Exhibit 3.1
Execution Copy
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
TABLE OF CONTENTS
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ARTICLE I
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DEFINITIONS
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Section 1.1.
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Definitions
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1 |
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Section 1.2.
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Construction
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20 |
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ARTICLE II
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ORGANIZATION
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Section 2.1.
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Formation
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20 |
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Section 2.2.
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Name
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20 |
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Section 2.3.
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Registered Office; Registered Agent; Principal Office; Other Offices
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21 |
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Section 2.4.
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Purpose and Business
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21 |
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Section 2.5.
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Powers
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21 |
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Section 2.6.
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Power of Attorney
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21 |
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Section 2.7.
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Term
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23 |
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Section 2.8.
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Title to Partnership Assets
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23 |
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ARTICLE III
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RIGHTS OF LIMITED PARTNERS
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Section 3.1.
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Limitation of Liability
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23 |
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Section 3.2.
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Management of Business
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23 |
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Section 3.3.
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Outside Activities of the Limited Partners
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24 |
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Section 3.4.
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Rights of Limited Partners
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24 |
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ARTICLE IV
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CERTIFICATES; RECORD HOLDERS; TRANSFER OF
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PARTNERSHIP INTERESTS; REDEMPTION OF PARTNERSHIP INTERESTS
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Section 4.1.
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Certificates
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25 |
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Section 4.2.
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Mutilated, Destroyed, Lost or Stolen Certificates
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25 |
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Section 4.3.
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Record Holders
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26 |
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Section 4.4.
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Transfer Generally
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26 |
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Section 4.5.
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Registration and Transfer of Limited Partner Interests
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27 |
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Section 4.6.
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Transfer of the General Partner’s General Partner Interest
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28 |
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Section 4.7.
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Transfer of Incentive Distribution Rights
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28 |
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Section 4.8.
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Restrictions on Transfers
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29 |
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Section 4.9.
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Citizenship Certificates; Non-citizen Assignees
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30 |
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Section 4.10.
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Redemption of Partnership Interests of Non-citizen Assignees
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31 |
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ARTICLE V
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CAPITAL CONTRIBUTIONS AND
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ISSUANCE OF PARTNERSHIP INTERESTS
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Section 5.1.
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Organizational Contributions
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32 |
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Section 5.2.
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Contributions by the General Partner and its Affiliates
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32 |
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Section 5.3.
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Contributions by Initial Limited Partners and Distributions to the
General Partner and its Affiliates
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33 |
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Section 5.4.
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Interest and Withdrawal
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33 |
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Section 5.5.
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Capital Accounts
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33 |
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i
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Section 5.6.
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Issuances of Additional Partnership Securities
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36 |
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Section 5.7.
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Conversion of Subordinated Units
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37 |
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Section 5.8.
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Limited Preemptive Right
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38 |
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Section 5.9.
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Splits and Combinations
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38 |
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Section 5.10.
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Fully Paid and Non-Assessable Nature of Limited Partner Interests
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39 |
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ARTICLE VI
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ALLOCATIONS AND DISTRIBUTIONS
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Section 6.1.
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Allocations for Capital Account Purposes
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Section 6.2.
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Allocations for Tax Purposes
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Section 6.3.
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Requirement and Characterization of Distributions; Distributions to
Record Holders
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50 |
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Section 6.4.
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Distributions of Available Cash from Operating Surplus
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51 |
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Section 6.5.
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Distributions of Available Cash from Capital Surplus
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53 |
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Section 6.6.
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Adjustment of Minimum Quarterly Distribution and Target Distribution Levels
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53 |
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Section 6.7.
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Special Provisions Relating to the Holders of Subordinated Units
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54 |
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Section 6.8.
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Special Provisions Relating to the Holders of Incentive Distribution Rights
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54 |
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Section 6.9.
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Entity-Level Taxation
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55 |
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ARTICLE VII
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MANAGEMENT AND OPERATION OF BUSINESS
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Section 7.1.
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Management
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55 |
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Section 7.2.
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Certificate of Limited Partnership
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57 |
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Section 7.3.
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Restrictions on the General Partner’s Authority
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58 |
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Section 7.4.
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Reimbursement of the General Partner
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58 |
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Section 7.5.
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Outside Activities
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59 |
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Section 7.6.
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Loans from the General Partner; Loans or Contributions from
the Partnership or Group Members
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60 |
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Section 7.7.
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Indemnification
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61 |
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Section 7.8.
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Liability of Indemnitees
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63 |
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Section 7.9.
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Resolution of Conflicts of Interest; Standards of Conduct and
Modification of Duties
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63 |
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Section 7.10.
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Other Matters Concerning the General Partner
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65 |
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Section 7.11.
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Purchase or Sale of Partnership Securities
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65 |
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Section 7.12.
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Registration Rights of the General Partner and its Affiliates
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66 |
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Section 7.13.
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Reliance by Third Parties
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69 |
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ARTICLE VIII
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BOOKS, RECORDS, ACCOUNTING AND REPORTS
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Section 8.1.
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Records and Accounting
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70 |
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Section 8.2.
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Fiscal Year
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70 |
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Section 8.3.
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Reports
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70 |
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ARTICLE IX
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TAX MATTERS
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Section 9.1.
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Tax Returns and Information
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71 |
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ii
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Section 9.2.
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Tax Elections
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71 |
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Section 9.3.
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Tax Controversies
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71 |
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Section 9.4.
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Withholding
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71 |
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ARTICLE X
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ADMISSION OF PARTNERS
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Section 10.1.
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Admission of Initial Limited Partners
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72 |
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Section 10.2.
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Admission of Limited Partners
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72 |
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Section 10.3.
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Admission of Successor General Partner
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73 |
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Section 10.4.
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Amendment of Agreement and Certificate of Limited Partnership
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73 |
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ARTICLE XI
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WITHDRAWAL OR REMOVAL OF PARTNERS
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Section 11.1.
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Withdrawal of the General Partner
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73 |
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Section 11.2.
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Removal of the General Partner
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75 |
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Section 11.3.
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Interest of Departing Partner and Successor General Partner
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75 |
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Section 11.4.
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Termination of Subordination Period, Conversion of Subordinated
Units and Extinguishment of Cumulative Common Unit Arrearages
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77 |
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Section 11.5.
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Withdrawal of Limited Partners
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77 |
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ARTICLE XII
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DISSOLUTION AND LIQUIDATION
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Section 12.1.
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Dissolution
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77 |
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Section 12.2.
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Continuation of the Business of the Partnership After Dissolution
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78 |
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Section 12.3.
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Liquidator
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78 |
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Section 12.4.
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Liquidation
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79 |
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Section 12.5.
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Cancellation of Certificate of Limited Partnership
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80 |
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Section 12.6.
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Return of Contributions
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80 |
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Section 12.7.
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Waiver of Partition
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80 |
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Section 12.8.
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Capital Account Restoration
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80 |
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ARTICLE XIII
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AMENDMENT OF PARTNERSHIP AGREEMENT;
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MEETINGS; RECORD DATE
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Section 13.1.
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Amendments to be Adopted Solely by the General Partner
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80 |
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Section 13.2.
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Amendment Procedures
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82 |
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Section 13.3.
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Amendment Requirements
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82 |
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Section 13.4.
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Special Meetings
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83 |
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Section 13.5.
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Notice of a Meeting
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83 |
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Section 13.6.
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Record Date
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83 |
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Section 13.7.
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Adjournment
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84 |
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Section 13.8.
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Waiver of Notice; Approval of Meeting; Approval of Minutes
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84 |
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Section 13.9.
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Quorum and Voting
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84 |
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Section 13.10.
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Conduct of a Meeting
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85 |
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Section 13.11.
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Action Without a Meeting
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85 |
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Section 13.12.
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Right to Vote and Related Matters
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85 |
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iii
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ARTICLE XIV
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MERGER
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Section 14.1.
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Authority
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86 |
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Section 14.2.
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Procedure for Merger or Consolidation
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86 |
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Section 14.3.
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Approval by Limited Partners of Merger or Consolidation
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87 |
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Section 14.4.
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Certificate of Merger
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88 |
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Section 14.5.
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Amendment of Partnership Agreement
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88 |
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Section 14.6.
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Effect of Merger
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88 |
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ARTICLE XV
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RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
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Section 15.1.
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Right to Acquire Limited Partner Interests
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89 |
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ARTICLE XVI
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GENERAL PROVISIONS
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Section 16.1.
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Addresses and Notices
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91 |
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Section 16.2.
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Further Action
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92 |
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Section 16.3.
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Binding Effect
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92 |
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Section 16.4.
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Integration
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92 |
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Section 16.5.
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Creditors
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92 |
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Section 16.6.
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Waiver
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92 |
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Section 16.7.
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Third-Party Beneficiaries
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92 |
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Section 16.8.
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Counterparts
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92 |
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Section 16.9.
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Applicable Law
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92 |
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Section 16.10.
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Invalidity of Provisions
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92 |
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Section 16.11.
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Consent of Partners
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92 |
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Section 16.12.
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Facsimile Signatures
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92 |
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iv
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THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
REGENCY ENERGY PARTNERS LP dated
as of February 3, 2006, is entered into by and between Regency GP LP, a
Delaware limited
partnership, as the General Partner, and Regency Acquisition LP, 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 terms shall be defined for all purposes of
this Agreement as follows, unless otherwise clearly indicated to the contrary.
“Acquisition” means any transaction in which any Group Member acquires (through an asset
acquisition, merger, stock acquisition or other form of investment) control over all or a portion
of the assets, properties or business of another Person for the purpose of increasing the operating
capacity or revenues of the Partnership Group from the operating capacity or revenues of the
Partnership Group existing immediately prior to such transaction.
“Additional Book Basis” means the portion of any remaining Carrying Value of an Adjusted
Property that is attributable to positive adjustments made to such Carrying Value as a result of
Book-Up Events. For purposes of determining the extent that Carrying Value constitutes Additional
Book Basis:
(i) Any negative adjustment made to the Carrying Value of an Adjusted Property as a
result of either a Book-Down Event or a Book-Up Event shall first be deemed to offset or
decrease that portion of the Carrying Value of such Adjusted Property that is attributable
to any prior positive adjustments made thereto pursuant to a Book-Up Event or Book-Down
Event.
(ii) If Carrying Value that constitutes Additional Book Basis is reduced as a result of
a Book-Down Event and the Carrying Value of other property is increased as a result of such
Book-Down Event, an allocable portion of any such increase in Carrying Value shall be
treated as Additional Book Basis; provided, that the amount treated as Additional Book Basis
pursuant hereto as a result of such Book-Down Event shall not exceed the amount by which the
Aggregate Remaining Net Positive Adjustments after such Book-Down Event exceeds the
remaining Additional Book Basis attributable to all of the Partnership’s Adjusted Property
after such Book-Down Event (determined without regard to the application of this clause (ii)
to such Book-Down Event).
“Additional Book Basis Derivative Items” means any Book Basis Derivative Items that are
computed with reference to Additional Book Basis. To the extent that the Additional Book Basis
attributable to all of the Partnership’s Adjusted Property as of the beginning of any taxable
period exceeds the Aggregate Remaining Net Positive Adjustments as of the beginning of such period
(the “Excess Additional Book Basis”), the Additional Book Basis Derivative Items for
such period shall be reduced by the amount that bears the same ratio to the amount of
Additional Book Basis Derivative Items determined without regard to this sentence as the Excess
Additional Book Basis bears to the Additional Book Basis as of the beginning of such period.
“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 Section 6.1(d)(ii)). The foregoing definition of Adjusted Capital
Account is intended to comply with the provisions of Treasury Regulation Section 1.704
1(b)(2)(ii)(d) and shall be interpreted consistently therewith. The “Adjusted Capital Account” of
a Partner in respect of a General Partner Unit, a Common Unit, a Subordinated Unit or an Incentive
Distribution Right or any other Partnership Interest shall be the amount that such Adjusted Capital
Account would be if such General Partner Unit, Common Unit, Subordinated Unit, Incentive
Distribution Right or other Partnership Interest were the only interest in the Partnership held by
such Partner from and after the date on which such General Partner Unit, Common Unit, Subordinated
Unit, Incentive Distribution Right or other Partnership Interest was first issued.
“Adjusted Operating Surplus” means, with respect to any period, Operating Surplus generated
with respect to such period (a) less (i) any net increase in Working Capital Borrowings with
respect to such period and (ii) any net reduction in cash reserves for Operating Expenditures with
respect to such period to the extent such reduction does not relate to an Operating Expenditure
made with respect to such period, and (b) plus (i) any net decrease in Working Capital Borrowings
with respect to such period, and (ii) any net increase in cash reserves for Operating Expenditures
with respect to such period to the extent such reserve is required by any debt instrument for the
repayment of principal, interest or premium. Adjusted Operating Surplus does not include that
portion of Operating Surplus included in clauses (a)(i) and (a)(ii) of the definition of Operating
Surplus.
“Adjusted Property” means any property the Carrying Value of which has been adjusted pursuant
to Section 5.5(d)(i) or Section 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.
2
“Aggregate Remaining Net Positive Adjustments” means, as of the end of any taxable period, the
sum of the Remaining Net Positive Adjustments of all the Partners.
“Agreed Allocation” means any allocation, other than a Required Allocation, of an item of
income, gain, loss or deduction pursuant to the provisions of Section 6.1, including, 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 General Partner. The General
Partner shall use such method as it determines to be appropriate to allocate the aggregate Agreed
Value of Contributed Properties contributed to the Partnership in a single or integrated
transaction among each separate property on a basis proportional to the fair market value of each
Contributed Property.
“
Agreement” means this Amended and Restated Agreement of Limited Partnership of
Regency Energy
Partners LP, as it may be amended, supplemented or restated from time to time.
“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.
“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 Working Capital Borrowings made subsequent to the end of such
Quarter, less
(b) the amount of any cash reserves established by the General Partner (i) to provide
for the proper conduct of the business of the Partnership Group (including reserves for
future capital expenditures and for anticipated future credit needs of the Partnership
Group) subsequent to such Quarter, (ii) to 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) to
provide funds for distributions under Section 6.4 or Section 6.5 in respect of any one or
more of the next four Quarters; provided, however, that the General Partner may not
establish cash reserves pursuant to (iii) above if the effect of such reserves would be that
the Partnership is unable to distribute the Minimum Quarterly Distribution on all Common
Units, plus any Cumulative Common Unit Arrearage on all Common Units, with respect to such
Quarter; and, provided further, that disbursements made by a Group Member or cash reserves
established, increased or reduced after the end
of such Quarter but on or before the date of determination of Available Cash with
respect to such Quarter shall be deemed to have been made, established, increased or
reduced, for
3
purposes of determining Available Cash, within such Quarter if the General
Partner so determines.
Notwithstanding the foregoing, “Available Cash” with respect to the Quarter in which the
Liquidation Date occurs and any subsequent Quarter shall equal zero.
“Board of Directors” means the board of directors or managers of a corporation or limited
liability company, as applicable, or if a limited partnership, the board of directors or board of
managers of the general partner of such limited partnership, as applicable.
“Book Basis Derivative Item” means any item of income, deduction, gain or loss included in the
determination of Net Income or Net Loss that is computed with reference to the Carrying Value of an
Adjusted Property (e.g., depreciation, depletion, or gain or loss with respect to an Adjusted
Property).
“Book-Down Event” means an event that triggers a negative adjustment to the Capital Accounts
of the Partners pursuant to Section 5.5(d).
“Book-Tax Disparity” means with respect to any item of Contributed Property or Adjusted
Property, as of the date of any determination, the difference between the Carrying Value of such
Contributed Property or Adjusted Property and the adjusted basis thereof for federal income tax
purposes as of such date. A Partner’s share of the Partnership’s Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the difference between such
Partner’s Capital Account balance as maintained pursuant to Section 5.5 and the hypothetical
balance of such Partner’s Capital Account computed as if it had been maintained strictly in
accordance with federal income tax accounting principles.
“Book-Up Event” means an event that triggers a positive adjustment to the Capital Accounts of
the Partners pursuant to Section 5.5(d).
“Business Day” means Monday through Friday of each week, except that a legal holiday
recognized as such by the government of the United States of America or the State of New York shall
not be regarded as a Business Day.
“Capital Account” means the capital account maintained for a Partner pursuant to Section 5.5.
The “Capital Account” of a Partner in respect of a General Partner Unit, a Common Unit, a
Subordinated Unit, an Incentive Distribution Right or any other Partnership Interest shall be the
amount that such Capital Account would be if such General Partner Unit, Common Unit, Subordinated
Unit, Incentive Distribution Right or other Partnership Interest were the only interest in the
Partnership held by such Partner from and after the date on which such General Partner Unit, Common
Unit, Subordinated Unit, Incentive Distribution Right or other Partnership Interest was first
issued.
“Capital Contribution” means any cash, cash equivalents or the Net Agreed Value of Contributed
Property that a Partner contributes to the Partnership.
“Capital Improvement” means any (a) addition or improvement to the capital assets owned by any
Group Member, or (b) acquisition of existing, or the construction of new, capital
4
assets (including, without limitation, any hydrocarbon gathering systems or pipelines, any natural gas
processing or natural gas liquids fractionation facilities, any storage or terminal facilities and
any related or similar midstream assets), in each case if such addition, improvement, acquisition
or construction is made to increase the operating capacity or revenues of the Partnership Group,
from the operating capacity or revenues of the Partnership Group or such Person, as the case may
be, existing immediately prior to such addition, improvement, acquisition or construction.
“Capital Surplus” has the meaning assigned to such term in Section 6.3(a).
“Carrying Value” means (a) with respect to a Contributed Property, the Agreed Value of such
property reduced (but not below zero) by all depreciation, amortization and cost recovery
deductions charged to the Partners’ 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 Section 5.5(d)(i) and Section 5.5(d)(ii) and to
reflect changes, additions or other adjustments to the Carrying Value for dispositions and
acquisitions of Partnership properties, as deemed appropriate by the General Partner.
“Cause” means a court of competent jurisdiction has entered a final, non-appealable judgment
finding the General Partner liable for actual fraud or willful misconduct in its capacity as a
general partner of the Partnership.
“Certificate” means a certificate (i) substantially in the form of Exhibit A to this
Agreement, (ii) issued in global form in accordance with the rules and regulations of the
Depositary or (iii) in such other form as may be adopted by the General Partner, issued by the
Partnership evidencing ownership of one or more Common Units or a certificate, in such form as may
be adopted by the General Partner, issued by the Partnership evidencing ownership of one or more
other Partnership Securities.
“
Certificate of Limited Partnership” means the Certificate of Limited Partnership of the
Partnership filed with the Secretary of State of the State of
Delaware as referenced in Section
7.2, as such Certificate of Limited Partnership may be amended, supplemented or restated from time
to time.
“Citizenship Certification” means a properly completed certificate in such form as may be
specified by the General Partner by which a Limited Partner certifies that he (and if he is a
nominee holding for the account of another Person, that to the best of his knowledge such other
Person) is an Eligible Citizen.
“Claim” (as used in Section 7.12(d)) has the meaning assigned to such term in Section 7.12(d).
“Closing Date” means the first date on which Common Units are sold by the Partnership to the
Underwriters pursuant to the provisions of the Underwriting Agreement.
“Closing Price” has the meaning assigned to such term in Section 15.1(a).
5
“Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time.
Any reference herein to a specific section or sections of the Code shall be deemed to include a
reference to any corresponding provision of any successor law.
“Combined Interest” has the meaning assigned to such term in Section 11.3(a).
“Commission” means the United States Securities and Exchange Commission.
“Common Unit” means a Partnership Security representing a fractional part of the Partnership
Interests of all Limited Partners, and having the rights and obligations specified with respect to
Common Units in this Agreement. The term “Common Unit” does not include a Subordinated Unit prior
to its conversion into a Common Unit pursuant to the terms hereof.
“Common Unit Arrearage” means, with respect to any Common Unit, whenever issued, as to any
Quarter within the Subordination Period, the excess, if any, of (a) the Minimum Quarterly
Distribution with respect to a Common Unit in respect of such Quarter over (b) the sum of all
Available Cash distributed with respect to a Common Unit in respect of such Quarter pursuant to
Section 6.4(a)(i).
“Conflicts Committee” means a committee of the Board of Directors of the general partner of
the General Partner composed entirely of two or more directors who are not (a) security holders,
officers or employees of the General Partner, (b) officers, directors or employees of any Affiliate
of the General Partner or (c) holders of any ownership interest in the Partnership Group other than
Common Units and who also meet the independence standards required of directors who serve on an
audit committee of a board of directors established by the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder and by the National Securities
Exchange on which the Common Units are listed or admitted to trading.
“
Contributed Property” means each property or other asset, in such form as may be permitted by
the
Delaware Act, but excluding cash, contributed to the Partnership. Once the Carrying Value of a
Contributed Property is adjusted pursuant to Section 5.5(d), such property shall no longer
constitute a Contributed Property, but shall be deemed an Adjusted Property.
“Contribution Agreement” means that certain Contribution, Conveyance and Assumption Agreement,
dated as of the Closing Date, among Regency GP LLC, the General Partner, the Partnership, the
Operating Partnership, OLP GP, Regency Acquisition and the other parties named therein, together
with the additional conveyance documents and instruments contemplated or referenced thereunder, as
such may be amended, supplemented or restated from time to time.
“Cumulative Common Unit Arrearage” means, with respect to any Common Unit, whenever issued,
and as of the end of any Quarter, the excess, if any, of (a) the sum resulting from adding together
the Common Unit Arrearage as to an Initial Common Unit for each of the Quarters within the
Subordination Period ending on or before the last day of such Quarter over (b) the sum of any
distributions theretofore made pursuant to Section 6.4(a)(ii) and the second
sentence of Section 6.5 with respect to an Initial Common Unit (including any distributions to
be made in respect of the last of such Quarters).
6
“Curative Allocation” means any allocation of an item of income, gain, deduction, loss or
credit pursuant to the provisions of Section 6.1(d)(xi).
“Current Market Price” has the meaning assigned to such term in Section 15.1(a).
“
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 from and after the effective date of any
withdrawal or removal of such former General Partner pursuant to Section 11.1 or Section 11.2.
“Depositary” means, with respect to any Units issued in global form, The Depository Trust
Company and its successors and permitted assigns.
“Economic Risk of Loss” has the meaning set forth in Treasury Regulation Section 1.752-2(a).
“Eligible Citizen” means a Person qualified to own interests in real property in jurisdictions
in which any Group Member does business or proposes to do business from time to time, and whose
status as a Limited Partner the General Partner determines does not or would not subject such Group
Member to a significant risk of cancellation or forfeiture of any of its properties or any interest
therein.
“Estimated Incremental Quarterly Tax Amount” has the meaning assigned to such term in Section
6.9.
“Event of Withdrawal” has the meaning assigned to such term in Section 11.1(a).
“Final Subordinated Units” has the meaning assigned to such term in Section 6.1(d)(x).
“First Liquidation Target Amount” has the meaning assigned to such term in Section
6.1(c)(i)(D).
“First Target Distribution” means $0.4025 per Unit per Quarter (or, with respect to the period
commencing on the Closing Date and ending on March 31, 2006, it means the product of $0.4025
multiplied by a fraction of which the numerator is the number of days in such period, and of which
the denominator is 90), subject to adjustment in accordance with Section 6.6 and Section 6.9.
“Fully Diluted Basis” means, when calculating the number of Outstanding Units for any period,
a basis that includes, in addition to the Outstanding Units, all Partnership Securities and
options, rights, warrants and appreciation rights relating to an equity interest in the Partnership
(a) that are convertible into or exercisable or exchangeable for Units that are senior to or pari
passu with the Subordinated Units, (b) whose conversion, exercise or exchange price is less than
the Current Market Price on the date of such calculation, (c) that may be converted into or
exercised or exchanged for such Units prior to or during the Quarter immediately following the end
of the period for which the calculation is being made without the satisfaction of any contingency
7
beyond the control of the holder other than the payment of consideration and the compliance with
administrative mechanics applicable to such conversion, exercise or exchange and (d) that were not
converted into or exercised or exchanged for such Units during the period for which the calculation
is being made; provided, that for purposes of determining the number of Outstanding Units on a
Fully Diluted Basis when calculating whether the Subordination Period has ended or the Subordinated
Units are entitled to convert into Common Units pursuant to Section 5.7, such Partnership
Securities, options, rights, warrants and appreciation rights shall be deemed to have been
Outstanding Units only for the four Quarters that comprise the last four Quarters of the
measurement period; provided, further, that if consideration will be paid to any Group Member in
connection with such conversion, exercise or exchange, the number of Units to be included in such
calculation shall be that number equal to the difference between (i) the number of Units issuable
upon such conversion, exercise or exchange and (ii) the number of Units that such consideration
would purchase at the Current Market Price.
“
General Partner” means Regency GP LP, a
Delaware limited partnership (and where applicable,
its general partner, Regency GP LLC) and its successors and permitted assigns that are admitted to
the Partnership as general partner of the Partnership, in its capacity as general partner of the
Partnership (except as the context otherwise requires).
“General Partner Interest” means the ownership interest of the General Partner in the
Partnership (in its capacity as a general partner without reference to any Limited Partner Interest
held by it), which is evidenced by General Partner Units and includes any and all benefits to which
the General Partner is entitled as provided in this Agreement, together with all obligations of the
General Partner to comply with the terms and provisions of this Agreement.
“General Partner Unit” means a fractional part of the General Partner Interest having the
rights and obligations specified with respect to the General Partner Interest. A General Partner
Unit is not a Unit.
“Group” means a Person that with or through any of its Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except
voting pursuant to a revocable proxy or consent given to such Person in response to a proxy or
consent solicitation made to 10 or more Persons), exercising investment power or disposing of any
Partnership Interests with any other Person that beneficially owns, or whose Affiliates or
Associates beneficially own, directly or indirectly, Partnership Interests.
“Group Member” means a member of the Partnership Group.
“Group Member Agreement” means the partnership agreement of any Group Member, other than the
Partnership, that is a limited or general partnership, the limited liability company agreement of
any Group Member that is a limited liability company, the certificate of incorporation and bylaws
or similar organizational documents of any Group Member that is a corporation, the joint venture
agreement or similar governing document of any Group Member that is a joint venture and the
governing or organizational or similar documents of any other Group Member that is a Person other
than a limited or general partnership, limited liability
company, corporation or joint venture, as such may be amended, supplemented or restated from
time to time.
8
“Xxxxx Muse” means Hicks, Muse, Xxxx & Xxxxx Incorporated, a Texas corporation and its
affiliates.
“Holder” as used in Section 7.12, has the meaning assigned to such term in Section 7.12(a).
“Incentive Distribution Right” means a non-voting Limited Partner Interest issued to the
General Partner, which Partnership Interest will confer upon the holder thereof only the rights and
obligations specifically provided in this Agreement with respect to Incentive Distribution Rights
(and no other rights otherwise available to or other obligations of a holder of a Partnership
Interest). Notwithstanding anything in this Agreement to the contrary, the holder of an Incentive
Distribution Right shall not be entitled to vote such Incentive Distribution Right on any
Partnership matter except as may otherwise be required by law.
“Incentive Distributions” means any amount of cash distributed to the holders of the Incentive
Distribution Rights pursuant to Section 6.4(a)(v), (vi) and (vii) and Section 6.4(b)(iii), (iv) and
(v).
“Indemnified Persons” has the meaning assigned to such term in Section 7.12(d).
“Indemnitee” means (a) the General Partner, (b) any Departing Partner, (c) any Person who is
or was an Affiliate of the General Partner (including Xxxxx Muse and its Subsidiaries) or any
Departing Partner, (d) any Person who is or was a member, partner, director, officer, fiduciary or
trustee of any Person that any of the preceding clauses of this definition describes, (e) any
Person who is or was serving at the request of the General Partner or any Departing Partner or any
Affiliate of the General Partner or any Departing Partner as an officer, director, member, partner,
fiduciary or trustee of another Person, provided that that Person shall not be an Indemnitee by
reason of providing, on a fee-for-services basis, trustee, fiduciary or custodial services, and (f)
any Person the General Partner designates as an “Indemnitee” for purposes of this Agreement.
“Initial Common Units” means the Common Units sold in the Initial Offering.
“Initial Limited Partners” means Regency Acquisition and the General Partner (with respect to
the Incentive Distribution Rights received by it pursuant to Section 5.2), and the Underwriters, in
each case upon being admitted to the Partnership in accordance with Section 10.1.
“Initial Offering” means the initial offering and sale of Common Units to the public, as
described in the Registration Statement.
“Initial Unit Price” means (a) with respect to the Common Units and the Subordinated Units,
the initial public offering price per Common Unit at which the Underwriters offered the Common
Units to the public for sale as set forth on the cover page of the prospectus included as part of
the Registration Statement and first issued at or after the time the Registration Statement
first became effective or (b) with respect to any other class or series of Units, the price
per Unit at which such class or series of Units is initially sold by the Partnership, as determined
by the
9
General Partner, in each case adjusted as the
General Partner determines to be appropriate
to give effect to any distribution, subdivision or combination of Units.
“Interim Capital Transactions” means the following transactions if they occur prior to the
Liquidation Date: (a) borrowings, refinancings or refundings of indebtedness (other than Working
Capital Borrowings and other than for items purchased on open account in the ordinary course of
business) by any Group Member and sales of debt securities of any Group Member; (b) sales of equity
interests of any Group Member (including the Common Units sold to the Underwriters in the Initial
Offering as well as pursuant to the exercise of the Over-Allotment Option); and (c) sales or other
voluntary or involuntary dispositions of any assets of any Group Member other than (i) sales or
other dispositions of inventory, accounts receivable and other assets in the ordinary course of
business, and (ii) sales or other dispositions of assets as part of normal retirements or
replacements.
“Issue Price” means the price at which a Unit is purchased from the Partnership, excluding any
sales commission or underwriting discount charged to the Partnership.
“Limited Partner” means, unless the context otherwise requires, (a) the Organizational Limited
Partner prior to its withdrawal from the Partnership, each Initial Limited Partner, each additional
person that becomes a Limited Partner pursuant to the terms of this Agreement and any Departing
Partner upon the change of its status from General Partner to Limited Partner pursuant to Section
11.3, in each case, in such Person’s capacity as a limited partner of the Partnership; provided,
however, that when the term “Limited Partner” is used herein in the context of any vote or other
approval, including Article XIII and Article XIV, such term shall not, solely for such purpose,
include any holder of an Incentive Distribution Right (solely with respect to its Incentive
Distribution Rights and not with respect to any other Limited Partner Interest held by such Person)
except as may otherwise be required by law.
“Limited Partner Interest” means the ownership interest of a Limited Partner in the
Partnership, which may be evidenced by Common Units, Subordinated Units, Incentive Distribution
Rights or other Partnership Securities or a combination thereof or interest therein, and includes
any and all benefits to which such Limited Partner is entitled as provided in this Agreement,
together with all obligations of such Limited Partner to comply with the terms and provisions of
this Agreement; provided, however, that when the term “Limited Partner Interest” is used herein in
the context of any vote or other approval, including Article XIII and Article XIV, such term shall
not, solely for such purpose, include any Incentive Distribution Right except as may otherwise be
required by law.
“Liquidation Date” means (a) in the case of an event giving rise to the dissolution of the
Partnership of the type described in clauses (a) and (b) of the first sentence of Section 12.2, the
date on which the applicable time period during which the holders of Outstanding Units have the
right to elect to continue the business of the Partnership has expired without such an election
being made, and (b) in the case of any other event giving rise to the dissolution of the
Partnership, the date on which such event occurs.
“
Liquidator” means one or more Persons selected by the General Partner to perform the
functions described in Section 12.4 as liquidating trustee of the Partnership within the meaning of
the
Delaware Act.
10
“Merger Agreement” has the meaning assigned to such term in Section 14.1.
“Minimum Quarterly Distribution” means $0.35 per Unit per Quarter (or with respect to the
period commencing on the Closing Date and ending on March 31, 2006, it means the product of $0.35
multiplied by a fraction of which the numerator is the number of days in such period and of which
the denominator is 90), subject to adjustment in accordance with Section 6.6 and Section 6.9.
“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 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 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); provided, that the determination of the items that have been
specially allocated under Section 6.1(d) shall be made as if Section 6.1(d)(xii) were not in this
Agreement.
“Net Loss” means, for any taxable year, the excess, if any, of the Partnership’s items of loss
and deduction (other than those items taken into account in the computation of Net Termination Gain
or Net Termination Loss) for such taxable year over the Partnership’s items of income and gain
(other than those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation of Net Loss shall
be determined in accordance with Section 5.5(b) and shall not include any items specially allocated
under Section 6.1(d); provided, that the determination of the items that have been specially
allocated under Section 6.1(d) shall be made as if Section 6.1(d)(xii) were not in this Agreement.
“Net Positive Adjustments” means, with respect to any Partner, the excess, if any, of the
total positive adjustments over the total negative adjustments made to the Capital Account of such
Partner pursuant to Book-Up Events and Book-Down Events.
“Net Termination Gain” means, for any taxable year, the sum, if positive, of all items of
income, gain, loss or deduction recognized by the Partnership after the Liquidation Date. The
11
items included in the determination of Net Termination Gain shall be determined in accordance with
Section 5.5(b) and shall not include any items of income, gain or loss specially allocated under
Section 6.1(d).
“Net Termination Loss” means, for any taxable year, the sum, if negative, of all items of
income, gain, loss or deduction recognized by the Partnership after the Liquidation Date. The
items included in the determination of Net Termination Loss shall be determined in accordance with
Section 5.5(b) and shall not include any items of income, gain or loss specially allocated under
Section 6.1(d).
“Non-citizen Assignee” means a Person whom the General Partner has determined does not
constitute an Eligible Citizen and as to whose Partnership Interest the General Partner has become
the Limited Partner, pursuant to Section 4.9.
“Nonrecourse Built-in Gain” means with respect to any Contributed Properties or Adjusted
Properties that are subject to a mortgage or pledge securing a Nonrecourse Liability, the amount of
any taxable gain that would be allocated to the Partners pursuant to Section 6.2(b)(i)(A), Section
6.2(b)(ii)(A) and Section 6.2(b)(iii) if such properties were disposed of in a taxable transaction
in full satisfaction of such liabilities and for no other consideration.
“Nonrecourse Deductions” means any and all items of loss, deduction or expenditure (including,
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(b), are attributable to a
Nonrecourse Liability.
“Nonrecourse Liability” has the meaning set forth in Treasury Regulation Section
1.752-1(a)(2).
“Notice of Election to Purchase” has the meaning assigned to such term in Section 15.1(b).
“
OLP GP” mean Regency OLP GP LLC, a
Delaware limited liability company and the general partner
of the Operating Partnership, and any successors thereto.
“Operating Expenditures” means all Partnership Group cash expenditures, including, without
limitation, taxes, reimbursements of the General Partner, repayment of Working Capital Borrowings,
debt service payments and capital expenditures, subject to the following:
(a) repayment of Working Capital Borrowings deducted from Operating Surplus pursuant to
clause (b)(iii) of the definition of Operating Surplus shall not constitute Operating
Expenditures when actually repaid;
(b) payments (including prepayments) of principal of and premium on indebtedness other
than Working Capital Borrowings shall not constitute Operating Expenditures; and
12
(c) Operating Expenditures shall not include (i) capital expenditures made for
Acquisitions or Capital Improvements, (ii) payment of transaction expenses relating to
Interim Capital Transactions or (iii) distributions to Partners.
Where capital expenditures are made in part for Acquisitions or for Capital Improvements and
in part for other purposes, the General Partner, with the concurrence of the Conflicts Committee,
shall determine the allocation between the amounts paid for each and, with respect to the part of
such capital expenditures made for other purposes, the period over which the capital expenditures
made for other purposes will be deducted as an Operating Expenditure in calculating Operating
Surplus.
“
Operating Partnership” means Regency Gas Services LP, a
Delaware limited partnership, and any
successors thereto (formerly Regency Gas Services LLC, a Delaware limited liability company).
“Operating Partnership Agreement” means the Agreement of the Limited Partnership of the
Operating Partnership, as it may be amended, supplemented or restated from time to time.
“Operating Surplus” means, with respect to any period ending prior to the Liquidation Date, on
a cumulative basis and without duplication,
(a) the sum of (i) $ 20.0 million, (ii) all cash and cash equivalents of the
Partnership Group on hand as of the close of business on the Closing Date, (iii) all cash
receipts of the Partnership Group for the period beginning on the Closing Date and ending on
the last day of such period, other than cash receipts from Interim Capital Transactions
(except to the extent specified in Section 6.5) and (iv) all cash receipts of the
Partnership Group after the end of such period but on or before the date of determination of
Operating Surplus with respect to such period resulting from Working Capital Borrowings,
less
(b) the sum of (i) Operating Expenditures for the period beginning on the Closing Date
and ending on the last day of such period (other than Operating Expenditures funded with
cash reserves established pursuant to clause (ii) of this paragraph (b)) and (ii) the amount
of cash reserves established by the General Partner to provide funds for future Operating
Expenditures and (iii) all Working Capital Borrowings not repaid within twelve months after
having been incurred; provided, however, that disbursements made (including contributions to
a Group Member or disbursements on behalf of a Group Member) or cash reserves established,
increased or reduced after the end of such period but on or before the date of determination
of Available Cash with respect to such period shall be deemed to have been made,
established, increased or reduced, for purposes of determining Operating Surplus, within
such period if the General Partner so determines.
Notwithstanding the foregoing, “Operating Surplus” with respect to the Quarter in which the
Liquidation Date occurs and any subsequent Quarter shall equal zero.
“Opinion of Counsel” means a written opinion of counsel (who may be regular counsel to the
Partnership or the General Partner or any of its Affiliates) acceptable to the General Partner.
13
“Option Closing Date” means the date or dates on which any Common Units are sold by the
Partnership to the Underwriters upon exercise of the Over-Allotment Option.
“Organizational Limited Partner” means Regency Acquisition in its capacity as the
organizational limited partner of the Partnership pursuant to this Agreement.
“Outstanding” means, with respect to Partnership Securities, all Partnership Securities that
are issued by the Partnership and reflected as outstanding on the Partnership’s books and records
as of the date of determination; provided, however, that if at any time any Person or Group (other
than the General Partner or its Affiliates) beneficially owns 20% or more of any Outstanding
Partnership Securities of any class then Outstanding, none of the Partnership Securities owned by
such Person or Group shall be voted on any matter and shall not be considered to be Outstanding
when sending notices of a meeting of Limited Partners to vote on any matter (unless otherwise
required by law), calculating required votes, determining the presence of a quorum or for other
similar purposes under this Agreement, except that Common Units so owned shall be considered to be
Outstanding for purposes of Section 11.1(b)(iv) (such Common Units shall not, however, be treated
as a separate class of Partnership Securities for purposes of this Agreement); provided, further,
that the foregoing limitation shall not apply (i) to any Person or Group who acquired 20% or more
of any Outstanding Partnership Securities of any class then Outstanding directly from the General
Partner or its Affiliates, (ii) to any Person or Group who acquired 20% or more of any Outstanding
Partnership Securities of any class then Outstanding directly or indirectly from a Person or Group
described in clause (i) provided that the General Partner shall have notified such Person or Group
in writing that such limitation shall not apply, or (iii) to any Person or Group who acquired 20%
or more of any Partnership Securities issued by the Partnership with the prior approval of the
Board of Directors of the general partner of the General Partner.
“Over-Allotment Option” means the over-allotment option granted to the Underwriters by the
Partnership pursuant to the Underwriting Agreement.
“Parity Units” means Common Units and all other Units of any other class or series that have
the right (i) to receive distributions of Available Cash from Operating Surplus pursuant to each of
subclauses (a)(i) and (a)(ii) of Section 6.4 in the same order of priority as the Common Units are
entitled to participate in such distributions or (ii) to participate in allocations of Net
Termination Gain pursuant to Section 6.1(c)(i)(B) in the same order of priority as the Common Units
are entitled to participate, in each case regardless of whether the amounts or value so distributed
or allocated to each Parity Unit equals the amount or value so distributed or allocated to each
Common Unit. Units whose participation in such (i) distributions of Available Cash from Operating
Surplus and (ii) allocations of Net Termination Gain are subordinate in order of priority to such
distributions and allocations on Common Units shall not constitute Parity Units even if such Units
are convertible under certain circumstances into Common Units or Parity Units.
“Partner Nonrecourse Debt” has the meaning set forth in Treasury Regulation Section
1.704-2(b)(4).
“Partner Nonrecourse Debt Minimum Gain” has the meaning set forth in Treasury Regulation
Section 1.704-2(i)(2).
14
“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 Partner and the Limited Partners.
“Partnership Group” means the Partnership and its Subsidiaries treated as a single
consolidated entity.
“Partnership Interest” means an interest in the Partnership, which shall include the General
Partner Interest and Limited Partner Interests.
“Partnership Minimum Gain” means that amount determined in accordance with the principles of
Treasury Regulation Section 1.704-2(d).
“Partnership Security” means any class or series of equity interest in the Partnership (but
excluding any options, rights, warrants and appreciation rights relating to an equity interest in
the Partnership), including without limitation, Common Units, Subordinated Units and Incentive
Distribution Rights.
“Per Unit Capital Amount” means, as of any date of determination, the Capital Account, stated
on a per Unit basis, underlying any Unit held by a Person other than the General Partner or any
Affiliate of the General Partner who holds Units.
“Percentage Interest” means as of any date of determination (a) as to the General Partner with
respect to General Partner Units and as to any Unitholder with respect to Units, the product
obtained by multiplying (i) 100% less the percentage applicable to clause (b) below by (ii) the
quotient obtained by dividing (A) the number of General Partner Units held by the General Partner
or the number of Units held by such Unitholder, as the case may be, by (B) the total number of all
Outstanding Units and all General Partner Units, and (b) as to the holders of other Partnership
Securities issued by the Partnership in accordance with Section 5.6, the percentage established as
a part of such issuance. The Percentage Interest with respect to an Incentive Distribution Right
shall at all times be zero.
“Person” means an individual or a corporation, firm, limited liability company, partnership,
joint venture, trust, unincorporated organization, association, governmental agency or political
subdivision thereof or other entity.
“Pro Rata” means (a) when modifying Units or any class thereof, apportioned equally among all
designated Units in accordance with their relative Percentage Interests, (b) when modifying
Partners or Record Holders, apportioned among all Partners or Record Holders, as the case may be,
in accordance with their relative Percentage Interests and (c) when modifying holders of Incentive
Distribution Rights, apportioned equally among all holders of Incentive
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Distribution Rights in accordance with the relative number or percentage of Incentive Distribution Rights held by each
such holder.
“Purchase Date” means the date determined by the General Partner as the date for purchase of
all Outstanding Limited Partner Interests of a certain class (other than Limited Partner Interests
owned by the General Partner and its Affiliates) pursuant to Article XV.
“Quarter” means, unless the context requires otherwise, a fiscal quarter of the Partnership
or, with respect to the first fiscal quarter of the Partnership after the Closing Date, the portion
of such fiscal quarter after the Closing Date.
“Recapture Income” means any gain recognized by the Partnership (computed without regard to
any adjustment required by Section 734 or Section 743 of the Code) upon the disposition of any
property or asset of the Partnership, which gain is characterized as ordinary income because it
represents the recapture of deductions previously taken with respect to such property or asset.
“Record Date” means the date established by the General Partner or otherwise in accordance
with this Agreement for determining (a) the identity of the Record Holders entitled to notice of,
or to vote at, any meeting of Limited Partners or entitled to vote by ballot or give approval of
Partnership action in writing without a meeting or entitled to exercise rights in respect of any
lawful action of Limited Partners or (b) the identity of Record Holders entitled to receive any
report or distribution or to participate in any offer.
“Record Holder” means the Person in whose name a Common Unit is registered on the books of the
Transfer Agent as of the opening of business on a particular Business Day or, with respect to other
Partnership Interests, the Person in whose name any such other Partnership Interest is registered
on the books that the General Partner has caused to be kept as of the opening of business on such
Business Day.
“Redeemable Interests” means any Partnership Interests for which a redemption notice has been
given, and has not been withdrawn, pursuant to Section 4.10.
“Regency Acquisition” means Regency Acquisition LP, a Delaware limited partnership, and any
successors thereto (formerly Regency Acquisition LLC, a Delaware limited liability company).
“Registration Statement” means the Registration Statement on Form S-1 (Registration No.
333-128332) as it has been and may be amended or supplemented from time to time, filed by the
Partnership with the Commission under the Securities Act to register the offering, sale and
delivery of the Common Units in the Initial Offering.
“Remaining Net Positive Adjustments” means as of the end of any taxable period, (i) with
respect to the Unitholders holding Common Units or Subordinated Units, the excess of (a) the Net
Positive Adjustments of the Unitholders holding Common Units or Subordinated Units as of the end of
such period over (b) the sum of those Partners’ Share of Additional Book Basis Derivative Items for
each prior taxable period, (ii) with respect to the General Partner (as holder of the General
Partner Units), the excess of (a) the Net Positive Adjustments of the General
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Partner as of the end of such period over (b) the sum of the General Partner’s Share of Additional Book Basis Derivative
Items with respect to the General Partner Units for each prior taxable period, and (iii) with
respect to the holders of Incentive Distribution Rights, the excess of (a) the Net Positive
Adjustments of the holders of Incentive Distribution Rights as of the end of such period over (b)
the sum of the Share of Additional Book Basis Derivative Items of the holders of the Incentive
Distribution Rights for each prior taxable period.
“Required Allocations” means (a) any limitation imposed on any allocation of Net Losses or Net
Termination Losses under Section 6.1(b) or Section 6.1(c)(ii) and (b) any allocation of an item of
income, gain, loss or deduction pursuant to Section 6.1(d)(i), Section 6.1(d)(ii), Section
6.1(d)(iv), Section 6.1(d)(vii) or Section 6.1(d)(ix).
“Residual Gain” or “Residual Loss” means any item of gain or loss, as the case may be, of the
Partnership recognized for federal income tax purposes resulting from a sale, exchange or other
disposition of a Contributed Property or Adjusted Property, to the extent such item of gain or loss
is not allocated pursuant to Section 6.2(b)(i)(A) or Section 6.2(b)(ii)(A), respectively, to
eliminate Book-Tax Disparities.
“Second Liquidation Target Amount” has the meaning assigned to such term in Section
6.1(c)(i)(E).
“Second Target Distribution” means $0.4375 per Unit per Quarter (or, with respect to the
period commencing on the Closing Date and ending on March 31, 2006, it means the product of $0.4375
multiplied by a fraction of which the numerator is equal to the number of days in such period and
of which the denominator is 90), subject to adjustment in accordance with Section 6.6 and Section
6.9.
“Securities Act” means the Securities Act of 1933, as amended from time to time and any
successor to such statute.
“Share of Additional Book Basis Derivative Items” means in connection with any allocation of
Additional Book Basis Derivative Items for any taxable period, (i) with respect to the Unitholders
holding Common Units or Subordinated Units, the amount that bears the same ratio to such Additional
Book Basis Derivative Items as the Unitholders’ Remaining Net Positive Adjustments as of the end of
such period bears to the Aggregate Remaining Net Positive Adjustments as of that time, (ii) with
respect to the General Partner (as holder of the General Partner Units), the amount that bears the
same ratio to such Additional Book Basis Derivative Items as the General Partner’s Remaining Net
Positive Adjustments as of the end of such period bears to the Aggregate Remaining Net Positive
Adjustment as of that time, and (iii) with respect to the Partners holding Incentive Distribution
Rights, the amount that bears the same ratio to such Additional Book Basis Derivative Items as the
Remaining Net Positive Adjustments of the
Partners holding the Incentive Distribution Rights as of the end of such period bears to the
Aggregate Remaining Net Positive Adjustments as of that time.
“Special Approval” means approval by a majority of the members of the Conflicts Committee.
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“Subordinated Unit” means a Unit representing a fractional part of the Partnership Interests
of all Limited Partners, and having the rights and obligations specified with respect to
Subordinated Units in this Agreement. The term “Subordinated Unit” as used herein does not include
a Common Unit or Parity Unit. A Subordinated Unit that is convertible into a Common Unit or a
Parity Unit shall not constitute a Common Unit or Parity Unit until such conversion occurs.
“Subordination Period” means the period commencing on the Closing Date and ending on the first
to occur of the following dates:
(a) the first day of any Quarter beginning after December 31, 2008 in respect of which
(i) (A) distributions of Available Cash from Operating Surplus on each of the Outstanding
Common Units and Subordinated Units and any other Outstanding Units that are senior or equal
in right of distribution to the Subordinated Units with respect to each of the three
consecutive, non-overlapping four-Quarter periods immediately preceding such date equaled or
exceeded the sum of the Minimum Quarterly Distribution on all Outstanding Common Units and
Subordinated Units and any other Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units during such periods and (B) the Adjusted Operating
Surplus generated during each of the three consecutive, non-overlapping four-Quarter periods
immediately preceding such date equaled or exceeded the sum of the Minimum Quarterly
Distribution on all of the Common Units and Subordinated Units and any other Units that are
senior or equal in right of distribution to the Subordinated Units that were Outstanding
during such periods on a Fully Diluted Basis, plus the related distribution on the General
Partner Units, during such periods and (ii) there are no Cumulative Common Unit Arrearages;
(b) the first date on which there are no longer outstanding Subordinated Unites to the
conversion of all Subordinated Units under Section 5.7(b); and
(c) the date on which the General Partner is removed as general partner of the
Partnership upon the requisite vote by holders of Outstanding Units under circumstances
where Cause does not exist and Units held by the General Partner and its Affiliates are not
voted in favor of such removal.
“Subsidiary” means, with respect to any Person, (a) a corporation of which more than 50% of
the voting power of shares entitled (without regard to the occurrence of any contingency) to vote
in the election of directors or other governing body of such corporation is owned, directly or
indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such
Person or a combination thereof, (b) a partnership (whether general or limited) in which such
Person or a Subsidiary of such Person is, at the date of determination, a general or limited
partner of such partnership, but only if more than 50% of the partnership interests of such
partnership (considering all of the partnership interests of the partnership as a single class) is
owned, directly
or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of
such Person, or a combination thereof, and if a limited partner, only it has the power to remove
the general partner or (c) any other Person (other than a corporation or a partnership) in which
such Person, one or more Subsidiaries of such Person, or a combination thereof, directly or
indirectly, at the date of determination, has (i) at least a majority ownership interest or (ii)
the power to elect or direct the election of a majority of the directors or other governing body of
such Person.
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“Surviving Business Entity” has the meaning assigned to such term in Section 14.2(b).
“Third Liquidation Target Amount” has the meaning assigned to such term in Section
6.1(c)(i)(F).
“Third Target Distribution” means $0.5250 per Unit per Quarter (or, with respect to the period
commencing on the Closing Date and ending on March 31, 2006, it means the product of $0.5250
multiplied by a fraction of which the numerator is equal to the number of days in such period and
of which the denominator is 90), subject to adjustment in accordance with Section 6.6 and Section
6.9.
“Trading Day” has the meaning assigned to such term in Section 15.1(a).
“Transfer” has the meaning assigned to such term in Section 4.4(a).
“Transfer Agent” means such bank, trust company or other Person (including the General Partner
or one of its Affiliates) as shall be appointed from time to time by the General Partner to act as
registrar and transfer agent for the Common Units; provided, that if no Transfer Agent is
specifically designated for any other Partnership Securities, the General Partner shall act in such
capacity.
“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 January 30, 2006 among the
Underwriters, the Partnership, the General Partner, Regency GP LLC, the Operating Partnership and
Regency Acquisition, providing for the purchase of Common Units by such Underwriters.
“Unit Majority” means, during the Subordination Period, at least a majority of the Outstanding
Common Units (excluding Common Units owned by the General Partner and its Affiliates) voting as a
class and at least a majority of the Outstanding Subordinated Units voting as a single class, and
after the end of the Subordination Period, at least a majority of the Outstanding Units.
“Unitholders” means the holders of Units.
“Unpaid MQD” has the meaning assigned to such term in Section 6.1(c)(i)(B).
“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).
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“Unrealized Loss” attributable to any item of Partnership property means, as of any date of
determination, the excess, if any, of (a) the Carrying Value of such property as of such date
(prior to any adjustment to be made pursuant to Section 5.5(d) as of such date) over (b) the fair
market value of such property as of such date (as determined under Section 5.5(d)).
“Unrecovered Capital” means at any time, with respect to a Unit, the Initial Unit Price less
the sum of all distributions constituting Capital Surplus theretofore made in respect of an Initial
Common Unit and any distributions of cash (or the Net Agreed Value of any distributions in kind) in
connection with the dissolution and liquidation of the Partnership theretofore made in respect of
an Initial Common Unit, adjusted as the General Partner determines to be appropriate to give effect
to any distribution, subdivision or combination of such Units.
“U.S. GAAP” means United States generally accepted accounting principles consistently applied.
“Withdrawal Opinion of Counsel” has the meaning assigned to such term in Section 11.1(b).
“Working Capital Borrowings” means borrowings used solely for working capital purposes or to
pay distributions to Partners made pursuant to a credit facility, commercial paper or similar
financing arrangement; provided, that when incurred it is the intent of the borrower to repay such
borrowings within 12 months from other than additional Working Capital Borrowings.
Section 1.2.
Construction. Unless the context requires otherwise: (a) any pronoun used in
this Agreement shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice versa; (b) references
to Articles and Sections refer to Articles and Sections of this Agreement; (c) the term “
include”
or “
includes” means includes, without limitation, and “
including” means including, without
limitation; and (d) the conjunctives “and” and “or” shall include both the conjunctive and the
disjunctive.
Section 2.1.
Formation. The General Partner and the Organizational Limited Partner have
previously formed the Partnership as a limited partnership pursuant to the provisions of the
Delaware Act and hereby amend and restate the original Agreement of Limited Partnership of
Regency
Energy Partners LP 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 and
a Partner has no interest in specific Partnership property.
Section 2.2.
Name. The name of the Partnership shall be “
Regency Energy Partners LP.” The
Partnership’s business may be conducted under any other name or names as determined by the General
Partner, including the name of the General Partner. The words “Limited Partnership,” “L.P.,”
“Ltd.” or similar words or letters shall be included in the
20
Partnership’s name where necessary for
the purpose of complying with the laws of any jurisdiction that so requires. The General Partner
may change the name of the Partnership at any time and from time to time and shall notify the
Limited Partners of such change in the next regular communication to the Limited Partners.
Section 2.3.
Registered Office; Registered Agent; Principal Office; Other Offices. Unless
and until changed by the General Partner, the registered office of the Partnership in the State of
Delaware shall be located at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000, and
the registered agent for service of process on the Partnership in the State of Delaware at such
registered office shall be Corporation Trust Center. The principal office of the Partnership shall
be located at 0000 Xxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 or such other place as the General
Partner may from time to time designate by notice to the Limited Partners. The Partnership may
maintain offices at such other place or places within or outside the State of Delaware as the
General Partner determines to be necessary or appropriate. The address of the General Partner
shall be 0000 Xxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 or such other place as the General Partner
may from time to time designate by notice to the Limited Partners.
Section 2.4.
Purpose and Business. The purpose and nature of the business to be conducted
by the Partnership shall be to (a) engage directly in, or enter into or form, hold or dispose of
any corporation, partnership, joint venture, limited liability company or other arrangement to
engage indirectly in, any business activity that is approved by the General Partner and that
lawfully may be conducted by a limited partnership organized pursuant to the Delaware Act and, in
connection therewith, to exercise all of the rights and powers conferred upon the Partnership
pursuant to the agreements relating to such business activity, and (b) do anything necessary or
appropriate to the foregoing, including the making of capital contributions or loans to a Group
Member;
provided, however, that the General Partner shall not cause the Partnership to engage,
directly or indirectly, in any business activity that the General Partner determines would cause
the Partnership to be treated as an association taxable as a corporation or otherwise taxable as an
entity for federal income tax purposes. To the fullest extent permitted by law, the General
Partner shall have no duty or obligation to propose or approve, and may decline to propose or
approve, the conduct by the Partnership of any business free of any fiduciary duty or obligation
whatsoever to the Partnership or any Limited Partner and, in declining to so propose or approve,
shall not be required to act in good faith or pursuant to any other standard imposed by this
Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the
Delaware Act or any other law, rule or regulation or at equity.
Section 2.5.
Powers. The Partnership shall be empowered to do any and all acts and things
necessary and appropriate for the furtherance and accomplishment of the purposes and business
described in Section 2.4 and for the protection and benefit of the Partnership.
(a) Each Limited Partner hereby constitutes and appoints the General Partner and, if a
Liquidator shall have been selected pursuant to Section 12.3, the Liquidator (and any
successor to the Liquidator by merger, transfer, assignment, election or otherwise) and each
of their authorized officers and attorneys-in-fact, as the case may be, with full power of
substitution, as his true and lawful agent and attorney-in-fact, with full power and
authority in his name, place and xxxxx:
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(i) To execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices all certificates, documents and other instruments (A)
that the General Partner or the Liquidator determines to be necessary or appropriate
to form, qualify or continue the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the limited partners have limited
liability) in the State of Delaware and in all other jurisdictions in which the
Partnership may conduct business or own property (including this Agreement and the
Certificate of Limited Partnership and all amendments or restatements hereof or
thereof); (B) that the General Partner or the Liquidator determines to be necessary
or appropriate to reflect, in accordance with its terms, any amendment, change,
modification or restatement of this Agreement; (C) that the General Partner or the
Liquidator determines to be necessary or appropriate to reflect the dissolution and
liquidation of the Partnership pursuant to the terms of this Agreement (including
conveyances and a certificate of cancellation); (D) relating to the admission,
withdrawal, removal or substitution of any Partner pursuant to, or other events
described in, Article IV, Article X, Article XI or Article XII; (E) 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) relating to a merger,
consolidation or conversion of the Partnership pursuant to Article XIV (including
agreements and a certificate of merger); and
(ii) to execute, swear to, acknowledge, deliver, file and record all ballots,
consents, approvals, waivers, certificates, documents and other instruments that the
General Partner or the Liquidator determines to be necessary or appropriate (A) 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 (B) effectuate the terms or intent of this Agreement;
provided, however, that when required by Section 13.3 or any other provision of this
Agreement that establishes a percentage of the Limited Partners or of the Limited
Partners of any class or series required to take any action, the General Partner and
the Liquidator may exercise the power of attorney made in this Section 2.6(a)(ii)
only after the necessary vote,
consent or approval of the Limited Partners or of the Limited Partners of such
class or series, as applicable.
Nothing contained in this Section 2.6(a) shall be construed as authorizing the General
Partner to amend this Agreement except in accordance with Article XIII or as may be
otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be irrevocable and a power
coupled with an interest, and it shall survive and, to the maximum extent permitted by law,
not be affected by the subsequent death, incompetency, disability, incapacity, dissolution,
bankruptcy or termination of any Limited Partner, the transfer of all or any portion of such
Limited Partner’s Limited Partner Interest and shall extend to such Limited Partner’s heirs,
successors, assigns and personal representatives. Each such Limited Partner hereby agrees
to be bound by any representation made by the General
22
Partner or the Liquidator acting in
good faith pursuant to such power of attorney; and each such Limited Partner, to the maximum
extent permitted by law, hereby waives any and all defenses that may be available to
contest, negate or disaffirm the action of the General
Partner or the Liquidator taken in
good faith under such power of attorney. Each Limited Partner shall execute and deliver to
the General Partner or the Liquidator, within 15 days after receipt of the request therefor,
such further designation, powers of attorney and other instruments as the General Partner or
the Liquidator may request in order to effectuate this Agreement and the purposes of the
Partnership.
Section 2.7.
Term. The term of the Partnership commenced upon the filing of the
Certificate of Limited Partnership in accordance with the Delaware Act and shall continue in
existence until the dissolution of the Partnership in accordance with the provisions of Article
XII. The existence of the Partnership as a separate legal entity shall continue until the
cancellation of the Certificate of Limited Partnership as provided in the Delaware Act.
Section 2.8.
Title to Partnership Assets. Title to Partnership assets, whether real,
personal or mixed and whether tangible or intangible, shall be deemed to be owned by the
Partnership as an entity, and no Partner, individually or collectively, shall have any ownership
interest in such Partnership assets or any portion thereof. Title to any or all of the Partnership
assets may be held in the name of the Partnership, the General Partner, one or more of its
Affiliates or one or more nominees, as the General Partner may determine. The General Partner
hereby declares and warrants that any Partnership assets for which record title is held in the name
of the General Partner or one or more of its Affiliates or one or more nominees shall be held by
the General Partner or such Affiliate or nominee for the use and benefit of the Partnership in
accordance with the provisions of this Agreement;
provided, however, that the General Partner shall
use reasonable efforts to cause record title to such assets (other than those assets in respect of
which the General Partner determines that the expense and difficulty of conveyancing makes transfer
of record title to the Partnership impracticable) to be vested in the Partnership as soon as
reasonably practicable.
Section 3.1.
Limitation of Liability. The Limited Partners and 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, in its capacity as such, shall
participate in the operation, management or control (within the meaning of the Delaware Act) of the
Partnership’s business, transact any business in the Partnership’s name or have the power to sign
documents for or otherwise bind the Partnership. Any action taken by any Affiliate of the General
Partner or any officer, director, employee, manager, member, general partner, agent or trustee of
the General Partner or any of its Affiliates, or any officer, director, employee, manager, member,
general partner, agent or trustee of a Group Member, in its capacity as such, shall not be deemed
to be participation in the control of the business of the Partnership by a limited partner of the
Partnership (within the meaning of Section 17-303(a) of the Delaware Act) and shall not affect,
impair or eliminate the limitations on the liability of the Limited Partners or assignees under
this Agreement.
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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, any Limited Partner 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 shall have any rights by
virtue of this Agreement in any business ventures of any Limited Partner.
(a) In addition to other rights provided by this Agreement or by applicable law, and
except as limited by Section 3.4(b), each Limited Partner shall have the right, for a
purpose reasonably related to such Limited Partner’s interest as a Limited Partner in the
Partnership, upon reasonable written demand stating the purpose of such demand and at such
Limited Partner’s own expense:
(i) promptly after becoming available, to obtain a copy of the Partnership’s
federal, state and local income tax returns for each year;
(ii) to obtain a current list of the name and last known business, residence or
mailing address of each Partner;
(iii) 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
which each other Partner has made or agreed to contribute in the future, and the
date on which each other Partner became a Partner;
(iv) to obtain a copy of this Agreement and the Certificate of Limited
Partnership and all amendments thereto, together with a copy of each power 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 status of the business
and financial condition of the Partnership Group; and
(vi) to obtain such other information regarding the affairs of the Partnership
as is just and reasonable.
(b) The General Partner may keep confidential from the Limited Partners, for such
period of time as the General Partner deems reasonable, (i) any information that the General
Partner reasonably believes to be in the nature of trade secrets or (ii) other information
the disclosure of which the General Partner in good faith believes (A) is not in the best
interests of the Partnership Group, (B) could damage the Partnership Group or its business
or (C) that any Group Member is required by law or by agreement with any third party to keep
confidential (other than agreements with Affiliates of the Partnership the primary purpose
of which is to circumvent the obligations set forth in this Section 3.4).
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ARTICLE IV
CERTIFICATES; RECORD HOLDERS; TRANSFER OF
PARTNERSHIP INTERESTS; REDEMPTION OF PARTNERSHIP INTERESTS
Section 4.1. Certificates. Upon the Partnership’s issuance of Common Units or Subordinated
Units to any Person, the Partnership shall issue, upon the request of such Person, one or more
Certificates in the name of such Person evidencing the number of such Units being so issued. In
addition, (a) upon the General Partner’s request, the Partnership shall issue to it one or more
Certificates in the name of the General Partner evidencing its General Partner Units and (b) upon
the request of any Person owning Incentive Distribution Rights or any other Partnership Securities
other than Common Units or Subordinated Units, the Partnership shall issue to such Person one or
more certificates evidencing such Incentive Distribution Rights or other Partnership Securities
other than Common Units or Subordinated Units. Certificates shall be executed on behalf of the
Partnership by the Chairman of the Board, President or any Executive Vice President or Vice
President and the Chief Financial Officer or the Secretary or any Assistant Secretary of the
General Partner. No Common Unit Certificate shall be valid for any purpose until it has been
countersigned by the Transfer Agent; provided, however, that if the General Partner elects to issue
Common Units in global form, the Common Unit Certificates shall be valid upon receipt of a
certificate from the Transfer Agent certifying that the Common Units have been duly registered in
accordance with the directions of the Partnership. Subject to the requirements of Section 6.7(c),
the Partners holding Certificates evidencing Subordinated Units may exchange such Certificates for
Certificates evidencing Common Units on or after the date on which such Subordinated Units are
converted into Common Units pursuant to the terms of Section 5.7.
Section 4.2. Mutilated, Destroyed, Lost or Stolen Certificates.
(a) If any mutilated Certificate is surrendered to the Transfer Agent, the appropriate
officers of the General Partner on behalf of the Partnership shall execute, and the Transfer
Agent shall countersign and deliver in exchange therefor, a new Certificate evidencing the
same number and type of Partnership Securities as the Certificate so surrendered.
(b) The appropriate officers of the General Partner on behalf of the Partnership shall
execute and deliver, and the Transfer Agent shall countersign, a new Certificate in place of
any Certificate previously issued if the Record Holder of the Certificate:
(i) makes proof by affidavit, in form and substance satisfactory to the General
Partner, that a previously issued Certificate has been lost, destroyed or stolen;
(ii) requests the issuance of a new Certificate before the General Partner has
notice that the Certificate has been acquired by a purchaser for value in good faith
and without notice of an adverse claim;
(iii) upon request by the General Partner, delivers to the General Partner a
bond, in form and substance satisfactory to the General Partner, with
25
surety or
sureties and with fixed or open penalty as the General Partner may direct to
indemnify the Partnership, the Partners, the General Partner and the Transfer Agent
against any claim that may be made on account of the alleged loss, destruction or
theft of the Certificate; and
(iv) satisfies any other reasonable requirements imposed by the General
Partner.
If a Limited Partner fails to notify the General Partner within a reasonable period of time
after he has notice of the loss, destruction or theft of a Certificate, and a transfer of
the Limited Partner Interests represented by the Certificate is registered before the
Partnership, the General Partner or the Transfer Agent receives such notification, the
Limited Partner shall be precluded from making any claim against the Partnership, the
General Partner or the Transfer Agent for such transfer or for a new Certificate.
(c) As a condition to the issuance of any new Certificate under this Section 4.2, the
General Partner may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Transfer Agent) reasonably connected therewith.
Section 4.3. Record Holders. The Partnership shall be entitled to recognize the Record
Holder as the Partner with respect to any Partnership Interest and, accordingly, shall not be bound
to recognize any equitable or other
claim to, or interest in, such Partnership Interest on the part of any other Person, regardless of
whether the Partnership shall have actual or other notice thereof, except as otherwise provided by
law or any applicable rule, regulation, guideline or requirement of any National Securities
Exchange on which such Partnership Interests are listed or admitted to trading. Without limiting
the foregoing, when a Person (such as a broker, dealer, bank, trust company or clearing corporation
or an agent of any of the foregoing) is acting as nominee, agent or in some other representative
capacity for another Person in acquiring and/or holding Partnership Interests, as between the
Partnership on the one hand, and such other Persons on the other, such representative Person shall
be the Record Holder of such Partnership Interest.
Section 4.4. Transfer Generally.
(a) The term “transfer,” when used in this Agreement with respect to a Partnership
Interest, shall be deemed to refer to a transaction (i) by which the General Partner assigns
its General Partner Interest to another Person or by which a holder of Incentive
Distribution Rights assigns its Incentive Distribution Rights to another Person, and
includes a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange
and any other disposition by law or otherwise or (ii) by which the holder of a Limited
Partner Interest (other than an Incentive Distribution Right) assigns such Limited Partner
Interest to another Person who is or becomes a Limited Partner, and includes a sale,
assignment, gift, exchange and any other disposition by law or otherwise, including any
transfer upon foreclosure of any pledge, encumbrance, hypothecation or mortgage.
(b) No Partnership Interest shall be transferred, in whole or in part, except in
accordance with the terms and conditions set forth in this Article IV. Any transfer or
26
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 stockholder, member, partner or other owner of the General Partner of any or all of the
shares of stock, membership interests, partnership interests or other ownership interests in
the General Partner.
(a) The General Partner shall keep or cause to be kept on behalf of the Partnership a
register in which, subject to such reasonable regulations as it may prescribe and subject to
the provisions of Section 4.5(b), the Partnership will provide for the registration and
transfer of Limited Partner Interests. The Transfer Agent is hereby appointed registrar and
transfer agent for the purpose of registering Common Units and transfers of such Common
Units as herein provided. The Partnership shall not recognize transfers of Certificates
evidencing Limited Partner Interests unless such transfers are effected in the manner
described in this Section 4.5. Upon surrender of a Certificate for registration of transfer
of any Limited Partner Interests evidenced by a Certificate, and subject to the provisions
of Section 4.5(b), the appropriate officers of the General Partner on behalf of the
Partnership shall execute and deliver, and in the case of Common Units, the Transfer Agent
shall countersign and deliver, in the name of the holder or the designated transferee or
transferees, as required pursuant to the holder’s instructions, one
or more new Certificates evidencing the same aggregate number and type of Limited
Partner Interests as was evidenced by the Certificate so surrendered.
(b) Except as otherwise provided in Section 4.9, the General Partner shall not
recognize any transfer of Limited Partner Interests until the Certificates evidencing such
Limited Partner Interests are surrendered for registration of transfer. No charge shall be
imposed by the General Partner for such transfer; provided, that as a condition to the
issuance of any new Certificate under this Section 4.5, the General Partner may require the
payment of a sum sufficient to cover any tax or other governmental charge that may be
imposed with respect thereto.
(c) Subject to (i) the foregoing provisions of this Section 4.5, (ii) Section 4.3,
(iii) Section 4.8, (iv) with respect to any class or series of Limited Partner Interests,
the provisions of any statement of designations or amendment to this Agreement establishing
such class or series, (v) any contractual provisions binding on any Limited Partner and (vi)
provisions of applicable law including the Securities Act, Limited Partner Interests (other
than the Incentive Distribution Rights) shall be freely transferable.
(d) The General Partner and its Affiliates shall have the right at any time to transfer
their Subordinated Units and Common Units (whether issued upon conversion of the
Subordinated Units or otherwise) to one or more Persons.
27
(a) Subject to Section 4.6(c) below, prior to December 31, 2015, the General Partner
shall not transfer all or any part of its General Partner Interest (represented by General
Partner Units) to a Person unless such transfer (i) has been approved by the prior written
consent or vote of the holders of at least a majority of the Outstanding Common Units
(excluding Common Units held by the General Partner and its Affiliates) or (ii) is of all,
but not less than all, of its General Partner Interest to (A) an Affiliate of the General
Partner (other than an individual) or (B) another Person (other than an individual) in
connection with the merger or consolidation of the General Partner with or into such other
Person or the transfer by the General Partner of all or substantially all of its assets to
such other Person.
(b) Subject to Section 4.6(c) below, on or after December 31, 2015, the General Partner
may transfer all or any of its General Partner Interest without Unitholder approval.
(c) Notwithstanding anything herein to the contrary, no transfer by the General Partner
of all or any part of its General Partner Interest to another Person shall be permitted
unless (i) the transferee agrees to assume the rights and duties of the General Partner
under this Agreement and to be bound by the provisions of this Agreement, (ii) the
Partnership receives an Opinion of Counsel that such transfer would not result in the loss
of limited liability of any Limited Partner or cause the Partnership to be treated as an
association taxable as a corporation or otherwise to be taxed as an entity for federal
income tax purposes (to the extent not already so treated or taxed) and (iii) such
transferee also agrees to purchase all (or the appropriate portion thereof, if applicable)
of the partnership or membership interest of the General Partner as the general partner or
managing member, if any, of each other Group Member. In the case of a transfer pursuant to
and in compliance with this Section 4.6, the transferee or successor (as the case may be)
shall, subject to compliance with the terms of Section 10.3, be admitted to the Partnership
as the General Partner immediately prior to the transfer of the General Partner Interest,
and the business of the Partnership shall continue without dissolution.
Section 4.7.
Transfer of Incentive Distribution Rights. Prior to December 31, 2015, a
holder of Incentive Distribution Rights may transfer any or all of the Incentive Distribution
Rights held by such holder without any consent of the Unitholders to (a) an Affiliate of such
holder (other than an individual) or (b) another Person (other than an individual) in connection
with (i) the merger or consolidation of such holder of Incentive Distribution Rights with or into
such other Person, (ii) the transfer by such holder of all or substantially all of its assets to
such other Person or (iii) the sale of all of the ownership interests in such holder. Any other
transfer of the Incentive Distribution Rights prior to December 31, 2015 shall require the prior
approval of holders of at least a majority of the Outstanding Common Units (excluding Common Units
held by the General Partner and its Affiliates). On or after December 31, 2015, the General
Partner or any other holder of Incentive Distribution Rights may transfer any or all of its
Incentive Distribution Rights without Unitholder approval. Notwithstanding anything herein to the
contrary, no transfer of Incentive Distribution Rights to another Person shall be permitted unless
the transferee agrees to be bound by the provisions of this Agreement.
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(a) Except as provided in Section 4.8(d) below, but notwithstanding the other
provisions of this Article IV, no transfer of any Partnership Interests shall be made if
such transfer would (i) violate the then applicable federal or state securities laws or
rules and regulations of the Commission, any state securities commission or any other
governmental authority with jurisdiction over such transfer, (ii) terminate the existence or
qualification of the Partnership under the laws of the jurisdiction of its formation or
(iii) cause the Partnership to be treated as an association taxable as a corporation or
otherwise to be taxed as an entity for federal income tax purposes (to the extent not
already so treated or taxed).
(b) The General Partner may impose restrictions on the transfer of Partnership
Interests if it receives an Opinion of Counsel that such restrictions are necessary to avoid
a significant risk of the Partnership becoming taxable as a corporation or otherwise
becoming taxable as an entity for federal income tax purposes. The General Partner may
impose such restrictions by amending this Agreement; provided, however, that any amendment
that would result in the delisting or suspension of trading of any class of Limited Partner
Interests on the principal National Securities Exchange on which such class of Limited
Partner Interests is then listed or admitted to trading must be approved, prior to such
amendment being effected, by the holders of at least a majority of the Outstanding Limited
Partner Interests of such class.
(c) The transfer of a Subordinated Unit that has converted into a Common Unit shall be
subject to the restrictions imposed by Section 6.7(c).
(d) Nothing contained in this Article IV, or elsewhere in this Agreement, shall
preclude the settlement of any transactions involving Partnership Interests entered into
through the facilities of any National Securities Exchange on which such Partnership
Interests are listed or admitted to trading.
(e) If any Partnership Interest is evidenced in certificated form, each such
certificate shall bear a conspicuous legend in substantially the following form:
THE HOLDER OF THIS SECURITY ACKNOWLEDGES FOR THE BENEFIT OF
REGENCY ENERGY PARTNERS
LP THAT THIS SECURITY MAY NOT BE SOLD, OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED IF SUCH TRANSFER WOULD (A) VIOLATE THE THEN APPLICABLE FEDERAL OR STATE
SECURITIES LAWS OR RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION,
ANY STATE SECURITIES COMMISSION OR ANY OTHER GOVERNMENTAL AUTHORITY WITH
JURISDICTION OVER SUCH TRANSFER, (B) TERMINATE THE EXISTENCE OR QUALIFICATION OF
REGENCY ENERGY PARTNERS LP UNDER THE LAWS OF THE STATE OF DELAWARE, OR (C) CAUSE
REGENCY ENERGY PARTNERS LP 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
29
TAXED). REGENCY GP LP, THE GENERAL PARTNER OF REGENCY
ENERGY PARTNERS LP, MAY IMPOSE ADDITIONAL RESTRICTIONS ON THE TRANSFER OF THIS
SECURITY IF IT RECEIVES AN OPINION OF COUNSEL THAT SUCH RESTRICTIONS ARE NECESSARY
TO AVOID A SIGNIFICANT RISK OF REGENCY ENERGY PARTNERS LP BECOMING TAXABLE AS A
CORPORATION OR OTHERWISE BECOMING TAXABLE AS AN ENTITY FOR FEDERAL INCOME TAX
PURPOSES. THE RESTRICTIONS SET FORTH ABOVE SHALL NOT PRECLUDE THE SETTLEMENT OF ANY
TRANSACTIONS INVOLVING THIS SECURITY ENTERED INTO THROUGH THE FACILITIES OF ANY
NATIONAL SECURITIES EXCHANGE ON WHICH THIS SECURITY IS LISTED OR ADMITTED TO
TRADING.
(a) If any Group Member is or becomes subject to any federal, state or local law or
regulation that the General Partner determines would create a substantial risk of
cancellation or forfeiture of any property in which the Group Member has an interest based
on the nationality, citizenship or other related status of a Limited Partner, the General
Partner may request any Limited Partner to furnish to the General Partner, within 30 days
after receipt of such request, an executed Citizenship Certification or such other
information concerning his nationality, citizenship or other related status (or, if the
Limited Partner is a nominee holding for the account of another Person, the nationality,
citizenship or other related status of such Person) as the General Partner may request.
If a Limited Partner fails to furnish to the General Partner within the aforementioned
30-day period such Citizenship Certification or other requested information or if upon
receipt of such Citizenship Certification or other requested information the General Partner
determines that a Limited Partner is not an Eligible Citizen, the Limited Partner Interests
owned by such Limited Partner shall be subject to redemption in accordance with the
provisions of Section 4.10. In addition, the General Partner may require that the status of
any such Limited Partner be changed to that of a Non-citizen Assignee and, thereupon, the
General Partner shall be substituted for such Non-citizen Assignee as the Limited Partner in
respect of the Non-citizen Assignee’s Limited Partner Interests.
(b) The General Partner shall, in exercising voting rights in respect of Limited
Partner Interests held by it on behalf of Non-citizen Assignees, distribute the votes in the
same ratios as the votes of Partners (including the General Partner) in respect of Limited
Partner Interests other than those of Non-citizen Assignees are cast, either for, against or
abstaining as to the matter.
(c) Upon dissolution of the Partnership, a Non-citizen Assignee shall have no right to
receive a distribution in kind pursuant to Section 12.4 but shall be entitled to the cash
equivalent thereof, and the Partnership shall provide cash in exchange for an assignment of
the Non-citizen Assignee’s share of any distribution in kind. Such payment and assignment
shall be treated for Partnership purposes as a purchase by the Partnership from the
Non-citizen Assignee of his Limited Partner Interest (representing his right to receive his
share of such distribution in kind).
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(d) At any time after he can and does certify that he has become an Eligible Citizen, a
Non-citizen Assignee may, upon application to the General Partner, request that with respect
to any Limited Partner Interests of such Non-citizen Assignee not redeemed pursuant to
Section 4.10, such Non-citizen Assignee be admitted as a Limited Partner, and upon approval
of the General Partner, such Non-citizen Assignee shall be admitted as a Limited Partner and
shall no longer constitute a Non-citizen Assignee and the General Partner shall cease to be
deemed to be the Limited Partner in respect of the Non-citizen Assignee’s Limited Partner
Interests.
(a) If at any time a Limited Partner fails to furnish a Citizenship Certification or
other information requested within the 30-day period specified in Section 4.9(a), or if upon
receipt of such Citizenship Certification or other information the General Partner
determines, with the advice of counsel, that a Limited Partner is not an Eligible Citizen,
the Partnership may, unless the Limited Partner establishes to the satisfaction of the
General Partner that such Limited Partner is an Eligible Citizen or has transferred his
Partnership Interests to a Person who is an Eligible Citizen and who furnishes a Citizenship
Certification to the General Partner prior to the date fixed for redemption as provided
below, redeem the Limited Partner Interest of such Limited Partner as follows:
(i) The General Partner shall, not later than the 30th day before the date
fixed for redemption, give notice of redemption to the Limited Partner, at his
last address designated on the records of the Partnership or the Transfer
Agent, by registered or certified mail, postage prepaid. The notice shall be deemed
to have been given when so mailed. The notice shall specify the Redeemable
Interests, the date fixed for redemption, the place of payment, that payment of the
redemption price will be made upon surrender of the Certificate evidencing the
Redeemable Interests and that on and after the date fixed for redemption no further
allocations or distributions to which the Limited Partner would otherwise be
entitled in respect of the Redeemable Interests will accrue or be made.
(ii) The aggregate redemption price for Redeemable Interests shall be an amount
equal to the Current Market Price (the date of determination of which shall be the
date fixed for redemption) of Limited Partner Interests of the class to be so
redeemed multiplied by the number of Limited Partner Interests of each such class
included among the Redeemable Interests. The redemption price shall be paid, as
determined by the General Partner, in cash or by delivery of a promissory note of
the Partnership in the principal amount of the redemption price, bearing interest at
the rate of 10% annually and payable in three equal annual installments of principal
together with accrued interest, commencing one year after the redemption date.
(iii) Upon surrender by or on behalf of the Limited Partner, at the place
specified in the notice of redemption, of the Certificate evidencing the Redeemable
Interests, duly endorsed in blank or accompanied by an assignment duly executed in
blank, the Limited Partner or his duly authorized representative shall be entitled
to receive the payment therefor.
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(iv) After the redemption date, Redeemable Interests shall no longer constitute
issued and Outstanding Limited Partner Interests.
(b) The provisions of this Section 4.10 shall also be applicable to Limited Partner
Interests held by a Limited Partner as nominee of a Person determined to be other than an
Eligible Citizen.
(c) Nothing in this Section 4.10 shall prevent the recipient of a notice of redemption
from transferring his Limited Partner Interest before the redemption date if such transfer
is otherwise permitted under this Agreement. Upon receipt of notice of such a transfer, the
General Partner shall withdraw the notice of redemption, provided the transferee of such
Limited Partner Interest certifies to the satisfaction of the General Partner that he is an
Eligible Citizen. If the transferee fails to make such certification, such redemption shall
be effected from the transferee on the original redemption date.
Section 5.1. Organizational Contributions
In connection with the formation of the Partnership under the Delaware Act, the General Partner
made an initial Capital Contribution to the Partnership in the amount of $20.00, for a 2% General
Partner Interest in the Partnership and has been admitted as the General Partner of the
Partnership, and the Organizational Limited Partner made an initial Capital Contribution to the
Partnership in the amount of $980.00 for a 98% Limited Partner Interest in the Partnership and has
been admitted as a Limited Partner of the Partnership. As of the Closing Date, the interest of the
Organizational Limited Partner shall be redeemed; and the initial Capital Contribution of the
Organizational Limited Partner shall thereupon be refunded. Ninety-eight percent of any interest
or other profit that may have resulted from the investment or other use of such initial Capital
Contributions shall be allocated and distributed to the Organizational Limited Partner, and the
balance thereof shall be allocated and distributed to the General Partner.
Section 5.2. Contributions by the General Partner and its Affiliates.
(a) On the Closing Date and pursuant to the Contribution Agreement: (i) the General
Partner shall contribute to the Partnership, as a Capital Contribution, all of its ownership
interests in the Operating Partnership in exchange for (A) a continuation of its 2% General
Partner Interest, subject to all of the rights, privileges and duties of the General Partner
under this Agreement, and (B) the Incentive Distribution Rights; and (ii) Regency
Acquisition shall contribute to the Partnership, as a Capital Contribution, all of (A) its
member interest in the OLP GP and (B) all of its ownership interest in the Operating
Partnership in exchange for 5,353,896 Common Units, 19,103,896 Subordinated Units and the
right to receive $197.0 million in cash to reimburse it for certain capital expenditures
incurred by it or an affiliate.
(b) Upon the issuance of any additional Limited Partner Interests by the Partnership,
the General Partner may, in exchange for a proportionate number of General Partner Units,
make additional Capital Contributions in an amount equal to the product
32
obtained by multiplying (i) the quotient determined by dividing (A) the General Partner’s Percentage
Interest by (B) 100% less the General Partner’s Percentage Interest times (ii) the amount
contributed to the Partnership by the Limited Partners in exchange for such additional
Limited Partner Interests. Except as set forth in Article XII, the General Partner shall not
be obligated to make any additional Capital Contributions to the Partnership.
Section 5.3. Contributions by Initial Limited Partners and Distributions to the General
Partner and its Affiliates.
(a) On the Closing Date and pursuant to the Underwriting Agreement, each Underwriter
shall contribute to the Partnership cash in an amount equal to the Issue Price per Initial
Common Unit, multiplied by the number of Common Units specified in the Underwriting
Agreement to be purchased by such Underwriter at the Closing Date. In exchange for such
Capital Contributions by the Underwriters, the Partnership shall issue Common Units to each
Underwriter on whose behalf such Capital Contribution is made in an amount equal to the
quotient obtained by dividing (i) the cash contribution to the Partnership by or on behalf
of such Underwriter by (ii) the Issue Price per Initial Common Unit.
(b) No Limited Partner Interests will be issued or issuable as of or at the Closing
Date other than (i) the Common Units issuable pursuant to subparagraph (a) hereof in
aggregate number equal to 13,750,000, (ii) the 5,353,896 Common Units and 19,103,896
Subordinated Units issuable pursuant to Section 5.2 hereof, (iii) the Incentive Distribution
Rights and (iv) any Common Units issuable under, or to satisfy the obligations of the
Partnership or any of its Affiliates under the Regency GP LLC Long-Term Incentive Plan. No
additional Limited Partner Interests will be issued in connection with any exercise of the
Over-Allotment Option. If the Underwriters exercise their Over-Allotment Option, the
Partnership shall use the net proceeds from such exercise to redeem an equal number of
Common Units from Regency Acquisition.
Section 5.4. Interest and Withdrawal. No interest shall be paid by the Partnership on
Capital Contributions. No Partner 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 shall have priority over any other Partner 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 agree within the meaning of Section 17-502(b) of the Delaware Act.
Section 5.5. Capital Accounts.
(a) The Partnership shall maintain for each Partner (or a beneficial owner of
Partnership Interests held by a nominee in any case in which the nominee has furnished the
identity of such owner to the Partnership in accordance with Section 6031(c) of the Code or
any other method acceptable to the General Partner) owning a Partnership Interest a separate
Capital Account with respect to such Partnership Interest in accordance with the rules of
Treasury Regulation Section 1.704-1(b)(2)(iv). Such Capital
33
Account shall be increased by
(i) the amount of all Capital Contributions made to the Partnership with respect to such
Partnership Interest and (ii) all items of Partnership income and gain (including income and
gain exempt from tax) computed in accordance with Section 5.5(b) and allocated with respect
to such Partnership Interest pursuant to Section 6.1, and decreased by (x) the amount of
cash or Net Agreed Value of all actual and deemed distributions of cash or property made
with respect to such Partnership Interest and (y) all items of Partnership deduction and
loss computed in accordance with Section 5.5(b) and allocated with respect to such
Partnership Interest pursuant to Section 6.1.
(b) For purposes of computing the amount of any item of income, gain, loss or deduction
that is to be allocated pursuant to Article VI and is to be reflected in the Partners’
Capital Accounts, the determination, recognition and classification of any such item shall
be the same as its determination, recognition and classification for federal income tax
purposes (including any method of depreciation, cost recovery or amortization used for that
purpose), provided, that:
(i) Solely for purposes of this Section 5.5, the Partnership shall be treated
as owning directly its proportionate share (as determined by the General Partner
based upon the provisions of the applicable Group Member Agreement or governing,
organizational or similar documents) of all property owned by (x) any other Group
Member classified as a partnership for federal income tax purposes and (y) any other
partnership, limited liability company, unincorporated business or other entity
classified as a partnership for federal income tax purposes of which a Group Member
is, directly or indirectly, a partner.
(ii) All fees and other expenses incurred by the Partnership to promote the
sale of (or to sell) a Partnership Interest that can neither be deducted nor
amortized under Section 709 of the Code, if any, shall, for purposes of Capital
Account maintenance, be treated as an item of deduction at the time such fees and
other expenses are incurred and shall be allocated among the Partners pursuant to
Section 6.1.
(iii) Except as otherwise provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss and
deduction shall be made without regard to any election under Section 754 of the Code
that 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
34
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, depreciation, cost recovery or amortization deductions
shall be determined using any method that the 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) (i) A transferee of a Partnership Interest shall succeed to a pro rata portion of
the Capital Account of the transferor relating to the Partnership Interest so transferred.
(ii) Immediately prior to the transfer of a Subordinated Unit or of a
Subordinated Unit that has converted into a Common Unit pursuant to Section 5.7 by a
holder thereof (other than a transfer to an Affiliate unless the General Partner
elects to have this Section 5.5(c)(ii) apply), the Capital Account maintained for
such Person with respect to its Subordinated Units or converted Subordinated Units
will (A) first, be allocated to the Subordinated Units or converted Subordinated
Units to be transferred in an amount equal to the product of (x) the number of such
Subordinated Units or converted Subordinated Units to be transferred and (y) the Per
Unit Capital Amount for a Common Unit, and (B) second, any remaining balance in such
Capital Account will be retained by the transferor, regardless of whether it has
retained any Subordinated Units or converted Subordinated Units. Following any such
allocation, the transferor’s Capital Account, if any, maintained with respect to the
retained Subordinated Units or converted Subordinated Units, if any, will have a
balance equal to the amount allocated under clause (B) hereinabove, and the
transferee’s Capital Account established with respect to the transferred
Subordinated Units or
35
converted Subordinated Units will have a balance equal to the
amount allocated under clause (A) hereinabove.
(d) (i) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), on an
issuance of additional Partnership Interests for cash or Contributed Property, the issuance
of Partnership Interests as consideration for the provision of services or the conversion of
the General Partner’s Combined Interest to Common Units pursuant to Section 11.3(b), the
Capital Account of 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 been allocated. In determining such Unrealized
Gain or Unrealized Loss, the aggregate cash amount and
fair market value of all Partnership assets (including cash or cash equivalents)
immediately prior to the issuance of additional Partnership Interests shall be determined by
the General Partner using such method of valuation as it may adopt; provided, however, that
the General Partner, in arriving at such valuation, must take fully into account the fair
market value of the Partnership Interests of all Partners at such time. The General Partner
shall allocate such aggregate value among the assets of the Partnership (in such manner as
it determines) to arrive at a fair market value for individual properties.
(ii) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f),
immediately prior to any actual or deemed distribution to a Partner of any
Partnership property (other than a distribution of cash that is not in redemption or
retirement of a Partnership Interest), the Capital Accounts of all Partners and the
Carrying Value of all Partnership property shall be adjusted upward or downward to
reflect any Unrealized Gain or Unrealized Loss attributable to such Partnership
property, as if such Unrealized Gain or Unrealized Loss had been recognized 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
that is not made pursuant to Section 12.4 or in the case of a deemed distribution,
be determined and allocated in the same manner as that provided in Section 5.5(d)(i)
or (B) in the case of a liquidating distribution pursuant to Section 12.4, be
determined and allocated by the Liquidator using such method of valuation as it may
adopt.
Section 5.6. Issuances of Additional Partnership Securities.
(a) The Partnership may issue additional Partnership Securities and options, rights,
warrants and appreciation rights relating to the Partnership Securities for any Partnership
purpose at any time and from time to time to such Persons for such
36
consideration and on such
terms and conditions as the General Partner shall determine, all without the approval of any
Limited Partners.
(b) Each additional Partnership Security authorized to be issued by the Partnership
pursuant to Section 5.6(a) may be issued in one or more classes, or one or more series of
any such classes, with such designations, preferences, rights, powers and duties (which may
be senior to existing classes and series of Partnership Securities), as shall be fixed by
the General Partner, including (i) the right to share Partnership profits and losses or
items thereof; (ii) the right to share in Partnership distributions; (iii) the rights upon
dissolution and liquidation of the Partnership; (iv) whether, and the terms and conditions
upon which, the Partnership may redeem the Partnership Security; (v) whether such
Partnership Security is issued with the privilege of conversion or exchange and, if so, the
terms and conditions of such conversion or exchange; (vi) the terms and conditions upon
which each Partnership Security will be issued, evidenced by certificates and assigned or
transferred; (vii) the method for determining the Percentage Interest as to
such Partnership Security; and (viii) the right, if any, of each such Partnership
Security to vote on Partnership matters, including matters relating to the relative rights,
preferences and privileges of such Partnership Security.
(c) The General Partner shall take all actions that it determines to be necessary or
appropriate in connection with (i) each issuance of Partnership Securities and options,
rights, warrants and appreciation rights relating to Partnership Securities pursuant to this
Section 5.6, (ii) the conversion of the General Partner Interest (represented by General
Partner Units) or any Incentive Distribution Rights into Units pursuant to the terms of this
Agreement, (iii) the admission of Additional Limited Partners and (iv) all additional
issuances of Partnership Securities. The General Partner shall determine the relative
rights, powers and duties of the holders of the Units or other Partnership Securities being
so issued. The General Partner shall do all things necessary to comply with the Delaware
Act and is authorized and directed to do all things that it determines to be necessary or
appropriate in connection with any future issuance of Partnership Securities or in
connection with the conversion of the General Partner Interest or any Incentive Distribution
Rights into Units pursuant to the terms of this Agreement, including compliance with any
statute, rule, regulation or guideline of any federal, state or other governmental agency or
any National Securities Exchange on which the Units or other Partnership Securities are
listed or admitted to trading.
(d) No fractional Units shall be issued by the Partnership.
Section 5.7. Conversion of Subordinated Units.
(a) All of the Subordinated Units shall convert into Common Units on a one-for-one
basis on the second Business Day following the distribution of Available Cash to Partners
pursuant to Section 6.3(a) in respect of the final Quarter of the Subordination Period.
(b) Notwithstanding Section 5.7(a) above, the Subordination Period shall terminate and
all Outstanding Subordinated Units shall convert into Common Units on a one-for-one basis on
the second Business Day following the distribution of Available
37
Cash to Partners pursuant to
Section 6.3(a) in respect of any Quarter ending on or after December 31, 2006, in respect of
which:
(i) distributions under Section 6.4 in respect of all Outstanding Common Units
and Subordinated Units and any other Outstanding Units that are senior or equal in
right of distribution to the Subordinated Units with respect to the four-Quarter
period immediately preceding such date equaled or exceeded 150% of the sum of the
Minimum Quarterly Distribution on all of the Outstanding Common Units and
Subordinated Units and any other Outstanding Units that are senior or equal in right
of distribution to the Subordinated Units during such period;
(ii) the Adjusted Operating Surplus generated during the consecutive
four-Quarter period immediately preceding such date equaled or exceeded 150% of the
sum of the Minimum Quarterly Distribution on all of the
Common Units, Subordinated Units and any other Units that are senior or equal
in right of distribution to the Subordinated Units that were Outstanding during such
period on a Fully Diluted Basis, plus the related distribution on the General
Partner Units during such period; and
(iii) the Cumulative Common Unit Arrearage on all of the Common Units is zero.
(c) Notwithstanding any other provision of this Agreement, all the Subordinated Units
will automatically convert into Common Units on a one-for-one basis as set forth in, and
pursuant to the terms of, Section 11.4.
(d) A Subordinated Unit that has converted into a Common Unit shall be subject to the
provisions of Section 6.7(b).
Section 5.8. Limited Preemptive Right. Except as provided in this Section 5.8 and in
Section 5.2(b), no Person shall have any preemptive, preferential or other similar right with
respect to the issuance of any Partnership Security, whether unissued, held in the treasury or
hereafter created. The General Partner shall have the right, which it may from time to time assign
in whole or in part to any of its Affiliates, to purchase Partnership Securities from the
Partnership whenever, and on the same terms that, the Partnership issues Partnership Securities to
Persons other than the General Partner and its Affiliates, to the extent necessary to maintain the
Percentage Interests of the General Partner and its Affiliates equal to that which existed
immediately prior to the issuance of such Partnership Securities.
Section 5.9. Splits and Combinations.
(a) Subject to Section 5.9(d), Section 6.6 and Section 6.9 (dealing with adjustments of
distribution levels), the Partnership may make a Pro Rata distribution of Partnership
Securities to all Record Holders or may effect a subdivision or combination of Partnership
Securities so long as, after any such event, each Partner shall have the same Percentage
Interest in the Partnership as before such event, and any amounts calculated on a per Unit
basis (including any Common Unit Arrearage or Cumulative
38
Common Unit Arrearage) or stated as
a number of Units (including the number of Subordinated Units that may convert prior to the
end of the Subordination Period) are proportionately adjusted.
(b) Whenever such a distribution, subdivision or combination of Partnership Securities
is declared, the General Partner shall select a Record Date as of which the distribution,
subdivision or combination shall be effective and shall send notice thereof at least 20 days
prior to such Record Date to each Record Holder as of a date not less than 10 days prior to
the date of such notice. The General Partner also may cause a firm of independent public
accountants selected by it to calculate the number of Partnership Securities to be held by
each Record Holder after giving effect to such distribution, subdivision or combination.
The General Partner shall be entitled to rely on any
certificate provided by such firm as conclusive evidence of the accuracy of such
calculation.
(c) Promptly following any such distribution, subdivision or combination, the
Partnership may issue Certificates to the Record Holders of Partnership Securities as of the
applicable Record Date representing the new number of Partnership Securities held by such
Record Holders, or the General Partner may adopt such other procedures that it determines to
be necessary or appropriate to reflect such changes. If any such combination results in a
smaller total number of Partnership Securities Outstanding, the Partnership shall require,
as a condition to the delivery to a Record Holder of such new Certificate, the surrender of
any Certificate held by such Record Holder immediately prior to such Record Date.
(d) The Partnership shall not issue fractional Units upon any distribution, subdivision
or combination of Units. If a distribution, subdivision or combination of Units would
result in the issuance of fractional Units but for the provisions of this Section 5.9(d),
each fractional Unit shall be rounded to the nearest whole Unit (and a 0.5 Unit shall be
rounded to the next higher Unit).
Section 5.10. Fully Paid and Non-Assessable Nature of Limited Partner Interests. All
Limited Partner Interests issued pursuant to, and in accordance with the requirements of, this
Article V shall be fully paid and non-assessable Limited Partner Interests in the Partnership,
except as such non-assessability may be affected by Section 17-607 of the Delaware Act.
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.
(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
39
deduction taken into account in computing Net Income for such taxable year shall be allocated as
follows:
(i) First, 100% to the General Partner, in an amount equal to the aggregate Net
Losses allocated to the General Partner pursuant to Section 6.1(b)(iii) for all
previous taxable years until the aggregate Net Income allocated to the General
Partner pursuant to this Section 6.1(a)(i) for the current taxable year and all
previous taxable years is equal to the aggregate Net Losses allocated to the General
Partner pursuant to Section 6.1(b)(iii) for all previous taxable years;
(ii) Second, 100% to the General Partner and the Unitholders, in accordance
with their respective Percentage Interests, until the aggregate Net Income allocated
to such Partners pursuant to this Section 6.1(a)(ii) for the current taxable year
and all previous taxable years is equal to the aggregate Net Losses allocated to
such Partners pursuant to Section 6.1(b)(ii) for all previous taxable years; and
(iii) Third, the balance, if any, 100% to the General Partner and the
Unitholders, in accordance with their respective Percentage Interests.
(b) Net Losses. After giving effect to the special allocations set forth in Section
6.1(d), Net Losses for each taxable period and all items of income, gain, loss and deduction
taken into account in computing Net Losses for such taxable period shall be allocated as
follows:
(i) First, 100% to the General Partner and the Unitholders, in accordance with
their respective Percentage Interests, until the aggregate Net Losses allocated
pursuant to this Section 6.1(b)(i) for the current taxable year and all previous
taxable years is equal to the aggregate Net Income allocated to such Partners
pursuant to Section 6.1(a)(iii) for all previous taxable years; provided, that the
Net Losses shall not be allocated pursuant to this Section 6.1(b)(i) to the extent
that such allocation would cause any Unitholder to have a deficit balance in its
Adjusted Capital Account at the end of such taxable year (or increase any existing
deficit balance in its Adjusted Capital Account);
(ii) Second, 100% to the General Partner and the Unitholders, in accordance
with their respective Percentage Interests; provided, that Net Losses shall not be
allocated pursuant to this Section 6.1(b)(ii) to the extent that such allocation
would cause any Unitholder to have a deficit balance in its Adjusted Capital Account
at the end of such taxable year (or increase any existing deficit balance in its
Adjusted Capital Account); and
(iii) Third, the balance, if any, 100% to the General Partner.
(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
40
taxable period shall be allocated in the same manner as such Net Termination Gain or Net Termination Loss
is allocated hereunder. All allocations under this Section 6.1(c) shall be made after
Capital Account balances have been adjusted by all other allocations provided under this
Section 6.1 and after all distributions of Available Cash provided under Section 6.4 and
Section 6.5 have been made; provided, however, that solely for purposes of this Section
6.1(c), Capital Accounts shall not be adjusted for distributions made pursuant to Section
12.4.
(i) If a Net Termination Gain is recognized (or deemed recognized pursuant to
Section 5.5(d)), such Net Termination Gain shall be allocated among the Partners in
the following manner (and the Capital Accounts of the Partners
shall be increased by the amount so allocated in each of the following
subclauses, in the order listed, before an allocation is made pursuant to the next
succeeding subclause):
A. First, to each Partner having a deficit balance in its Capital
Account, in the proportion that such deficit balance bears to the total
deficit balances in the Capital Accounts of all Partners, until each such
Partner has been allocated Net Termination Gain equal to any such deficit
balance in its Capital Account;
B. Second, (x) to the General Partner in accordance with its Percentage
Interest and (y) to all Unitholders holding Common Units, Pro Rata, a
percentage equal to 100% less the percentage applicable to subclause (x) of
this clause (B), until the Capital Account in respect of each Common Unit
then Outstanding is equal to the sum of (1) its Unrecovered Capital plus (2)
the Minimum Quarterly Distribution for the Quarter during which the
Liquidation Date occurs, reduced by any distribution pursuant to Section
6.4(a)(i) or Section 6.4(b)(i) with respect to such Common Unit for such
Quarter (the amount determined pursuant to this clause (2) is hereinafter
defined as the “Unpaid MQD”) and (3) any then existing Cumulative Common
Unit Arrearage;
C. Third, if such Net Termination Gain is recognized (or is deemed to
be recognized) prior to the conversion of the last Outstanding Subordinated
Unit, (x) to the General Partner in accordance with its Percentage Interest
and (y) all Unitholders holding Subordinated Units, Pro Rata, a percentage
equal to 100% less the percentage applicable to subclause (x) of this clause
(c), until the Capital Account in respect of each Subordinated Unit then
Outstanding equals the sum of (1) its Unrecovered Capital, determined for
the taxable year (or portion thereof) to which this allocation of gain
relates, and (2) the Minimum Quarterly Distribution for the Quarter during
which the Liquidation Date occurs, reduced by any distribution pursuant to
Section 6.4(a)(iii) with respect to such Subordinated Unit for such Quarter;
D. Fourth, 100% to the General Partner and all Unitholders, in
accordance with their respective Percentage Interests, until the Capital
41
Account in respect of each Common Unit then Outstanding is equal to the sum
of (1) its Unrecovered Capital, (2) the Unpaid MQD, (3) any then existing
Cumulative Common Unit Arrearage, and (4) the excess of (aa) the First
Target Distribution less the Minimum Quarterly Distribution for each Quarter
of the Partnership’s existence over (bb) the cumulative per Unit amount of
any distributions of Available Cash that is deemed to be Operating Surplus
made pursuant to Section 6.4(a)(iv) and Section 6.4(b)(ii) (the sum of (1),
(2), (3) and (4) is hereinafter defined as the “First Liquidation Target
Amount”);
E. Fifth, (x) to the General Partner in accordance with its Percentage
Interest and (y) 13% to the holders of the Incentive Distribution Rights,
Pro Rata, and (z) to all Unitholders, Pro Rata, a percentage equal to 100%
less the sum of the percentages applicable to subclause (x) and (y) of this
clause (E), until the Capital Account in respect of each Common Unit then
Outstanding is equal to the sum of (1) the First Liquidation Target Amount,
and (2) the excess of (aa) the Second Target Distribution less the First
Target Distribution for each Quarter of the Partnership’s existence over
(bb) the cumulative per Unit amount of any distributions of Available Cash
that is deemed to be Operating Surplus made pursuant to Section 6.4(a)(v)
and Section 6.4(b)(iii) (the sum of (1) and (2) is hereinafter defined as
the “Second Liquidation Target Amount”);
F. Sixth, (x) to the General Partner in accordance with its Percentage
Interest, (y) 23% to the holders of the Incentive Distribution Rights, Pro
Rata, and (z) to all Unitholders, Pro Rata, a percentage equal to 100% less
the sum of the percentages applicable to subclause (x) and (y) of this
clause (F), until the Capital Account in respect of each Common Unit then
Outstanding is equal to the sum of (1) the Second Liquidation Target Amount,
and (2) the excess of (aa) the Third Target Distribution less the Second
Target Distribution for each Quarter of the Partnership’s existence over
(bb) the cumulative per Unit amount of any distributions of Available Cash
that is deemed to be Operating Surplus made pursuant to Section 6.4(a)(vi)
and Section 6.4(b)(iv) (the sum of (1) and (2) is hereinafter defined as the
“Third Liquidation Target Amount”); and
G. Finally, (x) to the General Partner in accordance with its
Percentage Interest and (y) 48% to the holders of the Incentive Distribution
Rights, Pro Rata, and (z) to all Unitholders, Pro Rata, a percentage equal
to 100% less the sum of the percentages applicable to subclause (x) and (y)
of this clause (G).
(ii) Loss is recognized (or deemed recognized pursuant to Section 5.5(d)), such
Net Termination Loss shall be allocated among the Partners in the following manner:
A. First, if such Net Termination Loss is recognized (or is deemed to
be recognized) prior to the conversion of the last Outstanding
42
Subordinated Unit, (x) to the General Partner in accordance with its Percentage Interest
and (y) to all Unitholders holding Subordinated Units, Pro Rata, a
percentage equal to 100% less the percentage applicable to subclause (x) of
this clause (A), until the Capital Account in respect of each Subordinated
Unit then Outstanding has been reduced to zero;
B. Second, (x) to the General Partner in accordance with its Percentage
Interest and (y) to all Unitholders holding Common Units, Pro Rata, a
percentage equal to 100% less the percentage applicable to
subclause (x) of this clause (B), until the Capital Account in respect
of each Common Unit then Outstanding has been reduced to zero; and
C. Third, the balance, if any, 100% to the General Partner.
(d) Special Allocations. Notwithstanding any other provision of this Section 6.1, the
following special allocations shall be made for such taxable period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding any other provision
of this Section 6.1, if there is a net decrease in Partnership Minimum Gain during
any Partnership taxable period, each Partner shall be allocated items of Partnership
income and gain for such period (and, if necessary, subsequent periods) in the
manner and amounts provided in Treasury Regulation Sections 1.704-2(f)(6),
1.704-2(g)(2) and 1.704-2(j)(2)(i), or any successor provision. For purposes of
this Section 6.1(d), each Partner’s Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required hereunder shall be
effected, prior to the application of any other allocations pursuant to this Section
6.1(d) with respect to such taxable period (other than an allocation pursuant to
Section 6.1(d)(vi) and Section 6.1(d)(vii)). This Section 6.1(d)(i) is intended to
comply with the Partnership Minimum Gain chargeback requirement in Treasury
Regulation Section 1.704-2(f) and shall be interpreted consistently therewith.
(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain. Notwithstanding the
other provisions of this Section 6.1 (other than Section 6.1(d)(i)), except as
provided in Treasury Regulation Section 1.704-2(i)(4), if there is a net decrease in
Partner Nonrecourse Debt Minimum Gain during any Partnership taxable period, any
Partner with a share of Partner Nonrecourse Debt Minimum Gain at the beginning of
such taxable period shall be allocated items of Partnership income and gain for such
period (and, if necessary, subsequent periods) in the manner and amounts provided in
Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii), or any successor
provisions. For purposes of this Section 6.1(d), each Partner’s Adjusted Capital
Account balance shall be determined, and the allocation of income or gain required
hereunder shall be effected, prior to the application of any other allocations
pursuant to this Section 6.1(d), other than Section 6.1(d)(i) and other than an
allocation pursuant to Section 6.1(d)(vi) and Section 6.1(d)(vii), with respect to
such taxable period. This Section 6.1(d)(ii) is intended to comply with the
chargeback of items of
43
income and gain requirement in Treasury Regulation Section
1.704-2(i)(4) and shall be interpreted consistently therewith.
(iii) Priority Allocations.
A. If the amount of cash or the Net Agreed Value of any property
distributed (except cash or property distributed pursuant to Section 12.4)
to any Unitholder with respect to its Units for a taxable year is greater
(on a per Unit basis) than the amount of cash or the Net Agreed Value of
property distributed to the other Unitholders with respect to their
Units (on a per Unit basis), then (1) each Unitholder receiving such
greater cash or property distribution shall be allocated gross income in an
amount equal to the product of (aa) the amount by which the distribution (on
a per Unit basis) to such Unitholder exceeds the distribution (on a per Unit
basis) to the Unitholders receiving the smallest distribution and (bb) the
number of Units owned by the Unitholder receiving the greater distribution;
and (2) the General Partner shall be allocated gross income in an aggregate
amount equal to the product obtained by multiplying (aa) the quotient
determined by dividing (x) the General Partner’s Percentage Interest at the
time in which the greater cash or property distribution occurs by (y) the
sum of 100 less the General Partner’s Percentage Interest at the time in
which the greater cash or property distribution occurs times (bb) the sum of
the amounts allocated in clause (1) above.
B. After the application of Section 6.1(d)(iii)(A), all or any portion
of the remaining items of Partnership gross income or gain for the taxable
period, if any, shall be allocated (1) to the holders of Incentive
Distribution Rights, Pro Rata, until the aggregate amount of such items
allocated to the holders of Incentive Distribution Rights pursuant to this
Section 6.1(d)(iii)(B) for the current taxable year and all previous taxable
years is equal to the cumulative amount of all Incentive Distributions made
to the holders of Incentive Distribution Rights from the Closing Date to a
date 45 days after the end of the current taxable year and (2) to the
General Partner an amount equal to the product of (aa) an amount equal to
the quotient determined by dividing (x) the General Partner’s Percentage
Interest by (y) the sum of 100 less the General Partner’s Percentage
Interest times (bb) the sum of the amounts allocated in clause (1) above.
(iv) Qualified Income Offset. In the event any Partner unexpectedly receives
any adjustments, allocations or distributions described in Treasury Regulation
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
allocated to such Partner in an amount and manner sufficient to eliminate, to the
extent required by the Treasury Regulations promulgated under Section 704(b) of the
Code, the deficit balance, if any, in its Adjusted Capital Account created by such
adjustments, allocations or distributions as quickly as possible unless such deficit
balance is otherwise eliminated pursuant to Section 6.1(d)(i) or Section 6.1(d)(ii).
44
(v) Gross Income Allocations. In the event any Partner has a deficit balance
in its Capital Account at the end of any Partnership taxable period in excess of the
sum of (A) the amount such Partner is required to restore pursuant to the provisions
of this Agreement and (B) the amount such Partner is deemed obligated to restore
pursuant to Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5), such Partner
shall be specially allocated items of Partnership 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)(v) shall be made only if and to
the extent that such Partner would have a deficit balance in its Capital
Account as adjusted after all other allocations provided for in this Section 6.1
have been tentatively made as if this Section 6.1(d)(v) were not in this Agreement.
(vi) Nonrecourse Deductions. Nonrecourse Deductions for any taxable period
shall be allocated to the Partners in accordance with their respective Percentage
Interests. If the General Partner determines that the Partnership’s Nonrecourse
Deductions should be allocated in a different ratio to satisfy the safe harbor
requirements of the Treasury Regulations promulgated under Section 704(b) of the
Code, the General Partner is authorized, upon notice to the other Partners, to
revise the prescribed ratio to the numerically closest ratio that does satisfy such
requirements.
(vii) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any
taxable period shall be allocated 100% to the Partner that bears the Economic Risk
of Loss with respect to the Partner Nonrecourse Debt to which such Partner
Nonrecourse Deductions are attributable in accordance with Treasury Regulation
Section 1.704-2(i). If more than one Partner bears the Economic Risk of Loss with
respect to a Partner Nonrecourse Debt, such Partner Nonrecourse Deductions
attributable thereto shall be allocated between or among such Partners in accordance
with the ratios in which they share such Economic Risk of Loss.
(viii) Nonrecourse Liabilities. For purposes of Treasury Regulation Section
1.752-3(a)(3), the Partners agree that Nonrecourse Liabilities of the Partnership in
excess of the sum of (A) the amount of Partnership Minimum Gain and (B) the total
amount of Nonrecourse Built-in Gain shall be allocated among the Partners in
accordance with their respective Percentage Interests.
(ix) Code Section 754 Adjustments. To the extent an adjustment to the adjusted
tax basis of any Partnership asset pursuant to Section 734(b) or 743(b) of the Code
is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be
taken into account in determining Capital Accounts, the amount of such adjustment to
the Capital Accounts shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases such basis),
and such item of gain or loss shall be specially allocated to the Partners in a
manner consistent with the manner in which their Capital Accounts are required to be
adjusted pursuant to such Section of the Treasury Regulations.
45
(x) Economic Uniformity. At the election of the General Partner with respect
to any taxable period ending upon, or after, the termination of the Subordination
Period, all or a portion of the remaining items of Partnership gross income or gain
for such taxable period, after taking into account allocations pursuant to Section
6.1(d)(iii), shall be allocated 100% to each Partner holding Subordinated Units that
are Outstanding as of the termination of such Subordination Period (“Final
Subordinated Units”) in the proportion of the number of Final Subordinated Units
held by such Partner to the total number of Final Subordinated Units then
Outstanding, until each such Partner has been allocated an amount of gross income or
gain that increases the Capital Account maintained with respect to such Final
Subordinated Units to an amount equal to the product of (A) the number of Final
Subordinated Units held by such Partner and (B) the Per Unit Capital Amount for a
Common Unit. The purpose of this allocation is to establish uniformity between the
Capital Accounts underlying Final Subordinated Units and the Capital Accounts
underlying Common Units held by Persons other than the General Partner and its
Affiliates immediately prior to the conversion of such Final Subordinated Units into
Common Units. This allocation method for establishing such economic uniformity will
be available to
the General Partner only if the method for allocating the Capital Account
maintained with respect to the Subordinated Units between the transferred and
retained Subordinated Units pursuant to Section 5.5(c)(ii) does not otherwise
provide such economic uniformity to the Final Subordinated Units.
(xi) Curative Allocation.
A. Notwithstanding any other provision of this Section 6.1, other than
the Required Allocations, the Required Allocations shall be taken into
account in making the Agreed Allocations so that, to the extent possible,
the net amount of items of income, gain, loss and deduction allocated to
each Partner pursuant to the Required Allocations and the Agreed
Allocations, together, shall be equal to the net amount of such items that
would have been allocated to each such Partner under the Agreed Allocations
had the Required Allocations and the related Curative Allocation not
otherwise been provided in this Section 6.1. Notwithstanding the preceding
sentence, Required Allocations relating to (1) Nonrecourse Deductions shall
not be taken into account except to the extent that there has been a
decrease in Partnership Minimum Gain and (2) Partner Nonrecourse Deductions
shall not be taken into account except to the extent that there has been a
decrease in Partner Nonrecourse Debt Minimum Gain. Allocations pursuant to
this Section 6.1(d)(xi)(A) shall only be made with respect to Required
Allocations to the extent the General Partner determines that such
allocations will otherwise be inconsistent with the economic agreement among
the Partners. Further, allocations pursuant to this Section 6.1(d)(xi)(A)
shall be deferred with respect to allocations pursuant to clauses (1) and
(2) hereof to the extent the General Partner determines that such
allocations are likely to be offset by subsequent Required Allocations.
46
B. The General Partner shall, with respect to each taxable period, (1)
apply the provisions of Section 6.1(d)(xi)(A) in whatever order is most
likely to minimize the economic distortions that might otherwise result from
the Required Allocations, and (2) divide all allocations pursuant to Section
6.1(d)(xi)(A) among the Partners in a manner that is likely to minimize such
economic distortions.
(xii) Corrective Allocations. In the event of any allocation of Additional
Book Basis Derivative Items or any Book-Down Event or any recognition of a Net
Termination Loss, the following rules shall apply:
A. In the case of any allocation of Additional Book Basis Derivative
Items (other than an allocation of Unrealized Gain or Unrealized Loss under
Section 5.5(d) hereof), the General Partner shall allocate additional items
of gross income and gain away from the holders of Incentive Distribution
Rights to the Unitholders and the General Partner, or additional items of
deduction and loss away from the Unitholders and the General Partner to the
holders of Incentive Distribution Rights, to the
extent that the Additional Book Basis Derivative Items allocated to the
Unitholders or the General Partner exceed their Share of Additional Book
Basis Derivative Items. For this purpose, the Unitholders and the General
Partner shall be treated as being allocated Additional Book Basis Derivative
Items to the extent that such Additional Book Basis Derivative Items have
reduced the amount of income that would otherwise have been allocated to the
Unitholders or the General Partner under the Partnership Agreement (e.g.,
Additional Book Basis Derivative Items taken into account in computing cost
of goods sold would reduce the amount of book income otherwise available for
allocation among the Partners). Any allocation made pursuant to this
Section 6.1(d)(xii)(A) shall be made after all of the other Agreed
Allocations have been made as if this Section 6.1(d)(xii) were not in this
Agreement and, to the extent necessary, shall require the reallocation of
items that have been allocated pursuant to such other Agreed Allocations.
B. In the case of any negative adjustments to the Capital Accounts of
the Partners resulting from a Book-Down Event or from the recognition of a
Net Termination Loss, such negative adjustment (1) shall first be allocated,
to the extent of the Aggregate Remaining Net Positive Adjustments, in such a
manner, as determined by the General Partner, that to the extent possible
the aggregate Capital Accounts of the Partners will equal the amount that
would have been the Capital Account balance of the Partners if no prior
Book-Up Events had occurred, and (2) any negative adjustment in excess of
the Aggregate Remaining Net Positive Adjustments shall be allocated pursuant
to Section 6.1(c) hereof.
C. In making the allocations required under this Section 6.1(d)(xii),
the General Partner may apply whatever conventions
47
or other methodology it determines will satisfy the purpose of this Section 6.1(d)(xii).
Section 6.2. Allocations for Tax Purposes.
(a) Except as otherwise provided herein, for federal income tax purposes, each item of
income, gain, loss and deduction shall be allocated among the Partners in the same manner as
its correlative item of “book” income, gain, loss or deduction is allocated pursuant to
Section 6.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable to a Contributed
Property or Adjusted Property, items of income, gain, loss, depreciation, amortization and
cost recovery deductions shall be allocated for federal income tax purposes among the
Partners as follows:
(i) (A) In the case of a Contributed Property, such items attributable thereto
shall be allocated among the Partners in the manner provided under Section 704(c) of
the Code that takes into account the variation between the Agreed Value of such
property and its adjusted basis at the time of contribution;
and (B) any item of Residual Gain or Residual Loss attributable to a
Contributed Property shall be allocated among the Partners in the same manner as its
correlative item of “book” gain or loss is allocated pursuant to Section 6.1.
(ii) (A) In the case of an Adjusted Property, such items shall (1) first, be
allocated among the Partners in a manner consistent with the principles of Section
704(c) of the Code to take into account the Unrealized Gain or Unrealized Loss
attributable to such property and the allocations thereof pursuant to Section
5.5(d)(i) or Section 5.5(d)(ii), and (2) second, in the event such property was
originally a Contributed Property, be allocated among the Partners in a manner
consistent with Section 6.2(b)(i)(A); and (B) any item of Residual Gain or Residual
Loss attributable to an Adjusted Property shall be allocated among the Partners in
the same manner as its correlative item of “book” gain or loss is allocated pursuant
to Section 6.1.
(iii) The General Partner shall apply the principles of Treasury Regulation
Section 1.704-3(d) to eliminate Book-Tax Disparities.
(c) For the proper administration of the Partnership and for the preservation of
uniformity of the Limited Partner Interests (or any class or classes thereof), the General
Partner shall (i) adopt such conventions as it deems appropriate in determining the amount
of depreciation, amortization and cost recovery deductions; (ii) make special allocations
for federal income tax purposes of income (including, 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 Limited Partner
Interests (or any class or classes thereof). The General Partner may adopt such
conventions, make such allocations and make such amendments to this Agreement as provided in
this Section 6.2(c) only if such conventions, allocations
48
or amendments would not have a
material adverse effect on the Partners, the holders of any class or classes of Limited
Partner Interests issued and Outstanding or the Partnership, and if such allocations are
consistent with the principles of Section 704 of the Code.
(d) The General Partner may determine to depreciate or amortize the portion of an
adjustment under Section 743(b) of the Code attributable to unrealized appreciation in any
Adjusted Property (to the extent of the unamortized Book-Tax Disparity) using a
predetermined rate derived from the depreciation or amortization method and useful life
applied to the Partnership’s common basis of such property, despite any inconsistency of
such approach with Treasury Regulation Section 1.167(c)-l(a)(6) or any successor regulations
thereto. If the General Partner determines that such reporting position cannot reasonably
be taken, the General Partner may adopt depreciation and amortization conventions under
which all purchasers acquiring Limited Partner Interests in the same month would receive
depreciation and amortization deductions, based upon the same applicable rate as if they had
purchased a direct interest in the Partnership’s property. If the General Partner chooses
not to utilize such aggregate method, the General Partner may use any other depreciation and
amortization conventions to preserve the uniformity of the intrinsic tax characteristics of
any Limited Partner Interests, so long as such
conventions would not have a material adverse effect on the Limited Partners or the
Record Holders of any class or classes of Limited Partner Interests.
(e) Any gain allocated to the Partners upon the sale or other taxable disposition of
any Partnership asset shall, to the extent possible, after taking into account other
required allocations of gain pursuant to this Section 6.2, be characterized as Recapture
Income in the same proportions and to the same extent as such Partners (or their
predecessors in interest) have been allocated any deductions directly or indirectly giving
rise to the treatment of such gains as Recapture Income.
(f) All items of income, gain, loss, deduction and credit recognized by the Partnership
for federal income tax purposes and allocated to the Partners in accordance with the
provisions hereof shall be determined without regard to any election under Section 754 of
the Code that may be made by the Partnership; provided, however, that such allocations, once
made, shall be adjusted (in the manner determined by the General Partner) to take into
account those adjustments permitted or required by Sections 734 and 743 of the Code.
(g) Each item of Partnership income, gain, loss and deduction shall for federal income
tax purposes, be determined on an annual basis and prorated on a monthly basis and shall be
allocated to the Partners as of the opening of the National Securities Exchange on which the
Units are then traded on the first Business Day of each month; provided, however, such items
for the period beginning on the Closing Date and ending on the last day of the month in
which the Option Closing Date or the expiration of the Over-Allotment Option occurs shall be
allocated to the Partners as of the opening of the National Securities Exchange on which the
Units are then traded on the first Business Day of the next succeeding month; and provided,
further, that gain or loss on a sale or other disposition of any assets of the Partnership
or any other extraordinary item of income or loss realized and recognized other than in the
ordinary course of business, as determined by the General Partner, shall be allocated to the
Partners as of the opening of
49
the National Securities Exchange on which the Units are then
traded on the first Business Day of the month in which such gain or loss is recognized for
federal income tax purposes. The General Partner may revise, alter or otherwise modify such
methods of allocation to the extent permitted or required by Section 706 of the Code and the
regulations or rulings promulgated thereunder.
(h) Allocations that would otherwise be made to a Limited Partner under the provisions
of this Article VI shall instead be made to the beneficial owner of Limited Partner
Interests held by a nominee in any case in which the nominee has furnished the identity of
such owner to the Partnership in accordance with Section 6031(c) of the Code or any other
method determined by the General Partner.
Section 6.3. Requirement and Characterization of Distributions; Distributions to Record
Holders.
(a) Within 45 days following the end of each Quarter commencing with the Quarter ending
on December 31, 2005, an amount equal to 100% of Available Cash with respect to such Quarter
shall, subject to Section 17-607 of the Delaware Act, be
distributed in accordance with this Article VI by the Partnership to the Partners as of
the Record Date selected by the General Partner. All amounts of Available Cash distributed
by the Partnership on any date from any source shall be deemed to be Operating Surplus until
the sum of all amounts of Available Cash theretofore distributed by the Partnership to the
Partners pursuant to Section 6.4 equals the Operating Surplus from the Closing Date through
the close of the immediately preceding Quarter. Any remaining amounts of Available Cash
distributed by the Partnership on such date shall, except as otherwise provided in Section
6.5, be deemed to be “Capital Surplus.” All distributions required to be made under this
Agreement shall be made subject to Section 17-607 of the Delaware Act.
(b) Notwithstanding Section 6.3(a), in the event of the dissolution and liquidation of
the Partnership, all receipts received during or after the Quarter in which the Liquidation
Date occurs, 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 General Partner may treat taxes paid by the Partnership on behalf of, or
amounts withheld with respect to, all or less than all of the Partners, as a distribution of
Available Cash to such Partners.
(d) Each distribution in respect of a Partnership Interest shall be paid by the
Partnership, directly or through the Transfer Agent or through any other Person or agent,
only to the Record Holder of such Partnership Interest as of the Record Date set for such
distribution. Such payment shall constitute full payment and satisfaction of the
Partnership’s liability in respect of such payment, regardless of any claim of any Person
who may have an interest in such payment by reason of an assignment or otherwise.
50
Section 6.4. Distributions of Available Cash from Operating Surplus.
(a) During Subordination Period. Available Cash with respect to any Quarter within the
Subordination Period that is deemed to be Operating Surplus pursuant to the provisions of
Section 6.3 or Section 6.5 shall, subject to Section 17-607 of the Delaware Act, be
distributed as follows, except as otherwise required by Section 5.6(b) in respect of other
Partnership Securities issued pursuant thereto:
(i) First, (A) to the General Partner in accordance with its Percentage
Interest and (B) to the Unitholders holding Common Units, Pro Rata, a percentage
equal to 100% less the General Partner’s Percentage Interest, until there has been
distributed in respect of each Common Unit then Outstanding an amount equal to the
Minimum Quarterly Distribution for such Quarter;
(ii) Second, (A) to the General Partner in accordance with its Percentage
Interest and (B) to the Unitholders holding Common Units, Pro Rata, a percentage
equal to 100% less the General Partner’s Percentage Interest, until there has been
distributed in respect of each Common Unit then Outstanding an amount equal to the
Cumulative Common Unit Arrearage existing with respect to such Quarter;
(iii) Third, (A) to the General Partner in accordance with its Percentage
Interest and (B) to the Unitholders holding Subordinated Units, Pro Rata, a
percentage equal to 100% less the General Partner’s Percentage Interest, until there
has been distributed in respect of each Subordinated Unit then Outstanding an amount
equal to the Minimum Quarterly Distribution for such Quarter;
(iv) Fourth, to the General Partner and the Unitholders in accordance with
their respective Percentage Interests, until there has been distributed in respect
of each Unit then Outstanding an amount equal to the excess of the First Target
Distribution over the Minimum Quarterly Distribution for such Quarter;
(v) Fifth, (A) to the General Partner in accordance with its Percentage
Interest; (B) 13% to the holders of the Incentive Distribution Rights, Pro Rata; and
(C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclauses (A) and (B) of this clause (v), until there has
been distributed in respect of each Unit then Outstanding an amount equal to the
excess of the Second Target Distribution over the First Target Distribution for such
Quarter;
(vi) Sixth, (A) to the General Partner in accordance with its Percentage
Interest, (B) 23% to the holders of the Incentive Distribution Rights, Pro Rata; and
(C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclause (A) and (B) of this subclauses (vi), until there
has been distributed in respect of each Unit then Outstanding an
51
amount equal to the
excess of the Third Target Distribution over the Second Target Distribution for such
Quarter; and
(vii) Thereafter, (A) to the General Partner in accordance with its Percentage
Interest; (B) 48% to the holders of the Incentive Distribution Rights, Pro Rata; and
(C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclauses (A) and (B) of this clause (vii);
provided, however, if the Minimum Quarterly Distribution, the First Target Distribution, the
Second Target Distribution and the Third Target Distribution have been reduced to zero
pursuant to the second sentence of Section 6.6(a), the distribution of Available Cash that
is deemed to be Operating Surplus with respect to any Quarter will be made solely in
accordance with Section 6.4(a)(vii).
(b) After Subordination Period. Available Cash with respect to any Quarter after the
Subordination Period that is deemed to be Operating Surplus pursuant to the provisions of
Section 6.3 or Section 6.5, subject to Section 17-607 of the Delaware Act, shall be
distributed as follows, except as otherwise required by Section 5.6(b) in respect of
additional Partnership Securities issued pursuant thereto:
(i) First, 100% to the General Partner and the Unitholders in accordance with
their respective Percentage Interests, until there has been
distributed in respect of each Unit then Outstanding an amount equal to the
Minimum Quarterly Distribution for such Quarter;
(ii) Second, 100% to the General Partner and the Unitholders in accordance with
their respective Percentage Interests, until there has been distributed in respect
of each Unit then Outstanding an amount equal to the excess of the First Target
Distribution over the Minimum Quarterly Distribution for such Quarter;
(iii) Third, (A) to the General Partner in accordance with its Percentage
Interest; (B) 13% to the holders of the Incentive Distribution Rights, Pro Rata; and
(C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclauses (A) and (B) of this clause (iii), until there
has been distributed in respect of each Unit then Outstanding an amount equal to the
excess of the Second Target Distribution over the First Target Distribution for such
Quarter;
(iv) Fourth, (A) to the General Partner in accordance with its Percentage
Interest; (B) 23% to the holders of the Incentive Distribution Rights, Pro Rata; and
(C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclause (A) and (B) of this clause (iv), until there has
been distributed in respect of each Unit then Outstanding an amount equal to the
excess of the Third Target Distribution over the Second Target Distribution for such
Quarter; and
52
(v) Thereafter, (A) to the General Partner in accordance with its Percentage
Interest; (B) 48% to the holders of the Incentive Distribution Rights, Pro Rata; and
(C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclauses (A) and (B) of this clause (v);
provided, however, if the Minimum Quarterly Distribution, the First Target Distribution, the
Second Target Distribution and the Third Target Distribution have been reduced to zero
pursuant to the second sentence of Section 6.6(a), the distribution of Available Cash that
is deemed to be Operating Surplus with respect to any Quarter will be made solely in
accordance with Section 6.4(b)(v).
Section 6.5. Distributions of Available Cash from Capital Surplus. Available Cash that is
deemed to be Capital Surplus pursuant to the provisions of Section 6.3(a) shall, subject to Section
17-607 of the Delaware Act, be distributed, unless the provisions of Section 6.3 require otherwise,
100% to the General Partner and the Unitholders in accordance with their respective Percentage
Interests, until a hypothetical holder of a Common Unit acquired on the Closing Date has received
with respect to such Common Unit, during the period since the Closing Date through such date,
distributions of Available Cash that are deemed to be Capital Surplus in an aggregate amount equal
to the Initial Unit Price. Available Cash that is deemed to be Capital Surplus shall then be
distributed (A) to the General Partner in accordance with its Percentage Interest and (B) to all
Unitholders holding Common Units, Pro Rata, a percentage equal to 100% less the General Partner’s
Percentage Interest, until there has been distributed in
respect of each Common Unit then Outstanding an amount equal to the Cumulative Common Unit
Arrearage. Thereafter, all Available Cash shall be distributed as if it were Operating Surplus and
shall be distributed in accordance with Section 6.4.
Section 6.6. Adjustment of Minimum Quarterly Distribution and Target Distribution
Levels.
(a) The Minimum Quarterly Distribution, First Target Distribution, Second Target
Distribution, Third Target Distribution, Common Unit Arrearages and Cumulative Common Unit
Arrearages shall be proportionately adjusted in the event of any distribution, combination
or subdivision (whether effected by a distribution payable in Units or otherwise) of Units
or other Partnership Securities in accordance with Section 5.9. In the event of a
distribution of Available Cash that is deemed to be from Capital Surplus, the then
applicable Minimum Quarterly Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution, shall be adjusted proportionately downward to
equal the product obtained by multiplying the otherwise applicable Minimum Quarterly
Distribution, First Target Distribution, Second Target Distribution and Third Target
Distribution, as the case may be, by a fraction of which the numerator is the Unrecovered
Capital of the Common Units immediately after giving effect to such distribution and of
which the denominator is the Unrecovered Capital of the Common Units immediately prior to
giving effect to such distribution.
(b) The Minimum Quarterly Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution, shall also be subject to adjustment pursuant to
Section 6.9.
53
Section 6.7. Special Provisions Relating to the Holders of Subordinated Units.
(a) Except with respect to the right to vote on or approve matters requiring the vote
or approval of a percentage of the holders of Outstanding Common Units and the right to
participate in allocations of income, gain, loss and deduction and distributions made with
respect to Common Units, the holder of a Subordinated Unit shall have all of the rights and
obligations of a Unitholder holding Common Units hereunder; provided, however, that
immediately upon the conversion of Subordinated Units into Common Units pursuant to Section
5.7, the Unitholder holding a Subordinated Unit shall possess all of the rights and
obligations of a Unitholder holding Common Units hereunder, including the right to vote as a
Common Unitholder and the right to participate in allocations of income, gain, loss and
deduction and distributions made with respect to Common Units; provided, however, that such
converted Subordinated Units shall remain subject to the provisions of Section 5.5(c)(ii),
Section 6.1(d)(x) and Section 6.7(c).
(b) A Unitholder shall not be permitted to transfer a Subordinated Unit or a
Subordinated Unit that has converted into a Common Unit pursuant to Section 5.8 (other than
a transfer to an Affiliate) if the remaining balance in the transferring Unitholder’s
Capital Account with respect to the retained Subordinated Units or retained converted
Subordinated Units would be negative after giving effect to the allocation under Section
5.5(c)(ii)(B).
(c) The Unitholder holding a Subordinated Unit that has converted into a Common Unit
pursuant to Section 5.7 shall not be issued a Common Unit Certificate pursuant to Section
4.1, and shall not be permitted to transfer its converted Subordinated Units to a Person
that is not an Affiliate of the holder until such time as the General Partner determines,
based on advice of counsel, that a converted Subordinated Unit should have, as a substantive
matter, like intrinsic economic and federal income tax characteristics, in all material
respects, to the intrinsic economic and federal income tax characteristics of an Initial
Common Unit. In providing such advice, counsel may rely upon the fact that the General
Partner will take positions in filing the tax returns of the Partnership (including
information returns to unitholders) which are intended to preserve the uniformity of units,
as described at “Material Tax Consequences—Uniformity of Units” in the Registration
Statement, and may assume the validity of such positions. In connection with the condition
imposed by this Section 6.7(c), the General Partner may take whatever steps are required to
provide economic uniformity to the converted Subordinated Units in preparation for a
transfer of such converted Subordinated Units, including the application of Section
5.5(c)(ii) and Section 6.1(d)(x); provided, however, that no such steps may be taken that
would have a material adverse effect on the Unitholders holding Common Units represented by
Common Unit Certificates.
Section 6.8. Special Provisions Relating to the Holders of Incentive Distribution Rights.
Notwithstanding anything to the contrary set forth in this Agreement, the holders of the Incentive
Distribution Rights (a) shall (i) possess the rights and obligations provided in this Agreement
with respect to a Limited Partner pursuant to Article III and Article VII and (ii) have a Capital
Account as a Partner pursuant to Section 5.5 and all other provisions related thereto and (b) shall
not (i) be entitled to vote on any matters requiring the approval or vote of the holders of
Outstanding Units, except as provided by law, (ii) be entitled to any distributions other than as
54
provided in Section 6.4(a)(v), (vi) and (vii), Section 6.4(b)(iii), (iv) and (v), and Section 12.4
or (iii) be allocated items of income, gain, loss or deduction other than as specified in this
Article VI.
Section 6.9. Entity-Level Taxation. If legislation is enacted or the interpretation of
existing language is modified by a governmental taxing authority so that a Group Member is treated
as an association taxable as a corporation or is otherwise subject to an entity-level tax for
federal, state or local income tax purposes, then the General Partner shall estimate for each
Quarter the Partnership Group’s aggregate liability (the “Estimated Incremental Quarterly Tax
Amount”) for all such income taxes that are payable by reason of any such new legislation or
interpretation; provided that any difference between such estimate and the actual tax liability for
such Quarter that is owed by reason of any such new legislation or interpretation shall be taken
into account in determining the Estimated Incremental Quarterly Tax Amount with respect to each
Quarter in which any such difference can be determined. For each such Quarter, the Minimum
Quarterly Distribution, First Target Distribution, Second Target Distribution and Third Target
Distribution, shall be the product obtained by multiplying (a) the amounts therefor that are set
out herein prior to the application of this Section 6.9 times (b) the quotient obtained by dividing
(i) Available Cash with respect to such Quarter by (ii) the sum of Available Cash with respect to
such Quarter and the Estimated Incremental Quarterly Tax Amount for such Quarter, as determined by
the General
Partner. For purposes of the foregoing, Available Cash with respect to a Quarter will be deemed
reduced by the Estimated Incremental Quarterly Tax Amount for that Quarter.
Section 7.1. Management.
(a) The General Partner shall conduct, direct and manage all activities of the
Partnership. Except as otherwise expressly provided in this Agreement, all management
powers over the business and affairs of the Partnership shall be exclusively vested in the
General Partner, and no Limited Partner shall have any management power over the business
and affairs of the Partnership. In addition to the powers now or hereafter granted a
general partner of a limited partnership under applicable law or that are granted to the
General Partner under any other provision of this Agreement, the General Partner, subject to
Section 7.3, shall have full power and authority to do all things and on such terms as it
determines to be necessary or appropriate to conduct the business of the Partnership, to
exercise all powers set forth in Section 2.5 and to effectuate the purposes set forth in
Section 2.4, including the following:
(i) the making of any expenditures, the lending or borrowing of money, the
assumption or guarantee of, or other contracting for, indebtedness and other
liabilities, the issuance of evidences of indebtedness, including indebtedness that
is convertible into Partnership Securities, and the incurring of any other
obligations;
55
(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(a), the
lending of funds to other Persons (including other Group Members); the repayment or
guarantee of obligations of any Group Member; and the making of capital
contributions to any Group Member;
(v) the negotiation, execution and performance of any contracts, conveyances or
other instruments (including instruments that limit the liability of the Partnership
under contractual arrangements to all or particular assets of the Partnership, with
the other party to the contract to have no recourse against the General Partner or
its assets other than its interest in the Partnership, even if same
results in the terms of the transaction being less favorable to the Partnership
than would otherwise be the case);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees (including employees having
titles such as “president,” “vice president,” “secretary” and “treasurer”) and
agents, outside attorneys, accountants, consultants and contractors and the
determination of their compensation and other terms of employment or hiring;
(viii) the maintenance of insurance for the benefit of the Partnership Group
and the Partners;
(ix) the formation of, or acquisition of an interest in, and the contribution
of property and the making of loans to, any further limited or general partnerships,
joint ventures, corporations, limited liability companies or other relationships
(including the acquisition of interests in, and the contributions of property to,
any Group Member from time to time) subject to the restrictions set forth in Section
2.4;
(x) the control of any matters affecting the rights and obligations of the
Partnership, including the bringing and defending of actions at law or in equity and
otherwise engaging in the conduct of litigation, arbitration or mediation and the
incurring of legal expense and the settlement of claims and litigation;
56
(xi) the indemnification of any Person against liabilities and contingencies to
the extent permitted by law;
(xii) the entering into of listing agreements with any National Securities
Exchange and the delisting of some or all of the Limited Partner Interests from, or
requesting that trading be suspended on, any such exchange (subject to any prior
approval that may be required under Section 4.8);
(xiii) the purchase, sale or other acquisition or disposition of Partnership
Securities and the issuance of additional options, rights, warrants and appreciation
rights relating to Partnership Securities;
(xiv) the undertaking of any action in connection with the Partnership’s
participation in any Group Member; and
(xv) the entering into of agreements with any of its Affiliates to render
services to a Group Member or to itself in the discharge of its duties as General
Partner of the Partnership.
(b) Notwithstanding any other provision of this Agreement, any Group Member Agreement,
the Delaware Act or any applicable law, rule or regulation, each of the Partners and each
other Person who may acquire an interest in Partnership Securities hereby (i) approves,
ratifies and confirms the execution, delivery and performance by the
parties thereto of this Agreement, the Underwriting Agreement, the Contribution
Agreement, any Group Member Agreement of any other Group Member and the other agreements
described in or filed as exhibits to the Registration Statement that are related to the
transactions contemplated by the Registration Statement; (ii) agrees that the General
Partner (on its own or through any officer of the Partnership) is authorized to execute,
deliver and perform the agreements referred to in clause (i) of this sentence and the other
agreements, acts, transactions and matters described in or contemplated by the Registration
Statement on behalf of the Partnership without any further act, approval or vote of the
Partners or the other Persons who may acquire an interest in Partnership Securities; and
(iii) agrees that the execution, delivery or performance by the General Partner, any Group
Member or any Affiliate of any of them of this Agreement or any agreement authorized or
permitted under this Agreement (including the exercise by the General Partner or any
Affiliate of the General Partner of the rights accorded pursuant to Article XV) shall not
constitute a breach by the General Partner of any duty that the General Partner may owe the
Partnership or the Limited Partners or any other Persons 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 General Partner has caused the
Certificate of Limited Partnership to be filed with the Secretary of State of the State of Delaware
as required by the Delaware Act. The General Partner shall use all reasonable efforts to cause to
be filed such other certificates or documents that the General Partner determines to be necessary
or appropriate for the formation, continuation, qualification and operation of a limited
partnership (or a partnership in which the limited partners have limited liability) in the State of
Delaware or any other state in which the Partnership may elect to do business or own property.
57
To
the extent the General Partner determines such action to be necessary or appropriate, the General
Partner shall file amendments to and restatements of the Certificate of Limited Partnership and do
all things to maintain the Partnership as a limited partnership (or a partnership or other entity
in which the limited partners have limited liability) under the laws of the State of Delaware or of
any other state in which the Partnership may elect to do business or own property. Subject to the
terms of Section 3.4(a), the General Partner shall not be required, before or after filing, to
deliver or mail a copy of the Certificate of Limited Partnership, any qualification document or any
amendment thereto to any Limited Partner.
Section 7.3. Restrictions on the General Partner’s Authority. Except as provided in
Article XII and Article XIV, the General Partner may not sell, exchange or otherwise dispose of all
or substantially all of the assets of the Partnership Group, taken as a whole, in a single
transaction or a series of related transactions (including by way of merger, consolidation or other
combination or sale of ownership interests of the Partnership’s Subsidiaries) without the approval
of holders of a Unit Majority; provided, however, that this provision shall not preclude or limit
the General Partner’s ability to mortgage, pledge, hypothecate or grant a security interest in all
or substantially all of the assets of the Partnership Group and shall not apply to any forced sale
of any or all of the assets of the Partnership Group pursuant to the foreclosure of, or other
realization upon, any such encumbrance. Without the approval of holders of a Unit Majority, the
General Partner shall not, on behalf of the Partnership,
except as permitted under Section 4.6, Section 11.1 and Section 11.2, elect or cause the
Partnership to elect a successor general partner of the Partnership.
Section 7.4. Reimbursement of the General Partner.
(a) Except as provided in this Section 7.4 and elsewhere in this Agreement, the General
Partner shall not be compensated for its services as a general partner or managing member of
any Group Member.
(b) The General Partner and its general partner shall be reimbursed on a monthly basis,
or such other basis as the General Partner may determine, for (i) all direct and indirect
expenses it incurs or payments it makes on behalf of the Partnership Group (including
salary, bonus, incentive compensation and other amounts paid to any Person including
Affiliates of the General Partner to perform services for the Partnership Group or for the
General Partner in the discharge of its duties to the Partnership Group, which amounts shall
also include reimbursement for any Common Units purchased to satisfy obligations of the
Partnership under any of its equity compensation plans), and (ii) all other expenses
allocable to the Partnership Group or otherwise incurred by the General Partner in
connection with operating the Partnership Group’s business (including expenses allocated to
the General Partner by its Affiliates). The General Partner shall determine the expenses
that are allocable to the Partnership Group. Reimbursements pursuant to this Section 7.4
shall be in addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 7.7.
(c) The General Partner, without the approval of the Limited Partners (who shall have
no right to vote in respect thereof), may propose and adopt on behalf of the Partnership
employee benefit plans, employee programs and employee practices (including plans, programs
and practices involving the issuance of Partnership Securities
58
or options to purchase or
rights, warrants or appreciation rights relating to Partnership Securities), or cause the
Partnership to issue Partnership Securities in connection with, or pursuant to, any employee
benefit plan, employee program or employee practice maintained or sponsored by the General
Partner or any of its Affiliates, in each case for the benefit of employees of the 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. The
Partnership agrees to issue and sell to the General Partner or any of its Affiliates any
Partnership Securities that the General Partner or such Affiliates are obligated to provide
to any employees pursuant to any such employee benefit plans, employee programs or employee
practices. Expenses incurred by the General Partner in connection with any such plans,
programs and practices (including the net cost to the General Partner or such Affiliates of
Partnership Securities purchased by the General Partner or such Affiliates from the
Partnership to fulfill options or awards under such plans, programs and practices) shall be
reimbursed in accordance with Section 7.4(b). Any and all obligations of the General
Partner under any employee benefit plans, employee programs or employee practices adopted by
the General Partner as permitted by this Section 7.4(c) shall constitute obligations of the
General Partner hereunder and shall be assumed by any successor General Partner approved
pursuant to Section 11.1 or Section 11.2 or the transferee of or successor to all of the
General Partner’s General Partner Interest (represented by General Partner Units) pursuant
to Section 4.6.
Section 7.5. Outside Activities.
(a) After the Closing Date, the General Partner, for so long as it is the General
Partner of the Partnership (i) agrees that its sole business will be to act as a general
partner or managing member, as the case may be, of the Partnership and any other partnership
or limited liability company of which the Partnership is, directly or indirectly, a partner
or member and to undertake activities that are ancillary or related thereto (including being
a limited partner in the Partnership) and (ii) shall not engage in any business or activity
or incur any debts or liabilities except in connection with or incidental to (A) its
performance as general partner or managing member, if any, of one or more Group Members or
as described in or contemplated by the Registration Statement or (B) the acquiring, owning
or disposing of debt or equity securities in any Group Member.
(b) Each Indemnitee (other than the General Partner) shall have the right to engage in
businesses of every type and description and other activities for profit and to engage in
and possess an interest in other business ventures of any and every type or description,
whether in businesses engaged in or anticipated to be engaged in by any Group Member,
independently or with others, including business interests and activities in direct
competition with the business and activities of any Group Member, and none of the same shall
constitute a breach of this Agreement or any duty expressed or implied by law to any Group
Member or any Partner. Notwithstanding anything to the contrary in this Agreement, (i) the
engaging in competitive activities by any Indemnitees (other than the General Partner) in
accordance with the provisions of this Section 7.5 is hereby approved by the Partnership and
all Partners, (ii) it shall be deemed not to be a breach of any fiduciary duty or any other
obligation of any type whatsoever of the General Partner
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or of any Indemnitee for the
Indemnitees (other than the General Partner) to engage in such business interests and
activities in preference to or to the exclusion of the Partnership.
(c) Notwithstanding anything to the contrary in this Agreement, the doctrine of
corporate opportunity, or any analogous doctrine, shall not apply to any Indemnitee
(including the General Partner). No Indemnitee (including the General Partner) who acquires
knowledge of a potential transaction, agreement, arrangement or other matter that may be an
opportunity for the Partnership shall have any duty to communicate or offer such opportunity
to the Partnership, and such Indemnitee (including the General Partner) shall not be liable
to the Partnership, to any Limited Partner or any other Person for breach of any fiduciary
or other duty by reason of the fact that such Indemnitee (including the General Partner)
pursues or acquires for itself, directs such opportunity to another Person or does not
communicate such opportunity or information to the Partnership.
(d) None of any Group Member, any Limited Partner or any other Person shall have any
rights by virtue of this Agreement, any Group Member Agreement, or the partnership
relationship established hereby in any business ventures of any Indemnitee.
(e) The General Partner and each of its Affiliates may acquire Units or other
Partnership Securities in addition to those acquired on the Closing Date and, except as
otherwise provided in this Agreement, shall be entitled to exercise, at their option,
all rights relating to all Units or other Partnership Securities acquired by them. For
purposes of this Section 7.5(e), the term “Affiliates,” when used with respect to the
General Partner, shall not include any Group Member.
Section 7.6. Loans from the General Partner; Loans or Contributions from the Partnership
or Group Members.
(a) The General Partner or any of its Affiliates may lend to any Group Member, and any
Group Member may borrow from the General Partner or any of its Affiliates, funds needed or
desired by the Group Member for such periods of time and in such amounts as the General
Partner may determine; provided, however, that in any such case the lending party may not
charge the borrowing party interest at a rate greater than the rate that would be charged
the borrowing party or impose terms less favorable to the borrowing party than would be
charged or imposed on the borrowing party by unrelated lenders on comparable loans made on
an arm’s-length basis (without reference to the lending party’s financial abilities or
guarantees), all as determined by the General Partner. The borrowing party shall reimburse
the lending party for any costs (other than any additional interest costs) incurred by the
lending party in connection with the borrowing of such funds. For purposes of this Section
7.6(a) and Section 7.6(b), the term “Group Member” shall include any Affiliate of a Group
Member that is controlled by the Group Member.
(b) The Partnership may lend or contribute to any Group Member, and any Group Member
may borrow from the Partnership, funds on terms and conditions
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determined by the General
Partner. No Group Member may lend funds to the General Partner or any of its Affiliates
(other than another Group Member).
(c) No borrowing by any Group Member or the approval thereof by the General Partner
shall be deemed to constitute a breach of any duty, expressed or implied, of the General
Partner or its Affiliates to the Partnership or the Limited Partners by reason of the fact
that the purpose or effect of such borrowing is directly or indirectly to (i) enable
distributions to the General Partner or its Affiliates (including in their capacities as
Limited Partners) to exceed the General Partner’s Percentage Interest of the total amount
distributed to all partners or (ii) hasten the expiration of the Subordination Period or the
conversion of any Subordinated Units into Common Units.
Section 7.7. Indemnification.
(a) To the fullest extent permitted by law but subject to the limitations expressly
provided in this Agreement, all Indemnitees shall be indemnified and held harmless by the
Partnership from and against any and all losses, claims, damages, liabilities, joint or
several, expenses (including legal fees and expenses), judgments, fines, penalties,
interest, settlements or other amounts arising from any and all claims, demands, actions,
suits or proceedings, whether civil, criminal, administrative or investigative, in which any
Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, by
reason of its status as an Indemnitee; provided, that the Indemnitee shall not be
indemnified and held harmless if there has been a final and non-appealable
judgment entered by a court of competent jurisdiction determining that, in respect of
the matter for which the Indemnitee is seeking indemnification pursuant to this Section 7.7,
the Indemnitee acted in bad faith or engaged in fraud, willful misconduct or, in the case of
a criminal matter, acted with knowledge that the Indemnitee’s conduct was unlawful;
provided, further, no indemnification pursuant to this Section 7.7 shall be available to the
General Partner or its Affiliates (other than a Group Member) with respect to its or their
obligations incurred pursuant to the Underwriting Agreement or the Contribution Agreement
(other than obligations incurred by the General Partner on behalf of the Partnership). Any
indemnification pursuant to this Section 7.7 shall be made only out of the assets of the
Partnership, it being agreed that the General Partner shall not be personally liable for
such indemnification and shall have no obligation to contribute or lend any monies or
property to the Partnership to enable it to effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including legal fees and
expenses) incurred by an Indemnitee who is indemnified pursuant to Section 7.7(a) in
defending any claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Partnership prior to a determination that the Indemnitee is not entitled to
be indemnified upon receipt by the Partnership of an undertaking by or on behalf of the
Indemnitee to repay such amount if it shall be determined that the Indemnitee is not
entitled to be indemnified as authorized in this Section 7.7.
(c) The indemnification provided by this Section 7.7 shall be in addition to any other
rights to which an Indemnitee may be entitled under any agreement, pursuant to any vote of
the holders of Outstanding Limited Partner Interests, as a matter of law or
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otherwise, both
as to actions in the Indemnitee’s capacity as an Indemnitee and as to actions in any other
capacity (including any capacity under the Underwriting Agreement), and shall continue as to
an Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the
heirs, successors, assigns and administrators of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the General Partner or its
Affiliates for the cost of) insurance, on behalf of the General Partner, its Affiliates and
such other Persons as the General Partner shall determine, against any liability that may be
asserted against, or expense that may be incurred by, such Person in connection with the
Partnership’s activities or such Person’s activities on behalf of the Partnership,
regardless of whether the Partnership would have the power to indemnify such Person against
such liability under the provisions of this Agreement.
(e) For purposes of this Section 7.7, the Partnership shall be deemed to have requested
an Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by
it of its duties to the Partnership also imposes duties on, or otherwise involves services
by, it to the plan or participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law shall
constitute “fines” within the meaning of Section 7.7(a); and action taken or omitted by it
with respect to any employee benefit plan in the performance of its duties for a purpose
reasonably believed by it to be in the best interest of the participants and beneficiaries
of the plan shall be deemed to be for a purpose that is in the best interests of the
Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to personal liability by
reason of the indemnification provisions set forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in part under this
Section 7.7 because the Indemnitee had an interest in the transaction with respect to which
the indemnification applies if the transaction was otherwise permitted by the terms of this
Agreement.
(h) The provisions of this Section 7.7 are for the benefit of the Indemnitees, their
heirs, successors, assigns and administrators and shall not be deemed to create any rights
for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 7.7 or any provision hereof
shall in any manner terminate, reduce or impair the right of any past, present or future
Indemnitee to be indemnified by the Partnership, nor the obligations of the Partnership to
indemnify any such Indemnitee under and in accordance with the provisions of this Section
7.7 as in effect immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or be asserted.
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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 or any other
Persons who have acquired interests in the Partnership Securities, for losses sustained or
liabilities incurred as a result of any act or omission of an Indemnitee unless there has
been a final and non-appealable judgment entered by a court of competent jurisdiction
determining that, in respect of the matter in question, the Indemnitee acted in bad faith or
engaged in fraud, willful misconduct or, in the case of a criminal matter, acted with
knowledge that the Indemnitee’s conduct was criminal.
(b) Subject to its obligations and duties as General Partner set forth in Section
7.1(a), the General Partner may exercise any of the powers granted to it by this Agreement
and perform any of the duties imposed upon it hereunder either directly or by or through its
agents, and the General Partner shall not be responsible for any misconduct or negligence on
the part of any such agent appointed by the General Partner in good faith.
(c) To the extent that, at law or in equity, an Indemnitee has duties (including
fiduciary duties) and liabilities relating thereto to the Partnership or to the Partners, no
such Indemnitee (including the General Partner) acting in connection with the Partnership’s
business or affairs shall be liable to the Partnership or to any Partner for its good faith
reliance on the provisions of this Agreement.
(d) Any amendment, modification or repeal of this Section 7.8 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the liability
of the Indemnitees under this Section 7.8 as in effect immediately prior to
such amendment, modification or repeal with respect to claims arising from or relating
to matters occurring, in whole or in part, prior to such amendment, modification or repeal,
regardless of when such claims may arise or be asserted.
Section 7.9. Resolution of Conflicts of Interest; Standards of Conduct and Modification of
Duties.
(a) Unless otherwise expressly provided in this Agreement or any Group Member
Agreement, whenever a potential conflict of interest exists or arises between the General
Partner or any of its Affiliates, on the one hand, and the Partnership, any Group Member or
any Partner, on the other, any resolution or course of action by the General Partner or its
Affiliates in respect of such conflict of interest shall be permitted and deemed approved by
all Partners, and shall not constitute a breach of this Agreement, of any Group Member
Agreement, of any agreement contemplated herein or therein, or of any duty stated or implied
by law or equity, if the resolution or course of action in respect of such conflict of
interest is (i) approved by Special Approval, (ii) approved by the vote of a majority of the
Common Units (excluding Common Units owned by the General Partner and its Affiliates), (iii)
on terms no less favorable to the Partnership than those generally being provided to or
available from unrelated third parties or (iv) fair and reasonable to the Partnership,
taking into account the totality of the relationships between the parties involved
(including other transactions that may be particularly favorable or
63
advantageous to the
Partnership). The General Partner shall be authorized but not required in connection with
its resolution of such conflict of interest to seek Special Approval of such resolution, and
the General Partner may also adopt a resolution or course of action that has not received
Special Approval. If Special Approval is not sought and the Board of Directors of the
General Partner determines that the resolution or course of action taken with respect to a
conflict of interest satisfies either of the standards set forth in clauses (iii) or (iv)
above, then it shall be presumed that, in making its decision, the Board of Directors of the
General Partner acted in good faith, and in any proceeding brought by any Limited Partner or
by or on behalf of such Limited Partner or any other Limited Partner or the Partnership
challenging such approval, the Person bringing or prosecuting such proceeding shall have the
burden of overcoming such presumption. Notwithstanding anything to the contrary in this
Agreement or any duty otherwise existing at law or equity, the existence of the conflicts of
interest described in the Registration Statement are hereby approved by all Partners and
shall not constitute a breach of this Agreement.
(b) Whenever the General Partner makes a determination or takes or declines to take any
other action, or any of its Affiliates causes it to do so, in its capacity as the general
partner of the Partnership as opposed to in its individual capacity, whether under this
Agreement, any Group Member Agreement or any other agreement contemplated hereby or
otherwise, then, unless another express standard is provided for in this Agreement, the
General Partner, or such Affiliates causing it to do so, shall make such determination or
take or decline to take such other action in good faith and shall not be subject to any
other or different standards imposed by this Agreement, any Group Member Agreement, any
other agreement contemplated hereby or under the Delaware Act or any other law, rule or
regulation or at equity. In order for a determination or other
action to be in “good faith” for purposes of this Agreement, the Person or Persons
making such determination or taking or declining to take such other action must believe that
the determination or other action is in the best interests of the Partnership.
(c) Whenever the General Partner makes a determination or takes or declines to take any
other action, or any of its Affiliates causes it to do so, in its individual capacity as
opposed to in its capacity as the general partner of the Partnership, whether under this
Agreement, any Group Member Agreement or any other agreement contemplated hereby or
otherwise, then the General Partner, or such Affiliates causing it to do so, are entitled to
make such determination or to take or decline to take such other action free of any
fiduciary duty or obligation whatsoever to the Partnership, any Limited Partner, and the
General Partner, or such Affiliates causing it to do so, shall not be required to act in
good faith or pursuant to any other standard imposed by this Agreement, any Group Member
Agreement, any other agreement contemplated hereby or under the Delaware Act or any other
law, rule or regulation or at equity. By way of illustration and not of limitation,
whenever the phrase, “at the option of the General Partner,” or some variation of that
phrase, is used in this Agreement, it indicates that the General Partner is acting in its
individual capacity. For the avoidance of doubt, whenever the General Partner votes or
transfers its Partnership Interests, or refrains from voting or transferring its Partnership
Interests, it shall be acting in its individual capacity.
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(d) Notwithstanding anything to the contrary in this Agreement, the General Partner and
its Affiliates shall have no duty or obligation, express or implied, to (i) sell or
otherwise dispose of any asset of the Partnership Group other than in the ordinary course of
business or (ii) permit any Group Member to use any facilities or assets of the General
Partner and its Affiliates, except as may be provided in contracts entered into from time to
time specifically dealing with such use. Any determination by the General Partner or any of
its Affiliates to enter into such contracts shall be at its option.
(e) Except as expressly set forth in this Agreement, neither the General Partner nor
any other Indemnitee shall have any duties or liabilities, including fiduciary duties, to
the Partnership or any Limited Partner and the provisions of this Agreement, to the extent
that they restrict, eliminate or otherwise modify the duties and liabilities, including
fiduciary duties, of the General Partner or any other Indemnitee otherwise existing at law
or in equity, are agreed by the Partners to replace such other duties and liabilities of the
General Partner or such other Indemnitee.
(f) The Unitholders hereby authorize the General Partner, on behalf of the Partnership
as a partner or member of a Group Member, to approve of actions by the general partner or
managing member of such Group Member similar to those actions permitted to be taken by the
General Partner pursuant to this Section 7.9.
Section 7.10. Other Matters Concerning the General Partner.
(a) The General Partner may rely and shall be protected in acting or refraining from
acting upon any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties.
(b) The General Partner may consult with legal counsel, accountants, appraisers,
management consultants, investment bankers and other consultants and advisers selected by
it, and any act taken or omitted to be taken in reliance upon the opinion (including an
Opinion of Counsel) of such Persons as to matters that the General Partner reasonably
believes to be within such Person’s professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance with such opinion.
(c) The General Partner shall have the right, in respect of any of its powers or
obligations hereunder, to act through any of its duly authorized officers, a duly appointed
attorney or attorneys-in-fact or the duly authorized officers of the Partnership.
Section 7.11.
Purchase or Sale of Partnership Securities. The General Partner may cause
the Partnership to purchase or otherwise acquire Partnership Securities;
provided that, except as
permitted by Section 4.10, the General Partner may not cause any Group Member to purchase
Subordinated Units during the Subordination Period. As long as Partnership Securities are held by
any Group Member, such Partnership Securities shall not be considered Outstanding for any purpose,
except as otherwise provided herein. The General Partner or any Affiliate of the General Partner
may also purchase or otherwise acquire and sell or otherwise dispose of Partnership Securities for
its own account, subject to the provisions of Article IV and Article X.
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(a) If (i) the General Partner or any Affiliate of the General Partner (including for
purposes of this Section 7.12, any Person that is an Affiliate of the General Partner at the
date hereof notwithstanding that it may later cease to be an Affiliate of the General
Partner) holds Partnership Securities that it desires to sell and (ii) Rule 144 of the
Securities Act (or any successor rule or regulation to Rule 144) or another exemption from
registration is not available to enable such holder of Partnership Securities (the “Holder”)
to dispose of the number of Partnership Securities it desires to sell at the time it desires
to do so without registration under the Securities Act, then at the option and upon the
request of the Holder, the Partnership shall file with the Commission as promptly as
practicable after receiving such request, and use all commercially reasonable efforts to
cause to become effective and remain effective for a period of not less than six months
following its effective date or such shorter period as shall terminate when all Partnership
Securities covered by such registration statement have been sold, a registration statement
under the Securities Act registering the offering and sale of the number of Partnership
Securities specified by the Holder; provided, however, that the Partnership shall not be
required to effect more than three registrations pursuant to Section 7.12(a) and Section
7.12(b); and provided further, however, that if the Conflicts Committee determines that the
requested registration would be materially detrimental to the Partnership and its Partners
because such registration would (x) materially interfere with a significant acquisition,
reorganization or other similar transaction involving the Partnership, (y) require premature
disclosure of material information that the Partnership has a bona fide business purpose for
preserving as confidential or (z) render the Partnership unable to comply with requirements
under applicable securities laws, then the
Partnership shall have the right to postpone such requested registration for a period
of not more than three months after receipt of the Holder’s request, such right pursuant to
this Section 7.12(a) or Section 7.12(b) not to be utilized more than twice in any
twelve-month period. Except as provided in the preceding sentence, the Partnership shall be
deemed not to have used all commercially reasonable efforts to keep the registration
statement effective during the applicable period if it voluntarily takes any action that
would result in Holders of Partnership Securities covered thereby not being able to offer
and sell such Partnership Securities at any time during such period, unless such action is
required by applicable law. In connection with any registration pursuant to the first
sentence of this Section 7.12(a), the Partnership shall (i) promptly prepare and file (A)
such documents as may be necessary to register or qualify the securities subject to such
registration under the securities laws of such states as the Holder shall reasonably
request; provided, however, that no such qualification shall be required in any jurisdiction
where, as a result thereof, the Partnership would become subject to general service of
process or to taxation or qualification to do business as a foreign corporation or
partnership doing business in such jurisdiction solely as a result of such registration, and
(B) such documents as may be necessary to apply for listing or to list the Partnership
Securities subject to such registration on such National Securities Exchange as the Holder
shall reasonably request, and (ii) do any and all other acts and things that may be
necessary or appropriate to enable the Holder to consummate a public sale of such
Partnership Securities in such states. Except as set forth in Section 7.12(d), all costs
and expenses of any such
66
registration and offering (other than the underwriting discounts
and commissions) shall be paid by the Partnership, without reimbursement by the Holder.
(b) If any Holder holds Partnership Securities that it desires to sell and Rule 144 of
the Securities Act (or any successor rule or regulation to Rule 144) or another exemption
from registration is not available to enable such Holder to dispose of the number of
Partnership Securities it desires to sell at the time it desires to do so without
registration under the Securities Act, then at the option and upon the request of the
Holder, the Partnership shall file with the Commission as promptly as practicable after
receiving such request, and use all reasonable efforts to cause to become effective and
remain effective for a period of not less than six months following its effective date or
such shorter period as shall terminate when all Partnership Securities covered by such shelf
registration statement have been sold, a “shelf” registration statement covering the
Partnership Securities specified by the Holder on an appropriate form under Rule 415 under
the Securities Act, or any similar rule that may be adopted by the Commission; provided,
however, that the Partnership shall not be required to effect more than three registrations
pursuant to Section 7.12(a) and this Section 7.12(b); and provided further, however, that if
the Conflicts Committee determines in good faith that any offering under, or the use of any
prospectus forming a part of, the shelf registration statement would be materially
detrimental to the Partnership and its Partners because such offering or use would (x)
materially interfere with a significant acquisition, reorganization or other similar
transaction involving the Partnership, (y) require premature disclosure of material
information that the Partnership has a bona fide business purpose for preserving as
confidential or (z) render the Partnership unable to comply with requirements under
applicable securities laws, then the Partnership shall have the right to suspend such
offering or use for a period of not more than three months after receipt of the Holder’s
request, such right pursuant to Section 7.12(a) or this Section 7.12(b) not to be
utilized more than twice in any twelve-month period.
(c) Except as provided in the first sentence of each of subsection (a) and (b) of this
Section 7.12, the Partnership shall be deemed not to have used all reasonable efforts to
keep the registration statement effective during the applicable period if it voluntarily
takes any action that would result in Holders of Partnership Securities covered thereby not
being able to offer and sell such Partnership Securities at any time during such period,
unless such action is required by applicable law. In connection with any shelf registration
pursuant to subsection (a) or (b) of this Section 7.12(c), the Partnership shall (i)
promptly prepare and file (A) such documents as may be necessary to register or qualify the
securities subject to such shelf registration under the securities laws of such states as
the Holder shall reasonably request; provided, however, that no such qualification shall be
required in any jurisdiction where, as a result thereof, the Partnership would become
subject to general service of process or to taxation or qualification to do business as a
foreign corporation or partnership doing business in such jurisdiction solely as a result of
such shelf registration, and (B) such documents as may be necessary to apply for listing or
to list the Partnership Securities subject to such shelf registration on such National
Securities Exchange as the Holder shall reasonably request, and (ii) do any and all other
acts and things that may be necessary or appropriate to enable the Holder to consummate a
public sale of such Partnership Securities in such
67
states. Except as set forth in Section
7.12(e), all costs and expenses of any such shelf registration and offering (other than the
underwriting discounts and commissions) shall be paid by the Partnership, without
reimbursement by the Holder.
(d) If the Partnership shall at any time propose to file a registration statement under
the Securities Act for an offering of equity securities of the Partnership for cash (other
than an offering relating solely to an employee benefit plan), the Partnership shall use all
reasonable efforts to provide notice of its intention to file such registration statement
and shall use all reasonable efforts to include such number or amount of securities held by
the Holder in such registration statement as the Holder shall request; provided, that the
Partnership is not required to make any effort or take any action to so include the
securities of the Holder once the registration statement is declared effective by the
Commission, including any registration statement providing for the offering from time to
time of securities pursuant to Rule 415 of the Securities Act. If the proposed offering
pursuant to this Section 7.12(d) shall be an underwritten offering, then, if the managing
underwriter or managing underwriters of such offering advise the Partnership and the Holder
in writing that in their opinion the inclusion of all or some of the Holder’s Partnership
Securities would adversely and materially affect the success of the offering, the
Partnership shall include in such offering only that number or amount, if any, of securities
held by the Holder that, in the opinion of the managing underwriter or managing
underwriters, will not so adversely and materially affect the offering. Except as set forth
in Section 7.12(e), all costs and expenses of any such registration and offering (other than
the underwriting discounts and commissions) shall be paid by the Partnership, without
reimbursement by the Holder.
(e) If underwriters are engaged in connection with any registration referred to in this
Section 7.12, the Partnership shall provide indemnification, representations, covenants,
opinions and other assurance to the underwriters in form and substance reasonably
satisfactory to such underwriters. Further, in addition to and not in limitation of the
Partnership’s obligation under Section 7.7, the Partnership shall, to the fullest extent
permitted by law, indemnify and hold harmless the Holder, its officers, directors and each
Person who controls the Holder (within the meaning of the Securities Act) and any agent
thereof (collectively, “Indemnified Persons”) from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including legal fees and expenses),
judgments, fines, penalties, interest, settlements or other amounts arising from any and all
claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or
investigative, in which any Indemnified Person may be involved, or is threatened to be
involved, as a party or otherwise under the Securities Act or otherwise (hereinafter
referred to in this Section 7.12(e) as a “claim” and in the plural as “claims”) based upon,
arising out of or resulting from any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which any Partnership Securities
were registered under the Securities Act or any state securities or Blue Sky laws, in any
preliminary prospectus (if used prior to the effective date of such registration statement),
or in any summary or final prospectus or in any amendment or supplement thereto (if used
during the period the Partnership is required to keep the registration statement current),
or arising out of, based upon or resulting from the omission or alleged omission to state
therein a material fact required to be stated therein
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or necessary to make the statements
made therein not misleading; provided, however, that the Partnership shall not be liable to
any Indemnified Person to the extent that any such claim arises out of, is based upon or
results from an untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, such preliminary, summary or final prospectus or such
amendment or supplement, in reliance upon and in conformity with written information
furnished to the Partnership by or on behalf of such Indemnified Person specifically for use
in the preparation thereof.
(f) The provisions of Section 7.12(a), Section 7.12(b) and Section 7.12(d) shall
continue to be applicable with respect to the General Partner (and any of the General
Partner’s Affiliates) after it ceases to be a General Partner of the Partnership, during a
period of two years subsequent to the effective date of such cessation and for so long
thereafter as is required for the Holder to sell all of the Partnership Securities with
respect to which it has requested during such two-year period inclusion in a registration
statement otherwise filed or that a registration statement be filed; provided, however, that
the Partnership shall not be required to file successive registration statements covering
the same Partnership Securities for which registration was demanded during such two-year
period. The provisions of Section 7.12(d) shall continue in effect thereafter.
(g) The rights to cause the Partnership to register Partnership Securities pursuant to
this Section 7.12 may be assigned (but only with all related obligations) by a Holder to a
transferee or assignee of such Partnership Securities, provided (i) the Partnership is,
within a reasonable time after such transfer, furnished with written notice of the name and
address of such transferee or assignee and the Partnership Securities with respect to which
such registration rights are being assigned; and (ii) such transferee or
assignee agrees in writing to be bound by and subject to the terms set forth in this
Section 7.12.
(h) Any request to register Partnership Securities pursuant to this Section 7.12 shall
(i) specify the Partnership Securities intended to be offered and sold by the Person making
the request, (ii) express such Person’s present intent to offer such Partnership Securities
for distribution, (iii) describe the nature or method of the proposed offer and sale of
Partnership Securities, and (iv) contain the undertaking of such Person to provide all such
information and materials and take all action as may be required in order to permit the
Partnership to comply with all applicable requirements in connection with the registration
of such Partnership Securities.
Section 7.13.
Reliance by Third Parties. Notwithstanding anything to the contrary in this
Agreement, any Person dealing with the Partnership shall be entitled to assume that the General
Partner and any officer of the General Partner authorized by the General Partner to act on behalf
of and in the name of the Partnership has full power and authority to encumber, sell or otherwise
use in any manner any and all assets of the Partnership and to enter into any authorized contracts
on behalf of the Partnership, and such Person shall be entitled to deal with the General Partner or
any such officer as if it were the Partnership’s sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other remedies that may
be available against such Person to contest, negate or disaffirm any action of the General Partner
or any such officer in connection with any such dealing. In no event shall any Person dealing with
the General Partner or any such officer or its representatives be obligated to
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ascertain that the
terms of this Agreement have been complied with or to inquire into the necessity or expedience of
any act or action of the General Partner or any such officer or its representatives. Each and
every certificate, document or other instrument executed on behalf of the Partnership by the
General Partner or its representatives shall be conclusive evidence in favor of any and every
Person relying thereon or claiming thereunder that (a) at the time of the execution and delivery of
such certificate, document or instrument, this Agreement was in full force and effect, (b) the
Person executing and delivering such certificate, document or instrument was duly authorized and
empowered to do so for and on behalf of the Partnership and (c) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 8.1.
Records and Accounting. The General Partner shall keep or cause to be kept at
the principal office of the Partnership appropriate books and records with respect to the
Partnership’s business, including all books and records necessary to provide to the Limited
Partners any information required to be provided pursuant to Section 3.4(a). Any books and records
maintained by or on behalf of the Partnership in the regular course of its business, including the
record of the Record Holders and assignees of Units or other Partnership Securities, books of
account and records of Partnership proceedings, may be kept on, or be in the form of, computer
disks, hard drives, punch cards, magnetic tape,
photographs, micrographics or any other information storage device;
provided, that the books and
records so maintained are convertible into clearly legible written form within a reasonable period
of time. The books of the Partnership shall be maintained, for financial reporting purposes, on an
accrual basis in accordance with U.S. GAAP.
Section 8.2.
Fiscal Year. The fiscal year of the Partnership shall be a fiscal year ending
December 31.
(a) As soon as practicable, but in no event later than 120 days after the close of each
fiscal year of the Partnership, the General Partner shall cause to be mailed or made
available to each Record Holder of a Unit as of a date selected by the General Partner, an
annual report containing financial statements of the Partnership for such fiscal year of the
Partnership, presented in accordance with U.S. GAAP, including a balance sheet and
statements of operations, Partnership equity and cash flows, such statements to be audited
by a firm of independent public accountants selected by the General Partner.
(b) As soon as practicable, but in no event later than 90 days after the close of each
Quarter except the last Quarter of each fiscal year, the General Partner shall cause to be
mailed or made available to each Record Holder of a Unit, as of a date selected by the
General Partner, a report containing unaudited financial statements of the Partnership and
such other information as may be required by applicable law, regulation or rule of any
National Securities Exchange on which the Units are listed or admitted to trading, or as the
General Partner determines to be necessary or appropriate.
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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 Record Holders for federal and state income tax reporting purposes with respect to a
taxable year shall be furnished to them within 90 days of the close of the calendar year in which
the Partnership’s taxable year ends. The classification, realization and recognition of income,
gain, losses and deductions and other items shall be on the accrual method of accounting for
federal income tax purposes.
Section 9.2. Tax Elections.
(a) The Partnership shall make the election under Section 754 of the Code in accordance
with applicable regulations thereunder, subject to the reservation of the right to seek to
revoke any such election upon the General Partner’s determination that such revocation is in
the best interests of the Limited Partners. Notwithstanding any other provision herein
contained, for the purposes of computing the adjustments under Section 743(b) of the Code,
the General Partner shall be authorized (but not required) to
adopt a convention whereby the price paid by a transferee of a Limited Partner Interest
will be deemed to be the lowest quoted closing price of the Limited Partner Interests on any
National Securities Exchange on which such Limited Partner Interests are listed during the
calendar month in which such transfer is deemed to occur pursuant to Section 6.2(g) without
regard to the actual price paid by such transferee.
(b) Except as otherwise provided herein, the General Partner shall determine whether
the Partnership should make any other elections permitted by the Code.
Section 9.3. Tax Controversies. Subject to the provisions hereof, the General Partner is
designated as the Tax Matters Partner (as defined in the Code) and is authorized and required to
represent the Partnership (at the Partnership’s expense) in connection with all examinations of the
Partnership’s affairs by tax authorities, including resulting administrative and judicial
proceedings, and to expend Partnership funds for professional services and costs associated
therewith. Each Partner agrees to cooperate with the General Partner and to do or refrain from
doing any or all things reasonably required by the General Partner to conduct such proceedings.
Section 9.4. Withholding. Notwithstanding any other provision of this Agreement, the
General Partner is authorized to take any action that may be required to cause the Partnership and
other Group Members to comply with any withholding requirements established under the Code or any
other federal, state or local law including pursuant to Sections 1441, 1442, 1445 and 1446 of the
Code. To the extent that the Partnership is required or elects to withhold and pay over to any
taxing authority any amount resulting from the allocation or distribution of income to any Partner
(including by reason of Section 1446 of the Code), the General Partner may treat the amount
withheld as a distribution of cash pursuant to Section 6.3 in the amount of such withholding from
such Partner.
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Section 10.1. Admission of Initial Limited Partners. Upon the issuance by the Partnership
of Common Units, Subordinated Units and Incentive Distribution Rights to the General Partner,
Regency Acquisition and the Underwriters as described in Section 5.2 and Section 5.3 in connection
with the Initial Offering, the General Partner shall admit such parties to the Partnership as
Initial Limited Partners in respect of the Common Units, Subordinated Units or Incentive
Distribution Rights issued to them.
Section 10.2. Admission of Limited Partners.
(a) By acceptance of the transfer of any Limited Partner Interests in accordance with
Article IV or the acceptance of any Limited Partner Interests issued pursuant to Article V
or pursuant to a merger or consolidation pursuant to Article XIV, and except as provided in
Section 4.9, each transferee of, or other such Person acquiring, a Limited Partner Interest
(including any nominee holder or an agent or representative
acquiring such Limited Partner Interests for the account of another Person) (i) shall
be admitted to the Partnership as a Limited Partner with respect to the Limited Partner
Interests so transferred or issued to such Person when any such transfer, issuance or
admission is reflected in the books and records of the Partnership and such Limited Partner
becomes the Record Holder of the Limited Partner Interests so transferred, (ii) shall become
bound by the terms of this Agreement, (iii) represents that the transferee has the capacity,
power and authority to enter into this Agreement, (iv) grants the powers of attorney set
forth in this Agreement and (v) makes the consents and waivers contained in this Agreement,
all with or without execution of this Agreement by such Person. The transfer of any Limited
Partner Interests and the admission of any new Limited Partner shall not constitute an
amendment to this Agreement. A Person may become a Limited Partner or Record Holder of a
Limited Partner Interest without the consent or approval of any of the Partners. A Person
may not become a Limited Partner without acquiring a Limited Partner Interest and until such
Person is reflected in the books and records of the Partnership as the Record Holder of such
Limited Partner Interest. The rights and obligations of a Person who is a Non-citizen
Assignee shall be determined in accordance with Section 4.9 hereof.
(b) The name and mailing address of each Limited Partner shall be listed on the books
and records of the Partnership maintained for such purpose by the Partnership or the
Transfer Agent. The General Partner shall update the books and records of the Partnership
from time to time as necessary to reflect accurately the information therein (or shall cause
the Transfer Agent to do so, as applicable). A Limited Partner Interest may be represented
by a Certificate, as provided in Section 4.1 hereof.
(c) Any transfer of a Limited Partner Interest shall not entitle the transferee to
share in the profits and losses, to receive distributions, to receive allocations of income,
gain, loss, deduction or credit or any similar item or to any other rights to which the
transferor was entitled until the transferee becomes a Limited Partner pursuant to Section
10.2(a).
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Section 10.3. Admission of Successor General Partner. A successor General Partner approved
pursuant to Section 11.1 or Section 11.2 or the transferee of or successor to all of the General
Partner Interest (represented by General Partners Units) pursuant to Section 4.6 who is proposed to
be admitted as a successor General Partner shall be admitted to the Partnership as the General
Partner, effective immediately prior to the withdrawal or removal of the predecessor or
transferring General Partner, pursuant to Section 11.1 or Section 11.2 or the transfer of the
General Partner Interest (represented by General Partners Units) pursuant to Section 4.6, provided,
however, that no such successor shall be admitted to the Partnership until compliance with the
terms of Section 4.6 has occurred and such successor has executed and delivered such other
documents or instruments as may be required to effect such admission. Any such successor shall,
subject to the terms hereof, carry on the business of the members of the Partnership Group without
dissolution.
Section 10.4.
Amendment of Agreement and Certificate of Limited Partnership. To effect the admission to the Partnership of any Partner, the General Partner shall take all
steps necessary or appropriate under the Delaware Act to amend the records of the Partnership to
reflect such admission and, if necessary, to prepare as soon as practicable an amendment to this
Agreement and, if required by law, the General Partner shall prepare and file an amendment to the
Certificate of Limited Partnership, and the General Partner may for this purpose, among others,
exercise the power of attorney granted pursuant to Section 2.6.
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
(a) The General Partner shall be deemed to have withdrawn from the Partnership upon the
occurrence of any one of the following events (each such event herein referred to as an
“Event of Withdrawal”);
(i) The General Partner voluntarily withdraws from the Partnership by giving
written notice to the other Partners;
(ii) The General Partner transfers all of its rights as General Partner
pursuant to Section 4.6;
(iii) The General Partner is removed pursuant to Section 11.2;
(iv) The General Partner (A) makes a general assignment for the benefit of
creditors; (B) files a voluntary bankruptcy petition for relief under Chapter 7 of
the United States Bankruptcy Code; (C) files a petition or answer seeking for itself
a liquidation, dissolution or similar relief (but not a reorganization) under any
law; (D) files an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against the General Partner in a proceeding
of the type described in clauses (A)-(C) of this Section 11.1(a)(iv); or (E) seeks,
consents to or acquiesces in the appointment of a trustee (but not a
debtor-in-possession), receiver or liquidator of the General Partner or of all or
any substantial part of its properties;
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(v) A final and non-appealable order of relief under Chapter 7 of the United
States Bankruptcy Code is entered by a court with appropriate jurisdiction pursuant
to a voluntary or involuntary petition by or against the General Partner; or
(vi) If the General Partner is a corporation, a certificate of dissolution or
its equivalent is filed for the General Partner, or 90 days expire after the date of
notice to the General Partner of revocation of its charter without a reinstatement
of its charter, under the laws of its state of incorporation; (B) if the General
Partner is a partnership or a limited liability company, the dissolution and
commencement of winding up of the General Partner; (C) if the General Partner is
acting in such capacity by virtue of being a trustee of a trust, the termination of
the trust; (D) if the General Partner is a natural person, his death or adjudication
of incompetency; and (E) otherwise in the event of the termination of the
General Partner.
If an Event of Withdrawal specified in Section 11.1(a)(iv), (v) or (vi)(A), (B), (C) or (E)
occurs, the withdrawing General Partner shall give notice to the Limited Partners within 30
days after such occurrence. The Partners hereby agree that only the Events of Withdrawal
described in this Section 11.1 shall result in the withdrawal of the General Partner from
the Partnership.
(b) Withdrawal of the General Partner from the Partnership upon the occurrence of an
Event of Withdrawal shall not constitute a breach of this Agreement under the following
circumstances: (i) at any time during the period beginning on the Closing Date and ending at
12:00 midnight, Central Time, on December 31, 2015, the General Partner voluntarily
withdraws by giving at least 90 days’ advance notice of its intention to withdraw to the
Limited Partners; provided, that prior to the effective date of such withdrawal, the
withdrawal is approved by Unitholders holding at least a majority of the Outstanding Common
Units (excluding Common Units held by the General Partner and its Affiliates) and the
General Partner delivers to the Partnership an Opinion of Counsel (“Withdrawal Opinion of
Counsel”) that such withdrawal (following the selection of the successor General Partner)
would not result in the loss of the limited liability of any Limited Partner or any Group
Member or cause any Group Member to be treated as an association taxable as a corporation or
otherwise to be taxed as an entity for federal income tax purposes (to the extent not
already so treated or taxed); (ii) at any time after 12:00 midnight, Central Time, on
December 31, 2015, the General Partner voluntarily withdraws by giving at least 90 days’
advance notice to the Unitholders, such withdrawal to take effect on the date specified in
such notice; (iii) at any time that the General Partner ceases to be the General Partner
pursuant to Section 11.1(a)(ii) or is removed pursuant to Section 11.2; or (iv)
notwithstanding clause (i) of this sentence, at any time that the General Partner
voluntarily withdraws by giving at least 90 days’ advance notice of its intention to
withdraw to the Limited Partners, such withdrawal to take effect on the date specified in
the notice, if at the time such notice is given one Person and its Affiliates (other than
the General Partner and its Affiliates) own beneficially or of record or control at least
50% of the Outstanding Units. The withdrawal of the General Partner from the Partnership
upon the occurrence of an Event
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of Withdrawal shall also constitute the withdrawal of the
General Partner as general partner or managing member, if any, to the extent applicable, of
the other Group Members. If the General Partner gives a notice of withdrawal pursuant to
Section 11.1(a)(i), the holders of a Unit Majority, may, prior to the effective date of such
withdrawal, elect a successor General Partner. The Person so elected as successor General
Partner shall automatically become the successor general partner or managing member, to the
extent applicable, of the other Group Members of which the General Partner is a general
partner or a managing member. If, prior to the effective date of the General Partner’s
withdrawal, a successor is not selected by the Unitholders as provided herein or the
Partnership does not receive a Withdrawal Opinion of Counsel, the Partnership shall be
dissolved in accordance with Section 12.1. Any successor General Partner elected in
accordance with the terms of this Section 11.1 shall be subject to the provisions of Section
10.3.
Section 11.2.
Removal of the General Partner. The General Partner may be removed if such
removal is approved by the Unitholders holding at least 66 2/3% of the Outstanding Units (including
Units held by the General Partner and its Affiliates) voting as a single class. Any such action by
such holders for removal of the General Partner must also provide for the election of a successor
General Partner by the Unitholders holding a majority of the outstanding Common Units voting as a
class and a majority of the outstanding Subordinated Units voting as a class (including Units held
by the General Partner and its Affiliates). Such removal shall be effective immediately following
the admission of a successor General Partner pursuant to Section 10.3. The removal of the General
Partner shall also automatically constitute the removal of the General Partner as general partner
or managing member, to the extent applicable, of the other Group Members of which the General
Partner is a general partner or a managing member. If a Person is elected as a successor General
Partner in accordance with the terms of this Section 11.2, such Person shall, upon admission
pursuant to Section 10.3, automatically become a successor general partner or managing member, to
the extent applicable, of the other Group Members of which the General Partner is a general partner
or a managing member. The right of the holders of Outstanding Units to remove the General Partner
shall not exist or be exercised unless the Partnership has received an opinion opining as to the
matters covered by a Withdrawal Opinion of Counsel. Any successor General Partner elected in
accordance with the terms of this Section 11.2 shall be subject to the provisions of Section 10.3.
(a) In the event of (i) withdrawal of the General Partner under circumstances in which
such withdrawal does not violate this Agreement or (ii) removal of the General Partner by
the holders of Outstanding Units under circumstances where Cause does not exist, if the
successor General Partner is elected in accordance with the terms of Section 11.1 or Section
11.2, the Departing Partner shall have the option, exercisable prior to the effective date
of the departure of such Departing Partner, to require its successor to purchase its General
Partner Interest (represented by General Partners Units) and its general partner interest
(or equivalent interest), if any, in the other Group Members and all of its Incentive
Distribution Rights (collectively, the “Combined Interest”) in exchange for an amount in
cash equal to the fair market value of such Combined Interest, such amount to be determined
and payable as of the effective date of
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its departure. If the General Partner is removed by
the Unitholders under circumstances where Cause exists or if the General Partner withdraws
under circumstances where such withdrawal violates this Agreement, and if a successor
General Partner is elected in accordance with the terms of Section 11.1 or Section 11.2 (or
if the business of the Partnership is continued pursuant to Section 12.2 and the successor
General Partner is not the former General Partner), such successor shall have the option,
exercisable prior to the effective date of the departure of such Departing Partner (or, if
the business of the Partnership is continued, prior to the date the business of the
Partnership is continued), to purchase the Combined Interest for such fair market value of
such Combined Interest of the Departing Partner. In either event, 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 liabilities),
incurred in connection with
the termination of any employees employed by the Departing Partner or its Affiliates
(other than any Group Member) for the benefit of the Partnership or the other Group Members.
For purposes of this Section 11.3(a), the fair market value of the Departing Partner’s
Combined Interest shall be determined by agreement between the Departing Partner and its
successor or, failing agreement within 30 days after the effective date of such Departing
Partner’s departure, by an independent investment banking firm or other independent expert
selected by the Departing Partner and its successor, which, in turn, may rely on other
experts, and the determination of which shall be conclusive as to such matter. If such
parties cannot agree upon one independent investment banking firm or other independent
expert within 45 days after the effective date of such departure, then the Departing Partner
shall designate an independent investment banking firm or other independent expert, the
Departing Partner’s successor shall designate an independent investment banking firm or
other independent expert, and such firms or experts shall mutually select a third
independent investment banking firm or independent expert, which third independent
investment banking firm or other independent expert shall determine the fair market value of
the Combined Interest of the Departing Partner. In making its determination, such third
independent investment banking firm or other independent expert may consider the then
current trading price of Units on any National Securities Exchange on which Units are then
listed or admitted to trading, the value of the Partnership’s assets, the rights and
obligations of the Departing Partner and other factors it may deem relevant.
(b) If the Combined Interest is not purchased in the manner set forth in Section
11.3(a), the Departing Partner (or its transferee) shall become a Limited Partner and its
Combined Interest shall be converted into Common Units pursuant to a valuation made by an
investment banking firm or other independent expert selected pursuant to Section 11.3(a),
without reduction in such Partnership Interest (but subject to proportionate dilution by
reason of the admission of its successor). Any successor General Partner shall indemnify
the Departing Partner (or its transferee) as to all debts and liabilities of the Partnership
arising on or after the date on which the Departing Partner (or its transferee) becomes a
Limited Partner. For purposes of this Agreement, conversion of the Combined Interest of the
Departing Partner to Common Units will be
76
characterized as if the Departing Partner (or its
transferee) contributed its Combined Interest to the Partnership in exchange for the newly
issued Common Units.
(c) If a successor General Partner is elected in accordance with the terms of Section
11.1 or Section 11.2 (or if the business of the Partnership is continued pursuant to Section
12.2 and the successor General Partner is not the former General Partner) and the option
described in Section 11.3(a) is not exercised by the party entitled to do so, the successor
General Partner shall, at the effective date of its admission to the Partnership, contribute
to the Partnership cash in the amount equal to the product of the Percentage Interest of the
Departing Partner and the Net Agreed Value of the Partnership’s assets on such date. In
such event, such successor General Partner shall, subject to the following sentence, be
entitled to its Percentage Interest of all Partnership allocations and distributions to
which the Departing Partner was entitled. In addition, the successor
General Partner shall cause this Agreement to be amended to reflect that, from and
after the date of such successor General Partner’s admission, the successor General
Partner’s interest in all Partnership distributions and allocations shall be its Percentage
Interest.
Section 11.4.
Termination of Subordination Period, Conversion of Subordinated Units and
Extinguishment of Cumulative Common Unit Arrearages. Notwithstanding any provision of this
Agreement, if the General Partner is removed as general partner of the Partnership under
circumstances where Cause does not exist and Units held by the General Partner and its Affiliates
are not voted in favor of such removal, (i) the Subordination Period will end and all Outstanding
Subordinated Units will immediately and automatically convert into Common Units on a one-for-one
basis, (ii) all Cumulative Common Unit Arrearages on the Common Units will be extinguished and
(iii) the General Partner will have the right to convert its General Partner Interest (represented
by General Partner Units) and its Incentive Distribution Rights into Common Units or to receive
cash in exchange therefor.
Section 11.5.
Withdrawal of Limited Partners. No Limited Partner shall have any right to
withdraw from the Partnership;
provided,
however, that when a transferee of a Limited Partner’s
Limited Partner Interest becomes a Record Holder of the Limited Partner Interest so transferred,
such transferring Limited Partner shall cease to be a Limited Partner with respect to the Limited
Partner Interest so transferred.
Section 12.1.
Dissolution. The Partnership shall not be dissolved by the admission of
additional Limited Partners or by the admission of a successor General Partner in accordance with
the terms of this Agreement. Upon the removal or withdrawal of the General Partner, if a successor
General Partner is elected pursuant to Section 11.1 or Section 11.2, the Partnership shall not be
dissolved and such successor 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) an election to dissolve the Partnership by the General Partner that is approved by
the holders of a Unit Majority;
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(b) the entry of a decree of judicial dissolution of the Partnership pursuant to the
provisions of the Delaware Act;
(c) an Event of Withdrawal of the General Partner as provided in Section 11.1(a) (other
than Section 11.1(a)(ii)), unless a successor is elected and an Opinion of Counsel is
received as provided in Section 11.1(b) or Section 11.2 and such successor is admitted to
the Partnership pursuant to Section 10.3; or
(d) at any time there are no Limited Partners, unless the Partnership is continued
without dissolution in accordance with the Delaware Act.
Section 12.2.
Continuation of the Business of the Partnership After Dissolution. Upon (a)
dissolution of the Partnership following an Event of Withdrawal caused by the withdrawal or removal
of the General Partner as provided in Section 11.1(a)(i) or (iii) and the failure of the Partners
to select a successor to such Departing Partner pursuant to Section 11.1 or Section 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), then, to the maximum extent
permitted by law, within 180 days thereafter, the holders of a Unit Majority may elect to continue
the business of the Partnership on the same terms and conditions set forth in this Agreement by
appointing as a successor General Partner a Person approved by the holders of a Unit Majority.
Unless such an election is made within the applicable time period as set forth above, the
Partnership shall conduct only activities necessary to wind up its affairs. If such an election is
so made, then:
(i) the Partnership shall continue without dissolution unless earlier dissolved in
accordance with this Article XII;
(ii) if the successor General Partner is not the former General Partner, then the
interest of the former General Partner shall be treated in the manner provided in Section
11.3; and
(iii) the successor General Partner shall be admitted to the Partnership as General
Partner, effective as of the Event of Withdrawal, by agreeing in writing to be bound by this
Agreement; provided, however, that the right of the holders of a Unit Majority to approve a
successor General Partner and to continue the business of the Partnership shall not exist
and may not be exercised unless the Partnership has received an Opinion of Counsel that (x)
the exercise of the right would not result in the loss of limited liability of any Limited
Partner and (y) neither the Partnership nor any Group Member would be treated as an
association taxable as a corporation or otherwise be taxable as an entity for federal income
tax purposes upon the exercise of such right to continue (to the extent not already so
treated or taxed).
Section 12.3.
Liquidator. Upon dissolution of the Partnership, unless the business of the
Partnership is continued pursuant to Section 12.2, the General Partner shall select one or more
Persons to act as Liquidator. The Liquidator (if other than the General Partner) shall be entitled
to receive such compensation for its services as may be approved by holders of at least a majority
of the Outstanding Common Units and Subordinated Units voting as a single class. The Liquidator
(if other than the General Partner) shall agree not to resign at any time without 15
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days’ prior
notice and may be removed at any time, with or without cause, by notice of removal approved by
holders of at least a majority of the Outstanding Common Units and Subordinated Units voting as a
single class. 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 holders of at least a majority of the
Outstanding Common Units and Subordinated Units voting as a single class. The right to approve a
successor or substitute Liquidator in the manner provided herein shall be deemed to refer also to
any such successor or substitute Liquidator approved in the manner herein provided.
Except as expressly provided in this Article XII, the Liquidator approved in the manner provided
herein shall have and may exercise, without further authorization or consent of any of the parties
hereto, all of the powers conferred upon the General Partner under the terms of this Agreement (but
subject to all of the applicable limitations, contractual and otherwise, upon the exercise of such
powers, other than the limitation on sale set forth in Section 7.3) necessary or appropriate to
carry out the duties and functions of the Liquidator hereunder for and during the period of time
required to complete the winding up and liquidation of the Partnership as provided for herein.
Section 12.4.
Liquidation. The Liquidator shall proceed to dispose of the assets of the
Partnership, discharge its liabilities, and otherwise wind up its affairs in such manner and over
such period as determined by the Liquidator, subject to Section 17-804 of the Delaware Act and the
following:
(a) The assets may be disposed of by public or private sale or by distribution in kind
to one or more Partners on such terms as the Liquidator and such Partner or Partners may
agree. If any property is distributed in kind, the Partner receiving the property shall be
deemed for purposes of Section 12.4(c) to have received cash equal to its fair market value;
and contemporaneously therewith, appropriate cash distributions must be made to the other
Partners. The Liquidator may defer liquidation or distribution of the Partnership’s assets
for a reasonable time if it determines that an immediate sale or distribution of all or some
of the Partnership’s assets would be impractical or would cause undue loss to the Partners.
The Liquidator may distribute the Partnership’s assets, in whole or in part, in kind if it
determines that a sale would be impractical or would cause undue loss to the Partners.
(b) Liabilities of the Partnership include amounts owed to the Liquidator as
compensation for serving in such capacity (subject to the terms of Section 12.3) and amounts
to Partners otherwise than in respect of their distribution rights under Article VI. With
respect to any liability that is contingent, conditional or unmatured or is otherwise not
yet due and payable, the Liquidator shall either settle such claim for such amount as it
thinks appropriate or establish a reserve of cash or other assets to provide for its
payment. When paid, any unused portion of the reserve shall be distributed as additional
liquidation proceeds.
(c) All property and all cash in excess of that required to discharge liabilities as
provided in Section 12.4(b) shall be distributed to the Partners in accordance with, and to
the extent of, the positive balances in their respective Capital Accounts, as determined
after taking into account all Capital Account adjustments (other than those made by reason
of distributions pursuant to this Section 12.4(c)) for the taxable year of the
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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 Certificate of Limited Partnership
and all qualifications of the Partnership as a foreign limited partnership in jurisdictions other
than the State of Delaware shall be canceled and such other actions as may be necessary to
terminate the Partnership shall be taken.
Section 12.6.
Return of Contributions. The General Partner shall not be personally liable
for, and shall have no obligation to contribute or loan any monies or property to the Partnership
to enable it to effectuate, the return of the Capital Contributions of the Limited Partners or
Unitholders, or any portion thereof, it being expressly understood that any such return shall be
made solely from Partnership assets.
Section 12.7.
Waiver of Partition. To the maximum extent permitted by law, each Partner
hereby waives any right to partition of the Partnership property.
Section 12.8.
Capital Account Restoration. No Limited Partner shall have any obligation to
restore any negative balance in its Capital Account upon liquidation of the Partnership. The
General Partner shall be obligated to restore any negative balance in its Capital Account upon
liquidation of its interest in the Partnership by the end of the taxable year of the Partnership
during which such liquidation occurs, or, if later, within 90 days after the date of such
liquidation.
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT;
MEETINGS; RECORD DATE
Section 13.1.
Amendments to be Adopted Solely by the General Partner. Each Partner agrees
that the General Partner, without the approval of any Partner may amend any provision of this
Agreement and execute, swear to, acknowledge, deliver, file and record whatever documents may be
required in connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the principal place of
business of the Partnership, the registered agent of the Partnership or the registered
office of the Partnership;
(b) admission, substitution, withdrawal or removal of Partners in accordance with this
Agreement;
(c) a change that the General Partner determines to be necessary or appropriate to
qualify or continue the qualification of the Partnership as a limited partnership or a
partnership in which the Limited Partners have limited liability under the
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laws
of any state
or to ensure that the Group Members will not be treated as associations taxable as
corporations or otherwise taxed as entities for federal income tax purposes;
(d) a change that the General Partner determines (i) does not adversely affect the
Limited Partners (including any particular class of Partnership Interests as compared to
other classes of Partnership Interests) in any material respect, (ii) to be necessary or
appropriate (A) to 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)
to facilitate the trading of the Units (including the division of any class or classes of
Outstanding Units into different classes to facilitate uniformity of tax consequences within
such classes of Units) or comply with any rule, regulation, guideline or requirement of any
National Securities Exchange on which the Units are or will be listed or admitted to
trading, (iii) to be necessary or appropriate in connection with action taken by the General
Partner pursuant to Section 5.9 or (iv) is required to effect the intent expressed in the
Registration Statement or the intent of the provisions of this Agreement or is otherwise
contemplated by this Agreement;
(e) a change in the fiscal year or taxable year of the Partnership and any other
changes that the General Partner determines to be necessary or appropriate as a result of a
change in the fiscal year or taxable year of the Partnership including, if the General
Partner shall so determine, a change in the definition of “Quarter” and the dates on which
distributions are to be made by the Partnership;
(f) an amendment that is necessary, in the Opinion of Counsel, to prevent the
Partnership, or the General Partner or its directors, officers, trustees or agents from in
any manner being subjected to the provisions of the Investment Company Act of 1940, as
amended, the Investment Advisers Act of 1940, as amended, or “plan asset” regulations
adopted under the Employee Retirement Income Security Act of 1974, as amended, regardless of
whether such are substantially similar to plan asset regulations currently applied or
proposed by the United States Department of Labor;
(g) an amendment that the General Partner determines to be necessary or appropriate in
connection with the authorization or issuance of any class or series of Partnership
Securities pursuant to Section 5.6;
(h) any amendment expressly permitted in this Agreement to be made by the General
Partner acting alone;
(i) an amendment effected, necessitated or contemplated by a Merger Agreement approved
in accordance with Section 14.3;
(j) an amendment that the General Partner determines to be necessary or appropriate to
reflect and account for the formation by the Partnership of, or investment by the
Partnership in, any corporation, partnership, joint venture, limited liability company or
other entity, in connection with the conduct by the Partnership of activities permitted by
the terms of Section 2.4;
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(k) an amendment necessary to require Limited Partners to provide a statement,
certification or other proof evidence to the Partnership regarding whether such
Limited Partner is subject to United States federal income taxation on the income
generated by the Partnership;
(l) a merger or conveyance pursuant to Section 14.3(d); or
(m) any other amendments substantially similar to the foregoing.
Section 13.2.
Amendment Procedures. Except as provided in Section 13.1 and Section 13.3,
all amendments to this Agreement shall be made in accordance with the following requirements.
Amendments to this Agreement may be proposed only by the General Partner;
provided,
however, that
the General Partner shall have no duty or obligation to propose any amendment to this Agreement and
may decline to do so free of any fiduciary duty or obligation whatsoever to the Partnership or any
Limited Partner and, in declining to propose an amendment, to the fullest extent permitted by law
shall not be required to act in good faith or pursuant to any other standard imposed by this
Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the
Delaware Act or any other law, rule or regulation or at equity. A proposed amendment shall be
effective upon its approval by the General Partner and the holders of a Unit Majority, unless a
greater or different percentage is required under this Agreement or by Delaware law. Each proposed
amendment that requires the approval of the holders of a specified percentage of Outstanding Units
shall be set forth in a writing that contains the text of the proposed amendment. If such an
amendment is proposed, the General Partner shall seek the written approval of the requisite
percentage of Outstanding Units or call a meeting of the Unitholders to consider and vote on such
proposed amendment. The General Partner shall notify all Record Holders upon final adoption of any
such proposed amendments.
(a) Notwithstanding the provisions of Section 13.1 and Section 13.2, no provision of
this Agreement that establishes a percentage of Outstanding Units (including Units deemed
owned by the General Partner) required to take any action shall be amended, altered,
changed, repealed or rescinded in any respect that would have the effect of reducing such
voting percentage unless such amendment is approved by the written consent or the
affirmative vote of holders of Outstanding Units whose aggregate Outstanding Units
constitute not less than the voting requirement sought to be reduced.
(b) Notwithstanding the provisions of Section 13.1 and Section 13.2, no amendment to
this Agreement may (i) enlarge the obligations of any Limited Partner without its consent,
unless such shall be deemed to have occurred as a result of an amendment approved pursuant
to Section 13.3(c), or (ii) enlarge the obligations of, restrict in any way any action by or
rights of, or reduce in any way the amounts distributable, reimbursable or otherwise payable
to, the General Partner or any of its Affiliates without its consent, which consent may be
given or withheld at its option.
(c) Except as provided in Section 14.3, and without limitation of the General Partner’s
authority to adopt amendments to this Agreement without the approval of any Partners as
contemplated in Section 13.1, any amendment that would have a material
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adverse effect on the rights or preferences of any class of Partnership Interests in
relation to other classes of Partnership Interests must be approved by the holders of not
less than a majority of the Outstanding Partnership Interests of the class affected.
(d) Notwithstanding any other provision of this Agreement, except for amendments
pursuant to Section 13.1 and except as otherwise provided by Section 14.3(b), no amendments
shall become effective without the approval of the holders of at least 90% of the
Outstanding Units voting as a single class unless the Partnership obtains an Opinion of
Counsel to the effect that such amendment will not affect the limited liability of any
Limited Partner under applicable law.
(e) Except as provided in Section 13.1, this Section 13.3 shall only be amended with
the approval of the holders of at least 90% of the Outstanding Units.
Section 13.4.
Special Meetings. All acts of Limited Partners to be taken pursuant to this
Agreement shall be taken in the manner provided in this Article XIII. Special meetings of the
Limited Partners may be called by the General Partner or by Limited Partners owning 20% or more of
the Outstanding Units of the class or classes for which a meeting is proposed. Limited Partners
shall call a special meeting by delivering to the General Partner one or more requests in writing
stating that the signing Limited Partners wish to call a special meeting and indicating the general
or specific purposes for which the special meeting is to be called. Within 60 days after receipt
of such a call from Limited Partners or within such greater time as may be reasonably necessary for
the Partnership to comply with any statutes, rules, regulations, listing agreements or similar
requirements governing the holding of a meeting or the solicitation of proxies for use at such a
meeting, the General Partner shall send a notice of the meeting to the Limited Partners either
directly or indirectly through the Transfer Agent. A meeting shall be held at a time and place
determined by the General Partner on a date not less than 10 days nor more than 60 days after the
mailing of notice of the meeting. Limited Partners shall not vote on matters that would cause the
Limited Partners to be deemed to be taking part in the management and control of the business and
affairs of the Partnership so as to jeopardize the Limited Partners’ limited liability under the
Delaware Act or the law of any other state in which the Partnership is qualified to do business.
Section 13.5.
Notice of a Meeting. Notice of a meeting called pursuant to Section 13.4
shall be given to the Record Holders of the class or classes of Units for which a meeting is
proposed in writing by mail or other means of written communication in accordance with Section
16.1. The notice shall be deemed to have been given at the time when deposited in the mail or sent
by other means of written communication.
Section 13.6.
Record Date. For purposes of determining the Limited Partners entitled to
notice of or to vote at a meeting of the Limited Partners or to give approvals without a meeting as
provided in Section 13.11 the General Partner may set a Record Date, which shall not be less than
10 nor more than 60 days before (a) the date of the meeting (unless such requirement conflicts with
any rule, regulation,
guideline or requirement of any National Securities Exchange on which the Units are listed or
admitted to trading, in which case the rule, regulation, guideline or requirement of such National
Securities Exchange shall govern) or (b) if approvals are sought without a meeting, the date by
which Limited Partners are requested in writing by the General Partner to give such approvals. If
the General Partner does not set a Record Date, then (a) the
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Record Date for determining the
Limited Partners entitled to notice of or to vote at a meeting of the Limited Partners shall be the
close of business on the day next preceding the day on which notice is given, and (b) the Record
Date for determining the Limited Partners entitled to give approvals without a meeting shall be the
date the first written approval is deposited with the Partnership in care of the General Partner in
accordance with Section 13.11.
Section 13.7.
Adjournment. When a meeting is adjourned to another time or place, notice
need not be given of the adjourned meeting and a new Record Date need not be fixed, if the time and
place thereof are announced at the meeting at which the adjournment is taken, unless such
adjournment shall be for more than 45 days. At the adjourned meeting, the Partnership may transact
any business which might have been transacted at the original meeting. If the adjournment is for
more than 45 days or if a new Record Date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given in accordance with this Article XIII.
Section 13.8.
Waiver of Notice; Approval of Meeting; Approval of Minutes. The transactions
of any meeting of Limited Partners, however called and noticed, and whenever held, shall be as
valid as if it had occurred at a meeting duly held after regular call and notice, if a quorum is
present either in person or by proxy. Attendance of a Limited Partner at a meeting shall
constitute a waiver of notice of the meeting, except when the Limited Partner attends the meeting
for the express purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened; and except that attendance at a
meeting is not a waiver of any right to disapprove the consideration of matters required to be
included in the notice of the meeting, but not so included, if the disapproval is expressly made at
the meeting.
Section 13.9.
Quorum and Voting. The holders of a majority of the Outstanding Units of the
class or classes for which a meeting has been called (including Outstanding Units deemed owned by
the General Partner) represented in person or by proxy shall constitute a quorum at a meeting of
Limited Partners of such class or classes unless any such action by the Limited Partners requires
approval by holders of a greater percentage of such Units, in which case the quorum shall be such
greater percentage. At any meeting of the Limited Partners duly called and held in accordance with
this Agreement at which a quorum is present, the act of Limited Partners holding Outstanding Units
that in the aggregate represent a majority of the Outstanding Units entitled to vote and be present
in person or by proxy at such meeting shall be deemed to constitute the act of all Limited
Partners, unless a greater or different percentage is required with respect to such action under
the provisions of this Agreement, in which case the act of the Limited Partners holding Outstanding
Units that in the aggregate represent at least such greater or different percentage shall be
required. The Limited Partners present at a duly called or held meeting at which a quorum is
present may continue to
transact business until adjournment, notwithstanding the withdrawal of enough Limited Partners to
leave less than a quorum, if any action taken (other than adjournment) is approved by the required
percentage of Outstanding Units specified in this Agreement (including Outstanding Units deemed
owned by the General Partner). In the absence of a quorum any meeting of Limited Partners may be
adjourned from time to time by the affirmative vote of holders of at least a majority of the
Outstanding Units entitled to vote at such meeting (including Outstanding Units deemed owned by the
General Partner) represented either in person or by proxy, but no other business may be transacted,
except as provided in Section 13.7.
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Section 13.10.
Conduct of a Meeting. The General Partner shall have full power and
authority concerning the manner of conducting any meeting of the Limited Partners or solicitation
of approvals in writing, including the determination of Persons entitled to vote, the existence of
a quorum, the satisfaction of the requirements of Section 13.4, the conduct of voting, the validity
and effect of any proxies and the determination of any controversies, votes or challenges arising
in connection with or during the meeting or voting. The General Partner shall designate a Person
to serve as chairman of any meeting and shall further designate a Person to take the minutes of any
meeting. All minutes shall be kept with the records of the Partnership maintained by the General
Partner. The General Partner may make such other regulations consistent with applicable law and
this Agreement as it may deem advisable concerning the conduct of any meeting of the Limited
Partners or solicitation of approvals in writing, including regulations in regard to the
appointment of proxies, the appointment and duties of inspectors of votes and approvals, the
submission and examination of proxies and other evidence of the right to vote, and the revocation
of approvals in writing.
Section 13.11.
Action Without a Meeting. If authorized by the General Partner, any action
that may be taken at a meeting of the Limited Partners may be taken without a meeting if an
approval in writing setting forth the action so taken is signed by Limited Partners owning not less
than the minimum percentage of the Outstanding Units (including Units deemed owned by the General
Partner) that would be necessary to authorize or take such action at a meeting at which all the
Limited Partners were present and voted (unless such provision conflicts with any rule, regulation,
guideline or requirement of any National Securities Exchange on which the Units are listed or
admitted to trading, in which case the rule, regulation, guideline or requirement of such National
Securities Exchange shall govern). Prompt notice of the taking of action without a meeting shall
be given to the Limited Partners who have not approved in writing. The General Partner may specify
that any written ballot submitted to Limited Partners for the purpose of taking any action without
a meeting shall be returned to the Partnership within the time period, which shall be not less than
20 days, specified by the General Partner. If a ballot returned to the Partnership does not vote
all of the Units held by the Limited Partners, the Partnership shall be deemed to have failed to
receive a ballot for the Units that were not voted. If approval of the taking of any action by the
Limited Partners is solicited by any Person other than by or on behalf of the General Partner, the
written approvals shall have no force and effect unless and until (a) they are deposited with the
Partnership in care of the General Partner, (b) approvals sufficient to take the action proposed
are dated as of a date not more than 90 days prior to the date sufficient approvals are deposited
with the Partnership and (c) an Opinion of Counsel is delivered to the General Partner to the
effect that the exercise of such right and the action proposed to be taken with respect to any
particular
matter (i) will not cause the Limited Partners to be deemed to be taking part in the management and
control of the business and affairs of the Partnership so as to jeopardize the Limited Partners’
limited liability, and (ii) is otherwise permissible under the state statutes then governing the
rights, duties and liabilities of the Partnership and the Partners.
(a) Only those Record Holders of the Units on the Record Date set pursuant to Section
13.6 (and also subject to the limitations contained in the definition of “Outstanding”)
shall be entitled to notice of, and to vote at, a meeting of Limited Partners
85
or to act with
respect to matters as to which the holders of the Outstanding Units have the right to vote
or to act. All references in this Agreement to votes of, or other acts that may be taken
by, the Outstanding Units shall be deemed to be references to the votes or acts of the
Record Holders of such Outstanding Units.
(b) With respect to Units that are held for a Person’s account by another Person (such
as a broker, dealer, bank, trust company or clearing corporation, or an agent of any of the
foregoing), in whose name such Units are registered, such other Person shall, in exercising
the voting rights in respect of such Units on any matter, and unless the arrangement between
such Persons provides otherwise, vote such Units in favor of, and at the direction of, the
Person who is the beneficial owner, and the Partnership shall be entitled to assume it is so
acting without further inquiry. The provisions of this Section 13.12(b) (as well as all
other provisions of this Agreement) are subject to the provisions of Section 4.3.
Section 14.1. Authority. The Partnership may merge or consolidate with or into one or more
corporations, limited liability companies, statutory trusts or associations, real estate investment
trusts, common law trusts or unincorporated businesses, including a partnership (whether general or
limited including a limited liability 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 XIV.
Section 14.2. Procedure for Merger or Consolidation. Merger or consolidation of the
Partnership pursuant to this Article XIV requires the prior consent of the General Partner;
provided, however, that, to the fullest extent permitted by law, the General Partner shall have no
duty or obligation to consent to any merger or consolidation of the Partnership and may decline to
do so free of any fiduciary duty or obligation whatsoever to the Partnership, any Limited Partner
and, in declining to consent to a merger or consolidation, shall not be required to act in good
faith or pursuant to any other standard imposed by this Agreement, any Group Member Agreement, any
other agreement contemplated hereby or under the Delaware Act or any other law, rule or regulation
or at equity. If the General Partner shall
determine to consent to the merger or consolidation, the General Partner shall approve the Merger
Agreement, which shall set forth:
(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, cash, property or interests, rights, securities
86
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 interests, rights, securities or
obligations of the Surviving Business Entity, the cash, property or interests, rights,
securities or obligations of any general or limited partnership, corporation, trust, limited
liability company, unincorporated business or other entity (other than the Surviving
Business Entity) that the holders of such interests, securities or rights are to receive in
exchange for, or upon conversion of their interests, securities or rights, and (ii) in the
case of securities represented by certificates, the terms on which, such cash, property or
general or limited partner interests, rights, securities or obligations of the Surviving
Business Entity or any general or limited partnership, corporation, trust, limited liability
company, unincorporated business or other entity (other than the Surviving Business Entity),
or evidences thereof, are to be delivered;
(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, however, that if the effective time of
the merger is to be later than the date of the filing of such certificate of merger, the
effective time shall be fixed at a date or time certain at or prior to the time of the
filing of such certificate of merger and stated therein); and
(g) such other provisions with respect to the proposed merger or consolidation that the
General Partner determines to be necessary or appropriate.
Section 14.3. Approval by Limited Partners of Merger or Consolidation.
(a) Except as provided in Section 14.3(d) or Section 14.3(e), the General Partner, upon
its approval of the Merger Agreement, shall direct that the Merger
Agreement be submitted to a vote of Limited Partners, whether at a special meeting or
by written consent, in either case in accordance with the requirements of Article XIII. A
copy or a summary of the Merger Agreement shall be included in or enclosed with the notice
of a special meeting or the written consent.
(b) Except as provided in Section 14.3(d) or Section 14.3(e), the Merger Agreement
shall be approved upon receiving the affirmative vote or consent of the holders of a Unit
Majority.
(c) Except as provided in Section 14.3(d) or Section 14.3(e), after such approval by
vote or consent of the Limited Partners, and at any time prior to the filing of the
certificate of merger pursuant to Section 14.4, the merger or consolidation may be abandoned
pursuant to provisions therefor, if any, set forth in the Merger Agreement.
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(d) Notwithstanding anything else contained in this Article XIV or in this Agreement,
the General Partner is permitted, without Limited Partner approval, to convert the
Partnership or any Group Member into a new limited liability entity, to merge the
Partnership or any Group Member into, or convey all of the Partnership’s assets to, another
limited liability entity which shall be newly formed and shall have no assets, liabilities
or operations at the time of such conversion, merger or conveyance other than those it
receives from the Partnership or other Group Member if (i) the General Partner has received
an Opinion of Counsel that the conversion, merger or conveyance, as the case may be, would
not result in the loss of the limited liability of any Limited Partner or cause the
Partnership to be treated as an association taxable as a corporation or otherwise to be
taxed as an entity for federal income tax purposes (to the extent not previously treated as
such), (ii) the sole purpose of such conversion, merger or conveyance is to effect a mere
change in the legal form of the Partnership into another limited liability entity and (iii)
the governing instruments of the new entity provide the Limited Partners and the General
Partner with the same rights and obligations as are herein contained.
(e) Additionally, notwithstanding anything else contained in this Article XIV or in
this Agreement, the General Partner is permitted, without Limited Partner approval, to merge
or consolidate the Partnership with or into another entity if (A) the General Partner has
received an Opinion of Counsel that the merger or consolidation, as the case may be, would
not result in the loss of the limited liability of any Limited Partner or cause the
Partnership to be treated as an association taxable as a corporation or otherwise to be
taxed as an entity for federal income tax purposes (to the extent not previously treated as
such), (B) the merger or consolidation would not result in an amendment to the Partnership
Agreement, other than any amendments that could be adopted pursuant to Section 13.1, (C)
except in the case of a consolidation, the Partnership is the Surviving Business Entity and
(D) each Unit outstanding immediately prior to the effective date of the merger or
consolidation is to be an identical Unit of the Partnership after the effective date of the
merger or consolidation.
Section 14.4. Certificate of Merger. Upon the required approval by the General Partner and the Unitholders 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. Amendment of Partnership Agreement. Pursuant to Section 17-211(g) of the
Delaware Act, an agreement of merger or consolidation approved in accordance with this Article XIV
may (a) effect any amendment to this Agreement or (b) effect the adoption of a new partnership
agreement for the Partnership if it is the Surviving Business Entity. Any such amendment or
adoption made pursuant to this Section 14.5 shall be effective at the effective time or date of the
merger or consolidation.
Section 14.6. 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
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mixed, and all
debts due to any of those business entities and all other things and causes of
action belonging to each of those business entities, shall be vested in the
Surviving Business Entity and after the merger or consolidation shall be the
property of the Surviving Business Entity to the extent they were of each
constituent business entity;
(ii) the title to any real property vested by deed or otherwise in any of those
constituent business entities shall not revert and shall not be 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.
Section 15.1. Right to Acquire Limited Partner Interests.
(a) Notwithstanding any other provision of this Agreement, if at any time the General
Partner and its Affiliates hold more than 80% of the total Limited Partner Interests of any
class then Outstanding, the General Partner shall then have the right,
which right it may assign and transfer in whole or in part to the Partnership or any
Affiliate of the General Partner, exercisable at its option, to purchase all, but not less
than all, of such Limited Partner Interests of such class then Outstanding held by Persons
other than the General Partner and its Affiliates, at the greater of (x) the Current Market
Price as of the date three days prior to the date that the notice described in Section
15.1(b) is mailed and (y) the highest price paid by the General Partner or any of its
Affiliates for any such Limited Partner Interest of such class purchased during the 90-day
period preceding the date that the notice described in Section 15.1(b) is mailed. As used
in this Agreement, (i) “Current Market Price” as of any date of any class of Limited Partner
Interests means the average of the daily Closing Prices (as hereinafter defined) per Limited
Partner Interest of such class for the 20 consecutive Trading Days (as hereinafter defined)
immediately prior to such date; (ii) “Closing Price” for any day means the last sale price
on such day, regular way, or in case no such sale takes place on such day, the average of
the closing bid and asked prices on such day, regular way, as reported in the principal
consolidated transaction reporting system with respect to securities listed on the principal
National Securities Exchange (other than The Nasdaq Stock Market) on which such Limited
Partner Interests are listed or admitted to trading or, if such Limited Partner
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Interests of
such class are not listed or admitted to trading on any National Securities Exchange (other
than The Nasdaq Stock Market), the last quoted price on such day or, if not so quoted, the
average of the high bid and low asked prices on such day in the over-the-counter market, as
reported by The Nasdaq Stock Market or such other system then in use, or, if on any such day
such Limited Partner Interests of such class are not quoted by any such organization, the
average of the closing bid and asked prices on such day as furnished by a professional
market maker making a market in such Limited Partner Interests of such class selected by the
General Partner, or if on any such day no market maker is making a market in such Limited
Partner Interests of such class, the fair value of such Limited Partner Interests on such
day as determined by the General Partner; and (iii) “Trading Day” means a day on which the
principal National Securities Exchange on which such Limited Partner Interests of any class
are listed or admitted for trading is open for the transaction of business or, if Limited
Partner Interests of a class are not listed or admitted for trading on any National
Securities Exchange, a day on which banking institutions in New York City generally are
open.
(b) If the General Partner, any Affiliate of the General Partner or the Partnership
elects to exercise the right to purchase Limited Partner Interests granted pursuant to
Section 15.1(a), the General Partner shall deliver to the Transfer Agent notice of such
election to purchase (the “Notice of Election to Purchase”) and shall cause the Transfer
Agent to mail a copy of such Notice of Election to Purchase to the Record Holders of Limited
Partner Interests of such class (as of a Record Date selected by the General Partner) at
least 10, but not more than 60, days prior to the Purchase Date. Such Notice of Election to
Purchase shall also be published for a period of at least three consecutive days in at least
two daily newspapers of general circulation printed in the English language and published in
the Borough of Manhattan, New York. The Notice of Election to Purchase shall specify the
Purchase Date and the price (determined in accordance with Section 15.1(a)) at which Limited
Partner Interests will be purchased and state that the General Partner, its Affiliate or the
Partnership, as the case may be, elects to purchase such Limited Partner Interests, upon
surrender of Certificates
representing such Limited Partner Interests in exchange for payment, at such office or
offices of the Transfer Agent as the Transfer Agent may specify, or as may be required by
any National Securities Exchange on which such Limited Partner Interests are listed. Any
such Notice of Election to Purchase mailed to a Record Holder of Limited Partner Interests
at his address as reflected in the records of the Transfer Agent shall be conclusively
presumed to have been given regardless of whether the owner receives such notice. On or
prior to the Purchase Date, the General Partner, its Affiliate or the Partnership, as the
case may be, shall deposit with the Transfer Agent cash in an amount sufficient to pay the
aggregate purchase price of all of such Limited Partner Interests to be purchased in
accordance with this Section 15.1. If the Notice of Election to Purchase shall have been
duly given as aforesaid at least 10 days prior to the Purchase Date and if on or prior to
the Purchase Date the deposit described in the preceding sentence has been made for the
benefit of the holders of Limited Partner Interests subject to purchase as provided herein,
then from and after the Purchase Date, notwithstanding that any Certificate shall not have
been surrendered for purchase, all rights of the holders of such Limited Partner Interests
(including any rights pursuant to Article IV, Article V, Article VI and Article XII) shall
thereupon cease, except the right to receive the purchase price
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(determined in accordance
with Section 15.1(a)) for Limited Partner Interests therefor, without interest, upon
surrender to the Transfer Agent of the Certificates representing such Limited Partner
Interests, and such Limited Partner Interests shall thereupon be deemed to be transferred to
the General Partner, its Affiliate or the Partnership, as the case may be, on the record
books of the Transfer Agent and the Partnership, and the General Partner or any Affiliate of
the General Partner, or the Partnership, as the case may be, shall be deemed to be the owner
of all such Limited Partner Interests from and after the Purchase Date and shall have all
rights as the owner of such Limited Partner Interests (including all rights as owner of such
Limited Partner Interests pursuant to Article IV, Article V, Article VI and Article XII).
(c) At any time from and after the Purchase Date, a holder of an Outstanding Limited
Partner Interest subject to purchase as provided in this Section 15.1 may surrender his
Certificate evidencing such Limited Partner Interest to the Transfer Agent in exchange for
payment of the amount described in Section 15.1(a), therefor, without interest thereon.
Section 16.1. Addresses and Notices. Any notice, demand, request, report or proxy
materials required or permitted to be given or made to a Partner under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when sent by first class
United States mail or by other means of written communication to the Partner at the address
described below. Any notice, payment or report to be given or made to a Partner hereunder shall be
deemed conclusively to have been given or made, and the obligation to give such notice or report or
to make such payment shall be deemed conclusively to have been fully satisfied, upon sending of
such notice, payment or report to the Record Holder of such Partnership Securities at his address
as shown on the records of the Transfer Agent or as otherwise shown on the records of the
Partnership, regardless of any claim
of any Person who may have an interest in such Partnership Securities by reason of any assignment
or otherwise. An affidavit or certificate of making of any notice, payment or report in accordance
with the provisions of this Section 16.1 executed by the General Partner, the Transfer Agent or the
mailing organization shall be prima facie evidence of the giving or making of such notice, payment
or report. If any notice, payment or report addressed to a Record Holder at the address of such
Record Holder appearing on the books and records of the Transfer Agent or the Partnership is
returned by the United States Postal Service marked to indicate that the United States Postal
Service is unable to deliver it, such notice, payment or report and any subsequent notices,
payments and reports shall be deemed to have been duly given or made without further mailing (until
such time as such Record Holder or another Person notifies the Transfer Agent or the Partnership of
a change in his address) if they are available for the Partner at the principal office of the
Partnership for a period of one year from the date of the giving or making of such notice, payment
or report to the other Partners. Any notice to the Partnership shall be deemed given if received
by the General Partner at the principal office of the Partnership designated pursuant to Section
2.3. The General Partner may rely and shall be protected in relying on any notice or other
document from a Partner or other Person if believed by it to be genuine.
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Section 16.2. Further Action. The parties shall execute and deliver all documents, provide
all information and take or refrain from taking action as may be necessary or appropriate to
achieve the purposes of this Agreement.
Section 16.3. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 16.4. Integration. This Agreement constitutes the entire agreement among the
parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto.
Section 16.5. Creditors. None of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.
Section 16.6. Waiver. No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy
consequent upon a breach thereof shall constitute waiver of any such breach of any other covenant,
duty, agreement or condition.
Section 16.7. Third-Party Beneficiaries
. Each Partner agrees that any Indemnitee, including Xxxxx Muse or any of its Subsidiaries, shall
be entitled to assert rights and remedies hereunder as a third-party beneficiary hereto with
respect to those provisions of this Agreement affording a right, benefit or privilege to such
Indemnitee.
Section 16.8. Counterparts. This Agreement may be executed in counterparts, all of which
together shall constitute an agreement binding on all the parties hereto, notwithstanding that all
such parties are not signatories to the original or the same counterpart. Each party shall become
bound by this Agreement immediately upon affixing its signature hereto or, in the case of a Person
acquiring a Limited Partner Interest, pursuant to Section 10.2(a) without execution of this
Agreement.
Section 16.9. Applicable Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Delaware, without regard to the principles of conflicts of
law.
Section 16.10. Invalidity of Provisions. If any provision of this Agreement is or becomes
invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
Section 16.11. Consent of Partners. Each Partner hereby expressly consents and agrees
that, whenever in this Agreement it is specified that an action may be taken upon the affirmative
vote or consent of less than all of the Partners, such action may be so taken upon the concurrence
of less than all of the Partners and each Partner shall be bound by the results of such action.
Section 16.12. Facsimile Signatures. The use of facsimile signatures affixed in the name
and on behalf of the transfer agent and registrar of the Partnership on certificates representing
Common Units is expressly permitted by this Agreement.
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GENERAL PARTNER: |
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REGENCY GP LP |
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By: |
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Regency GP LLC, |
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its General Partner |
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By: |
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/s/ Xxxxx X. Xxxx |
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Name:
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Xxxxx X. Xxxx |
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Title:
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President and Chief Executive Officer |
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ORGANIZATIONAL LIMITED PARTNER: |
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REGENCY ACQUISITION LP |
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By: |
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Regency Holdings LLC, |
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its General Partner |
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By: |
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/s/ Xxxxx X. Xxxxxx |
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Name:
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Xxxxx X. Xxxxxx |
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Title:
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Vice President |
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All Limited Partners now and hereafter admitted
as Limited Partners of the Partnership, pursuant to
powers of attorney now and hereafter executed in
favor of, and granted and delivered to the General
Partner or without execution hereof pursuant to
Section 10.2(a) hereof. |
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REGENCY GP LP |
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By: |
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Regency GP LLC, |
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its General Partner |
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By: |
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/s/ Xxxxx X. Xxxx |
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Name:
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Xxxxx X. Xxxx |
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Title:
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President and Chief Executive Officer |
EXHIBIT A
to the Amended and Restated
Agreement of Limited Partnership of
Regency Energy Partners LP
Certificate Evidencing Common Units
Representing Limited Partner Interests in
Regency Energy Partners LP
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No. ___
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___Common Units
CUSIP ___ |
In accordance with Section 4.1 of the Amended and Restated Agreement of Limited Partnership of
Regency Energy Partners LP, as amended, supplemented or restated from time to time (the
“Partnership Agreement”), Regency Energy Partners LP, a Delaware limited partnership (the
“Partnership”), hereby certifies that
____________(the “Holder”) is the
registered owner of
Common Units representing limited partner interests in the Partnership (the “Common
Units”) transferable on the books of the Partnership, in person or by duly authorized attorney,
upon surrender of this Certificate properly endorsed. The rights, preferences and limitations of
the Common Units are set forth in, and this Certificate and the Common Units represented hereby are
issued and shall in all respects be subject to the terms and provisions of, the Partnership
Agreement. Copies of the Partnership Agreement are on file at, and will be furnished without
charge on delivery of written request to the Partnership at, the principal office of the
Partnership located at 0000 Xxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000. Capitalized terms used
herein but not defined shall have the meanings given them in the Partnership Agreement.
THE HOLDER OF THIS SECURITY ACKNOWLEDGES FOR THE BENEFIT OF REGENCY ENERGY PARTNERS LP THAT
THIS SECURITY MAY NOT BE SOLD, OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IF SUCH TRANSFER
WOULD (A) VIOLATE THE THEN APPLICABLE FEDERAL OR STATE SECURITIES LAWS OR RULES AND REGULATIONS OF
THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER GOVERNMENTAL
AUTHORITY WITH JURISDICTION OVER SUCH TRANSFER, (B) TERMINATE THE EXISTENCE OR QUALIFICATION OF
REGENCY ENERGY PARTNERS LP UNDER THE LAWS OF THE STATE OF DELAWARE, OR (C) CAUSE REGENCY ENERGY
PARTNERS LP 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). REGENCY
GP LP, THE GENERAL PARTNER OF REGENCY ENERGY PARTNERS LP, MAY IMPOSE ADDITIONAL RESTRICTIONS ON THE
TRANSFER OF THIS SECURITY IF IT RECEIVES AN OPINION OF COUNSEL THAT SUCH RESTRICTIONS ARE NECESSARY
TO AVOID A SIGNIFICANT RISK OF REGENCY ENERGY PARTNERS LP BECOMING TAXABLE AS A CORPORATION OR
OTHERWISE BECOMING TAXABLE AS AN ENTITY FOR FEDERAL INCOME TAX
A-1
PURPOSES. THE RESTRICTIONS SET FORTH ABOVE SHALL NOT PRECLUDE THE SETTLEMENT OF ANY
TRANSACTIONS INVOLVING THIS SECURITY ENTERED INTO THROUGH THE FACILITIES OF ANY NATIONAL SECURITIES
EXCHANGE ON WHICH THIS SECURITY IS LISTED OR ADMITTED TO TRADING.
The Holder, by accepting this Certificate, is deemed to have (i) requested admission as, and
agreed to become, a Limited Partner and to have agreed to comply with and be bound by and to have
executed the Partnership Agreement, (ii) represented and warranted that the Holder has all right,
power and authority and, if an individual, the capacity necessary to enter into the Partnership
Agreement, (iii) granted the powers of attorney provided for in the Partnership Agreement and (iv)
made the waivers and given the consents and approvals contained in the Partnership Agreement.
This Certificate shall not be valid for any purpose unless it has been countersigned and
registered by the Transfer Agent and Registrar.
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Dated: |
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Regency Energy Partners LP |
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Countersigned and Registered by: |
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Regency GP LP, |
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its
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General Partner |
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By:
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Regency GP LLC, |
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as Transfer Agent and Registrar |
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its General Partner |
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By:
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By: |
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Authorized Signature
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Name: |
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By: |
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Secretary |
[Reverse of Certificate]
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Certificate,
shall be construed as follows according to applicable laws or regulations:
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TEN COM -
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as tenants in common
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UNIF GIFT/TRANSFERS MIN ACT |
TEN ENT -
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as tenants by the entireties
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_________Custodian_________
(Cust) (Minor) |
JT TEN -
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as joint tenants with right of
survivorship and not as
tenants in common
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under Uniform Gifts/Transfers to CD
Minors Act (State) |
Additional abbreviations, though not in the above list, may also be used.
A-2
ASSIGNMENT OF COMMON UNITS
in
REGENCY ENERGY PARTNERS LP
FOR VALUE RECEIVED, ___hereby assigns, conveys, sells and transfers unto
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(Please print or typewrite name
and address of assignee)
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(Please insert Social Security or other
identifying number of assignee) |
Common Units representing limited partner interests evidenced by this Certificate,
subject to the Partnership Agreement, and does hereby irrevocably constitute and appoint ___
as its attorney-in-fact with full power of substitution to transfer the same on the books of
Regency Energy Partners LP
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Date:
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NOTE: |
The signature to any endorsement hereon
must correspond with the name as written upon
the face of this Certificate in every particular,
without alteration, enlargement or change. |
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THE SIGNATURE(S) MUST BE
GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT
UNIONS WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUAR-XXXXX MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17d-15
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(Signature) |
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(Signature) |
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Signature(s) Guaranteed |
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No transfer of the Common Units evidenced hereby will be registered on the books of the
Partnership, unless the Certificate evidencing the Common Units to be transferred is surrendered
for registration or transfer.