the entity is not subject to United States federal income taxation, but it is a pass-through
entity and all of its beneficial owners are subject to United States federal income taxation on the
income generated by the Partnership; the entity is not subject to United States federal income
taxation and it is (a) not a pass-through entity or (b) a pass-through entity, but not all of its
beneficial owners are subject to United States federal income taxation on the income generated by
the Partnership. Important Note — by checking this box, the Assignee is contradicting its
certification that it is an Eligible Holder.
Nationality (check one):
o U.S. Citizen, Resident or Domestic Entity o Non-resident Alien
Foreign Corporation
If the U.S. Citizen, Resident or Domestic Entity box is checked, the following certification
must be completed.
Under Section 1445(e) of the Internal Revenue Code of 1986, as amended (the “Code”), the
Partnership must withhold tax with respect to certain transfers of property if a holder of an
interest in the Partnership is a foreign person. To inform the Partnership that no withholding is
required with respect to the undersigned interestholder’s interest in it, the undersigned hereby
certifies the following (or, if applicable, certifies the following on behalf of the
interestholder).
Complete Either A or B:
A. Individual Interestholder
1. I am not a non-resident alien for purposes of U.S. income taxation.
2. My U.S. taxpayer identification number (Social Security Number) is .
3. My home address is .
B. Partnership, Corporation or Other Interestholder
1. is not a foreign corporation, foreign partnership,
foreign trust (Name of Interestholder) or foreign estate (as those terms are defined in the Code
and Treasury Regulations).
B-2
2. The interestholder’s U.S. employer identification number is .
3. The interestholder’s office address and place of incorporation (if applicable) is
.
The interestholder agrees to notify the Partnership within sixty (60) days of the date the
interestholder becomes a foreign person.
The interestholder understands that this certificate may be disclosed to the Internal Revenue
Service and the Federal Energy Regulatory Commission by the Partnership and that any false
statement contained herein could be punishable by fine, imprisonment or both.
B-3