EXHIBIT 3.2
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CORNERSTONE PROPANE, L.P.
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS . . . . . . . . . . . . . . . . . 1
Section 1.2 CONSTRUCTION . . . . . . . . . . . . . . . . 12
ARTICLE II
ORGANIZATION
Section 2.1 FORMATION . . . . . . . . . . . . . . . . . . 12
Section 2.2 NAME . . . . . . . . . . . . . . . . . . . . 12
Section 2.3 REGISTERED OFFICE; REGISTERED AGENT;
PRINCIPAL OFFICE; OTHER OFFICES . . . . . . . 12
Section 2.4 PURPOSE AND BUSINESS . . . . . . . . . . . . 13
Section 2.5 POWERS . . . . . . . . . . . . . . . . . . . 13
Section 2.6 POWER OF ATTORNEY . . . . . . . . . . . . . . 14
Section 2.7 TERM . . . . . . . . . . . . . . . . . . . . 15
Section 2.8 TITLE TO PARTNERSHIP ASSETS . . . . . . . . . 15
ARTICLE III
RIGHTS OF LIMITED PARTNERS
Section 3.1 LIMITATION OF LIABILITY . . . . . . . . . . . 16
Section 3.2 MANAGEMENT OF BUSINESS . . . . . . . . . . . 16
Section 3.3 OUTSIDE ACTIVITIES OF THE LIMITED PARTNERS . 17
Section 3.4 RIGHTS OF LIMITED PARTNERS . . . . . . . . . 17
ARTICLE IV
TRANSFER OF PARTNERSHIP INTERESTS
Section 4.1 TRANSFER GENERALLY . . . . . . . . . . . . . 18
Section 4.2 TRANSFER OF A GENERAL PARTNER'S PARTNERSHIP
INTEREST . . . . . . . . . . . . . . . . . . 18
Section 4.3 TRANSFER OF THE LIMITED PARTNERS' PARTNERSHIP
INTERESTS . . . . . . . . . . . . . . . . . . 19
Section 4.4 RESTRICTIONS ON TRANSFERS . . . . . . . . . . 19
ARTICLE V
CONTRIBUTIONS AND INITIAL TRANSFERS
Section 5.1 INITIAL CONTRIBUTIONS . . . . . . . . . . . . 20
Section 5.2 CONTRIBUTIONS AND INITIAL TRANSFERS BY THE
GENERAL PARTNERS AND THEIR AFFILIATES . . . . 20
Section 5.3 ADDITIONAL CAPITAL CONTRIBUTIONS . . . . . . 20
Section 5.4 INTEREST AND WITHDRAWAL . . . . . . . . . . . 21
Section 5.5 CAPITAL ACCOUNTS . . . . . . . . . . . . . . 21
Section 5.6 LOANS FROM PARTNERS . . . . . . . . . . . . . 25
Section 5.7 LIMITED PREEMPTIVE RIGHTS . . . . . . . . . . 25
Section 5.8 FULLY PAID AND NON-ASSESSABLE NATURE OF
LIMITED PARTNER PARTNERSHIP INTERESTS . . . . 25
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ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
Section 6.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES . . 25
Section 6.2 ALLOCATIONS FOR TAX PURPOSES . . . . . . . . 30
Section 6.3 SPECIAL DISTRIBUTION . . . . . . . . . . . . 32
Section 6.4 GENERAL DISTRIBUTIONS . . . . . . . . . . . . 32
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
Section 7.1 MANAGEMENT . . . . . . . . . . . . . . . . . 33
Section 7.2 CERTIFICATE OF LIMITED PARTNERSHIP . . . . . 35
Section 7.3 RESTRICTIONS ON GENERAL PARTNERS' AUTHORITY . 36
Section 7.4 REIMBURSEMENT OF THE MANAGING GENERAL
PARTNER . . . . . . . . . . . . . . . . . . . 37
Section 7.5 OUTSIDE ACTIVITIES . . . . . . . . . . . . . 38
Section 7.6 LOANS FROM THE GENERAL PARTNERS; LOANS OR
CONTRIBUTIONS FROM THE PARTNERSHIP; CONTRACTS
WITH AFFILIATES; CERTAIN RESTRICTIONS ON THE
GENERAL PARTNERS . . . . . . . . . . . . . . 39
Section 7.7 INDEMNIFICATION . . . . . . . . . . . . . . . 41
Section 7.8 LIABILITY OF INDEMNITEES . . . . . . . . . . 43
Section 7.9 RESOLUTION OF CONFLICTS OF INTEREST . . . . . 44
Section 7.10 OTHER MATTERS CONCERNING THE MANAGING GENERAL
PARTNER . . . . . . . . . . . . . . . . . . . 46
Section 7.11 RELIANCE BY THIRD PARTIES . . . . . . . . . . 47
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 8.1 RECORDS AND ACCOUNTING . . . . . . . . . . . 47
Section 8.2 FISCAL YEAR . . . . . . . . . . . . . . . . . 48
ARTICLE IX
TAX MATTERS
Section 9.1 TAX RETURNS AND INFORMATION . . . . . . . . . 48
Section 9.2 TAX ELECTIONS . . . . . . . . . . . . . . . . 48
Section 9.3 TAX CONTROVERSIES . . . . . . . . . . . . . . 48
Section 9.4 WITHHOLDING . . . . . . . . . . . . . . . . . 49
ARTICLE X
ADMISSION OF PARTNERS
Section 10.1 ADMISSION OF THE GENERAL PARTNERS AND THE
MLP . . . . . . . . . . . . . . . . . . . . . 49
Section 10.2 ADMISSION OF SUBSTITUTED LIMITED PARTNERS . . 49
Section 10.3 ADMISSION OF SUCCESSOR OR TRANSFEREE GENERAL
PARTNER . . . . . . . . . . . . . . . . . . . 50
Section 10.4 ADMISSION OF ADDITIONAL LIMITED PARTNERS . . 50
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Section 10.5 AMENDMENT OF AGREEMENT AND CERTIFICATE OF
LIMITED PARTNERSHIP . . . . . . . . . . . . . 50
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
Section 11.1 WITHDRAWAL OF THE GENERAL PARTNERS . . . . . 51
Section 11.2 REMOVAL OF THE MANAGING GENERAL PARTNER . . . 53
Section 11.3 INTEREST OF DEPARTING PARTNER AND SUCCESSOR
GENERAL PARTNER . . . . . . . . . . . . . . . 53
Section 11.4 WITHDRAWAL OF THE LIMITED PARTNER . . . . . . 54
ARTICLE XII
DISSOLUTION AND LIQUIDATION
Section 12.1 DISSOLUTION . . . . . . . . . . . . . . . . . 54
Section 12.2 CONTINUATION OF THE BUSINESS OF THE
PARTNERSHIP AFTER DISSOLUTION . . . . . . . . 54
Section 12.3 LIQUIDATOR . . . . . . . . . . . . . . . . . 56
Section 12.4 LIQUIDATION . . . . . . . . . . . . . . . . . 56
Section 12.5 CANCELLATION OF CERTIFICATE OF LIMITED
PARTNERSHIP . . . . . . . . . . . . . . . . . 57
Section 12.6 RETURN OF CONTRIBUTIONS . . . . . . . . . . . 57
Section 12.7 WAIVER OF PARTITION . . . . . . . . . . . . . 57
Section 12.8 CAPITAL ACCOUNT RESTORATION . . . . . . . . . 58
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
Section 13.1 AMENDMENT TO BE ADOPTED SOLELY BY THE
MANAGING GENERAL PARTNER . . . . . . . . . . 60
Section 13.2 AMENDMENT PROCEDURES . . . . . . . . . . . . 60
ARTICLE XIV
MERGER
Section 14.1 AUTHORITY . . . . . . . . . . . . . . . . . . 60
Section 14.2 PROCEDURE FOR MERGER OR CONSOLIDATION . . . . 60
Section 14.3 APPROVAL BY LIMITED PARTNER OF MERGER OR
CONSOLIDATION . . . . . . . . . . . . . . . . 61
Section 14.4 CERTIFICATE OF MERGER . . . . . . . . . . . . 62
Section 14.5 EFFECT OF MERGER . . . . . . . . . . . . . . 62
ARTICLE XV
GENERAL PROVISIONS
Section 15.1 ADDRESSES AND NOTICES . . . . . . . . . . . . 63
Section 15.2 REFERENCES . . . . . . . . . . . . . . . . . 63
Section 15.3 FURTHER ACTION . . . . . . . . . . . . . . . 63
Section 15.4 BINDING EFFECT . . . . . . . . . . . . . . . 63
Section 15.5 INTEGRATION . . . . . . . . . . . . . . . . . 64
Section 15.6 CREDITORS . . . . . . . . . . . . . . . . . . 64
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Section 15.7 WAIVER . . . . . . . . . . . . . . . . . . . 64
Section 15.8 COUNTERPARTS . . . . . . . . . . . . . . . . 64
Section 15.9 APPLICABLE LAW . . . . . . . . . . . . . . . 64
Section 15.10 INVALIDITY OF PROVISIONS . . . . . . . . . . 64
Section 15.11 CONSENT OF PARTNERS . . . . . . . . . . . . . 64
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AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
CORNERSTONE PROPANE, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
CORNERSTONE PROPANE, L.P. dated as of December 17, 1996, is entered
into by and among Cornerstone Propane GP, Inc., a California
corporation, as the Managing General Partner, SYN Inc., a Delaware
corporation, as Special General Partner and Cornerstone Propane
Partners, L.P., a Delaware limited partnership, as 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.
"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 interest or any other
specified interest in the Partnership shall be the amount which such
Adjusted Capital Account would be if such general partner interest or
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other interest in the Partnership were the only interest in the
Partnership held by a Partner from and after the date on which such
general partner interest or other interest was first issued.
"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).
Once an Adjusted Property is deemed distributed by, and recontributed
to, the Partnership for federal income tax purposes upon a termination
thereof pursuant to Treasury Regulation Section 1.708-1(b)(1)(iv) such
property shall thereafter constitute a Contributed Property until the
Carrying Value of such property is subsequently adjusted pursuant to
Section 5.5(d)(i) or 5.5(d)(ii). Upon a termination of the
Partnership following the publication of Proposed Treasury Regulation
1.708-1(b)(1)(iv) as a final regulation, an Adjusted Property deemed
contributed to a new partnership in exchange for an interest in the
new partnership, followed by the deemed liquidation of the
Partnership, shall thereafter constitute a Contributed Property until
the Carrying Value of such property is subsequently 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.
"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, without limitation, 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 Managing General Partner using such
reasonable method of valuation as it may adopt; provided, however,
that the Agreed Value of any property deemed contributed to the
Partnership for federal income tax purposes upon termination and
reconstitution thereof pursuant to Section 708 of the Code (whether
before or after finalization of Proposed Treasury Regulation Section
1.708-1(b)(1)(iv)) shall be determined in accordance with Section
5.5(c). Subject to Section 5.5(c), the Managing General Partner shall,
in its discretion, use such method as it deems reasonable and
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.
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"Agreement" means this Amended and Restated Agreement of Limited
Partnership of Cornerstone Propane, L.P., as it may be amended,
supplemented or restated from time to time.
"Assets" means the asset being conveyed by the General Partners
and EESC, to the Partnership on the Closing Date pursuant to Section
5.2(a) and the Contribution and Conveyance Agreement.
"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.
"Assumed Liabilities" means the liabilities that the Partnership
is either assuming or taking subject in connection with the conveyance
of the Assets pursuant to Section 5.2(a) and the Contribution and
Conveyance Agreement.
"Audit Committee" means a committee of the Board of Directors of
the Managing General Partner composed entirely of two or more
directors who are neither officers nor employees of either of the
General Partners nor officers, directors or employees of any Affiliate
of the General Partners.
"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 on hand at the end of such Quarter, and (ii) all
additional cash and cash equivalents of the Partnership Group on hand
on the date of determination of Available Cash with respect to such
Quarter resulting from borrowings for working capital purposes made
subsequent to the end of such Quarter, less
(b) the amount of any cash reserves that is necessary or
appropriate in the reasonable discretion of the Managing General
Partner to (i) provide for the proper conduct of the business of the
Partnership Group (including reserves for future capital expenditures
and for the anticipated future credit needs of the Partnership Group)
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 of the MLP Agreement in respect
of any one or more of the next four Quarters; provided, however, that
the Managing General Partner may not establish cash reserves pursuant
to (iii) above if the effect of such reserves would be that the MLP is
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unable to distribute the Minimum Quarterly Distribution 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 Managing 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.
"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.
"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 states of New York or California 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 interest or any other Partnership
Interest shall be the amount which such Capital Account would be if
such general partner interest or other Partnership Interest were the
only interest in the Partnership held by a Partner from and after the
date on which such general partner interest 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 pursuant to this Agreement.
"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
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changes, additions or other adjustments to the Carrying Value for
dispositions and acquisitions of Partnership properties, as deemed
appropriate by the Managing General Partner.
"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 2.1, as such
Certificate of Limited Partnership may be amended, supplemented or
restated from time to time.
"Closing Date" means the first date on which Common Units are
sold by the MLP to the Underwriters pursuant to the provisions of the
Underwriting Agreement.
"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 successor law.
"Common Unit" has the meaning assigned to such term in the MLP
Agreement.
"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 (or deemed contributed to the
Partnership on termination and reconstitution thereof pursuant to
Section 708 of the Code whether before or after finalization of
Proposed Treasury Regulation Section 1.708-1(b)(1)(iv)). 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 and Conveyance Agreement" means that certain
Contribution, Conveyance and Assumption Agreement, dated as of the
Closing Date, among the General Partners, the Partnership, the MLP and
certain other parties, together with the additional conveyance
documents and instruments contemplated or referenced thereunder.
"Cornerstone Propane GP, Inc." means Cornerstone Propane
GP, Inc., a California corporation, which is currently the Managing
General Partner of the Partnership.
"Curative Allocation" means any allocation of an item of income,
gain, deduction, loss or credit pursuant to the provisions of Section
6.1(d)(ix).
"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.
"Departing Partner" means a former General Partner (either
Managing General Partner or Special General Partner) from and after
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the effective date of any withdrawal or removal of such former General
Partner pursuant to Section 11.1 or 11.2.
"Economic Risk of Loss" has the meaning set forth in Treasury
Regulation Section 1.752-2(a).
"EESC" means Empire Energy SC Corporation, a Delaware
corporation.
"Event of Withdrawal" has the meaning assigned to such term in
Section 11.1(a).
"General Partners" means the Managing General Partner and the
Special General Partner and their successors and permitted assigns as
general partners of the Partnership.
"Group Member" means a member of the Partnership Group.
"Indemnitee" means (a) any General Partner, any Departing Partner
and any Person who is or was an Affiliate of any General Partner or
any Departing Partner, (b) any Person who is or was a director,
officer, employee, agent or trustee of a Group Member, (c) any Person
who is or was an officer, member, partner, director, employee, agent
or trustee of any General Partner or any Departing Partner or any
Affiliate of the General Partner or any Departing Partner, or any
Affiliate of any such Person, (d) any Person who is or was serving at
the request of any General Partner or any Departing Partner or any
such Affiliate as a director, officer, employee, member, partner,
agent, 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.
"Initial Offering" means the initial offering and sale of Common
Units to the public, as described in the Registration Statement.
"Limited Partner" means any Person that is admitted to the
Partnership as a limited partner pursuant to the terms and conditions
of this Agreement; but the term Limited Partner shall not include any
Person from and after the time such Person withdraws as a Limited
Partner from the Partnership.
"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 Partners have the right to
elect to reconstitute the Partnership and continue its business 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 Managing
General Partner to perform the functions described in Section 12.3 as
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liquidating trustee of the Partnership within the meaning of the
Delaware Act.
"Managing General Partner" means Cornerstone Propane GP, Inc. and
its successors and permitted assigns as general partner of the
Partnership.
"Merger Agreement" has the meaning assigned to such term in
Section 14.1.
"Minimum Quarterly Distribution" has the meaning assigned to such
term in the MLP Agreement.
"MLP" means Cornerstone Propane Partners, L.P., a Delaware
limited partnership.
"MLP Agreement" means the Amended and Restated Agreement of
Limited Partnership of the MLP, dated December 17, 1996.
"National Securities Exchange" means an exchange registered with
the Commission under Section 6(a) of the Securities Exchange Act of
1934, as amended, supplemented or restated from time to time, and any
successor to such statute, or the Nasdaq Stock Market or any successor
thereto.
"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 determined under Section 752 of the
Code.
"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).
"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
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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).
"Net Note Proceeds" means the proceeds remaining from the
issuance of the Partnership's Notes after the Partnership repays a
portion of the Assumed Liabilities.
"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).
"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, 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 expenditures (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).
"Notes" means the $220 million of Senior Secured Notes issued by
the Partnership in a private placement in conjunction with the Initial
Offering.
"OLP Subsidiary" means a Subsidiary of the Partnership.
"Opinion of Counsel" means a written opinion of counsel (who may
be regular counsel to the Partnership or the General Partners or any
of their Affiliates) acceptable to the Managing General Partner in its
reasonable discretion.
"Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(4).
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"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, without limitation, 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 Partners and the Limited Partner.
"Partnership" means Cornerstone Propane, L.P., a Delaware limited
partnership, and any successors thereto.
"Partnership Group" means the Partnership and the OLP
Subsidiaries, treated as a single consolidated entity.
"Partnership Interest" means an ownership interest of a Partner
in the Partnership.
"Partnership Minimum Gain" means that amount determined in
accordance with the principles of Treasury Regulation Section
1.704-2(d).
"Percentage Interest" means (a) as to the General Partners (in
their capacity as general partners of the Partnership) 1.0101% and (b)
as to the Limited Partner 98.9899%.
"Person" means an individual or a corporation, limited liability
company, partnership, joint venture, trust, unincorporated
organization, association, government agency or political subdivision
thereof or other entity.
"Pro Rata" means when modifying the General Partners, apportioned
76.8645% to the Managing General Partner and 23.1355% to the Special
General Partner, provided, however, to the extent an allocation of
losses pursuant to Section 6.1(b) or Section 6.1(c)(ii) would cause
the Special General Partner to have a deficit balance in its Adjusted
Capital Account at the end of such taxable year (or increase any
existing deficit in its Adjusted Capital Account), then Pro Rata shall
mean 100% to the Managing General Partner and zero to the Special
General Partner.
"Quarter" means, unless the context requires otherwise, a fiscal
quarter of the Partnership.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Sections 734 or
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.
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"Registration Statement" means the Registration Statement on Form
S-1 (Registration No. 333-13879) as it has been or as it may be
amended or supplemented from time to time, filed by the MLP with the
Commission under the Securities Act to register the offering and sale
of the Common Units in the Initial Offering.
"Required Allocations" means (a) any limitation imposed on any
allocation of Net Losses or Net Termination Losses under Section
6.1(b) or 6.1(c)(ii) and (b) any allocation of an item of income,
gain, loss or deduction pursuant to Section 6.1(d)(i), 6.1(d)(ii),
6.1(d)(iv), 6.1(d)(vii) or 6.1(d)(ix).
"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 6.2(b)(ii)(A), respectively, to eliminate Book-Tax
Disparities.
"Securities Act" means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to such
statute.
"Special Approval" means approval by a majority of the members of
the Audit Committee.
"Special General Partner" mean SYN and it successors and assigns
as special general partner of the Partnership.
"Subordinated Unit" has the meaning assigned to such term in the
MLP Agreement.
"Subordination Period" has the meaning assigned to such term in
the MLP Agreement.
"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
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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).
"SYN" means SYN Inc., a Delaware corporation.
"Transfer" has the meaning assigned to such term in Section
4.1(a).
"Underwriter" means each Person named as an underwriter in
Schedule I to the Underwriting Agreement who purchases Common Units
pursuant thereto.
"Underwriting Agreement" means the Underwriting Agreement dated
December 11, 1996, among the Underwriters, the MLP and certain other
parties, providing for the purchase of Common Units by such
Underwriters.
"Unit" has the meaning assigned to such term in the MLP
Agreement.
"Unit Majority" has the meaning assigned to such term in the MLP
Agreement.
"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)).
"U.S. GAAP" means United States Generally Accepted Accounting
Principles consistently applied.
"Withdrawal Opinion of Counsel" has the meaning assigned to such
term in Section 11.1(b).
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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; and
(c) "include" or "includes" means includes, without limitation, and
"including" means including, without limitation.
ARTICLE II
ORGANIZATION
Section 2.1 FORMATION.
The Managing 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
Cornerstone Propane 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 "Cornerstone Propane, L.P."
The Partnership's business may be conducted under any other name or
names deemed necessary or appropriate by the Managing General Partner
in its sole discretion, including the name of the Managing General
Partner. The words "Limited Partnership," "L.P.," "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 Managing General Partner in its
discretion may change the name of the Partnership at any time and from
time to time and shall notify the Limited Partner 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 Managing General Partner, the
registered office of the Partnership in the State of Delaware shall be
located at 0000 Xxxxxx Xxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxxxx, 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
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Partnership shall be located at 000 Xxxxxxxxx Xxxxx, Xxxxxxxxxxx,
Xxxxxxxxxx 00000 or such other place as the Managing 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 Managing General Partner deems
necessary or appropriate. The address of the Managing General Partner
shall be 000 Xxxxxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxxx 00000 or such
other place as the Managing 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) acquire, manage and operate the Assets and
any similar assets or properties, (b) engage directly in, or enter
into or form any corporation, partnership, joint venture, limited
liability company or other arrangement to engage indirectly in, any
type of business or activity engaged in by the General Partners and
their predecessors prior to the Closing Date 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, (c) engage directly in, or enter into or form any
corporation, partnership, joint venture, limited liability company or
other arrangement to engage indirectly in, any business activity that
is approved by the Managing General Partner and which 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; provided, however, that the
Managing General Partner reasonably determines, as of the date of the
acquisition or commencement of such activity, that such activity
(i) generates "qualifying income" (as such term is defined pursuant to
Section 7704 of the Code) or (ii) enhances the operations of an
activity of the Partnership that generates qualifying income, and
(d) do anything necessary or appropriate to the foregoing, including
the making of capital contributions or loans to a Group Member, the
MLP or any Subsidiary of the MLP. The Managing General Partner has no
obligation or duty to the Partnership, the Limited Partners, or the
Assignees to propose or approve, and in its discretion may decline to
propose or approve, the conduct by the Partnership of any business.
Section 2.5 POWERS.
The Partnership shall be empowered to do any and all acts and
things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and
business described in Section 2.4 and for the protection and benefit
of the Partnership.
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Section 2.6 POWER OF ATTORNEY.
(a) The Special General Partner, each Limited Partner and
each Assignee hereby constitutes and appoints the Managing General
Partner and, if a Liquidator shall have been selected pursuant to
Section 12.3, the Liquidator, severally (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 Managing General Partner
or the Liquidator deems 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 Managing General Partner or the
Liquidator deems 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 Managing General Partner or the Liquidator
deems 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, X, XI or 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) relating to a merger or
consolidation of the Partnership pursuant to Article XIV; and
(ii) execute, swear to, acknowledge, deliver, file and
record all ballots, consents, approvals, waivers, certificates,
documents and other instruments necessary or appropriate, in the
discretion of the Managing General Partner or the Liquidator, to
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 is necessary or appropriate, in the discretion of
the Managing General Partner or the Liquidator, to effectuate the
terms or intent of this Agreement; provided, that when required
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by any 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 Managing 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 Managing 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 Special
General Partner's, Limited Partner's or Assignee's Partnership
Interest and shall extend to such Special General Partner's, Limited
Partner's or Assignee's heirs, successors, assigns and personal
representatives. Each such Special General Partner, Limited Partner or
Assignee hereby agrees to be bound by any representation made by the
Managing General Partner or the Liquidator acting in good faith
pursuant to such power of attorney; and each such Special General
Partner, 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 Managing General
Partner or the Liquidator taken in good faith under such power of
attorney. Each Special General Partner, Limited Partner or Assignee
shall execute and deliver to the Managing 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
Managing General Partner or the Liquidator deems necessary 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 close of Partnership
business on December 31, 2086 or until the earlier 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
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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, a General Partner,
one or more of its Affiliates or one or more nominees, as the Managing
General Partner may determine. The General Partners hereby declare
and warrant that any Partnership assets for which record title is held
in the name of a General Partner or one or more of its Affiliates or
one or more nominees shall be held by such 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 such General Partner shall use reasonable efforts to cause record
title to such assets (other than those assets in respect of which the
Managing 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 such General Partner or as soon thereafter as practicable,
such 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 Managing 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.
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 Managing General Partner or any officer,
director, employee, member, general partner, agent or trustee of the
Managing General Partner or any of its Affiliates, or any officer,
director, employee, member, general partner or agent or trustee of a
Group Member, the MLP or any Subsidiary of the MLP, 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
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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, which shall continue to
be applicable to the Persons referred to therein, regardless of
whether such Persons shall also be Limited Partners or Assignees, 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 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 becoming available, to obtain a
copy of the Partnership's federal, state and local income tax
returns for each year;
(iii) to have furnished to him a current list of
the name and last known business, residence or mailing address of
each Partner;
(iv) to have furnished to him a copy of this Agreement
and the Certificate of Limited Partnership and all amendments
thereto, together with a copy 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 which
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.
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(b) The General Partners may keep confidential from the
Limited Partners and Assignees, for such period of time as the
Managing General Partner deems reasonable, (i) any information that
the Managing General Partner reasonably believes to be in the nature
of trade secrets or (ii) other information the disclosure of which the
Managing General Partner in good faith believes (A) is not in the best
interests of the MLP or the Partnership Group, (B) could damage the
MLP or the Partnership Group or (C) that the MLP or 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
TRANSFER OF PARTNERSHIP INTERESTS
Section 4.1 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 by which a Partner assigns its Partnership Interest to
another Person, and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other
disposition by law or otherwise.
(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 null and void.
(c) Nothing contained in this Agreement shall be construed
to prevent a disposition by any shareholder of a General Partner of
any or all of the issued and outstanding capital stock of a General
Partner.
Section 4.2 TRANSFER OF A GENERAL PARTNER'S PARTNERSHIP INTEREST.
If a General Partner transfers its Partnership Interest as the
general partner of the MLP to any Person in accordance with the
provisions of the MLP Agreement, such General Partner shall
contemporaneously therewith transfer all, but not less than all, of
its Partnership Interest as the general partner of the Partnership to
such Person, and the Limited Partners hereby expressly consent to such
transfer. Except as set forth in the immediately preceding sentence
and in Section 5.2, a General Partner may not transfer all or any part
of its Partnership Interest as the general partner of the Partnership;
provided, however, that this provision shall not preclude or limit a
General Partner's ability to mortgage, pledge, hypothecate or grant a
security interest in its Partnership Interest as the General Partner
of the Partnership and shall not prevent any forced sale of any or all
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of its Partnership Interest as the General Partner of the Partnership
pursuant to the foreclosure of, or other realization upon, any such
encumbrance.
Section 4.3 TRANSFER OF THE LIMITED PARTNERS' PARTNERSHIP
INTERESTS.
Any Limited Partner may transfer all, but not less than all, of
its Partnership Interest as a limited partner of the Partnership in
connection with the merger, consolidation or other combination of any
of the Limited Partners with or into any other Person or the transfer
by any of the Limited Partners of all or substantially all of its
assets to another Person, and following any such transfer such Person
may become a Substituted Limited Partner pursuant to Article X.
Except as set forth in the immediately preceding sentence and in
Section 5.2, or in connection with any pledge of (or any related
foreclosure on) the Limited Partner's Partnership Interest as a
limited partner of the Partnership solely for the purpose of securing,
directly or indirectly, indebtedness of the Partnership or the MLP,
and except for the transfers contemplated by Sections 5.2 and 10.1, a
Limited Partner may not transfer all or any part of its Partnership
Interest or withdraw from the Partnership.
Section 4.4 RESTRICTIONS ON TRANSFERS.
(a) Notwithstanding the other provisions of this Article
IV, no transfer of any Partnership Interest 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 or the MLP under the laws of the
jurisdiction of its formation or (iii) cause the Partnership or the
MLP 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 Managing General Partner may impose restrictions on
the transfer of Partnership Interests if a subsequent Opinion of
Counsel determines that such restrictions are necessary to avoid a
significant risk of the Partnership or the MLP becoming taxable as a
corporation or otherwise to be taxed as an entity for federal income
tax purposes. The restrictions may be imposed by making such
amendments to this Agreement as the Managing General Partner may
determine to be necessary or appropriate to impose such restrictions.
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ARTICLE V
CONTRIBUTIONS AND INITIAL TRANSFERS
Section 5.1 INITIAL CONTRIBUTIONS.
In connection with the formation of the Partnership under the
Delaware Act, the Managing General Partner made an initial Capital
Contribution to the Partnership in the amount of $10.10 in exchange
for an interest in the Partnership and has been admitted as a general
partner of the Partnership, and the MLP made an initial Capital
Contribution to the Partnership in the amount of $989.90 in exchange
for an interest in the Partnership and has been admitted as a limited
partner of the Partnership.
Section 5.2 CONTRIBUTIONS AND INITIAL TRANSFERS BY THE GENERAL
PARTNERS AND THEIR AFFILIATES.
On the Closing Date, pursuant to, and subject to the conditions
of, the Contribution and Conveyance Agreement, the following
transactions shall occur in the following order:
(a) The General Partners and ESSC shall convey the Assets
to the Partnership. In exchange, the Partnership shall (A) continue
the General Partners' 1.0101% general partner interest in the
Partnership, (B) issue to the General Partners and EESC a 98.9899%
limited partner interest in the Partnership and (C) assume the Assumed
Liabilities. The Managing General Partner's interest in 1.0101% in
the general partner described in (A) above shall be 76.8645%
(representing a .7764% Managing General Partner interest) and the
remaining 23.1355% belongs to the Special General Partner
(representing a .2337% Special General Partner interest). The
Managing General Partner and EESC shall share their combined 76.8645%
of the 98.9899% limited partner interest based on the relative Net
Agreed Value of the Property each contributed for such interest.
(b) The General Partners and EESC shall transfer all of
their limited partner interest in the Partnership to the MLP in
exchange for the consideration provided for in the Contribution and
Conveyance Agreement.
Section 5.3 ADDITIONAL CAPITAL CONTRIBUTIONS.
With the consent of the Managing General Partner, any Limited
Partner may, but shall not be obligated to, make additional Capital
Contributions to the Partnership. Contemporaneously with the making
of any Capital Contributions by a Limited Partner in addition to those
provided in Sections 5.1 and 5.2, the General Partners shall be
obligated to make an additional combined Capital Contribution to the
Partnership in an amount equal to 1.0101 divided by 98.9899 of the Net Agreed
Value of the additional Capital Contribution then made by such Limited
Partner. Each General Partner shall contribute its Pro Rata share of
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such additional combined Capital Contribution. Except as set forth in
the immediately preceding sentence and Article XII, the General
Partners shall not be obligated to make any additional Capital
Contributions to the Partnership.
Section 5.4 INTEREST AND WITHDRAWAL.
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 termination 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 and 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 Managing General Partner in its sole
discretion) 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 pursuant
to this Agreement and (ii) all items of Partnership income and gain
(including, without limitation, 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 pursuant to this Agreement 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.
(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, without limitation, any
method of depreciation, cost recovery or amortization used for that
purpose), provided, that:
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(i) Solely for purposes of this Section 5.5, the
Partnership shall be treated as owning directly its proportionate
share (as determined by the Managing General Partner) of all
property owned by any OLP Subsidiary that is classified as a
partnership for federal income tax purposes.
(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
(A) as if the adjusted basis of such property were equal to the
Carrying Value of such property immediately following such
adjustment and (B) using a rate of depreciation, cost recovery or
amortization derived from the same method and useful life (or, if
applicable, the remaining useful life) as is applied for federal
income tax purposes; provided, however, that, if the asset has a
zero adjusted basis for federal income tax purposes,
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depreciation, cost recovery or amortization deductions shall be
determined using any reasonable method that the Managing General
Partner may adopt.
(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) 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; provided, however, that if
the transfer causes a termination of the Partnership under Section
708(b)(1)(B) of the Code, the Partnership's properties and liabilities
shall be deemed (i) to have been distributed in liquidation of the
Partnership to the Partners (including any transferee of a Partnership
Interest that is a party to the transfer causing such termination)
pursuant to Section 12.4 (after adjusting the balance of the Capital
Accounts of the Partners as provided in Section 5.5(d)(ii) and
recontributed by such Partners in reconstitution of the Partnership or
(ii) in the event of a termination of the Partnership that occurs
after the finalization of Proposed Treasury Regulation Section 1.704-
1(b)(1)(iv), to have been contributed to a new partnership which will
be deemed to make liquidating distributions of the interests in this
new partnership to the Partners (including any transferee of a
Partnership Interest that is a party to the transfer causing such
termination) pursuant to Section 12.4 (after adjusting the balance of
the Capital Accounts of the Partners as provided in Section
5.5(d)(ii)). Any such deemed distribution and contribution, in the
case of a characterization under clause (i) of the preceding sentence,
or any such deemed contribution and distribution, in the case of a
characterization under clause (ii) of the preceding sentence, shall be
treated as an actual contribution and distribution for purposes of
this Section 5.5. In such event, the Carrying Values of the
Partnership's properties shall be adjusted immediately prior to such
deemed distribution and contribution, or deemed contribution and
distribution, pursuant to Treasury Regulation Section 1.704-
1(b)(2)(iv) and this Section 5.5 and such Carrying Values shall then
constitute the Agreed Values of such properties upon such deemed
contribution to the new partnership. In either case, the Capital
Accounts of the new partnership that results under the applicable
characterization shall be maintained in accordance with the principles
of this Section 5.5.
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(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 or the
conversion of the General Partners' Combined Interest to Common
Units pursuant to Section 11.3(a) (or upon the occurance of any
other event listed in such regulation), the Capital Account of
all Partners and the Carrying Value of each Partnership property
immediately prior to such issuance shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as if such Unrealized
Gain or Unrealized Loss had been recognized on an actual sale of
each such property immediately prior to such issuance and had
been allocated to the Partners at such time pursuant to
Section 6.1 in the same manner as any item of gain or loss
actually recognized during such period would have to be
allocated. In determining such Unrealized Gain or Unrealized
Loss, the aggregate cash amount and fair market value of all
Partnership assets (including, without limitation, cash or cash
equivalents) immediately prior to the issuance of additional
Partnership Interests shall be determined by the Managing General
Partner using such reasonable method of valuation as it may
adopt; provided, however, that the Managing 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 Managing General Partner shall allocate such aggregate
value among the assets of the Partnership (in such manner as it
determines in its discretion to be reasonable) to arrive at a
fair market value for individual properties.
(ii) In accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), immediately prior to any actual or
deemed distribution to a Partner of any Partnership property
(other than a distribution of cash that is not in redemption or
retirement of a Partnership Interest), the Capital Accounts of
all Partners and the Carrying Value of all Partnership property
shall be adjusted upward or downward to reflect any Unrealized
Gain or Unrealized Loss attributable to such Partnership
property, as if such Unrealized Gain or Unrealized Loss had been
recognized 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 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, without limitation, cash or cash equivalents)
immediately prior to a distribution shall (A) in the case of an
actual distribution which is not made pursuant to Section 12.4 or
in the case of a deemed contribution and/or distribution
occurring as a result of a termination of the Partnership
pursuant to Section 708 of the Code, be determined and allocated
in the same manner as that provided in Section 5.5(d)(i) or
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(B) in the case of a liquidating distribution pursuant to
Section 12.4, be determined and allocated by the Liquidator using
such reasonable method of valuation as it may adopt.
Section 5.6 LOANS FROM PARTNERS.
Loans by a Partner to the Partnership shall not constitute
Capital Contributions. If any Partner shall advance funds to the
Partnership in excess of the amounts required hereunder to be
contributed by it to the capital of the Partnership, the making of
such excess advances shall not result in any increase in the amount of
the Capital Account of such Partner. The amount of any such excess
advances shall be a debt obligation of the Partnership to such Partner
and shall be payable or collectible only out of the Partnership assets
in accordance with the terms and conditions upon which such advances
are made.
Section 5.7 LIMITED PREEMPTIVE RIGHTS.
Except as provided in Section 5.3, no Person shall have
preemptive, preferential or other similar rights with respect to (a)
additional Capital Contributions; (b) issuance or sale of any class or
series of Partnership Interests, whether unissued, held in the
treasury or hereafter created; (c) issuance of any obligations,
evidences of indebtedness or other securities of the Partnership
convertible into or exchangeable for, or carrying or accompanied by
any rights to receive, purchase or subscribe to, any such Partnership
Interests; (d) issuance of any right of subscription to or right to
receive, or any warrant or option for the purchase of, any such
Partnership Interests; or (e) issuance or sale of any other securities
that may be issued or sold by the Partnership.
Section 5.8 FULLY PAID AND NON-ASSESSABLE NATURE OF LIMITED PARTNER
PARTNERSHIP INTERESTS.
All Limited Partner Partnership Interests issued pursuant to, and
in accordance with the requirements of, this Article V shall be fully
paid and non-assessable Limited Partner Partnership Interests in the
Partnership, except as such non-assessability may be affected by
Section 17-607 of the Delaware Act.
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 Partners, Pro Rata,
until the aggregate Net Income allocated to the General Partners
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 Partners pursuant to Section
6.1(b)(ii) for all previous taxable years;
(ii) Second, 1.0101% to the General Partners, Pro Rata,
and 98.9899% to the Limited Partners, in accordance with their
respective Percentage Interests.
(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, 1.0101% to the General Partners, Pro Rata,
and 98.9899% to the Limited Partners, in accordance with their
respective Percentage Interests; provided, that Net Losses shall
not be allocated pursuant to this Section 6.1(b)(i) to the extent
that such allocation would cause a Limited Partner 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, the balance, if any, 100% to the General
Partners, Pro Rata.
(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
have been made with respect to the taxable period ending on or before
the Liquidation Date; 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 between the General Partners, Pro Rata, and
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the Limited 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; and
(B) Second, 100% to the General Partners, Pro
Rata, and the Limited Partners in accordance with their
respective Percentage Interests.
(ii) If a Net Termination Loss is recognized (or deemed
recognized pursuant to Section 5.5(d)), such Net Termination Loss
shall be allocated to the Partners in the following manner:
(A) First, 100% to the General Partners, Pro
Rata, and the Limited Partners in proportion to, and to the
extent of, the positive balances in their respective Capital
Accounts; and
(B) Second, the balance, if any, 100% to the
General Partners, Pro Rata.
(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 Sections 6.1(d)(v) and 6.1(d)(vi)). 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.
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(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 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
Sections 6.1(d)(v) and 6.1(d)(vi), 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) 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 (ii).
(iv) 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 gross income and gain in the
amount of such excess as quickly as possible; provided, that an
allocation pursuant to this Section 6.1(d)(iv) 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)(iv) were not in this
Agreement.
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(v) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for
any taxable period shall be allocated to the Partners in
accordance with their respective Percentage Interests. If the
Managing General Partner determines in its good faith discretion
that the Partnership's Nonrecourse Deductions must 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 Managing 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.
(vi) 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.
(vii) NONRECOURSE LIABILITIES. For purposes of
Treasury Regulation Section 1.752-3(a)(3), the Partners agree
that Nonrecourse Liabilities of the Partnership in excess 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.
(viii) 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(c) 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.
(ix) 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
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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)(ix)(A) shall only be made with
respect to Required Allocations to the extent the Managing
General Partner reasonably determines that such allocations
will otherwise be inconsistent with the economic agreement
among the Partners. Further, allocations pursuant to this
Section 6.1(d)(ix)(A) shall be deferred with respect to
allocations pursuant to clauses (1) and (2) hereof to the
extent the Managing General Partner reasonably determines
that such allocations are likely to be offset by subsequent
Required Allocations.
(B) The Managing General Partner shall have reasonable
discretion, with respect to each taxable period, to (1)
apply the provisions of Section 6.1(d)(ix)(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)(ix)(A) among the Partners in a manner that is likely
to minimize such economic distortions.
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
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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 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 Managing General Partner shall apply the
principles of Treasury Regulation Section 1.704-3(d) to eliminate
Book-Tax Disparities.
(c) For the proper administration of the Partnership and
for the preservation of uniformity of the Units or other limited
partner interests of the MLP (or any class or classes thereof), the
Managing General Partner shall have sole discretion to (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, without limitation, 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 Units or other limited partner interests of
the MLP (or any class or classes thereof). The Managing 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 Units or other limited partner interests of the
MLP issued and Outstanding or the Partnership, and if such allocations
are consistent with the principles of Section 704 of the Code.
(d) The Managing General Partner in its discretion 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 Proposed Treasury Regulation Section 1.168-2(n),
Treasury Regulation Section 1.167(c)-l(a)(6) or the legislative
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history of Section 197 of the Code. If the Managing General Partner
determines that such reporting position cannot reasonably be taken,
the Managing General Partner may adopt depreciation and amortization
conventions under which all purchasers acquiring Limited Partner
Interests of the MLP 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 Managing General Partner chooses not to utilize such aggregate
method, the Managing General Partner may use any other reasonable
depreciation and amortization conventions to preserve the uniformity
of the intrinsic tax characteristics of any Limited Partner Interests
of the MLP that would not have a material adverse effect on the
Limited Partners or the holders of any class or classes of Limited
Partner Interests of the MLP.
(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 which may be made by the Partnership; provided, however,
that such allocations, once made, shall be adjusted as necessary or
appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
(g) The Managing General Partner may adopt such methods of
allocation of income, gain, loss or deduction between a transferor and
a transferee of a Partnership Interest as it determines necessary, to
the extent permitted or required by Section 706 of the Code and the
regulations or rulings promulgated thereunder.
Section 6.3 SPECIAL DISTRIBUTION.
Immediately following the Note Offering, the Partnership shall,
subject to Section 17-607 of the Delaware Act, distribute (i) to the
Special General Partner $77,320,851 of the Net Note Proceeds and (ii)
to the Managing General Partner the balance of the Net Note Proceeds
(approximately $2,074,000).
Section 6.4 GENERAL DISTRIBUTIONS.
(a) Within 45 days following the end of each Quarter
commencing with the Quarter ending on March 31, 1997, an amount equal
to 100% of Available Cash with respect to such Quarter shall, subject
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to Section 17-607 of the Delaware Act, be distributed in accordance
with this Article VI by the Partnership to the Partners in accordance
with their respective Percentage Interests. The immediately preceding
sentence shall not require any distribution of cash if and to the
extent such distribution would be prohibited by applicable law or by
any loan agreement, security agreement, mortgage, debt instrument or
other agreement or obligation to which the Partnership is a party or
by which it is bound or its assets are subject. All distributions
required to be made under this Agreement shall be made subject to
Section 17-607 of the Delaware Act.
(b) 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, other than from borrowings
described in (a)(ii) of the definition of Available Cash, shall be
applied and distributed solely in accordance with, and subject to the
terms and conditions of, Section 12.4.
(c) The Managing General Partner shall have the discretion
to 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.
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
Section 7.1 MANAGEMENT.
(a) The Managing 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 Managing General Partner, neither the Special General Partner nor
any 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 which are granted to the Managing General
Partner under any other provision of this Agreement, the Managing
General Partner, subject to Section 7.3, shall have full power and
authority to do all things and on such terms as it, in its sole
discretion, may deem 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 Interests, and the incurring of any
other obligations;
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(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);
(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) the lending of funds to other Persons (including the MLP,
the General Partners and their Affiliates), the repayment of
obligations of the Partnership, the MLP or Partnership Group and
the making of capital contributions to any member of the
Partnership Group;
(v) the negotiation, execution and performance of any
contracts, conveyances or other instruments (including
instruments that limit the liability of the Partnership under
contractual arrangements to all or particular assets of the
Partnership, with the other party to the contract to have no
recourse against the General Partners or their assets other than
their 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 such insurance for the
benefit of the Partnership Group and the Partners (including the
assets of the Partnership) as it deems necessary or appropriate;
(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 or other relationships subject to the restrictions
set forth in Section 2.4;
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(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 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;
(b) Notwithstanding any other provision of this Agreement,
the MLP Agreement, the Delaware Act or any applicable law, rule or
regulation, each of the Partners hereby (i) approves, ratifies and
confirms the execution, delivery and performance by the parties
thereto of the MLP Agreement, the Underwriting Agreement, the
Contribution and Conveyance Agreement, the agreements and other
documents filed as exhibits to the Registration Statement, and the
other agreements described in or filed as a part of the Registration
Statement; (ii) agrees that the Managing 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; and (iii) agrees that the execution, delivery or performance
by the General Partners, the MLP, 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 Managing
General Partner or any Affiliate of the Managing General Partner of
the rights accorded pursuant to Article XV), shall not constitute a
breach by the Managing General Partner of any duty that the General
Partners may owe the Partnership or the Limited Partners or the
Assignees or any other Persons under this Agreement (or any other
agreements) or of any duty stated or implied by law or equity.
Section 7.2 CERTIFICATE OF LIMITED PARTNERSHIP.
The Managing 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 and shall use all
reasonable efforts to cause to be filed such other certificates or
documents as may be determined by the Managing General Partner in its
sole discretion to be reasonable and 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 that such action is determined by the Managing General Partner
in its sole discretion to be reasonable and necessary or appropriate,
the Managing 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)
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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 Managing 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 or Assignee.
Section 7.3 RESTRICTIONS ON GENERAL PARTNERS' AUTHORITY.
(a) The Managing General Partner may not, without written
approval of the specific act by the Limited Partner or by other
written instrument executed and delivered by the Limited Partner
subsequent to the date of this Agreement, take any action in
contravention of this Agreement, including, except as otherwise
provided in this Agreement, (i) committing any act that would make it
impossible to carry on the ordinary business of the Partnership;
(ii) possessing Partnership property, or assigning any rights in
specific Partnership property, for other than a Partnership purpose;
(iii) admitting a Person as a Partner; (iv) amending this Agreement in
any manner; or (v) transferring its interest as general partner of the
Partnership.
(b) Except as provided in Articles XII and XIV, the
Managing General Partner may not sell, exchange or otherwise dispose
of all or substantially all of the Partnership's assets in a single
transaction or a series of related transactions or approve on behalf
of the Partnership the sale, exchange or other disposition of all or
substantially all of the assets of the Partnership, without the
approval of the Limited Partners; provided however that this provision
shall not preclude or limit the Managing General Partner's ability to
mortgage, pledge, hypothecate or grant a security interest in all or
substantially all of the assets of the Partnership and shall not apply
to any forced sale of any or all of the assets of the Partnership
pursuant to the foreclosure of, or other realization upon, any such
encumbrance. Without the approval of holders of at least a Unit
Majority, the Managing General Partner shall not, on behalf of the
MLP, (i) consent to any amendment to this Agreement or, except as
expressly permitted by Section 7.9(d) of the MLP Agreement, take any
action permitted to be taken by a partner of the Partnership, in
either case, that would have a material adverse effect on the MLP as a
partner of the Partnership or (ii) except as permitted under
Sections 4.6, 11.1 and 11.2 of the MLP Agreement, elect or cause the
MLP to elect a successor general partner of the Partnership.
(c) At all times while serving as a General Partner of the
Partnership, each of the General Partners shall not make any dividend
or distribution on, or repurchase any shares of, its stock or take any
other action within its control if the effect of such action would
cause their combined net worth, independent of their interest in the
Partnership Group, to be less than $15.0 million or such lower amount,
which lower amount is based on an Opinion of Counsel that states,
(i) based on a change in the position of the Internal Revenue Service
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with respect to partnership status pursuant to Code Section 7701, such
lower amount would not cause the Partnership or the MLP to be treated
as an association taxable as a corporation or otherwise to be taxed as
an entity for federal income tax purposes and (ii) would not result in
the loss of the limited liability of any Limited Partner.
Section 7.4 REIMBURSEMENT OF THE MANAGING GENERAL PARTNER.
(a) Except as provided in this Section 7.4 and elsewhere in
this Agreement or in the MLP Agreement, the Managing General Partner
shall not be compensated for its services as general partner of the
MLP or any Group Member.
(b) The Managing General Partner shall be reimbursed on a
monthly basis, or such other reasonable basis as the Managing General
Partner may determine in its sole discretion, for (i) all direct and
indirect expenses it incurs or payments it makes on behalf of the
Partnership (including salary, bonus, incentive compensation and other
amounts paid to any Person including Affiliates of the Managing
General Partner to perform services for the Partnership or for the
Managing General Partner in the discharge of its duties to the
Partnership), and (ii) all other necessary or appropriate expenses
allocable to the Partnership or otherwise reasonably incurred by the
Managing General Partner in connection with operating the
Partnership's business (including expenses allocated to the Managing
General Partner by its Affiliates). The Managing General Partner shall
determine the expenses that are allocable to the Partnership in any
reasonable manner determined by the Managing General Partner in its
sole discretion. Reimbursements pursuant to this Section 7.4 shall be
in addition to any reimbursement to the Managing General Partner as a
result of indemnification pursuant to Section 7.7.
(c) Subject to Section 5.7, the Managing General Partner,
in its sole discretion and 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, or cause the Partnership to
issue partnership securities, in connection with, pursuant to any
employee benefit plan, employee program or employee practice
maintained or sponsored by the Managing General Partner or any of its
Affiliates, in each case for the benefit of employees of the Managing
General Partner, any Group Member or any Affiliate, or any of them, in
respect of services performed, directly or indirectly, for the benefit
of the Partnership Group. Expenses incurred by the Managing General
Partner in connection with any such plans, programs and practices
shall be reimbursed in accordance with Section 7.4(b). Any and all
obligations of the Managing General Partner under any employee benefit
plans, employee programs or employee practices adopted by the Managing
General Partner as permitted by this Section 7.4(c) shall constitute
obligations of the Managing General Partner hereunder and shall be
assumed by any successor Managing General Partner approved pursuant to
Section 11.1 or 11.2 or the transferee of or successor to all of the
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Managing General Partner's Partnership Interest as a general partner
in the Partnership pursuant to Section 4.2.
Section 7.5 OUTSIDE ACTIVITIES.
(a) After the Closing Date, the Managing General Partner,
for so long as it is the Managing General Partner of the Partnership
(i) agrees that its sole business will be to act as a general partner
of the Partnership, the MLP, and any other partnership of which the
Partnership or the MLP is, directly or indirectly, a partner and to
undertake activities that are ancillary or related thereto (including
being a limited partner in the MLP), (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 of the MLP or one or more Group Members or as described in or
contemplated by the Registration Statement or (B) the acquiring,
owning or disposing of debt or equity securities in the MLP or any
Group Member and (iii) shall not engage in the retail sale of propane
to end users in the continental United States. Except as provided in
this Section 7.5(a) with respect to the retail sale of propane to end
users in the continental United States, nothing herein contained in
this paragraph shall prohibit an Affiliate of the Managing General
Partner (including the Special General Partner) from competing with
the Partnership.
Affiliates of the Managing General Partner (including the Special
General Partner) may engage in a business activity that involves the
retail sales of propane to end users in the continental United States
only if (i) the Managing General Partner determines in its reasonable
judgment, prior to the commencement of such activity, that it is not
in the best interests of the Partnership to engage in such activity
either (A) because of the financial commitments or operating
characteristics associated with such activity or (B) because such
activity is not consistent with the Partnership's business strategy or
cannot otherwise be integrated with the Partnership's operations on a
beneficial basis to the Partnership or (ii) such activity is being
undertaken as provided in a joint venture agreement or other agreement
between the Partnership and an Affiliate of a General Partner and such
joint venture or other agreement was determined at the time it was
entered into to be fair to the Partnership in the reasonable judgment
of the Managing General Partner.
(b) Except as specifically restricted by Section 7.5(a),
each Indemnitee 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 the MLP or any Group Member, independently or with
others, including business interests and activities in direct
competition with the business and activities of the MLP or any Group
Member, and none of the same shall constitute a breach of this
Agreement or any duty express or implied by law to the MLP or any
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Group Member or any Partner or Assignee. Neither the MLP, any Group
Member, any Limited Partner nor any other Person shall have any rights
by virtue of this Agreement, the MLP Agreement or the partnership
relationship established hereby or thereby in any business ventures of
any Indemnitee.
(c) Subject to the terms of Section 7.5(a) and (b), but
otherwise notwithstanding anything to the contrary in this Agreement,
(i) the engaging in competitive activities by any Indemnitees (other
than the Managing General Partner) in accordance with the provisions
of this Section 7.5 is hereby approved by the Partnership and all
Partners and (ii) it shall be deemed not to be a breach of the
Managing General Partner's fiduciary duty or any other obligation of
any type whatsoever of the General Partners for the Indemnitees (other
than the Managing General Partner) to engage in such business
interests and activities in preference to or to the exclusion of the
Partnership (including, without limitation, the Managing General
Partner and the Indemnities shall have no obligation to present
business opportunities to the Partnership).
(d) The Managing General Partner and any of its Affiliates
may acquire Units or other Partnership Securities (as defined in the
MLP Agreement) of the MLP in addition to those acquired on the Closing
Date and, except as otherwise provided in this Agreement, shall be
entitled to exercise all rights of a General Partner or Limited
Partner, as applicable, relating to such Units or Partnership
Securities of the MLP.
(e) The term "Affiliates" when used in Section 7.5(a) and
Section 7.5(b) with respect to the Managing General Partner shall not
include the MLP, any Group Member or any Subsidiary of the MLP or any
Group Member.
(f) Anything in this Agreement to the contrary
notwithstanding, to the extent that provisions of Sections 7.7, 7.8,
7.9 or 7.10 or other Sections of this Agreement purport or are
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 Managing 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
inapplicable and have no effect in determining whether the Managing
General Partner has complied with its fiduciary duties in connection
with determinations made by it under this Section 7.5.
Section 7.6 LOANS FROM THE GENERAL PARTNERS; LOANS OR CONTRIBUTIONS
FROM THE PARTNERSHIP; CONTRACTS WITH AFFILIATES;
CERTAIN RESTRICTIONS ON THE GENERAL PARTNERS.
(a) The General Partners or their Affiliates may lend to
the MLP or any Group Member, and the MLP or any Group Member may
borrow from the General Partners or any of their Affiliates, funds
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needed or desired by the MLP or the Group Member for such periods of
time and in such amounts as the Managing 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). 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. No Group Member
may lend funds to the General Partners or any of their Affiliates
(other than the MLP, a Subsidiary of the MLP, any other Group Member
or any Subsidiary of a 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 established in the sole discretion of the
Managing General Partner; provided, however, that the Partnership may
not charge the Group Member interest at a rate less than the rate that
would be charged to the Group Member (without reference to the General
Partners' financial abilities or guarantees) by unrelated lenders on
comparable loans. The foregoing authority shall be exercised by the
Managing General Partner in its sole discretion and shall not create
any right or benefit in favor of any Group Member or any other Person.
(c) The Managing General Partner may itself, or may enter
into an agreement with any of its Affiliates to, render services to a
Group Member or to the Managing General Partner in the discharge of
its duties as general partner of the Partnership. Any services
rendered to a Group Member by the Managing General Partner or any of
its Affiliates shall be on terms that are fair and reasonable to the
Partnership; provided, however, that the requirements of this
Section 7.6(c) shall be deemed satisfied as to (1) any transaction
approved by Special Approval, (ii) any transaction, the terms of which
are no less favorable to the Partnership Group than those generally
being provided to or available from unrelated third parties or
(iii) any transaction that, 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 Group), is equitable to the Partnership Group. The
provisions of Section 7.4 shall apply to the rendering of services
described in this Section 7.6(c).
(d) Any Group Member may transfer assets to joint ventures,
other partnerships, corporations, limited liability companies or other
business entities in which it is or thereby becomes a participant upon
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such terms and subject to such conditions as are consistent with this
Agreement and applicable law.
(e) Neither the General Partners nor any of their
Affiliates shall sell, transfer or convey any property to, or purchase
any property from the Partnership, directly or indirectly, except
pursuant to transactions that are fair and reasonable to the
Partnership; provided, however, that the requirements of this
Section 7.6(e) shall be deemed to be satisfied as to (1) the
transactions effected pursuant to Sections 5.2 and 5.3, the
Contribution and Conveyance Agreement and any other transactions
described in or contemplated by the Registration Statement, (ii) any
transaction approved by Special Approval, (iii) any transaction, the
terms of which are no less favorable to the Partnership than those
generally being provided to or available from unrelated third parties,
or (iv) any transaction that, 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), is equitable to the Partnership.
(f) The General Partners and their Affiliates will have no
obligation to permit any Group Member to use any facilities or assets
of the General Partners and their Affiliates, except as may be
provided in contracts entered into from time to time specifically
dealing with such use, nor shall there be any obligation on the part
of the General Partners or their Affiliates to enter into such
contracts.
(g) Without limitation of Sections 7.6(a) through 7.6(f),
and notwithstanding anything to the contrary in this Agreement, the
existence of the conflicts of interest described in the Registration
Statement are hereby approved by all Partners.
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 in each case the Indemnitee acted in good faith and in
a manner that such Indemnitee reasonably believed to be in, or (in the
case of a Person other than a General Partner) not opposed to, the
best interests of the Partnership and, with respect to any criminal
proceeding, had no reasonable cause to believe its conduct was
unlawful; provided, further, no indemnification pursuant to this
Section 7.7 shall be available to the General Partners with respect to
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their obligations incurred pursuant to the Underwriting Agreement or
the Contribution and Conveyance Agreement (other than obligations
incurred by the Managing General Partner on behalf of the Partnership
or the MLP). The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that the
Indemnitee acted in a manner contrary to that specified above. 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
Partners 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 the final disposition of such claim, demand,
action, suit or proceeding 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 Partners, 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 Partners or their Affiliates for the cost of) insurance,
on behalf of the General Partners, their Affiliates and such other
Persons as the Managing 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 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
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duties for a purpose reasonably believed by it to be in the interest
of the participants and beneficiaries of the plan shall be deemed to
be for a purpose which is in, or not opposed to, 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 Units or other Partnership
Securities of the MLP, for losses sustained or liabilities incurred as
a result of any act or omission if such Indemnitee acted in good
faith.
(b) Subject to its obligations and duties as Managing
General Partner set forth in Section 7.1(a), the Managing 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 Managing General Partner
shall not be responsible for any misconduct or negligence on the part
of any such agent appointed by the Managing 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
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thereto to the Partnership or to the Partners, the General Partners
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. The provisions of this Agreement, to the extent that they
restrict or otherwise modify the duties and liabilities of an
Indemnitee otherwise existing at law or in equity, are agreed by the
Partners to replace such other duties and liabilities of such
Indemnitee.
(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 to the
Partnership, the Limited Partners, the General Partners, and the
Partnership's and General Partners' directors, officers and employees
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.
(a) Unless otherwise expressly provided in this Agreement
or the MLP Agreement, whenever a potential conflict of interest exists
or arises between any of the General Partners or any of their
Affiliates, on the one hand, and the Partnership, the MLP, any Partner
or any Assignee, on the other, any resolution or course of action by
the Managing 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 the
MLP 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 is, or by operation of this Agreement is deemed to
be, fair and reasonable to the Partnership. The Managing 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. Any conflict of interest and any resolution of such
conflict of interest shall be conclusively deemed fair and reasonable
to the Partnership if such conflict of interest or resolution is
(i) approved by Special Approval (as long as the material facts known
to the Managing General Partner or any of its Affiliates regarding any
proposed transaction were disclosed to the Audit Committee at the time
it gave its approval), (ii) on terms no less favorable to the
Partnership than those generally being provided to or available from
unrelated third parties or (iii) fair 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 Managing General Partner may
also adopt a resolution or course of action that has not received
Special Approval. The Managing General Partner (including the Audit
Committee in connection with Special Approval) shall be authorized in
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connection with its determination of what is "fair and reasonable" to
the Partnership and in connection with its resolution of any conflict
of interest to consider (A) the relative interests of any party to
such conflict, agreement, transaction or situation and the benefits
and burdens relating to such interest; (B) any customary or accepted
industry practices and any customary or historical dealings with a
particular Person; (C) any applicable generally accepted accounting
practices or principles; and (D) such additional factors as the
Managing General Partner (including the Audit Committee) determines in
its sole discretion to be relevant, reasonable or appropriate under
the circumstances. Nothing contained in this Agreement, however, is
intended to nor shall it be construed to require the Managing General
Partner (including the Audit Committee) to consider the interests of
any Person other than the Partnership. In the absence of bad faith by
the Managing General Partner, the resolution, action or terms so made,
taken or provided by the Managing General Partner with respect to such
matter shall not constitute a breach of this Agreement or any other
agreement contemplated herein or a breach of any standard of care or
duty imposed herein or therein or, to the extent permitted by law,
under the Delaware Act or any other law, rule or regulation.
(b) Whenever this Agreement or any other agreement
contemplated hereby provides that the Managing General Partner or any
of its Affiliates is permitted or required to make a decision (i) in
its "sole discretion" or "discretion," that it deems "necessary or
appropriate" or "necessary or advisable" or under a grant of similar
authority or latitude, except as otherwise provided herein, the
Managing General Partner or such Affiliate shall be entitled to
consider only such interests and factors as it desires and shall have
no duty or obligation to give any consideration to any interest of, or
factors affecting, the Partnership, any Limited Partner or any
Assignee, (ii) it may make such decision in its sole discretion
(regardless of whether there is a reference to "sole discretion" or
"discretion") unless another express standard is provided for, or
(iii) in "good faith" or under another express standard, the Managing
General Partner or such Affiliate shall act under such express
standard and shall not be subject to any other or different standards
imposed by this Agreement, the MLP Agreement, any other agreement
contemplated hereby or under the Delaware Act or any other Law,
rule or regulation. In addition, any actions taken by the Managing
General Partner or such Affiliate consistent with the standards of
"reasonable discretion" set forth in the definitions of Available Cash
shall not constitute a breach of any duty of the Managing General
Partner to the Partnership, any Limited Partner or any limited partner
of the Limited Partner. The Managing General Partner shall have no
duty, express or implied, to sell or otherwise dispose of any asset of
the Partnership Group other than in the ordinary course of business.
No borrowing by any Group Member or the approval thereof by the
Managing General Partner shall be deemed to constitute a breach of any
duty of the Managing General Partner to the Partnership or any Limited
Partners by reason of the fact that the purpose or effect of such
borrowing is directly or indirectly to (A) enable distributions to the
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General Partners or their Affiliates (including in their capacities as
Limited Partners) to exceed 1% of the total amount distributed to all
partners or (B) hasten the expiration of the Subordination Period or
the conversion of any Subordinated Units into Common Units.
(c) Whenever a particular transaction, arrangement or
resolution of a conflict of interest is required under this Agreement
to be "fair and reasonable" to any Person, the fair and reasonable
nature of such transaction, arrangement or resolution shall be
considered in the context of all similar or related transactions.
(d) The Limited Partner hereby authorizes the Managing
General Partner, on behalf of the Partnership as a partner of a Group
Member, to approve of actions by the General Partner of such Group
Member similar to those actions permitted to be taken by the Managing
General Partner pursuant to this Section 7.9.
Section 7.10 OTHER MATTERS CONCERNING THE MANAGING GENERAL PARTNER.
(a) The Managing 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 Managing 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 Managing
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 Managing 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.
(d) Any standard of care and duty imposed by this Agreement
or under the Delaware Act or any applicable law, rule or regulation
shall be modified, waived or limited, to the extent permitted by law,
as required to permit the Managing General Partner to act under this
Agreement or any other agreement contemplated by this Agreement and to
make any decision pursuant to the authority prescribed in this
Agreement, so long as such action is reasonably believed by the
Managing General Partner to be in, or not inconsistent with, the best
interests of the Partnership.
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Section 7.11 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 Managing General Partner and any officer of the Managing General
Partner authorized by the Managing General Partner to act on behalf of
and in the name of 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
Managing 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 any and all defenses or other
remedies that may be available against such Person to contest, negate
or disaffirm any action of the Managing General Partner or any such
officer in connection with any such dealing. In no event shall any
Person dealing with the Managing General Partner or any such officer
or its representatives be obligated to ascertain that the terms of the
Agreement have been complied with or to inquire into the necessity or
expedience of any act or action of the Managing 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 Managing 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.
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 8.1 RECORDS AND ACCOUNTING.
The Managing 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 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
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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
June 30.
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 a taxable year ending on
December 31. The tax information reasonably required by the Partners
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 Managing General Partner's determination
that such revocation is in the best interests of the Limited Partners.
(b) The Partnership shall elect to deduct expenses incurred
in organizing the Partnership ratably over a sixty-month period as
provided in Section 709 of the Code.
(c) Except as otherwise provided herein, the Managing
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 Managing 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 Managing General Partner and to
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do or refrain from doing any or all things reasonably required by the
Managing General Partner to conduct such proceedings.
Section 9.4 WITHHOLDING.
Notwithstanding any other provision of this Agreement, the
Managing General Partner is authorized to take any action that it
determines in its discretion to be necessary or appropriate to cause
the Partnership to comply with any withholding requirements
established under the Code or any other federal, state or local law
including, without limitation, 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, without limitation, by reason of Section 1446
of the Code), the amount withheld may, at the discretion of the
Managing General Partner be treated by the Partnership 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 THE GENERAL PARTNERS AND THE MLP.
Upon the conveyance referred to in Section 5.2(a), the General
Partners and EESC shall be admitted to the Partnership as Limited
Partners. Upon the transfer referred to in Section 5.2(b), the
General Partners and EESC shall withdraw from, and cease to be a
Limited Partner of, the Partnership and the MLP shall be admitted as a
Limited Partner.
Section 10.2 ADMISSION OF SUBSTITUTED LIMITED PARTNERS.
Any person that is the successor in interest to a Limited Partner
as described in Section 4.3 shall be admitted to the Partnership as a
Limited Partner upon (a) furnishing to the General Partner (i)
acceptance in form satisfactory to the Managing General Partner of all
of the terms and conditions of this Agreement and (ii) such other
documents or instruments as may be required to effect its admission as
a Limited Partner in the Partnership and (b) obtaining the consent of
the Managing General Partner, which consent may be given or withheld
in the Managing General Partner's sole discretion. Such Person shall
be admitted to the Partnership as a Limited Partner immediately prior
to the transfer of the Partnership Interest, and the business of the
Partnership shall continue without dissolution, except that the
Managing General Partner shall give such consent to a person who has
become a successor in interest pursuant to a bonafide pledge and
foreclosure as contemplated by Section 4.3.
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Section 10.3 ADMISSION OF SUCCESSOR OR TRANSFEREE GENERAL PARTNER.
A successor General Partner approved pursuant to Section 11.1 or
11.2 or the transferee of or successor to all of a General Partner's
Partnership Interest as general partner in the Partnership pursuant to
Section 4.2 who is proposed to be admitted as a successor General
Partner shall, subject to compliance with the terms of Section 11.3,
if applicable, be admitted to the Partnership as a 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 a General Partner's Partnership Interest as
a general partner in the Partnership pursuant to Section 4.2,
provided, however, that no such successor shall be admitted to the
Partnership until compliance with the terms of Section 4.2 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 Partners, the MLP 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 Managing General Partner (i) evidence of acceptance in form
satisfactory to the Managing General Partner of all of the terms and
conditions of this Agreement, including the power of attorney granted
in Section 2.6, and (ii) such other documents or instruments as may be
required in the discretion of the Managing 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 Managing General Partner, which
consent may be given or withheld in the Managing General Partner's
discretion. 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 Managing General Partner to
such admission.
Section 10.5 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED
PARTNERSHIP.
To effect the admission to the Partnership of any Partner, the
Managing General Partner shall take all steps necessary and
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 Managing General Partner shall prepare and file an amendment
to the Certificate of Limited Partnership, and the Managing General
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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 PARTNERS.
(a) The Managing 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 Managing General Partner voluntarily withdraws
from the Partnership by giving written notice to the Limited
Partners;
(ii) The Managing General Partner transfers all of its
rights as Managing General Partner pursuant to Section 4.2;
(iii) The Managing General Partner is removed
pursuant to Section 11.2;
(iv) The Managing General Partner of the MLP withdraws
from, or is removed as the managing general partner of, the MLP;
(v) The Managing 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 Managing General Partner in a
proceeding of the type described in clauses (A)-(C) of this
Section 11.1(a)(v); or (E) seeks, consents to or acquiesces in
the appointment of a trustee (but not a debtor in possession),
receiver or liquidator of the Managing General Partner or of all
or any substantial part of its properties;
(vi) 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 Managing General Partner;
or
(vii) (A) in the event the Managing General Partner
is a corporation, a certificate of dissolution or its equivalent
is filed for the Managing General Partner, or 90 days expire
after the date of notice to the Managing General Partner of
revocation of its charter without a reinstatement of its charter,
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under the laws of its state of incorporation; (B) in the event
the Managing General Partner is a partnership, the dissolution
and commencement of winding up of the Managing General Partner;
(C) in the event the Managing 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 Managing General Partner is a
natural person, his death or adjudication of incompetency; and
(E) otherwise in the event of the termination of the Managing
General Partner.
If an Event of Withdrawal specified in Section 11.1(a)(iv)(with
respect to withdrawal), (v), (vi) or (vii)(A), (B), (C) or (E) occurs,
the withdrawing Managing 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 Managing General
Partner from the Partnership.
(b) Withdrawal of the Managing 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, Eastern Standard Time, on
December 31, 2006, the Managing 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 the Limited
Partner and the Managing 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 of the limited partner of the MLP or cause the Partnership
or the MLP 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) at any time after
12:00 midnight, Eastern Standard Time, on December 31, 2006, the
Managing General Partner voluntarily withdraws by giving at least 90
days' advance notice to the Limited Partners, such withdrawal to take
effect on the date specified in such notice; (iii) at any time that
the Managing General Partner ceases to be the Managing General Partner
pursuant to Section 11.1(a)(ii), (iii) or (iv). If the Managing
General Partner gives a notice of withdrawal pursuant to
Section 11.1(a)(i) or Section 11.1(a)(1) of the MLP Agreement, the
Limited Partner may, prior to the effective date of such withdrawal,
elect a successor Managing General Partner; provided, however, that
such successor shall be the same person, if any, that is elected by
the limited partners of the MLP pursuant to Section 11.1 of the MLP
Agreement as the successor to the Managing General Partner in its
capacity as general partner of the MLP. If, prior to the effective
date of the Managing General Partner's withdrawal, a successor is not
selected by the Limited Partners as provided herein or the Partnership
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does not receive a Withdrawal Opinion of Counsel, the Partnership
shall be dissolved in accordance with Section 12.1. Any successor
Managing General Partner elected in accordance with the terms of this
Section 11.1 shall be subject to the provisions of Section 10.3.
(c) An Event of Withdrawal of the Managing General Partner
shall also be an Event of Withdrawal of the Special General Partner
from the Partnership and as general partner of other Group Members of
which the Special General Partner is a general partner at the same
time and upon the same conditions as set forth in Section 11.1(a) and
11.1(b) with respect to the Managing General Partner. The Partners
hereby agree that only the Events of Withdrawal described in Section
11.1 with respect to the Managing General Partner shall result in a
withdrawal of the Special General Partner. Upon a withdrawal of the
Special General Partner, the Limited Partners are not required to
elect a successor Special General Partner of the Partnership.
Section 11.2 REMOVAL OF THE MANAGING GENERAL PARTNER.
The Managing General Partner shall be removed if such Managing
General Partner is removed as a Managing General Partner of the MLP
pursuant to Section 11.2 of the MLP Agreement. Such removal shall be
effective concurrently with the effectiveness of the removal of such
Managing General Partner as the Managing General Partner of the MLP
pursuant to the terms of the MLP Agreement. If a successor Managing
General Partner is elected in connection with the removal of such
Managing General Partner as a Managing General Partner of the MLP,
such successor Managing General Partner shall, upon admission pursuant
to Article X, automatically become a successor Managing General
Partner of the Partnership. The admission of any such successor
Managing General Partner to the Partnership shall be subject to the
provisions of Section 10.3.
Section 11.3 INTEREST OF DEPARTING PARTNER AND SUCCESSOR GENERAL
PARTNER.
(a) The Partnership Interest of a Departing Partner
departing as a result of withdrawal or removal pursuant to Section
11.1 or 11.2 shall (unless it is otherwise required to be converted
into Common Units pursuant to Section 11.3(b) of the MLP Agreement) be
purchased by the successor to the Departing Partner for cash in the
manner specified in the MLP Agreement. Such purchase (or conversion
into Common Units, as applicable) shall be a condition to the
admission to the Partnership of the successor as the General Partner.
Any successor General Partner shall indemnify the Departing General
Partner as to all debts and liabilities of the Partnership arising on
or after the effective date of the withdrawal or removal of the
Departing Partner.
(b) The Departing Partner shall be entitled to receive all
reimbursements due such Departing Partner pursuant to Section 7.4,
including any employee-related liabilities (including severance
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liabilities), incurred in connection with the termination of any
employees employed by such Departing Partner for the benefit of the
Partnership.
Section 11.4 WITHDRAWAL OF THE LIMITED PARTNER.
Without the prior written consent of the Managing General
Partner, which may be granted or withheld in its sole discretion, and
except as provided in Section 10.1, no Limited Partner shall have the
right to withdraw from the Partnership.
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 Managing General Partner in accordance with
the terms of this Agreement. Upon the removal or withdrawal of the
Managing General Partner, if a successor Managing General Partner is
elected pursuant to Section 11.1 or 11.2, the Partnership shall not be
dissolved and such successor Managing General Partner shall continue
the business of the Partnership. The Partnership shall dissolve, and
(subject to Section 12.2) its affairs shall be wound up, upon:
(a) the expiration of its term as provided in Section 2.7;
(b) an Event of Withdrawal of the Managing General Partner
as provided in Section 11.1(a) (other than Section 11.1(a)(ii)),
unless a successor is elected and an Opinion of Counsel is received as
provided in Section 11.1(b) or 11.2 and such successor is admitted to
the Partnership pursuant to Section 10.3;
(c) an election to dissolve the Partnership by the Managing
General Partner that is approved by all the Limited Partners;
(d) the entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Delaware Act;
(e) the sale of all or substantially all of the assets and
properties of the Partnership Group; or
(f) the dissolution of the MLP.
Section 12.2 CONTINUATION OF THE BUSINESS OF THE PARTNERSHIP AFTER
DISSOLUTION.
Upon (a) dissolution of the Partnership following an Event of
Withdrawal caused by the withdrawal or removal of the Managing General
Partner as provided in Section 11.1(a)(i) or (iii) and the failure of
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the Partners to select a successor to such Departing Partner pursuant
to Section 11.1 or 11.2, then within 90 days thereafter, or
(b) dissolution of the Partnership upon an event constituting an Event
of Withdrawal as defined in Section 11.1(a)(iv), (v) or (vi) of the
MLP Agreement, then, to the maximum extent permitted by law, within
180 days thereafter, all of the Limited Partners may elect to
reconstitute the Partnership and continue its business on the same
terms and conditions set forth in this Agreement by forming a new
limited partnership on terms identical to those set forth in this
Agreement and having as a general partner a Person approved by the
majority in interest of the Limited Partners. In addition, upon
dissolution of the Partnership pursuant to Section 12.1(f), if the MLP
is reconstituted pursuant to Section 12.2 of the MLP Agreement, the
reconstituted MLP may, within 180 days after such event of
dissolution, as the Limited Partner (whether or not it is the sole
limited partner), elect to reconstitute the Partnership in accordance
with the immediately preceding sentence. Upon any such election by
the Limited Partners, all Partners shall be bound thereby and shall be
deemed to have approved same. Unless such an election is made within
the applicable time period as set forth above, the Partnership shall
conduct only activities necessary to wind up its affairs. If such an
election is so made, then:
(i) the reconstituted Partnership shall continue until
the end of the term set forth in Section 2.7 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 Partners
shall be purchased by the successor General Partner or converted
into Common Units of the MLP as provided in the MLP Agreement;
and
(iii) all necessary steps shall be taken to cancel
this Agreement and the Certificate of Limited Partnership and to
enter into and, as necessary, to file a new partnership agreement
and certificate of limited partnership, and the successor General
Partner may for this purpose exercise the powers of attorney
granted the General Partner pursuant to Section 2.6; provided,
that the right to approve a successor General Partner and to
reconstitute 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 the
Limited Partners or any limited partner of the MLP and (y)
neither the Partnership, the reconstituted limited 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.
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Section 12.3 LIQUIDATOR.
Upon dissolution of the Partnership, unless the Partnership is
continued under an election to reconstitute and continue the
Partnership pursuant to Section 12.2, the Managing General Partner
shall select one or more Persons to act as Liquidator. The Liquidator
(if other than the Managing General Partner) shall be entitled to
receive such compensation for its services as may be approved by the
Limited Partners. The Liquidator (if other than the Managing 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 the Limited Partner. Upon dissolution,
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 the Limited Partner. 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
Managing 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(b)) to the extent necessary or
desirable in the good faith judgment of the Liquidator to carry out
the duties and functions of the Liquidator hereunder for and during
such period of time as shall be reasonably required in the good faith
judgment of the Liquidator 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 the Liquidator
determines to be in the best interest of the Partners, subject to
Section 17-804 of the Delaware Act and the following:
(a) Disposition of Assets. 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, in its absolute
discretion, 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
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may, in its absolute discretion, 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) Discharge of Liabilities. Liabilities of the
Partnership include amounts owed 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) Liquidation Distributions. 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).
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 Partnership shall be terminated
and 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 Partners 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 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.
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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. Each of the General Partners shall be obligated to
restore any negative balance in their 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; provided, however,
the Special General Partner's total obligation, pursuant to this
Section 12.8 and Section 12.8 of the MLP Agreement, shall be limited
to $88,000,000. The non-contributing General Partner shall indemnify
the contributing General Partner for amounts contributed to the
Partnership pursuant to this Section 12.8 and Section 12.8 of the MLP
Agreement to the extent it exceeds the contributing General Partner's
Pro Rata share of the amounts so contributed, provided, however, that
the Special General Partner's total indemnification obligation is
limited by the excess of $88,000,000 over the aggregate amount
previously contributed to the Partnership pursuant to this Section
12.8 and Section 12.8 of the MLP Agreement.
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
Section 13.1 AMENDMENT TO BE ADOPTED SOLELY BY THE MANAGING GENERAL
PARTNER.
Each Partner agrees that the Managing 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, in the sole discretion of the Managing
General Partner, is necessary or advisable to qualify or continue the
qualification of the Partnership as a limited partnership or a
partnership in which the Limited Partners have limited liability under
the laws of any state or to ensure that neither the Partnership and
the MLP will not be treated as an association taxable as a corporation
or otherwise taxed as an entity for federal income tax purposes;
(d) a change that, in the discretion of the Managing
General Partner, (i) does not adversely affect the the Limited
Partners in any material respect, (ii) is necessary or advisable to
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(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 or other Limited Partner Partnership Interests of
the MLP (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 or other Limited Partner Partnership
Interests of the MLP are or will be listed for trading, compliance
with any of which the Managing General Partner determines in its
discretion to be in the best interests of the Partnership and the
Limited Partners, (iii) 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 or (iv) is
required to conform the provisions of this Agreement with the
provisions of the MLP Agreement as the provisions of the MLP Agreement
may be amended, supplemented or restated from time to time;
(e) a change in the fiscal year or taxable year of the
Partnership and any changes that, in the discretion of the Managing
General Partner, are necessary or advisable as a result of a change in
the fiscal year or taxable year of the Partnership including, if the
Managing 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 Partners or their
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) any amendment expressly permitted in this Agreement to
be made by the Managing General Partner acting alone;
(h) an amendment effected, necessitated or contemplated by
a Merger Agreement approved in accordance with Section 14.3;
(i) an amendment that, in the discretion of the Managing
General Partner, is necessary or advisable to reflect, account for and
deal with appropriately 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;
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(j) a merger or conveyance pursuant to Section 14.3(d); or
(k) any other amendments substantially similar to the
foregoing.
Section 13.2 AMENDMENT PROCEDURES.
Except with respect to amendments of he type described in Section
13.1, all amendments to this Agreement shall be made in accordance
with the following requirements: Amendments to this Agreement may be
proposed only by or with the consent of the Managing General Partner
which consent may be given or withheld in its sole discretion. A
proposed amendments shall be effective upon its approval by the
Limited Partner.
ARTICLE XIV
MERGER
Section 14.1 AUTHORITY.
The Partnership may merge or consolidate with one or more
corporations, limited liability companies, business trusts or
associations, real estate investment trusts, common law trusts or
unincorporated businesses, including a general partnership or limited
partnership, formed under the laws of the State of Delaware or any
other state of the United States of America, pursuant to a written
agreement of merger or consolidation ("Merger Agreement") in
accordance with this Article IV.
Section 14.2 PROCEDURE FOR MERGER OR CONSOLIDATION.
Merger or consolidation of the Partnership pursuant to this
Article XIV requires the prior approval of the Managing General
Partner. If the Managing General Partner shall determine, in the
exercise of its discretion, to consent to the merger or consolidation,
the Managing General Partner shall approve the Merger Agreement, which
shall set forth:
(a) The names and jurisdictions of formation or
organization of each of the business entities proposing to merge or
consolidate;
(b) 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");
(c) The terms and conditions of the proposed merger or
consolidation;
(d) The manner and basis of exchanging or converting the
equity securities of each constituent business entity for, or into,
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cash, property or general or limited partner 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 general or limited partner interests,
rights, securities or obligations of any limited partnership,
corporation, trust 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 general or limited partner 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 or other entity (other than
the Surviving Business Entity), or evidences thereof, are to be
delivered;
(e) 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 or other similar
charter or governing document) of the Surviving Business Entity to be
effected by such merger or consolidation;
(f) 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 the certificate of
merger, the effective time shall be fixed no later than the time of
the filing of the certificate of merger and stated therein); and
(g) Such other provisions with respect to the proposed
merger or consolidation as are deemed necessary or appropriate by the
Managing General Partner.
Section 14.3 APPROVAL BY LIMITED PARTNER OF MERGER OR CONSOLIDATION.
(a) Except as provided in Section 14.3(d), the Managing
General Partner, upon its approval of the Merger Agreement, shall
direct that a copy or a summary of the Merger Agreement be submitted
to a vote of Limited Partner, 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 shall be
included in or enclosed with the notice of a special meeting or the
written consent.
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(b) Except as provided in Section 14.3(d), the Merger
Agreement shall be approved upon receiving the approval of the Limited
Partner.
(c) After such approval by the Limited Partner, and at any
time prior to the filing of the certificate of merger pursuant to
Section 14.4, the merger or consolidation may be abandoned pursuant to
provisions therefor, if any, set forth in the Merger Agreement.
(d) Notwithstanding anything else contained in this
Article XIV or in this Agreement, the Managing General Partner is
permitted, in its discretion, without approval of the other Partners,
to merge the Partnership or any Group Member into, or convey all of
the Partnership's assets to, another limited liability entity which
shall be newly formed and shall have no assets, liabilities or
operations at the time of such Merger other than those it receives
from the Partnership or other Group Member if (1) the Managing General
Partner has received an Opinion of Counsel that the merger or
conveyance, as the case may be, would not result in the loss of the
limited liability of any Limited Partner or any limited partner in the
MLP or cause the Partnership or the MLP 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 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 Managing
General Partner with the same rights and obligations as are herein
contained.
Section 14.4 CERTIFICATE OF MERGER.
Upon the required approval by the Managing General Partner and
the Limited Partner of a Merger Agreement, a certificate of merger
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.
(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;
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(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) A merger or consolidation effected pursuant to this
Article shall not be deemed to result in a transfer or assignment of
assets or liabilities from one entity to another.
ARTICLE XV
GENERAL PROVISIONS
Section 15.1 ADDRESSES AND NOTICES.
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
received by it at the principal office of the Partnership referred to
in Section 2.3.
Section 15.2 REFERENCES.
Except as specifically provided as otherwise, references to
"Articles" and "Sections" are to Articles and Sections of this
Agreement.
Section 15.3 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 15.4 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.
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Section 15.5 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 15.6 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 15.7 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 breach thereof shall
constitute waiver of any such breach of any other covenant, duty,
agreement or condition.
Section 15.8 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,
independently of the signature of any other party.
Section 15.9 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 15.10 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 15.11 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.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
MANAGING GENERAL PARTNER:
CORNERSTONE PROPANE GP, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
and Chief Financial
Officer
SPECIAL GENERAL PARTNER:
SYN INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
ORGANIZATIONAL LIMITED PARTNER:
CORNERSTONE PROPANE PARTNERS, L.P.
By: Cornerstone Propane GP, Inc.,
as Managing General Partner
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
and Chief Financial
Officer
LIMITED PARTNER:
EMPIRE ENERGY SC CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
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