1
Exhibit 10CG
AGREEMENT
OF
LIMITED PARTNERSHIP
OF
MILLENNIUM PIPELINE COMPANY, L.P.
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TABLE OF CONTENTS
PAGE NO.
ARTICLE 1
DEFINITIONS
1.01 Defined Terms......................................................1
(a) "AAA"..............................................................1
(b) "Abstaining Partner"...............................................1
(c) "Act"..............................................................1
(d) "Additional Capital Contributions".................................2
(e) "Adjusted Capital Account Deficit".................................2
(f) "Affiliate"........................................................2
(g) "Affiliate Transaction"............................................2
(h) "Agreement"........................................................2
(i) "Allocation Year"..................................................2
(j) "Base Interest Rate"...............................................2
(k) "Budget"...........................................................3
(l) "Business Day".....................................................3
(m) "Capacity Lease and Exchange Agreement"............................3
(n) "Capital Account"..................................................3
(o) "Capital Contribution".............................................4
(p) "Change in Control"................................................4
(q) "Code".............................................................4
(r) "Columbia".........................................................4
(s) "Commitment Voting Date"...........................................5
(t) "Contribution Agreement"...........................................5
(u) "Contribution Date.................................................5
(v) "Credit Support Documents".........................................5
(w) "Debt".............................................................5
(x) "Delinquent Partner"...............................................5
(y) "Depreciation".....................................................5
(z) "Dispose," "Disposing" or "Disposition"............................6
(aa) "Dispute"..........................................................6
(bb) "Effective Date"...................................................6
(cc) "FERC".............................................................6
(dd) "General Interest Rate"............................................6
(ee) "General Partner"..................................................6
(ff) "Gross Asset Value"................................................6
(gg) "Initial Capital Contributions"....................................7
(hh) "In-Service Date"..................................................7
(ii) "Interest".........................................................7
(jj) "Lake Crossing Agreement"..........................................7
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(kk) "Limited Partner"..................................................8
(ll) "Limited Partner Owner"............................................8
(mm) "Liquidator".......................................................8
(nn) "Losses"...........................................................8
(oo) "Millennium Pipeline System".......................................8
(pp) "MOU"..............................................................8
(qq) "Net Cash Flow"....................................................8
(rr) "Nonrecourse Deductions"...........................................8
(ss) "Nonrecourse Liability"............................................8
(tt) "O&M Agreement"....................................................8
(uu) "Partner Nonrecourse Debt".........................................8
(vv) "Partner Nonrecourse Debt Minimum Gain"............................9
(ww) "Partner Nonrecourse Deductions"...................................9
(xx) "Partners".........................................................9
(yy) "Partnership"......................................................9
(zz) "Partnership Property".............................................9
(aaa) "Person"...........................................................9
(bbb) "Precedent Agreements".............................................9
(ccc) "Prime Rate".......................................................9
(ddd) "Profits" and "Losses".............................................9
(eee) "Project Agreements"..............................................10
(fff) "Project Development Agreement"...................................10
(ggg) "PUHCA"...........................................................11
(hhh) "PUHCA Company"...................................................11
(iii) "Regulatory Allocations"..........................................11
(jjj) "Required Accounting Practices"...................................11
(kkk) "Required Interest"...............................................11
(lll) "Sale Notice......................................................11
(mmm) "Scheduled Capital Contributions".................................11
(nnn) "Substitute Limited Partner"......................................11
(ooo) "System Modification".............................................11
(ppp) "Treasury Regulations"............................................11
(qqq) "UCC".............................................................11
(rrr) "Unanimous Consent"...............................................11
(sss) "Unit"............................................................12
(ttt) "Withdrawal Effective Date".......................................12
(uuu) "Withdrawal Notice"...............................................12
(vvv) "Withdrawal Period"...............................................12
(www) "Withdrawing Limited Partner".....................................12
1.02 Construction......................................................12
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ARTICLE 2
ORGANIZATION
2.01 Formation.........................................................12
2.02 Name..............................................................13
2.03 Registered Agent and Registered Office............................13
2.04 Location of Principal Place of Business...........................13
2.05 Business and Purpose..............................................13
2.06 Term..............................................................13
2.07 Filing of Certificates............................................13
2.08 General and Original Limited Partners' Units and Interests........13
2.09 Additional Limited Partners.......................................14
2.10 Organization Certificates.........................................14
2.11 Power of Attorney.................................................14
ARTICLE 3
CAPITALIZATION AND FINANCING
3.01 Commencement of Operations........................................15
3.02 Initial Capital Contributions.....................................15
3.03 Scheduled and Additional Capital Contributions....................15
3.04 Failure to Contribute.............................................16
3.05 Partnership Borrowing.............................................16
3.06 Additional Financing..............................................17
3.07 Revenues..........................................................17
3.08 Partnership Capital...............................................17
3.09 Advances by Partners..............................................17
3.10 Capital Accounts..................................................18
3.11 Capital Contributions for System Modifications....................18
ARTICLE 4
ALLOCATIONS AND DISTRIBUTIONS
4.01 Profits...........................................................18
4.02 Losses............................................................18
4.03 Special Federal Income Tax Allocations............................19
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(a) Minimum Gain Chargeback...........................................19
(b) Partner Minimum Gain Chargeback...................................19
(c) Qualified Income Offset...........................................19
(d) Nonrecourse Deductions............................................20
(e) Partner Nonrecourse Deductions....................................20
(f) Section 754 Adjustments...........................................20
4.04 Curative Allocations..............................................20
4.05 Loss Limitation...................................................20
4.06 Other Allocation Rules............................................21
4.07 Contributed Property; Tax Allocations.............................21
4.08 Distributions.....................................................22
ARTICLE 5
RIGHTS AND DUTIES OF THE GENERAL PARTNER
5.01 Management........................................................22
5.02 Reliance by Public................................................22
5.03 Restrictions on Authority of General Partner......................23
5.04 Other Operations..................................................24
5.05 Disposition of All or Substantially All of Partnership Property...24
5.06 Contracts with the Partners or their Affiliates...................24
5.07 Liabilities and Indemnification of the General Partner............24
5.08 Title to Partnership Properties...................................25
5.09 Transfer of Interest of General Partner...........................25
5.10 Compensation......................................................25
ARTICLE 6
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
6.01 Limitation of Liability...........................................26
6.02 Management of Business............................................26
6.03 Conflicts of Interest.............................................26
6.04 Restrictions on Disposition of Limited Partner's Interest.........27
6.05 Right of First Refusal............................................29
6.06 Assignee's Rights.................................................29
6.07 No Liability of General Partner for Distributions.................30
6.08 Indemnification...................................................30
6.09 No Dissolution Caused.............................................30
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6.10 PUHCA.............................................................30
6.11 Remedies..........................................................30
ARTICLE 7
WITHDRAWAL OF THE GENERAL PARTNER AND LIMITED PARTNERS;
ADMISSION OF ADDITIONAL GENERAL PARTNERS
7.01 Withdrawal of the General Partner.................................31
7.02 Admission of Additional General Partner...........................31
7.03 Withdrawal of a Limited Partner and Effect of Withdrawal..........31
ARTICLE 8
FISCAL YEAR; BOOKS OF ACCOUNT;
BANK ACCOUNTS; AND REPORTS
8.01 Books and Records.................................................33
8.02 Bank Accounts.....................................................33
8.03 Tax Elections.....................................................33
8.04 Annual and Quarterly Reports......................................34
8.05 Tax Reporting Information.........................................34
8.06 Reporting Expenses................................................35
ARTICLE 9
REPRESENTATIONS AND WARRANTIES OF LIMITED PARTNERS
9.01 Representations and Warranties....................................35
ARTICLE 10
DISSOLUTION, WINDING UP AND TERMINATION; CONTINUATION
10.01 Events of Dissolution.............................................37
10.02 Continuation of Business..........................................37
10.03 Agreement of Successor General Partner............................38
10.04 Liquidation.......................................................38
10.05 Distributions in Kind.............................................39
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ARTICLE 11
AMENDMENT OF PARTNERSHIP AGREEMENT;
MEETINGS; RECORD DATE
11.01 Amendments to be Adopted Solely by General Partner................40
11.02 Amendments to be Adopted with Consent of Limited Partners.........40
11.03 Consent of General Partner Required...............................41
11.04 Meetings..........................................................42
11.05 Action Without a Meeting..........................................42
11.06 Record Date.......................................................42
ARTICLE 12
DISPUTE RESOLUTION
12.01 Disputes..........................................................43
12.02 Negotiations to Resolve Disputes..................................43
12.03 Arbitration.......................................................43
ARTICLE 13
GENERAL PROVISIONS
13.01 Payments and Offset...............................................45
13.02 Notices...........................................................45
13.03 Ratification......................................................46
13.04 Execution and Counterparts........................................46
13.05 Waiver of Partition...............................................46
13.06 Governing Law, Successors, Severability...........................46
13.07 Entire Agreement; Acknowledgment.................................47
13.08 No Waiver.........................................................47
13.09 Legends...........................................................47
13.10 Presumptions......................................................47
13.11 Time of Essence...................................................47
Exhibit A
Initial Partners, Units, Partnership Interest and Initial Capital
Contributions................................................................A-1
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Exhibit B
Limited Partner Owners.......................................................B-1
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AGREEMENT OF LIMITED PARTNERSHIP
OF
MILLENNIUM PIPELINE COMPANY, L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP, dated effective as of May 31, 1998,
by and among Millennium Pipeline Management Company, L.L.C., a Delaware limited
liability company (the "General Partner"), and those Persons signatory hereto
executing as "Limited Partners."
PREAMBLE
The General Partner and the Limited Partners have formed the Partnership
(defined below) to construct and own an interstate natural gas transmission
system (the "Millennium Pipeline System") extending from an interconnection with
a natural gas transmission system to be owned and operated by TransCanada
PipeLines Limited at the border between the United States and Canada in Lake
Erie to a terminus in Westchester County, New York. The Partners (defined below)
anticipate that the Millennium Pipeline System will be project financed and will
be in service by the end of 2000.
ARTICLE 1
DEFINITIONS
1.01 Defined Terms. As used in this Agreement, the following terms shall
have the meanings set forth below when capitalized:
(a) "AAA" shall have the meaning set forth in Section 12.03 hereof.
(b) "Abstaining Partner" means any Partner that has elected to
abstain from voting on any matter to be voted on by the Partners.
(c) "Act" means the Delaware Revised Uniform Limited Partnership
Act; Del. Code Xxx. Title 6 Sections 17-101 to 17-1111, as amended
from time to time.
------------------------------------
UNITS IN MILLENNIUM PIPELINE COMPANY, L.P. HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS AND MAY
NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED UNLESS SUBSEQUENTLY
REGISTERED UNDER SUCH ACTS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. THIS AGREEMENT CONTAINS ADDITIONAL RESTRICTIONS ON SALES AND OTHER
TRANSFERS OF UNITS.
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(d) "Additional Capital Contributions" means Capital Contributions
made by the Partners in excess of the Initial Capital Contributions or the
Scheduled Capital Contributions.
(e) "Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as
of the end of the relevant Allocation Year, after giving effect to the
following adjustments:
(i) Credit to such Capital Account any amounts which such
Partner is deemed to be obligated to restore pursuant to the
penultimate sentences in Sections 1.704-2(g)(1) and 1.704-2(i)(5) of
the Treasury Regulations; and
(ii) Debit to such Capital Account the items described in
Sections 1.704- 1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6) of the Treasury Regulations.
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of
the Treasury Regulations and shall be interpreted consistently therewith.
(f) "Affiliate" means, with respect to any Person, any other Person
that directly or indirectly through one or more intermediaries controls or
is controlled by or is under common control with the Person. The terms
"controls," "controlled by" and "under common control with" shall each
mean the possession, directly or indirectly or through one or more
intermediaries, of more than fifty percent (50%) of the outstanding voting
stock of, or the power to direct or cause the direction of the management
policies of any Person, whether through ownership of stock, as a general
partner or trustee, by contract or otherwise.
(g) "Affiliate Transaction" means a business transaction between the
Partnership and any Limited Partner or any Affiliate thereof; provided,
however, that "Affiliate Transaction" shall not include the Project
Agreements or any transaction between the Partnership and a Limited
Partner or any Affiliate thereof for transportation of natural gas or
other services offered by the Partnership relating to the Millennium
Pipeline System.
(h) "Agreement" means this Agreement of Limited Partnership as
originally executed or as amended, modified, supplemented or restated from
time to time.
(i) "Allocation Year" means (i) the period commencing on the
Effective Date and ending on December 31, 1998, (ii) any subsequent twelve
(12) month period commencing on January 1 and ending on December 31 or
(iii) any portion of the periods described in clauses (i) or (ii) for
which the Partnership is required to allocate Profits, Losses and other
items of Partnership income, gain, loss or deduction pursuant to Article 4
hereof.
(j) "Base Interest Rate" means a rate per annum equal to the lesser
of (a) two percent (2%) plus the Prime Rate and (b) the maximum rate
permitted by applicable law.
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(k) "Budget" means the annual operating budget or any other budget
for the Partnership approved by the General Partner.
(l) "Business Day" means any day other than a Saturday, Sunday or a
holiday on which national banking associations in the State of New York
are authorized to close.
(m) "Capacity Lease and Exchange Agreement" means that certain
Capacity Lease and Exchange Agreement to be entered into between the
Partnership and Columbia for the lease of capacity on the Millennium
Pipeline System on terms approved by the General Partner as the same may
be amended or modified from time to time.
(n) "Capital Account" means, with respect to any Partner, the
Capital Account maintained for such Partner in accordance with the
following provisions:
(i) To each Partner's Capital Account there shall be credited
(A) such Partner's Capital Contributions, (B) that Partner's share
of Profits and any items in the nature of income or gain which are
specially allocated pursuant to Sections 4.01 and 4.03 hereof, and
(C) the amount of any Partnership liabilities assumed by such
Partner or which are secured by any Partnership Property distributed
to such Partner; provided, however, that the principal amount of a
promissory note which is not readily traded on an established
securities market and which is contributed to the Partnership by the
maker of the note (or a Partner related to the maker of the note
within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(c)) shall not be included in the Capital Account
of any Partner until the Partnership makes a taxable disposition of
the note or until (and to the extent) principal payments are made on
the note, all in accordance with Treasury Regulations Section
1.704-1(b)(2)(iv)(d)(2);
(ii) To each Partner's Capital Account there shall be debited
(A) the amount of money and the Gross Asset Value of any Partnership
Property distributed to such Partner pursuant to any provision of
this Agreement, (B) such Partner's share of Losses and any items in
the nature of expenses or losses which are specially allocated
pursuant to Sections 4.02 or 4.03 hereof and (C) the amount of any
liabilities of such Partner assumed by the Partnership or which are
secured by any Partnership Property contributed by such Partner to
the Partnership;
(iii) In the event Units are transferred in accordance with
the terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor in the same proportion as the
Units so transferred; and
(iv) In determining the amount of any liability for purposes
of subparagraphs (i) and (ii) above, there shall be taken into
account Code Section 752(c) and any other applicable provisions of
the Code and Treasury Regulations.
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The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply
with Treasury Regulations Section 1.704-1(b), and shall be interpreted and
applied in a manner consistent with such Treasury Regulations. In the
event the General Partner shall determine that it is prudent to modify the
manner in which the Capital Accounts or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities
which are secured by contributed or distributed property or which are
assumed by the Partnership or any Partner), are computed in order to
comply with such Treasury Regulations, the General Partner may make such
modification, provided that it is not likely to have a material effect on
the amounts distributed to any Person pursuant to Article 10 hereof upon
the dissolution of the Partnership. The General Partner also shall make
(i) any adjustments that are necessary or appropriate to maintain equality
between the Capital Accounts of the Partners and the amount of capital
reflected on the Partnership's balance sheet, as computed for book
purposes, in accordance with Treasury Regulations Section
1.704-1(b)(2)(iv)(q), and (ii) any appropriate modifications in the event
unanticipated events might otherwise cause this Agreement not to comply
with Treasury Regulations Section 1.704-1(b).
(o) "Capital Contribution" means the total amount of money and/or
the initial Gross Asset Value of any property (net of any liabilities
assumed or taken subject to) actually contributed to the Partnership by
all of the Partners or any class of Partners or any one Partner, as the
context requires. A Limited Partner's Capital Contribution includes its
Initial Capital Contribution plus the amount of any Scheduled Capital
Contributions or Additional Capital Contributions paid by the Limited
Partner.
(p) "Change in Control" means the Disposition of (i) a controlling
interest in a Limited Partner to a Person that is not an Affiliate of the
Limited Partner or Limited Partner Owner or (ii) a controlling interest in
a Limited Partner Owner to a Person that is not an Affiliate of the
Limited Partner Owner or the Limited Partner; provided, however, that
Change in Control shall not include a Disposition of the interests of such
Limited Partner Owner in the Millennium Pipeline System, held through the
Limited Partner, which exceeds eighty percent (80%) of the value of such
Limited Partner Owner. For purposes of this subsection 1.01(p)(ii), (A) a
Disposition shall not include a mortgage, pledge, grant of a security
interest or other disposition or encumbrance and (B) "controlling
interest" shall mean possession, directly or indirectly, of power to
direct or cause the direction of management or policies of a Person
(whether through ownership of securities, partnership, limited liability
company or other ownership interests by contract or otherwise).
(q) "Code" means the Internal Revenue Code of 1986, as amended, or
any successor statute thereto.
(r) "Columbia" means Columbia Gas Transmission Corporation, a
Delaware corporation.
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(s) "Commitment Voting Date" means the date on which the General
Partner makes the determination to commit the Partnership to purchase all
or substantially all of the pipe necessary to construct the Millennium
Pipeline System or otherwise to commit to commence construction of the
Millennium Pipeline System, taking into consideration factors established
by the General Partner from time to time.
(t) "Contribution Agreement" means that certain Contribution
Agreement to be entered into between the Partnership and Columbia on terms
and conditions approved by the General Partner pertaining to the
contribution of assets by Columbia to the Partnership.
(u) "Contribution Date" shall have the meaning set forth in
subsection 3.03(c) hereof.
(v) "Credit Support Documents" means documents executed by an
Affiliate of a Limited Partner or other Person acceptable to the General
Partner whereby the Affiliate or such other Person provides credit support
for the obligations of such Limited Partner under this Agreement.
(w) "Debt" means (i) any indebtedness for borrowed money or the
deferred purchase price of property as evidenced by a note, bond or other
instrument, (ii) obligations as lessee under capital leases, (iii)
obligations secured by any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind existing on any asset owned or
held by the Partnership whether or not the Partnership has assumed or
become liable for the obligations secured thereby, (iv) any net obligation
under any interest rate swap agreement, (v) accounts payable and (vi)
obligations under direct or indirect guarantees of (including obligations
(contingent or otherwise) to assure a creditor against loss in respect of)
indebtedness or obligations of the kinds referred to in clauses (i), (ii),
(iii), (iv) and (v), above, provided that Debt shall not include
obligations in respect of any accounts payable that are incurred in the
ordinary course of the Company's business and are either not delinquent or
are being contested in good faith by appropriate proceedings.
(x) "Delinquent Partner" shall have the meaning set forth in Section
3.04 hereof.
(y) "Depreciation" means, for each Allocation Year, an amount equal
to the depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such Allocation Year, except that,
if the Gross Asset Value of an asset differs from its adjusted basis for
federal income tax purposes at the beginning of such Allocation Year,
Depreciation shall be an amount which bears the same ratio to such
beginning Gross Asset Value as the federal income tax depreciation,
amortization or other cost recovery deduction for such Allocation Year
bears to such beginning adjusted tax basis; provided, however, that if the
adjusted basis for federal income tax purposes of an asset at the
beginning of such Allocation Year is zero, Depreciation shall be
determined with reference to such beginning Gross Asset Value using any
reasonable method selected by the General Partner.
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(z) "Dispose," "Disposing" or "Disposition" shall each mean a sale,
assignment, transfer, exchange, mortgage, pledge, grant of a security
interest or other disposition or encumbrance (including without
limitation, by operation of law).
(aa) "Dispute" shall have the meaning set forth in Section 12.01
hereof.
(bb) "Effective Date" means the last to occur of (i) the date this
Agreement is executed and adopted by all of the parties hereto and (ii)
the date the Partnership's Certificate of Limited Partnership is filed
with the Secretary of State of the State of Delaware.
(cc) "FERC" means the Federal Energy Regulatory Commission or any
commission, agency or other governmental body succeeding to the power of
such commission under the Natural Gas Act.
(dd) "General Interest Rate"means a rate per annum equal to the
lesser of (i) one percent (1%) plus the Prime Rate and (ii) the maximum
rate permitted by applicable law.
(ee) "General Partner" means Millennium Pipeline Management Company,
L.L.C., a Delaware limited liability company. The term "General Partner"
also includes any other Person who is duly admitted to the Partnership as
an additional or substitute general partner.
(ff) "Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by
a Partner to the Partnership shall be the gross fair market value of
such asset as determined by the General Partner;
(ii) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values (taking
Code Section 7701(g) into account on the date determined), as
determined by the General Partner as of the following times: (A) the
acquisition of an additional interest in the Partnership by any new
or existing Partner in exchange for more than a de minimis Capital
Contribution; (B) the distribution by the Partnership to a Partner
of more than a de minimis amount of Partnership Property as
consideration for an interest in the Partnership; provided that
either or both adjustments described in clauses (A) and (B) of this
paragraph shall be made only if the General Partner reasonably
determine that such adjustment is necessary to reflect the relative
economic interests of the Partners in the Partnership;
(iii) The Gross Asset Value of any item of Partnership assets
distributed to any Partner shall be adjusted to equal the gross fair
market value (taking Code Section 7701(g) into account) of such
asset on the date of distribution as determined by the General
Partner; and
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(iv) The Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Sections 734(b) or 743(b), but
only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Treasury Regulations
Section 1.704-1(b)(2)(iv)(m) and subparagraph (vi) of the definition
of "Profits" and "Losses" or Section 4.02(c) hereof; provided,
however, that Gross Asset Values shall not be adjusted pursuant to
this subparagraph (iv) to the extent that an adjustment pursuant to
subparagraph (ii) of this subsection (ff) is required in connection
with a transaction that would otherwise result in an adjustment
pursuant to this subparagraph (iv).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to subparagraph (ii) or (iv) above, such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect
to such asset for purposes of computing Profits and Losses.
(gg) "Initial Capital Contributions" means the amount in cash to be
contributed to the capital of the Partnership pursuant to Articles 2 and 3
hereto by all the Partners, the Limited Partners, the General Partner, or
any one Partner, as the context requires.
(hh) "In-Service Date" shall have the meaning set forth in
subsection 7.03(c) hereof.
(ii) "Interest" means the entire ownership interest of a Partner in
the Partnership at any particular time as a General Partner or a Limited
Partner holding Units, including, but not limited to, the right of such
Partner to any and all rights and benefits to which a Partner is entitled
pursuant to the terms of this Agreement. The initial Interest of each
Partner shall be as set forth on Exhibit A hereto. The Interest of each
Partner shall be adjusted from time to time (i) based upon the Capital
Contributions made by the Partners in accordance with Article 3 hereto,
with the Interest of each Partner being equal to a fraction, the numerator
of which is a Partner's cumulative Capital Contribution and the
denominator of which is the cumulative total of all Partner's Capital
Contributions; and (ii) upon the withdrawal of a Limited Partner, in which
case the Interest of the Withdrawing Limited Partner shall, as of the
Withdrawal Effective Date, be distributed pro rata among all of the
non-withdrawing Partners in a portion equal to the ratio of (A) the
pre-withdrawal Interest of such non-withdrawing Partner to (B) the sum of
all pre-withdrawal Interests of all non-withdrawing Partners.
(jj) "Lake Crossing Agreement" means that certain Lake Crossing
Agreement to be entered into between TransCanada PipeLines Limited or an
Affiliate thereof and Columbia in its capacity as the project developer
under the Project Development Agreement, on terms approved by the General
Partner, relating to the construction of the segment of the Millennium
Pipeline System which will pass under Lake Erie.
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(kk) "Limited Partner" means any Person who is admitted to the
Partnership as a limited partner pursuant to the terms of this Agreement,
including the Persons executing this Agreement as "Limited Partners."
(ll) "Limited Partner Owner" means the Person or Persons that own,
of record or beneficially, all of the capital stock or equity interests in
a Limited Partner.
(mm) "Liquidator" shall have the meaning set forth in Section 10.04
hereof.
(nn) "Losses" shall have the meaning set forth in Section 1.01(ddd)
hereof.
(oo) "Millennium Pipeline System" shall have the meaning set forth
in the Preamble to this Agreement.
(pp) "MOU" means that certain Memorandum of Understanding dated as
of December 1, 1997, among Columbia, Westcoast Energy (U.S.), Inc., MCN
Investment Corporation and TransCanada PipeLines Limited, as amended,
modified and extended.
(qq) "Net Cash Flow" means the gross cash revenues of the
Partnership less the portion thereof used to pay or establish working
capital reserves for all Partnership expenses, debt payments, capital
improvements, replacements and contingencies, all as determined by the
General Partner; provided, however, that Net Cash Flow shall not be
reduced by depreciation, amortization, cost recovery deductions or similar
allowances, but shall be increased by any reductions of reserves
previously established pursuant to the first clause of this definition.
(rr) "Nonrecourse Deductions" shall have the meaning set forth in
Section 1.704- 2(b)(1) of the Treasury Regulations.
(ss) "Nonrecourse Liability" shall have the meaning set forth in
Section 1.704- 2(b)(3) of the Treasury Regulations.
(tt) "O&M Agreement" means that certain Operations, Maintenance and
Management Services Agreement to be entered into between the Partnership
and Columbia on terms and conditions acceptable to the General Partner
relating to the operation, maintenance and management of the Millennium
Pipeline System.
(uu) "Partner Nonrecourse Debt" shall have the same meaning as the
term "partner nonrecourse debt" set forth in Section 1.704-2(b)(4) of the
Treasury Regulations.
(vv) "Partner Nonrecourse Debt Minimum Gain" means an amount, with
respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum
Gain that would result if such Partner Nonrecourse Debt were treated as
nonrecourse as determined in accordance with Section 1.704-2(i)(3) of the
Treasury Regulations.
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(ww) "Partner Nonrecourse Deductions" shall have the same meaning as
the term "partner nonrecourse deductions" set forth in Sections
1.704-2(i)(1) and 1.704-2(i)(2) of the Treasury Regulations.
(xx) "Partners" means the General Partner and the Limited Partners
who are admitted as partners in the Partnership, unless otherwise
indicated.
(yy) "Partnership" means Millennium Pipeline Company, L.P., a
Delaware limited partnership, as the Partnership may be constituted from
time to time.
(zz) "Partnership Property" means all interests, properties and
rights of any type, whether real, personal, tangible or intangible, owned
by the Partnership.
(aaa) "Person" means a natural person, partnership (whether general
or limited and whether domestic or foreign), trust, estate, association,
corporation, custodian, nominee or any other individual or entity in its
own or any representative capacity.
(bbb) "Precedent Agreements" means the Precedent Agreements entered
into on behalf of the Partnership with proposed customers of the
Partnership for the transmission of natural gas through the Millennium
Pipeline System.
(ccc) "Prime Rate" means the fluctuating per annum rate of interest
announced from time to time by Citibank, N.A. as its "Prime Rate."
(ddd) "Profits" and "Losses" mean, for each Allocation Year, an
amount equal to the Partnership's taxable income or loss for such
Allocation Year, determined in accordance with Code Section 703(a) (for
purposes of such determination, all items of income, gain, loss or
deduction required to be stated separately pursuant to Code Section
703(a)(1) shall be included in taxable income or loss), with the following
adjustments (without duplication):
(i) Any income of the Partnership exempt from federal income
tax and not otherwise taken into account in computing Profits or
Losses pursuant to this definition of "Profits" and "Losses" shall
be added to such taxable income or loss;
(ii) Any expenditures of the Partnership described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(i) and not otherwise taken into account in
computing Profits or Losses pursuant to this definition of "Profits"
and "Losses" shall be subtracted from such taxable income or loss;
(iii) In the event the Gross Asset Value of any Partnership
asset is adjusted pursuant to subparagraphs (ii) or (iii) of the
definition of Gross Asset Value, the amount of such adjustment shall
be treated as an item of gain (if the adjustment increases the Gross
Asset Value of the asset) or an item of loss (if the adjustment
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decreases the Gross Asset Value of the asset) from the disposition
of such asset and shall be taken into account for purposes of
computing Profits or Losses;
(iv) Gain or loss resulting from any Disposition of
Partnership Property with respect to which gain or loss is
recognized for federal income tax purposes shall be computed by
reference to the Gross Asset Value of the Partnership Property
Disposed of, notwithstanding that the adjusted tax basis of such
Partnership Property differs from its Gross Asset Value;
(v) In lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for
such Allocation Year, computed in accordance with the definition of
Depreciation;
(vi) To the extent an adjustment to the adjusted tax basis of
any Partnership asset pursuant to Code Section 734(b) is required,
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(4), to
be taken into account in determining Capital Accounts as a result of
a distribution other than in liquidation of a Partner's Interest,
the amount of such adjustment 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) from the disposition of such asset
and shall be taken into account for purposes of computing Profits or
Losses; and
(vii) Notwithstanding any other provision of this definition,
any items which are specially allocated pursuant to Sections 4.02 or
4.03 hereof shall not be taken into account in computing Profits or
Losses.
The amounts of the items of Partnership income, gain, loss or
deduction available to be specially allocated pursuant to Sections 4.02
and 4.03 hereof shall be determined by applying rules analogous to those
set forth in subparagraphs (i) through (vi) above.
(eee) "Project Agreements" means the Capacity Lease and Exchange
Agreement, the Contribution Agreement, the Lake Crossing Agreement, the
O&M Agreement, the Project Development Agreement, and the Precedent
Agreements, as the same may be amended and modified from time to time.
(fff) "Project Development Agreement" means that certain Project
Development and Management Services Agreement to be entered into between
the Partnership and Columbia on terms and conditions acceptable to the
General Partner relating to the construction and development of the
Millennium Pipeline System.
(ggg) "PUHCA" means the Public Utility Holding Company Act of 1935,
as amended.
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(hhh) "PUHCA Company" shall have the meaning set forth in Section
6.10 hereof.
(iii) "Regulatory Allocations" shall have the meaning set forth in
Section 4.04 hereof.
(jjj) "Required Accounting Practices" means generally accepted
accounting principles as practiced in the United States at the time
prevailing for companies engaged in a business similar to the Partnership
or, if inconsistent therewith, the accounting rules and regulations, if
any, at the time prescribed by the regulatory body or bodies under the
jurisdiction of which the Partnership is at the time operating.
(kkk) "Required Interest" means a majority of the Interests of
Partners that are not Withdrawing Limited Partners or Abstaining Partners.
(lll) "Sale Notice" shall have the meaning set forth in subsection
6.05(a).
(mmm) "Scheduled Capital Contributions" shall have the meaning set
forth in Section 3.03 hereto.
(nnn) "Substitute Limited Partner" means any Person admitted to the
Partnership as a Limited Partner pursuant to the provisions of Section
6.04(c) hereof.
(ooo) "System Modification" shall mean any facilities to be
installed or action to be taken costing in excess of One Million Dollars
(US$1,000,000) to modify, improve, expand or increase the capacity of the
Millennium Pipeline System or any portion thereof after the Commitment
Voting Date (except in connection with customary maintenance and except
for modifications which in the reasonable judgment of the General Partner
(a) do not result in an expansion of the capacity or a change in the
essential design of the Millennium Pipeline System or (b) are necessary to
comply with applicable environmental or safety requirements).
(ppp) "Treasury Regulations" means the Income Tax Regulations,
including Temporary Regulations, promulgated under the Code, as such
regulations are issued, supplemented and amended from time to time.
(qqq) "UCC" means the Uniform Commercial Code of the State of
Delaware, as amended from time to time.
(rrr) "Unanimous Consent" means the consent of all Partners holding
an Interest in the Partnership who are not Withdrawing Limited Partners or
Abstaining Partners.
(sss) "Unit" means any one of the general or limited partnership
interests issued in the following classes:
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(i) Limited Partner Units -- Nine thousand nine hundred
(9,900) Units each issued in exchange for an Initial Capital
Contribution as set forth in Section 2.08(b) hereof, each
representing a 0.01% interest in the Partnership for an aggregate
Partnership interest for all Limited Partner Units of ninety-nine
percent (99%);
(ii) General Partner Units -- One hundred (100) General
Partner Units issued in exchange for the General Partner's Capital
Contribution as set forth in Section 2.08(c) hereof, each
representing a 0.01% interest in the Partnership for an aggregate
Partnership interest for all General Partner Units of one percent
(1%).
(ttt) "Withdrawal Effective Date" shall have the meaning set forth
in subsection 7.03(a) hereof.
(uuu) "Withdrawal Notice" shall have the meaning set forth in
Section 7.03(a) hereof.
(vvv) "Withdrawal Period" shall have the meaning set forth in
Section 7.04 hereof.
(www) "Withdrawing Limited Partner" shall have the meaning set forth
in Section 7.03(a) hereof.
Additional terms defined in other sections of this Agreement have the
meanings given them in such sections throughout this Agreement.
1.02 Construction. The headings in this Agreement are inserted for
convenience of reference only and shall not affect interpretation of this
Agreement. Whenever the context requires, each term stated in either the
singular or the plural shall include the singular and the plural, and the gender
of all words used in this Agreement includes the masculine, the feminine and the
neuter. Except as otherwise noted, references to Articles and Sections refer to
articles and sections of this Agreement, and all references to Exhibits are to
exhibits attached hereto, each of which is made a part hereof for all purposes.
Use of the word "including" shall mean without limitation by reason of
enumeration.
ARTICLE 2
ORGANIZATION
2.01 Formation. For and in consideration of the agreements contained
herein, the parties hereto agree to form and do hereby form a limited
partnership under the Act. The rights, duties and liabilities of the Partners
shall be as provided in the Act, except as otherwise provided herein.
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2.02 Name. The name of the Partnership shall be "Millennium Pipeline
Company, L.P.," or such other name or names as the General Partner may from time
to time deem necessary, appropriate or advisable.
2.03 Registered Agent and Registered Office. The initial registered agent
of the Partnership in the State of Delaware shall be The Corporation Trust
Company and the initial registered office of the Partnership shall be located at
0000 Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000. The General Partner may from time to
time change the registered agent or registered office of the Partnership, or
both. The General Partner shall promptly notify all other Partners of any change
in the registered office or registered agent of the Partnership.
2.04 Location of Principal Place of Business. The principal place of
business of the Partnership shall be 00000 Xxxx Xxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxx
00000, or such other place as the General Partner may from time to time
designate in writing to the Limited Partners. The Partnership may maintain such
other offices at such other places as the General Partner deems advisable.
2.05 Business and Purpose. The business and purpose of the Partnership
shall be to design, develop, construct, own and operate a natural gas
transmission system extending from an interconnection with a natural gas
transmission system to be owned and operated by TransCanada PipeLines Limited at
the border between the United States and Canada in Lake Erie to a terminus in
Westchester County, New York, and to engage in any other business or activity
that now or hereafter may be necessary, incidental, proper, advisable or
convenient to accomplish the foregoing purpose that is not forbidden by the law
of the jurisdiction in which the Partnership engages in that business. The
business and purpose of the Partnership shall additionally encompass any
activities contemplated by the rights and powers of the General Partner
described in this Agreement to the extent not specifically set forth in this
Section 2.05.
2.06 Term. The Partnership's existence shall commence on the Effective
Date and shall continue until the Partnership terminates pursuant to Article 10
hereof, following dissolution.
2.07 Filing of Certificates. The General Partner shall execute, file and
publish all such certificates, notices, statements or other instruments required
by law for the formation or operation of a limited partnership in all
jurisdictions where the Partnership may propose to do business. The General
Partner may amend the Certificate of Limited Partnership from time to time for
any proper purpose.
2.08 General and Original Limited Partners' Units and Interests.
(a) The General Partner has accepted Capital Contributions from the
Limited Partners consisting of the total amount of money and/or property
as set forth on Exhibit A hereto.
(b) The original Limited Partners and the respective Units, Interest
and the Initial Capital Contribution of each Limited Partner shall be as
set forth on Exhibit A hereto.
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(c) Millennium Pipeline Management Company, L.L.C., shall be the
initial sole General Partner and shall make the Initial Capital
Contribution set out on Exhibit A hereto. The General Partner shall
receive in exchange for such Initial Capital Contribution one hundred
(100) General Partner Units representing an aggregate Interest in the
Partnership of one percent (1%).
(d) All Units in the aggregate shall have a one hundred percent
(100%) interest in the Partnership.
2.09 Additional Limited Partners. A Person other than the original Limited
Partners shall become a Limited Partner only if (a) such Person executes and
delivers to the General Partner an amendment to this Partnership Agreement
together with any other documentation that may be required of a prospective
Limited Partner by the General Partner, including, without limitation, Credit
Support Documents and (b) such amendment to this Partnership Agreement is
executed and accepted by the General Partner.
2.10 Organization Certificates. Upon the request of the General Partner,
each Limited Partner agrees to execute and deliver from time to time all
certificates and other documents deemed necessary by the General Partner to
accomplish all filing, recording, publishing and other acts appropriate to
comply with all requirements for the formation, qualification and operation of
(a) a limited partnership under the Act and (b) a limited partnership, or a
partnership in which the limited partners have limited liability, in all other
jurisdictions where the Partnership shall propose to conduct business.
2.11 Power of Attorney.
(a) Each Limited Partner hereby irrevocably designates and appoints
the General Partner, its successors and assigns, each with full power of
substitution, his agent and attorney-in-fact in his name, place and xxxxx
to (i) do any acts necessary to qualify the Partnership to do business
under the laws of any jurisdiction in which it is necessary or advisable
to file any instrument in writing in connection with such qualification
and (ii) consent to, make, execute, swear to and acknowledge, amend, file,
record, deliver and publish: (1) any certificate of limited partnership or
amended certificate of limited partnership under the Act and any other
certificates, either original or amended, required or permitted to be
filed or recorded under statutes relating to limited partnerships under
the laws of any jurisdiction in which the Partnership shall engage or seek
to engage in business; (2) a counterpart of or amendment to this Agreement
for the purpose of substituting as a Limited Partner an assignee or
successor to all or any portion of a Limited Partner's Interest pursuant
to this Agreement; (3) a counterpart of this Agreement or of any amendment
hereto for the purpose of filing or recording such counterpart in any
jurisdiction in which the Partnership may own property or transact
business; (4) all certificates and other instruments necessary to qualify
or continue the Partnership as a limited partnership or partnership
wherein the Limited Partners have limited liability in any jurisdiction
where the Partnership may own property or be doing business; (5) any
fictitious or assumed name certificate required or permitted to
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be filed by or on behalf of the Partnership; (6) any other instrument
which is now or which may hereafter be required by law to be filed for or
on behalf of the Partnership or its Partners with respect to Partnership
business; (7) certificates or other instruments evidencing the dissolution
or termination of the Partnership when such shall be appropriate in each
jurisdiction in which the Partnership shall own property or do business;
(8) any amendment to this Agreement adopted pursuant to the applicable
provisions of this Agreement; and (9) a counterpart of or amendment to
this Agreement for the purpose of admitting or removing a Person as a
Partner pursuant to this Agreement (including, but not limited to, the
provisions of Section 6.04 hereof).
(b) Each Limited Partner hereby agrees to execute and deliver to the
General Partner within ten (10) days after receipt of a written request
therefor such other and further statements of interest and holdings,
designations, powers of attorney and other instruments as the General
Partner deems necessary or advisable to conduct the business of the
Partnership. The power of attorney granted herein is hereby declared
irrevocable and a power coupled with an interest, and shall (i) survive
the bankruptcy, disability or death of a Limited Partner, if an
individual, or the bankruptcy, dissolution or other termination of a
Limited Partner, if a corporation, trust, partnership or unincorporated
association, and (ii) extend to and be binding upon such Limited Partner's
legal representatives, heirs, successors and assigns. Each Limited Partner
hereby agrees to be bound by any representations made by the General
Partner acting pursuant to such power of attorney, and each Limited
Partner hereby waives any and all defenses which may be available to
contest, negate or disaffirm any action of the General Partner except in
cases of willful misconduct.
ARTICLE 3
CAPITALIZATION AND FINANCING
3.01 Commencement of Operations. The Partnership shall commence operations
on the Effective Date.
3.02 Initial Capital Contributions. The Initial Capital Contributions of
the Partners shall be as set forth on Exhibit A attached hereto, which shall
include amounts contributed by the Limited Partners or their Affiliates for the
development of the Millennium Pipeline System pursuant to the terms of the MOU.
3.03 Scheduled and Additional Capital Contributions.
(a) The Partners agree to contribute to the Partnership, upon the
request of the General Partner, the capital determined to be necessary
from time to time by the General Partner to fund expenditures approved in
any Budget (the "Scheduled Capital Contributions"). It is expressly
acknowledged and agreed by the Partners that Columbia will be contributing
certain assets to the Partnership as part of its Scheduled Capital
Contributions, the value of which shall be determined by the General
Partner. In addition,
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the General Partner may request Additional Capital Contributions that, in
the judgment of the General Partner, are necessary to enable the
Partnership to cause the assets of the Partnership to be properly
developed, operated and maintained and to discharge its costs, expenses,
obligations and liabilities. Additional Capital Contributions may be
requested from time to time and at any time during the term of the
Partnership in such amounts as estimated in good faith by the General
Partner.
(b) Additional Capital Contributions may be requested by the General
Partner in one or more requests. Each Limited Partner shall cause payment
for each respective Additional Capital Contribution to be actually
received in hand, in cash, by the General Partner within twenty (20) days
after the notice of the Additional Capital Contribution is deemed to have
been given to the Limited Partner in accordance with Section 13.02 hereof.
(c) Each request for a Scheduled Capital Contribution or an
Additional Capital Contribution shall specify the Limited Partner's
proportionate share of the amount required, a summary of the intended use
of the proceeds and the date such Scheduled Capital Contribution or
Additional Contribution is due (the "Contribution Date").
3.04 Failure to Contribute. If a Limited Partner fails to contribute all
or any portion of a Capital Contribution that the Limited Partner is required to
make by the Contribution Date as provided in this Agreement (becoming a
"Delinquent Partner") and such failure continues for sixty (60) days from the
date such Capital Contribution is scheduled to be made, then the Delinquent
Partner shall be deemed to be a Withdrawing Limited Partner pursuant to Section
7.03 hereof, effective as of the end of such sixty (60) day period; provided,
however, a Delinquent Partner shall not be entitled to (i) a return of any
Capital Contribution (and shall forfeit the same) and (ii) the indemnification
provided pursuant to Section 7.04 hereof. Throughout any period during which a
Limited Partner is a Delinquent Partner, the delinquent Capital Contribution, or
any delinquent portion thereof, shall bear interest at a rate per annum equal to
the lesser of (x) the sum of the Prime Rate plus five percent (5%) and (y) the
maximum rate permitted by applicable law from the Contribution Date until the
date the Capital Contribution is received by the Partnership.
3.05 Partnership Borrowing.
(a) The General Partner may cause the Partnership to borrow money
from time to time, from third parties or from the General Partner, and may
mortgage or pledge Partnership Property to obtain and secure the repayment
of such loans. The proceeds of Partnership loans may be used for any
Partnership purpose, including the payment of the costs and expenses
related to expenses of the Partnership, to refinance Partnership
indebtedness, or to pay costs that would have otherwise been paid by
Capital Contributions. The General Partner may cause the Partnership to
mortgage or pledge Partnership Properties to secure loans the proceeds of
which will be applied to benefit Partnership Properties.
(b) The General Partner may cause the Partnership to borrow from
third parties or the General Partner. The General Partner is not, however,
obligated to lend funds to the
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Partnership. If the General Partner loans money to the Partnership, it
will receive interest at the Base Interest Rate. The General Partner may
secure loans made by it to the Partnership by mortgages or pledges of
Partnership Property. Loans by the General Partner to the Partnership
shall be treated as indebtedness to a non-Partner lender and will be
payable prior to any distributions to the Limited Partners.
3.06 Additional Financing. No Limited Partner shall be required to make
any contribution to the capital of the Partnership other than (a) its Initial
Capital Contribution, (b) its Scheduled Capital Contributions, (c) its share of
Additional Capital Contributions and (d) any amounts required to be paid to or
for the benefit of the Partnership pursuant to Section 13.01 hereof. This
provision shall not be deemed a limitation, however, on the General Partner's
right to cause the Partnership to borrow or to retain, use or pledge so much of
the undistributed revenues and other assets of the Partnership as in its opinion
may be required to provide for the Partnership's anticipated future cash needs
(including contingencies), or to repay amounts borrowed.
3.07 Revenues. Any or all revenues received by the Partnership may be
accumulated and retained in the Partnership for any Partnership purpose
including, but not limited to, the costs of partnership expenses or the
repayment of borrowing by the Partnership. The extent to which the Partnership
accumulates or expends its revenues will be determined in the sole discretion of
the General Partner.
3.08 Partnership Capital.
(a) No interest shall be paid by the Partnership on any Capital
Contributions or Capital Account balances, except as may be specifically
provided in this Agreement.
(b) No Partner shall have the right to withdraw any part of its
Capital Contribution or Capital Account, or to receive any return of any
portion of its Capital Contribution or its Capital Account, except as may
be specifically provided in this Agreement.
(c) Under circumstances involving a return of any Capital
Contribution, no Partner shall have the right to receive property other
than cash, except as may be specifically provided in this Agreement.
(d) Loans from any Partner to the Partnership shall not be
considered Capital Contributions.
(e) A Partner shall not be required to contribute or to lend any
cash or property to the Partnership to enable the Partnership to return
any Partner's Capital Contributions.
3.09 Advances by Partners. If the Partnership does not have sufficient
cash to pay its obligations, any Partner(s) that may agree to do so may advance
all or part of the needed funds to or on behalf of the Partnership (provided the
Partner has made its Capital Contribution). An advance
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described in this Section 3.09 constitutes a loan from the Partner to the
Partnership, bears interest at the General Interest Rate from the date of the
advance until the date of payment and is not a Capital Contribution. Approval of
the terms of any loan to the Partnership by a Partner shall be determined by
majority vote of all Limited Partners that are not lenders in the transaction
under consideration plus the approval of the General Partner.
3.10 Capital Accounts. Each Partner shall have a capital account with a
balance maintained in accordance with the definition of "Capital Account" in
Section 1.01(k) hereof.
3.11 Capital Contributions for System Modifications. No Partner shall have
any obligation to make Additional Capital Contributions requested for the
purpose of funding the costs of a System Modification unless the Partner has
voted in favor of such System Modification. It is the intent of the Partners
that the Partners' Interests shall be adjusted to reflect the Interest of each
Partner immediately after Additional Capital Contributions are made relating to
the costs of any System Modifications. A Partner that votes against a System
Modification shall not be permitted to make Capital Contributions for such
System Modification unless the Partners voting in favor of the System
Modification unanimously consent to such contribution.
ARTICLE 4
ALLOCATIONS AND DISTRIBUTIONS
4.01 Profits. After giving effect to the special allocations set forth in
Sections 4.03 and 4.04 hereof, Profits for any Allocation Year shall be
allocated as follows:
(a) First, to each Partner in an amount equal to the excess, if any,
of (i) the cumulative Losses allocated to such Partner pursuant to Section
4.02(a) hereof for all prior Allocation Years, over (ii) the cumulative
Profits allocated to the Partners pursuant to this Section 4.01(a) for all
prior Allocation Years; and
(b) The balance, if any, to the Partners in proportion to their
interests.
All revenues used to repay any principal, interest or other amounts owing
with respect to Partnership borrowings or indebtedness shall be allocated to the
Partners in the same proportions that the costs paid with the proceeds of such
borrowings or indebtedness were allocated to the Partners and, with respect to
any indebtedness to which any property acquired by the Partnership was subject
at the time of its acquisition, in the same proportions as the costs of
acquisition of such property were allocated.
4.02 Losses. After giving effect to the special allocations set forth in
Sections 4.03 and 4.04 hereof, Losses for any Allocation Year shall be allocated
as follows:
(a) Among the Partners in proportion to their Interests, provided
that Losses shall not be allocated pursuant to this Section 4.02(a) to the
extent such allocation would cause
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any Partner to have an Adjusted Capital Account Deficit at the end of such
Allocation Year; and
(b) The balance, if any, to the General Partner.
4.03 Special Federal Income Tax Allocations. The following special
allocations shall be made in the following order:
(a) Minimum Gain Chargeback. Except as otherwise provided in Section
1.704-2(f) of the Treasury Regulations, notwithstanding any other
provisions of this Article 4, if there is a net decrease in Partnership
Minimum Gain during any Allocation Year, each Partner shall be specially
allocated items of Partnership income and gain for such Allocation Year
(and, if necessary, subsequent Allocation Years) in an amount equal to
such Partner's share of the net decrease in Partnership Minimum Gain,
determined in accordance with Treasury Regulations Section 1.704-2(g).
Allocations pursuant to the previous sentence shall be made in proportion
to the respective amounts required to be allocated to each Partner
pursuant thereto. The items to be so allocated shall be determined in
accordance with Sections 1.704-2(f) (6) and 1.704-2(j)(2) of the Treasury
Regulations. This Section 4.03(a) is intended to comply with the minimum
gain chargeback requirement in Section 1.704-2(f) of the Treasury
Regulations and shall be interpreted consistently therewith.
(b) Partner Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(i)(4) of the Treasury Regulations, notwithstanding any
other provision of this Article 4, if there is a net decrease in Partner
Nonrecourse Debt Minimum Gain attributable to a Partner Nonrecourse Debt
during any Allocation Year, each Partner who has a share of the Partner
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse
Debt, determined in accordance with Section 1.704-2(i)(5) of the Treasury
Regulations, shall be specially allocated items of Partnership income and
gain for such Allocation Year (and, if necessary, subsequent Allocation
Years) in an amount equal to such Partner's share of the net decrease in
Partner Nonrecourse Debt, determined in accordance with Treasury
Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to
be allocated to each Partner pursuant thereto. The items to be so
allocated shall be determined in accordance with Sections 1.704-2(i)(4)
and 1.704-2(j)(2) of the Treasury Regulations. This Section 4.03(b) is
intended to comply with the minimum gain chargeback requirement in Section
1.704-2(i)(4) of the Treasury Regulations and shall be interpreted
consistently therewith.
(c) Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in
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) of the Treasury Regulations, 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, the Adjusted Capital Account Deficit of the Partner as
quickly as possible, provided that an
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allocation pursuant to this Section 4.03(c) shall be made only if and to
the extent that the Partner would have an Adjusted Capital Account Deficit
after all other allocations provided for in this Article 4 have been
tentatively made as if this Section 4.03(c) were not in this Agreement.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any
Allocation Year shall be specially allocated to the Partners in proportion
to their respective Units.
(e) Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Allocation Year shall be specially allocated to the
Partner(s) who bear the economic risk of loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Treasury Regulations Section
1.704-2(i)(1).
(f) Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset, pursuant to Code Section
734(b) or Code Section 743(b) is required, pursuant to Treasury
Regulations Section 1.704-1(b)(2)(iv)(m)(2) or 1.704-1(b)(2)(iv)(m)(4), to
be taken into account in determining Capital Accounts as the result of a
distribution to a Partner in complete liquidation of such Partner's
Interest, the amount of such adjustment to Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis) and such gain or
loss shall be specially allocated to the Partners in accordance with their
interests in the Partnership in the event Treasury Regulations Section
1.704-1(b)(2)(iv)(m)(2) applies, or to the Partner to whom such
distribution was made in the event Treasury Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
4.04 Curative Allocations. The allocations set forth in Sections 4.03(a),
4.03(b), 4.03(c), 4.03(d), 4.03(e), 4.03(f) and 4.05 hereof (the "Regulatory
Allocations") are intended to comply with certain requirements of the Treasury
Regulations. It is the intent of the Partners that, to the extent possible, all
Regulatory Allocations shall be offset either with other Regulatory Allocations
or with special allocations of other items of Partnership income, gain, loss or
deduction pursuant to this Section 4.04. Therefore, notwithstanding any other
provision of this Article 4 (other than the Regulatory Allocations), the General
Partner shall make such offsetting special allocations of Partnership income,
gain, loss or deduction in whatever manner it determines appropriate so that,
after such offsetting allocations are made, each Partner's Capital Account
balance is, to the extent possible, equal to the Capital Account balance such
Partner would have had if the Regulatory Allocations were not part of this
Agreement and all Partnership items were allocated pursuant to Sections 4.01,
4.02 and 4.03(h) hereof.
4.05 Loss Limitation. Losses allocated pursuant to Section 4.02 hereof
shall not exceed the maximum amount of Losses that can be allocated without
causing any Partner to have an Adjusted Capital Account Deficit at the end of
any Allocation Year. In the event some but not all of the Partners would have
Adjusted Capital Account Deficits as a consequence of an allocation of Losses
pursuant to Section 4.02 hereof, the limitation set forth in this Section 4.05
shall be applied on a Partner-by-Partner basis and Losses not allocable to any
Partner as a result of such limitation
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shall be allocated to the other Partners in accordance with the positive
balances in such Partners' Capital Accounts so as to allocate the maximum
permissible Losses to each Partner under Section 1.704-1(b)(2)(ii)(d) of the
Treasury Regulations.
4.06 Other Allocation Rules.
(a) For purposes of determining the Profits, Losses or any other
items allocable to any period, Profits, Losses and any such other items
shall be determined on a daily, monthly or other basis, as determined by
the General Partner using any permissible method under Code Section 706
and the Treasury Regulations thereunder.
(b) The Partners are aware of the income tax consequences of the
allocations made by this Article 4 and hereby agree to be bound by the
provisions of this Article 4 in reporting their shares of Partnership
income and loss for income tax purposes.
(c) Solely for purposes of determining a Partner's proportionate
share of the "excess nonrecourse liabilities" of the Partnership within
the meaning of the Treasury Regulations Section 1.752-3(a)(3), the
Partners' interests in Partnership profits are in proportion to their
Units.
To the extent permitted by Section 1.704-2(h)(3) of the Treasury
Regulations, the General Partner shall endeavor to treat distributions of
Net Cash Flow as having been made from the proceeds of a Nonrecourse
Liability or a Partner Nonrecourse Debt only to the extent that such
distributions would cause or increase an Adjusted Capital Account Deficit
for any Partner.
4.07 Contributed Property; Tax Allocations.
(a) Code Section 704(c). In accordance with Code Section 704(c) and
the Treasury Regulations thereunder, income, gain, loss and deduction with
respect to any Property contributed to the capital of the Partnership
shall, solely for tax purposes, be allocated among the Partners so as to
take account of any variation between the adjusted basis of such Property
to the Partnership for federal income tax purposes and its initial Gross
Asset Value (computed in accordance with the definition of Gross Asset
Value) using an acceptable allocation method pursuant to the Treasury
Regulations under Section 704(c) as selected by the General Partner.
(b) In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to subparagraph (ii) of the definition of Gross Asset
Value, subsequent allocations of income, gain, loss and deduction with
respect to such asset shall take account of any variation between the
adjusted basis of such asset for federal income tax purposes and its Gross
Asset Value in the same manner as under Code Section 704(c) and the
Regulations thereunder.
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(c) Any elections or other decisions relating to such allocations
shall be made by the General Partner in any manner that reasonably
reflects the purpose and intention of this Agreement. Allocations pursuant
to this Section 4.07 are solely for purposes of federal, state and local
taxes and shall not affect, or in any way be taken into account in
computing, any Partner's Capital Account or share of Profits, Losses,
other items or distributions pursuant to any provision of this Agreement.
4.08 Distributions. The Partnership shall distribute cash to the Partners,
as determined in the sole and exclusive discretion of the General Partner. No
fees, salary, loans or other amounts paid to a Partner in connection with an
arm's-length transaction shall be considered a distribution, including, without
limitation, payments made pursuant to the Project Agreements. Distributions of
cash or property in respect of an Interest shall be made only to a Partner who,
according to the books and records of the Partnership, is the holder of such
Interest in respect of which such distribution is made on the date of such
distribution. The date for any distributions shall be determined by the General
Partner in its sole discretion. Except as provided in Section 7.03 hereof, all
distributions of cash or property (other than distributions in connection with
the dissolution and liquidation of the Partnership) shall be allocated among the
Partners in proportion to their Interests. Distributions among each class of
Unit shall be proportional by Unit, except as provided in Section 7.03 hereof.
Distributions in connection with the termination and liquidation of the
Partnership shall be allocated among the Partners as provided in Section 10.04
hereof.
ARTICLE 5
RIGHTS AND DUTIES OF THE GENERAL PARTNER
5.01 Management. The Partnership shall be managed by the General Partner
who shall have, subject to any restrictions imposed by applicable law or
expressly imposed by this Agreement, full, complete and exclusive authority to
(i) manage and control the business, affairs and properties of the Partnership,
(ii) make all decisions regarding those matters and (iii) perform any and all
other acts or activities customary or incident to the management of the
Partnership's business. In addition to the powers now or hereafter granted the
general partners of a limited partnership under the Act or that are granted the
General Partner under any provision of this Agreement, but subject to the
limitations described in Section 5.03 hereof and elsewhere in this Agreement,
the General Partner shall have the power, for and on behalf and in the name of
the Partnership, to carry out and implement the purpose of the Partnership set
forth in Section 2.05 hereof and to do all things necessary or desirable or
expedient in connection therewith or incidental thereto and to manage, conduct
and supervise the day-to-day business affairs of the Partnership.
5.02 Reliance by Public.
(a) In order to expedite the handling of the Partnership's business
and affairs, it is understood and agreed that any action taken or document
delivered by the General Partner while acting in the name and on behalf of
the Partnership shall be deemed to be the action of the Partnership as to
any third parties (including all Limited Partners or their assignees as
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third parties for such purpose). Any Person dealing with the Partnership
or the General Partner shall be entitled to rely upon a certificate of the
General Partner as to:
(i) the identity of the Partners;
(ii) the existence or nonexistence of any fact or facts that
constitute conditions precedent to acts by the party delivering or
receiving such certificate or which are in any other manner related
to the affairs of the Partnership;
(iii) the Persons who are authorized to execute and deliver
any instrument or document of the Partnership;
(iv) any act or failure to act by the Partnership; or
(v) any other matter whatsoever involving the Partnership or
any Partner.
(b) Notwithstanding any other provision of this Agreement to the
contrary, no Person shall be required to look to the application of
proceeds hereunder or to verify any representation by the General Partner.
Any such Person shall be entitled to rely exclusively on the
representations of the General Partner as to its authority to enter into
such financing or sale arrangements and shall be entitled to deal with the
General Partner as if it were the sole party in interest therein, both
legally and beneficially.
5.03 Restrictions on Authority of General Partner. Notwithstanding any
other provision of this Agreement to the contrary, the General Partner shall not
have the power or authority to, and shall not:
(a) cause the Partnership to make any loans to the General Partner
or any of its Affiliates unless approved by Unanimous Consent;
(b) receive or cause any Affiliate to receive any brokerage
commission or similar fee in connection with the sale or reinvestment of
the proceeds of sale, exchange or refinancing of any Partnership Property,
except as disclosed to the Partners and approved by Unanimous Consent;
(c) accept any rebates in connection with Partnership operations or
expenditures other than those received for the account of the Partnership
or as are approved by Unanimous Consent;
(d) sell, transfer or assign (other than collateral assignments and
transfers which shall be governed by Section 3.05 hereof) all or any
material portion of the assets of the Partnership unless approved by
Unanimous Consent; or
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(e) approve any System Modification without the approval of the
Required Interest plus the approval of the General Partner.
5.04 Other Operations. The General Partner shall devote all of its time to
the Partnership to carry on the Partnership's business.
5.05 Disposition of All or Substantially All of Partnership Property. The
General Partner shall be empowered to Dispose of all (being 80% or more of fair
market value) of the Partnership's Property (including its goodwill) to any of
its Affiliates or any other Person, and to receive for the Partnership
consideration consisting of cash, securities, other property, assumption of
Partnership debts, any other form of consideration or any combination thereof,
as it deems to be in the best interests of the Limited Partners; provided,
however, that no such Disposition shall be consummated unless prior Unanimous
Consent is received. The consent of Limited Partners shall not be required for
the General Partner to encumber or assign, as security for the payment of
Partnership indebtedness or obligations, all or substantially all Partnership
Property.
5.06 Contracts with the Partners or their Affiliates. The General Partner,
in its sole and exclusive discretion, may cause the Partnership to enter into
other contracts and arrangements with the Partners and its Affiliates for the
rendering of services and the sale and lease of supplies and equipment;
provided, however, that the compensation, price, or rental and other terms to
the Partnership must be no less favorable to the Partnership, taken as a whole,
than that generally available from unrelated third parties in the area who are
engaged in the business of rendering comparable services or selling or leasing
comparable equipment and supplies which could reasonably be made available to
the Partnership. The Limited Partners, by their execution of this Agreement,
acknowledge and consent to the Partnership entering into the Project Agreements.
Employee expenses for all non-Columbia employees of the Partners or their
Affiliates that are approved by the General Partner shall be recoverable at the
rate of $400.00 per day plus all reasonable travel and travel related expenses
of such employees that are for the benefit of the Partnership provided that they
are submitted within forty-five (45) days of the end of the month in which the
expenses were incurred.
5.07 Liabilities and Indemnification of the General Partner.
(a) THE GENERAL PARTNER AND ITS AFFILIATES SHALL NOT BE LIABLE TO
THE PARTNERSHIP OR THE PARTNERS FOR ANY LOSS OR DAMAGE INCURRED BY THE
PARTNERSHIP OR ANY PARTNER BY REASON OF ANY ACT OR OMISSION (WHETHER
NEGLIGENT OR NOT) PERFORMED OR OMITTED BY THE GENERAL PARTNER OR ITS
AFFILIATES IN GOOD FAITH AND IN A MANNER REASONABLY BELIEVED BY THE
GENERAL PARTNER TO BE WITHIN THE SCOPE OF THE AUTHORITY GRANTED TO THE
GENERAL PARTNER BY THIS AGREEMENT. THE PARTNERSHIP SHALL INDEMNIFY AND
SAVE HARMLESS THE GENERAL PARTNER AND ITS AFFILIATES TO THE FULLEST EXTENT
NOW OR HEREAFTER PERMITTED BY THE ACT.
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(b) Legal expenses and other costs incurred by the General Partner
and its Affiliates shall be reimbursed on a monthly basis by the
Partnership in advance of the final disposition of claims for which the
General Partner or its Affiliates may be entitled to be indemnified or
held harmless, provided that each Person to whom reimbursement is to be
made undertakes to repay funds so advanced if it is later determined by
final, non-appealable judgment of a court of competent jurisdiction that
such Person is not entitled to be indemnified or held harmless by the
Partnership. The right of the General Partner and its Affiliates to be
indemnified and held harmless under this Agreement shall continue after
the General Partner ceases to be a Partner. All rights of the General
Partner and its Affiliates under this Section 5.07 shall inure to their
respective successors and assigns.
5.08 Title to Partnership Properties. Title to all Partnership Property
shall be taken, held and recorded in the name of the Partnership.
5.09 Transfer of Interest of General Partner.
(a) The General Partner may assign its right or delegate its
responsibility to manage the affairs of the Partnership as the General
Partner deems reasonable and necessary, in its sole discretion. The
General Partner may transfer its share of the profits and distributions
from the Partnership without receiving the consent or approval of any
Partner. The Limited Partners hereby consent and agree to the delegation
of responsibilities of the General Partner pursuant to the Project
Agreements as the General Partner deems reasonable and necessary in the
sole discretion of the General Partner.
(b) The General Partner may assign all or any portion of its
Interest to any General Partner admitted to the Partnership pursuant to
Article 7 hereof.
(c) Notwithstanding the foregoing, nothing in this Agreement shall
be deemed to prevent (and all Limited Partners hereby expressly consent
to) the Disposition by the General Partner of its rights and Interest, and
the delegation of all its obligations to the Partnership and the Partners
to one or more Persons that have, as the result of a merger,
consolidation, asset purchase, corporate reorganization or other
transaction, acquired all or substantially all of the assets of the
General Partner and have assumed the obligations of the General Partner
hereunder.
5.10 Compensation.
(a) The General Partner shall be reimbursed by the Partnership for
all pre-approved and budgeted expenses incurred for the direct benefit of
the Partnership.
(b) Any amounts due to the General Partner by the Partnership
pursuant to subsection (a) of this Section which are not paid to the
General Partner within thirty (30) days after such payment was due as the
result of the Partnership having insufficient funds to
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pay such costs and meet other anticipated operating expenses shall,
after such thirty (30) day period, bear interest until paid at the Base
Interest Rate.
ARTICLE 6
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
6.01 Limitation of Liability. No Limited Partner shall be liable to the
Partnership for the debts, liabilities, contracts or any other obligations of
the Partnership, except to the extent of its Interest in the Partnership, and as
provided herein.
6.02 Management of Business. No Limited Partner, in its capacity as a
Limited Partner, shall take part in the operation, management, or control of the
Partnership business, transact any business in the Partnership's name, or have
the power to sign documents for or otherwise bind the Partnership.
6.03 Conflicts of Interest.
(a) The Limited Partners and their Affiliates agree not to
participate in the development of or invest in, directly or indirectly as
an equity participant, any other greenfield project or venture into the
U.S. Northeast which, if developed, would offer natural gas transportation
services in competition with the Millennium Pipeline System until December
31, 1998, unless a Partner discloses such interest in a potentially
competing project and receives written consent to participate from all of
the other Limited Partners. The Limited Partners and their Affiliates
shall be free to pursue any complementary or non-competing ventures
without the participation of any other Partner. The Limited Partners
hereby agree that Columbia's service on its existing transmission system
and Columbia's market expansion project authorized pursuant to FERC Docket
No. CP96-213 will not be deemed as a violation of its covenant not to
compete. The Limited Partners further acknowledge that Westcoast (or an
Affiliate) is involved in the Maritimes and Northeast Pipeline Project,
MCN (or an Affiliate) is involved in the Portland Natural Gas Transmission
Project, and TransCanada (or an Affiliate) is involved in the
TransMaritime Gas Transmission Project, Iroquois Gas Transmission and the
Portland Natural Gas Transmission Project, as well as TransCanada
PipeLines Limited "Canadian Mainline", and the Partners agree that
participation or ownership in any of the aforementioned projects or
pipelines, or any contemplated or future expansions thereof, will not be a
violation of the covenant not to compete.
(b) From and after December 31, 1998 (or such other date as may be
determined by Unanimous Consent), each Limited Partner and its Affiliates
at any time and from time to time may engage in and possess interests in
other business ventures of any and every type and description,
independently or with others, including ones in competition with the
Partnership, with no obligation to offer to the Company, any other Limited
Partner or any of their Affiliates the right to participate therein.
Neither the Partnership nor any of the other
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Partners shall have any rights by virtue of this Agreement in and to such
independent business ventures or to the income or profits derived
therefrom.
(c) The Partnership shall not engage in any Affiliate Transaction
unless (i) the terms of each Affiliate Transaction are no less favorable
than those the Partnership could obtain from unrelated third parties and
(ii) each Affiliate Transaction involving in excess of US$10,000 in the
aggregate is approved by the General Partner.
6.04 Restrictions on Disposition of Limited Partner's Interest.
(a) Except as specifically provided in this Section 6.04, a
Disposition of a Limited Partner's Interest in the Partnership may not be
affected without the consent of a Required Interest and approval by the
General Partner. Any attempted Disposition by a Limited Partner of its
Interest or other right in the Partnership other than in accordance with
this Section 6.04 shall be, and it hereby is, declared null and void ab
initio. A Change in Control of a Limited Partner or a Limited Partner
Owner shall be considered a Disposition of a Limited Partner's Interest.
(b) Notwithstanding the provisions of Section 6.04(a) hereof, the
Interest of any Limited Partner may be Disposed of without the consent of
the Required Interest and approval of the General Partner if (i) the
Disposition is to an Affiliate and (ii) such Disposition does not violate
any other provision of this Agreement.
(c) Subject to the provisions of Sections 6.04(d), (e), (f) and (g)
hereof, (i) a Person to whom a Limited Partner's Interest in the
Partnership is transferred has the right to be admitted to the Partnership
as a substitute limited partner ("Substitute Limited Partner"), entitled
to all the rights and benefits under this Agreement of the Limited Partner
effecting such Disposition in proportion to the Interest so transferred to
such Person if (A) the General Partner and the Limited Partner making such
transfer grant the transferee the right to be so admitted, and (B) such
transfer is consented to in accordance with Section 6.04(a) hereof; and
(ii) an Affiliate under the circumstances described in Section 6.04(b)
hereof has the right to be admitted to the Partnership as a Limited
Partner with the Interest so transferred to the Affiliate.
(d) The Partnership may not recognize, for any purpose, any
purported Disposition of all or part of a Limited Partner's Interest
unless and until the other applicable provisions of this Section 6.04 have
been satisfied, and the General Partner has received, on behalf of the
Partnership, a document (i) executed by both the Limited Partner effecting
the Disposition (or, if the Disposition is on account of the liquidation
of the transferor, its representative) and the Person to which the Limited
Partner's Interest or part thereof is Disposed, (ii) including the notice
address of any Person to be admitted to the Partnership as a Substitute
Limited Partner and its agreement in writing to be bound by this Agreement
and all amendments hereto in respect of the Limited Partner's Interest or
part thereof being obtained, (iii) setting forth the Interests after the
Disposition of the Limited Partner effecting
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the Disposition and the Person to which the Limited Partner's Interest or
part thereof is Disposed (which together must total the Interest of the
Limited Partner effecting the Disposition before the Disposition), (iv)
containing a representation and warranty that the Disposition was made in
accordance with all applicable laws and regulations (including securities
laws) and, if the Person to which the Limited Partner's Interest or part
thereof is Disposed is to be admitted to the Partnership, its
representation and warranty that the representations and warranties in
Section 9.01 hereof are true and correct with respect to that Person, and
(v) the Limited Partner effecting a Disposition executes a waiver of
liability in favor of the other Limited Partners and the General Partner
in form and substance acceptable to the General Partner. Each Disposition
and, if applicable, admission complying with the provisions of this
Section 6.04(d) shall be effective as of the first day of the calendar
month immediately succeeding the month in which the General Partner
receives the notification of Disposition and the other requirements of
this Section 6.04 have been met.
(e) For the right of a Limited Partner to Dispose of a Limited
Partner's Interest or any part thereof or of any Person to be admitted to
the Partnership in connection therewith to exist or to be exercised,
either (A) the Limited Partner's Interest or part thereof subject to the
Disposition or admission must be registered under the Securities Act of
1933, as amended, and any applicable state securities laws or (B) the
General Partner on behalf of the Partnership must receive a favorable
opinion by the Partnership's legal counsel or by other legal counsel
acceptable to the General Partner to the effect that the Disposition or
admission is exempt from registration under those laws.
(f) The Limited Partner effecting a Disposition, and any Person
admitted to the Partnership in connection therewith, shall pay, or
reimburse the Partnership for, all costs incurred by the Partnership in
connection with the Disposition or admission (including, without
limitation, the legal fees incurred in connection with the legal opinions
referred to in Section 6.04(e) hereof, on or before the tenth (10th) day
after the receipt by that Person of the Partnership's invoice for the
amount due. If payment is not made by the date due, the Person owing that
amount shall pay interest on the unpaid amount from the date due until
paid, at a rate per annum equal to the Base Interest Rate.
(g) Each Limited Partner agrees that he will, upon request of the
General Partner, execute such certificates or other documents and perform
such acts as the General Partner deems appropriate after a Disposition of
Interest by that Limited Partner to preserve the limited liability status
of the Partnership under the laws of the jurisdictions in which the
Partnership is doing business or to otherwise comply with applicable laws.
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6.05 Right of First Refusal.
(a) Subject to Section 6.10 hereof, at any time following the
Effective Date, any Limited Partner desiring to Dispose of all or any part
of its Interest to any Person other than an Affiliate (the "Disposing
Partner") shall first have received a written offer from the prospective
purchaser, and, as a condition precedent to its right to Dispose of the
Interest, the Disposing Partner shall notify the General Partner and the
other Limited Partners of its intention to Dispose of all or a specified
part of its Interest. The notice shall be in writing setting forth in
detail the name of the prospective purchaser and the terms and conditions
of the proposed Disposition (the "Sale Notice") and shall offer to Dispose
of such Partner's Interest at the same price and on the same terms and
conditions ("Third Party Terms"). The Partners and their designated
Affiliates (each an "Offeree Partner"), shall have the right to purchase
the Interest on the Third Party Terms within thirty (30) days after the
delivery of the Sale Notice to the Partnership (the "Notice Period"). In
the event the Offeree Partners do not elect to purchase the Interest
offered by the Disposing Partner on the Third Party Terms, then the
Disposing Partner shall be free to Dispose of the Interest in accordance
with the terms set out in the Sale Notice, subject to the other terms of
this Agreement, including Section 6.04 hereof, which shall apply to any
transferee. If such Disposition does not occur within thirty (30) days
after termination of the Notice Period, the Disposing Partner shall be
required to again comply with all the provisions of this Section 6.05.
(b) If any Third Party Terms contemplate that all or any part of the
purchase price for the proposed Disposition of an Interest will be paid in
any form other than cash, the fair market value of the offer shall be an
amount (in U.S. dollars) determined as follows: (i) cash payable at
closing shall be valued at the amount thereof in U.S. dollars, (ii) a
security trading on a public market and for which published trading prices
are readily available shall be valued at its closing sales price (or if a
sales price is not available at the average of its closing bid and asked
prices) on the last Business Day preceding the date of the offer with
respect to such offer, and (iii) a security not described in clause (ii)
or other property, including cash payable in one or more installments,
shall be valued at its fair market value on the last Business Day
preceding the date of the offer, as determined by a majority vote of the
Partners who are not Disposing Partners, which determination shall be
binding upon the Partners for purposes of determining the fair market
value of the offer. If the non-Disposing Partners, by majority vote, are
unable or unwilling to agree on the fair market value of the offer, the
General Partner shall select an independent appraiser to determine the
fair market value of the offer, which determination shall be binding upon
the Partners for purposes of determining the fair market value of the
offer.
6.06 Assignee's Rights. An assignee of all or any part of a Limited
Partner's Interest shall be entitled to receive distributions of cash or other
property from the Partnership attributable to such Interest after the effective
date of the Disposition. The effective date of an assignment of an Interest
under the provisions of this Article 6 for the purposes of Partnership
accounting shall be the first date of the calendar month following the date on
which all conditions precedent to such assignment provided for in this Agreement
are, in the opinion of the General Partner, fulfilled. An assignee of
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all or any part of a Limited Partner's Interest who does not become a Substitute
Limited Partner in accordance with this Article 6 shall have no right to require
any information or account of the Partnership's transactions or to inspect the
Partnership's books.
6.07 No Liability of General Partner for Distributions. Notwithstanding
anything herein to the contrary, both the Partnership and the General Partner
shall be entitled to treat the assignor of an Interest as the absolute owner
thereof in all respects, and shall incur no liability for distributions of cash
made to him, until such time as all conditions and requirements of this Article
6 have been, in the opinion of the General Partner, met.
6.08 Indemnification. Each Limited Partner shall indemnify and hold
harmless the Partnership, the General Partner and every other Limited Partner
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of or arising from (a) any actual or
alleged misrepresentation or misstatement of facts or omission to state facts
made by such Limited Partner in connection with any Disposition of all or any
part of an Interest, (b) the consent to or refusal of the General Partner to
consent to the Disposition of all or any part of such Limited Partner's Interest
to the fullest extent provided by the Act or (c) the admission of or refusal to
admit an assignee or transferee of all or any part of such Limited Partner's
Interest as a Substitute Limited Partner, from and against expenses actually and
reasonably incurred by it in connection with such action, suit or proceeding for
which the Partnership or such Partner has not otherwise been reimbursed
(including attorneys' fees, judgments, fines and amounts paid in settlement).
6.09 No Dissolution Caused. The bankruptcy or withdrawal pursuant to this
Agreement of a Limited Partner shall not cause a dissolution of the Partnership.
The admission of any additional or substitute General or Limited Partner shall
not cause a dissolution of the Partnership.
6.10 PUHCA. Notwithstanding anything to the contrary contained in this
Agreement, any Disposition of a Limited Partner Interest or the acquisition of a
Limited Partner Interest by a Partner permitted in this Agreement shall not be
so permitted, without Unanimous Consent, if the effect of such Disposition or
acquisition would cause the Company or the Partnership to become (i) a
"subsidiary company" of a "holding company;" (ii) an "affiliate" of a "holding
company;" or (iii) an "affiliate" of a "subsidiary company" of a "holding
company" (as such terms are defined in PUHCA) that are not exempt from the
obligations, duties and liabilities imposed by PUHCA (collectively, a "PUHCA
Company").
6.11 Remedies. The Partnership and/or any Partner shall have the right to
enforce its rights under this Article 6 by specific performance.
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ARTICLE 7
WITHDRAWAL OF THE GENERAL PARTNER AND LIMITED PARTNERS;
ADMISSION OF ADDITIONAL GENERAL PARTNERS
7.01 Withdrawal of the General Partner. The General Partner does not have
the right to withdraw from the Partnership as the General Partner without
Unanimous Consent. The General Partner agrees that it will not voluntarily
withdraw from the Partnership as a general partner within the meaning of Section
17-602 of the Act, and any such withdrawal shall be a breach of this Agreement.
7.02 Admission of Additional General Partner. The General Partner may
cause the Partnership to admit as an additional General Partner any Affiliate of
any of the Partners. The Limited Partners hereby consent in advance to such an
admission of an additional General Partner pursuant to this Section 7.02;
provided, however, that such admission shall not in any manner reduce the
Interests of the Limited Partners. Unless otherwise agreed by the General
Partner and the Person to be admitted as an additional General Partner, the
additional General Partner so admitted shall have the same rights and
responsibilities as the General Partner under this Agreement.
7.03 Withdrawal of a Limited Partner and Effect of Withdrawal.
(a) Prior to the Commitment Voting Date and subject to subsections
7.03(b), (c) and (d) hereof, any Limited Partner may elect to withdraw as
a Partner from the Partnership by delivering notice of such Limited
Partner's intention to withdraw to the General Partner and the other
Limited Partners on or prior to the Commitment Voting Date (the
"Withdrawal Notice"). The Withdrawal Notice shall be invalid if the
Limited Partner or the Limited Partner's Affiliate that is a Member of the
General Partner does not also deliver a "Withdrawal Notice" pursuant to
the Regulations of Millennium Pipeline Management Company, L.L.C. Any
Limited Partner sending a valid Withdrawal Notice shall become a
"Withdrawing Limited Partner." From and after the Commitment Voting Date,
a Limited Partner shall have no right or power to withdraw as a Partner
from the Partnership.
(b) To the extent the withdrawal of any Partner would have the
effect of causing the Partnership to become a PUHCA Company, the
Withdrawal Notice shall not immediately affect the withdrawal of the
Limited Partner and withdrawal shall not occur until the earlier of (i)
the receipt of Unanimous Consent and (ii) two hundred seventy (270) days
from the date of the Withdrawal Notice (in such circumstances, the date on
which the earlier of the events described in clauses (i) and (ii) occurs
being hereinafter referred to as the "Withdrawal Effective Date");
provided, however, that the non-withdrawing Limited Partners shall
endeavor to accommodate the Withdrawing Limited Partner's withdrawal to
become effective prior to the expiration of the time period described in
subsection 7.03(b)(ii). If the withdrawal of the Withdrawing Limited
Partner would not have the effect of causing the Partnership to become a
PUHCA Company and the Withdrawing Limited Partner delivers to the General
Partner a legal opinion to such effect, the Withdrawal Effective Date
shall be
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the tenth (10th) day following the Withdrawing Limited Partner's delivery
of its Withdrawal Notice.
(c) Upon delivery of the Withdrawal Notice, the Withdrawing Limited
Partner shall not (i) be entitled to any distributions from the
Partnership and (ii) have any obligation to make additional Capital
Contributions to the Company except Capital Contributions relating to the
expenditure of funds by the Partnership which was approved by the Partners
prior to the delivery of the Withdrawal Notice and Scheduled Capital
Contributions which are scheduled to be made prior to the delivery of the
Withdrawal Notice. A Withdrawing Partner shall be entitled to a return of
the cash equivalent of the value of its Capital Contributions; provided,
that such return of Capital Contributions shall not begin until after the
date on which the Millennium Pipeline System is fully operational and
in-service (the "In-Service Date"). Capital Contributions shall be
returned to a Withdrawing Partner if and when distributions are made to
the non-Withdrawing Partners as provided in this Agreement and shall be
paid to the Withdrawing Partner in one or more installments in amounts
equal to the sum that the Withdrawing Partner would have received if it
had not become a Withdrawing Partner (based upon the Withdrawing Partner's
Interest at the time of becoming a Withdrawing Partner) until the
Withdrawing Partner receives a sum equal to its aggregate Capital
Contributions. Interest shall accrue on the undistributed sums to be
distributed to a Withdrawing Partner at the General Interest Rate from a
date which commences three (3) months from the In-Service Date.
(d) Except as provided in Section 7.03(b), withdrawal by a Limited
Partner may not occur without Unanimous Consent if the effect of the
withdrawal would be to cause the Partnership, the General Partner or both
to become a PUHCA Company.
(e) A Withdrawing Limited Partner shall be treated as an Abstaining
Partner for the purpose of any matter to be voted on by the Partners.
(f)Notwithstanding any other provisions of this Section 7.03, a
Withdrawing Limited Partner shall be entitled to receive a copy of each
financial report prepared for and distributed to the non-withdrawing
Limited Partners as required by Section 8.04 hereof until such time as the
Withdrawing Limited Partner's Capital Contributions have been returned to
such Withdrawing Member.
(g) The non-Withdrawing Limited Partners shall have the right but
not the obligation for a period of sixty (60) days from the date of the
Withdrawal Notice to purchase the Interest of a Withdrawing Limited
Partner for an amount equal to the aggregate Capital Contributions of the
Withdrawing Limited Partner and such Interest shall be sold free and clear
of all claims, liens and encumbrances. If more than one non-Withdrawing
Limited Partner elects to purchase the Interest of the Withdrawing Limited
Partner, such Limited Partners shall be entitled to purchase such Interest
on a pro rata basis or in such other manner as they mutually agree.
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7.04 Indemnification of Withdrawing Limited Partner. If a Withdrawing
Limited Partner is made a party to or is threatened to be made a party to or is
involved in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, arbitrative or investigative
(hereinafter an "Action"), or any appeal of such an Action during the period
between the date of the Withdrawal Notice and the Withdrawal Effective Date (the
"Withdrawal Period") or if any Action is brought (whether during or after the
Withdrawal Period) in which the Withdrawing Limited Partner is made a Party
based upon events transpiring during the Withdrawal Period, such Withdrawing
Limited Partner shall be indemnified by the Partnership. The rights granted
pursuant to this Section 7.04 shall be deemed contract rights, and no amendment,
modification or repeal of this Section 7.04 after a Withdrawal Notice is
delivered shall have the effect of limiting or denying any such rights granted
hereunder to a Withdrawing Limited Partner.
ARTICLE 8
FISCAL YEAR; BOOKS OF ACCOUNT;
BANK ACCOUNTS; AND REPORTS
8.01 Books and Records.
(a) The General Partner, at the expense of the Partnership, shall
maintain for the Partnership adequate books and records of account which
shall be maintained, except as otherwise required by law, on the accrual
basis in accordance with the terms of this Agreement and Required
Accounting Practices, consistently applied. Notwithstanding the foregoing,
the Capital Accounts for each Partner shall also be maintained in
accordance with Article 3 hereof. The Partnership shall adopt the calendar
year as its fiscal year.
(b) The Limited Partners and their agents may, at their own cost and
expense, examine, audit and obtain copies of the books, records and
accounts of the Partnership, including federal, state and local income tax
returns for each year as and when they become available, inspect its
Properties, or otherwise make reasonable inquiry as to Partnership
affairs. Any such inspections shall be conducted during the normal
business hours of the General Partner.
8.02 Bank Accounts. All funds of the Partnership shall be deposited in its
name in such bank account or accounts as may be designated by the General
Partner. The General Partner and any Persons authorized in writing by it to do
so shall be authorized to draw checks on the bank accounts of the Partnership.
Each bank in which a Partnership account is maintained shall be relieved of any
responsibility to inquire into the authority of the General Partner to deal with
such funds.
8.03 Tax Elections.
(a) The General Partner shall make the following elections for the
Partnership in the first and subsequent tax years:
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(i) To elect December 31st as the end of the fiscal year of
the Partnership; provided, however, that the fiscal year of the
Partnership may be changed to any twelve (12) month period approved
by the General Partner;
(ii) To elect to have the General Partner be the "tax matters
partner" pursuant to Section 6231(a)(7)(A) of the Code;
(iii) To deduct expenses incurred in organizing the
Partnership ratably over a sixty (60) month period as provided in
Code Section 709;
(iv) If a distribution of Partnership property as described in
Section 734 of the Code occurs or if a transfer of an Interest as
described in Section 743 of the Code occurs, on written request of
any Partner, to elect, pursuant to Section 754 of the Code, to
adjust the basis of Partnership properties; and
(v) Subject to the other provisions of this Section 8.03, all
other elections required or permitted to be made by the Partnership
under the Code shall be made by the General Partner in its sole
discretion.
(b) No election shall be made by the Partnership or any Partner for
the Partnership to be excluded from the application of any of the
provisions of Subchapter K, Chapter 1 of Subtitle A of the Code, or from
any similar provisions of any state tax laws.
(c) The Partnership is intended to be classified as a partnership
for federal and state income tax purposes. No election shall be made by
the Partnership or any Partner to classify the Partnership as an
association pursuant to regulations issued under Code Section 7701 or any
similar provision of any state tax law.
8.04 Annual and Quarterly Reports. The General Partner shall furnish to
the Limited Partners (a) within ninety (90) days after the Partnership's fiscal
year financial statements of the Partnership as at and for the period ending
December 31 of the preceding year, including a balance sheet, a statement of
income, a statement of changes in Partners' equity, and a statement of cash
flows and accompanying independent auditor's report, if any, all of which shall
be prepared in accordance with Required Accounting Practices, consistently
applied; and (b) within forty-five (45) days after the end of each calendar
quarter, a quarterly report as at and for such calendar quarter including a
balance sheet, a statement of income, a statement of Partners' equity, and a
statement of cash flows, all of which shall be prepared in accordance with
Required Accounting Practices, consistently applied. The General Partner shall
use its best efforts to furnish such other reports as reasonably requested by
the Limited Partners.
8.05 Tax Reporting Information. The General Partner shall furnish the
Limited Partners a report within one hundred twenty (120) days after the close
of the Partnership's fiscal year containing all tax reporting information
reasonably necessary for federal income tax purposes.
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8.06 Reporting Expenses. The General Partner shall be reimbursed for all
expenses incurred by the General Partner in preparing (or causing to be
prepared) reports to Limited Partners.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES OF LIMITED PARTNERS
9.01 Representations and Warranties. Each Limited Partner further
represents and warrants that the following statements are true:
(a) Such Limited Partner is a corporation duly organized or a
partnership, limited liability company or other entity duly formed,
validly existing and in good standing under the laws of the jurisdiction
of its incorporation or formation and has the corporate, partnership or
company power and authority to own its property and carry on its business
as owned and carried on at the date hereof and as contemplated hereby.
Such Limited Partner is duly licensed or qualified to do business and is
in good standing in each of the jurisdictions in which the failure to be
so licensed or qualified would have a material adverse effect on its
financial condition or its ability to perform its obligations hereunder.
Such Limited Partner has the corporate, partnership or company power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder and the execution, delivery and performance of this
Agreement has been duly authorized by all necessary corporate, partnership
or company action. This Agreement constitutes the legal, valid and binding
obligation of such Limited Partner.
(b) Neither the execution, delivery and performance of this
Agreement nor the consummation by such Limited Partner of the transactions
contemplated hereby will (i) conflict with, violate or result in a breach
of any of the terms, conditions or provisions of any law, regulation,
order, writ, injunction, decree, determination or award of any court,
governmental department, board, agency or instrumentality, domestic or
foreign, or any arbitrator, applicable to such Limited Partner, (ii)
conflict with, violate, result in a breach of or constitute a default
under any of the terms, conditions or provisions of the articles or
certificate of incorporation, bylaws, partnership agreement or operating
agreement of such Limited Partner or of any material agreement or
instrument to which such Limited Partner is a party or by which such
Limited Partner is or may be bound or to which any of its material
properties or assets is subject, (iii) conflict with, violate, result in a
breach of, constitute a default under (whether with notice or lapse of
time or both), accelerate or permit the acceleration of the performance
required by, give to others any material interests or rights to require
any consent, authorization or approval under any indenture, mortgage,
lease agreement or instrument to which such Limited Partner is a party or
by which such Limited Partner is or may be bound or (iv) result in the
creation or imposition of any lien upon any of the material properties or
assets of such Limited Partner.
(c) Any registration, declaration or filing with, or consent,
approval, license, permit or other authorization or order by, any
governmental or regulatory authority, domestic
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or foreign, that is required in connection with the valid execution,
delivery, acceptance and performance by such Limited Partner under this
Agreement or the consummation by such Limited Partner of any transaction
contemplated hereby has been completed, made or obtained on or before the
date hereof.
(d) There are no actions, suits, proceedings or investigations
pending or, to the knowledge of such Limited Partner, threatened against
or affecting such Limited Partner or any of its properties, assets or
businesses in any court or before or by any governmental department,
board, agency or instrumentality, domestic or foreign, or any arbitrator
which could, if adversely determined (or, in the case of an investigation,
could lead to any action, suit or proceeding, which if adversely
determined) could reasonably be expected to materially impair such Limited
Partner's ability to perform its obligations under this Agreement or to
have a material adverse effect on the consolidated financial condition of
such Limited Partner; and such Limited Partner has not received any
currently effective notice of any default, and such Limited Partner is not
in default, under any applicable order, writ, injunction, decree, permit,
determination or award of any court, any governmental department, board,
agency or instrumentality, domestic or foreign, or any arbitrator which
could reasonably be expected to materially impair such Limited Partner's
ability to perform its obligations under this Agreement or to have a
material adverse effect on the consolidated financial condition of such
Limited Partner.
(e) Such Limited Partner is acquiring its Interest based upon its
own investigation, and the exercise by such Limited Partner of its rights
and the performance of its obligations under this Agreement will be based
upon its own investigation, analysis and expertise. Such Limited Partner
is the sole party in interest as to its participation in the Partnership
and such Limited Partner's acquisition of its Interest is being made for
its own account for investment and, in particular, such Limited Partner
has no present agreement, understanding or arrangement to (a) subdivide
its Interest, (b) hold its Interest in trust for any other Person or (c)
Dispose of any portion thereof to any other Person except for the
Disposition of any Partner's Interest to an Affiliate of such Partner.
Such Limited Partner is a sophisticated investor possessing an expertise
in analyzing the benefits and risks associated with acquiring investments
that are similar to the acquisition of its Interest. Prior to the
acquisition of its Interest, such Limited Partner and its representatives,
if any, have had the opportunity to obtain ample information concerning
the Partnership and its proposed activities.
(f) Such Limited Partner is not, nor will the Partnership as a
result of such Limited Partner holding an interest therein be, an
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940, as amended.
(g) Exhibit B hereto identifies the Limited Partner Owner for such
Limited Partner.
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ARTICLE 10
DISSOLUTION, WINDING UP AND TERMINATION; CONTINUATION
10.01 Events of Dissolution.
(a) The Partnership shall be dissolved and its affairs wound up upon
the first to occur of the following:
(i) the entry of a decree of judicial dissolution under the
Act;
(ii) the Partners determine by Unanimous Consent that the
Partnership should be dissolved;
(iii) an Event of Withdrawal occurs with respect to a General
Partner;
(iv) the sale of all or substantially all of the Partnership's
interest in the Partnership Property and the collection and
distribution of all sales proceeds; or
(v) the occurrence of any other event which, under the Act,
causes the dissolution of a limited partnership.
(b) As used in this Agreement, an "Event of Withdrawal" shall have
the meaning ascribed to that term in the Act.
(c) Upon the occurrence of an Event of Withdrawal with respect to a
General Partner, such General Partner shall cease to be a Partner of the
Partnership. A General Partner who suffers an event that with the passage
of the specified period becomes an Event of Withdrawal under the Act shall
notify the other Partners of the event within thirty (30) days after the
date of occurrence of the Event of Withdrawal.
(d) Neither the dissolution nor bankruptcy of any Limited Partner
nor the admission or substitution of a Person as a Limited Partner in
accordance with the terms hereof shall dissolve, or be deemed to dissolve,
the Partnership or cause any interruption in or affect the continued
existence of the Partnership and its business.
10.02 Continuation of Business.
(a) Notwithstanding the provisions of Section 10.01(a) hereof, the
Partnership shall not be dissolved and shall not be required to be wound
up if:
(i) at the time an Event of Withdrawal occurs, there remains
at least one (1) General Partner and that General Partner or those
General Partners elect to
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continue the business of the Partnership by written notice to all
Partners within ninety (90) days after the Event of Withdrawal; or
(ii) within ninety (90) days after the Event of Withdrawal,
all remaining Partners agree in writing to continue the business of
the Partnership and to the appointment, effective as of the date of
the Event of Withdrawal, of one or more additional General Partners
if necessary or desired.
(b) In the event the Partnership is continued after an Event of
Withdrawal with respect to a General Partner, the Partnership shall
promptly after the Event of Withdrawal and as a condition precedent to the
further continuation of the business of the Partnership after such Event
of Withdrawal (i) pay to the withdrawing General Partner all sums due and
owing to the General Partner through the date of withdrawal and (ii)
assign by duly recordable instruments of assignment an undivided interest
in the Partnership Property, whether tangible or intangible, real or
personal, equal to the percentage interest that the withdrawing General
Partner would share in revenues from the sale of such items of Partner
ship Property if such items of Property were sold in the ordinary course
of business on the date the Event of Withdrawal occurred.
10.03 Agreement of Successor General Partner. A successor General Partner
shall, upon consent to his admission by all of the Limited Partners, be admitted
as a General Partner of the Partnership upon his agreeing to be bound by the
provisions of this Agreement to the same extent and on the same terms and
conditions as the then General Partner, if any, or, if none, as the General
Partner most recently withdrawn. Any such successor General Partner shall, as a
condition of receiving any Interest, also agree to be bound by any contracts,
leases, instruments or other documents theretofore executed and delivered on
behalf of the Partnership to the same extent and on the same terms and
conditions as specified in the preceding sentence.
10.04 Liquidation. Upon dissolution of the Partnership, the General
Partner (or, if there shall not be any remaining General Partners, a special
liquidator [herein called the "Liquidator"] appointed by a Required Interest)
shall proceed with the winding up of the Partnership and shall distribute the
assets of the Partnership in the following order of priority:
(a) To creditors, including Partners who are creditors, to the
extent permitted by law, in satisfaction of liabilities of the Partnership
(whether by payment or the making of reasonable provision for payment
thereof) other than liabilities for which reasonable provision for payment
has been made and other than liabilities to Partners for distributions;
(b) To the setting up of any reserve which such General Partner (or
the Liquidator, where applicable) shall reasonably deem advisable to
provide for any contingent or unforeseen liabilities or obligations of the
Partnership;
(c) To the Partners and former Partners in satisfaction of
liabilities for distributions; and
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(d) all remaining assets of the Partnership shall be distributed to
the Partners as follows:
(i) the liquidator may sell any or all Property, including to
Partners, and any resulting gain or loss from each sale shall be computed
and allocated to the capital accounts of the Partners;
(ii) with respect to all Property that has not been sold, the fair
market value of that Property shall be determined and the Capital Accounts
of the Partners shall be adjusted to reflect the manner in which the
unrealized income, gain, loss and deduction inherent in Property that has
not been reflected in the Capital Accounts previously would be allocated
among the Partners if there were a taxable disposition of that Property
for the fair market value of that Property on the date of distribution;
and
(iii) Property, including cash, shall be distributed to the
Partners, in proportion to their positive Capital Accounts as of the date
of such distribution, after giving effect to all contributions,
distributions and allocations for all periods.
All distributions in kind to the Partners shall be made subject to the
liability of each distributee for costs, expenses and liabilities theretofore
incurred or for which the Company has committed prior to the date of termination
and those costs, expenses and liabilities shall be allocated to the distributee
pursuant to this Section 10.04. The distribution of cash and/or Property to a
Partner in accordance with the provisions of this Section 10.04 constitutes a
complete return to the Partner of its Capital Contributions and a complete
distribution to the Partner of its Interest and all the Partnership's Property.
To the extent that a Partner returns funds to the Partnership, it has no claim
against any other Partner for those funds.
At the expiration of such period of time as the General Partner (or, where
applicable, the Liquidator) shall deem advisable, the remaining balance of any
reserve established in accordance with subsection 10.04(b) shall be distributed
in the manner set forth in subsection 10.04(d).
10.05 Distributions in Kind. In the event the General Partner (or, where
applicable, the Liquidator) determines that it is necessary or desirable upon
dissolution to make a distribution of any Property of the Partnership in kind,
such Property shall be transferred and conveyed on the basis of the fair market
value thereof to the Partners or their assignees, so as to vest in each of them
an undivided interest, as tenants-in-common, in the whole of such Property
proportionate to their positive Capital Account balances. Any Partnership
Property distributed in kind shall be subject to such liens, encumbrances and
restrictions that affect such Partnership Property on the date of distribution
and will be subject to and operated in accordance with any operating agreements
then in effect.
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ARTICLE 11
AMENDMENT OF PARTNERSHIP AGREEMENT;
MEETINGS; RECORD DATE
11.01 Amendments to be Adopted Solely by General Partner. The General
Partner (pursuant to this Section 11.01 and its power of attorney from the
Limited Partners), without the consent of any Limited 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 office of
the Partnership or the registered agent of the Partnership;
(b) the admission or removal of any Partner in accordance with this
Agreement;
(c) a change in any Limited Partner's Capital Contribution;
(d) a change that is necessary to qualify the Partnership as a
limited partnership under the laws of any state or any change that is
necessary or advisable in the opinion of the General Partner to ensure
that the Partnership will not be treated as an association taxable as a
corporation for federal income tax purposes;
(e) the cure of any ambiguity in this Agreement or to correct or
supplement any provisions hereof which may be inconsistent with any other
provision hereof;
(f) amendments to the provisions of this Agreement in response to
changes in the Code or regulations thereunder or other developments in the
law applicable to the taxation of the Partnership or its Partners, if the
General Partner concludes in good faith that such amendments are in the
overall best interests of the Partners; provided, however, that the
General Partner shall be under no obligation to make any such amendment;
and
(g) any other amendments similar to the foregoing.
11.02 Amendments to be Adopted with Consent of Limited Partners. Except as
provided in Section 11.01 hereof, all amendments to this Agreement shall be made
in accordance with the following requirements:
(a) Amendments to this Agreement may be proposed by the General
Partner or by Limited Partners holding at least 10% of the Units.
(b) Following any proposal of an amendment, the General Partner
shall, within fifteen (15) days after receipt of such proposal, mail to
all Partners a verbatim statement of
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the proposed amendment and any alternative or additional proposal by the
General Partner. The General Partner may include in such submission its
recommendation as to the proposed amendments and may (but shall not be
required to) solicit the proxies of the Limited Partners to vote on such
proposals or any other matter which may come before the meeting at which
such proposal(s) will be voted upon. Such proposed amendment may be voted
upon by the Limited Partners by written vote in lieu of a meeting or at a
meeting in person or by proxy, as specified by the General Partner in such
notice of proposed amendment. The General Partner must include in such
submission the date on which the meeting will be held to vote on such
proposed amendment or the date by which written votes must be received by
the General Partner. Such date must be not less than thirty (30) days nor
more than forty-five (45) days after the date of mailing of such
submission to the Limited Partners; provided, however, if voting is by
written consent, the General Partner may deem such proposed amendment to
be approved or rejected before the expiration of such fifteen (15)
day-period if the General Partner has received the unanimous consent of
the Limited Partners to approve or reject the proposed amendment.
(c) Except as otherwise provided in this Agreement, a Required
Interest shall be required to approve or disapprove any proposal before
the Partners. If the General Partner determines that voting on such
proposal(s) shall be by written vote in lieu of a meeting, and the written
vote of a Limited Partner in the form submitted to the Limited Partner by
the General Partner is not actually received by the General Partner on or
before the date such written vote is due, such Limited Partner shall be
deemed to have voted on the proposal(s) in accordance with the
recommendation(s), if any, of the General Partner. If no recommendation of
the General Partner was submitted to the Limited Partners, the failure to
timely vote in the form submitted to a Limited Partner shall constitute a
vote against all proposals.
11.03 Consent of General Partner Required. Notwithstanding the foregoing
provisions of this Article 11, the consent of the General Partner shall be
required for any amendment which would:
(a) change the General Partner's sharing of costs and revenues or
any item of income, gain, loss, deduction or credit;
(b) increase or diminish the General Partner's duties under this
Agreement or the General Partner's liabilities, whether fixed or
contingent;
(c) modify the provisions of this Agreement relating to removal or
replacement of the General Partner;
(d) have or is reasonably expected to have a materially adverse
effect on the General Partner; or
(e) amend this Section 11.03.
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11.04 Meetings. Meetings of the Partners may be called by the General
Partner or by Limited Partners owning at least 10% of the Units. Any call for a
meeting by Limited Partners shall be submitted in writing to the General Partner
and such call shall contain a reasonably detailed description of matters to be
brought before the Partners at such meeting. Within twenty (20) days after
receipt of such a call from Limited Partners, the General Partner shall mail a
notice of the meeting to the Limited Partners, which notice shall contain a
reasonably detailed description of matters to be brought before the Partners at
such meeting. The General Partner may (but shall not be required to) solicit the
proxies of Limited Partners in connection with any meetings. A meeting shall be
held at a reasonable time and convenient place on a date not less than fifteen
(15) nor more than sixty (60) days after the mailing of notice of the meeting.
The General Partner shall select the time and place of the meeting. For purposes
of this Section 11.04, any location in the continental United States shall be
deemed a convenient meeting place. Limited Partners may vote either in person or
by proxy at any meeting. Action at any such meeting shall be limited to those
matters specified in the notice of meeting. The presence, in person or by proxy,
of a Required Interest shall constitute a quorum, and, except as otherwise
provided in this Agreement, the affirmative vote, in person or by proxy, of a
Required Interest shall be required to approve any action duly proposed at such
meeting. The presence of a Limited Partner at any meeting, whether in person or
by proxy, shall constitute a waiver of any irregularity in the notice of meeting
or lack of notice, except where the Limited Partner attends a meeting for the
sole and expressed purpose of objecting to the transaction of any business on
the ground that the meeting is not lawfully called or convened. Any such
objection shall be submitted in writing to the General Partner at such meeting
and shall specifically state the grounds of objection.
11.05 Action Without a Meeting. Any action that may be taken at a meeting
of the Limited Partners may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing setting forth the action so
taken shall be signed and dated by the General Partner (if its consent to such
action is required) and each of the Limited Partners. The notice and voting
procedures of Section 11.02(b) hereof relating to submission of amendment
proposals and voting thereon by written consent in lieu of a meeting shall also
apply to the submission of and voting on proposals pursuant to this Section
11.05. No written consent shall be effective to take the action that is the
subject to the consent unless, within sixty (60) days after the date of the
earliest dated consent delivered to the General Partner in the manner required
by this Section 11.05, a consent or consents signed and dated by the General
Partner (if required) and each of the Limited Partners are delivered to the
General Partner by delivery to its registered office or its principal place of
business. A telegram, telex, cablegram or similar transmission by a Partner
shall be regarded as signed by the Partner for purposes of this Section.
11.06 Record Date. For the purpose of determining Partners entitled to
notice of or to vote at any meeting of Partners or any reconvening thereof or by
consent, or the Partners and their assignees entitled to receive payment of any
distribution, or in order to make a determination of Partners and their
assignees for any other proper purpose, the General Partner may fix in advance a
date as the record date for any such determination of Partners and assignees,
such date in any case to be not more than sixty (60) days (and in case of a
meeting of Partners or solicitation of consents not less than ten (10) days)
prior to the date on which the particular action requiring such
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determination of Partners and assignees is to be taken or the first solicitation
of consents in writing. If no record date is fixed for the determination of
Partners entitled to notice of or to vote at a meeting of Partners or by
consent, or of the Partners and assignees entitled to receive payment of a
distribution, the date on which the notice of the meeting is mailed, the date
of the first solicitation of consents in writing or the date on which the
General Partner declares such distribution, as the case may be, shall be the
record date for such determination of Partners or assignees.
ARTICLE 12
DISPUTE RESOLUTION
12.01 Disputes. This Article 12 shall apply to any dispute arising under
or related to this Agreement (whether arising in contract, tort or otherwise,
and whether arising at law or in equity), including (a) any dispute regarding
the construction, interpretation, performance, validity or enforceability of any
provision of this Agreement or whether any Person is in compliance with, or in
breach of, any provisions of this Agreement and (b) the applicability of this
Article 12 to a particular dispute (collectively, a "Dispute").
12.02 Negotiations to Resolve Disputes. The Partners shall endeavor to
resolve any Dispute in a prompt and equitable manner. In the event a Dispute
arises which the Partners are unable to resolve, the Partners shall, prior to
the initiation of any claim or cause of action, each appoint an officer or
representative that has settlement authority to meet (in person or by telephone
conference) in an effort to resolve the Dispute equitably, in good faith and as
quickly as reasonably possible. No settlement shall be binding until reduced to
writing and signed by the Partners. The responsibility of these representatives
shall be to resolve the matter or propose a method of resolving the matter, if
possible. If the Dispute is not settled or resolved by the earlier of (a) sixty
(60) days following the first meeting of the representatives and (b) at such
time as the representatives unanimously agree that a resolution of the Dispute
is not possible, then the Partners may proceed as set forth in Section 12.03
hereof.
12.03 Arbitration. Subject to the provisions of Section 12.02 hereof, any
Dispute shall be settled by binding arbitration administered by the American
Arbitration Association (the "AAA") under its Commercial Arbitration Rules, and
judgment on the award rendered by the arbitrator(s) may be entered in any court
of competent jurisdiction. All Partners further agree to waive the
fifty-thousand dollar ($50,000) maximum claim amount applicable to the Expedited
Procedures contained in the Commercial Arbitration Rules, and agree to submit to
such Expedited Procedures, along with the additional discovery-related rules
outlined below, in all disputes subject to arbitration hereunder. In no event
may the initiation of arbitration by written submission to the AAA be given more
than one (1) year after the date the Dispute was first asserted in writing to
the other Partner in accordance with Section 12.02 hereof. The Partners shall
adhere to the following schedule for exchange of information upon commencement
of arbitration under the Commercial Arbitration Rules:
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(a) Within seven (7) days of the service by the responding Partner
of an answering statement upon the complaining Partner, the complaining
Partner shall serve upon the responding Partner a copy of each document in
possession of the complaining Partner and a list of any witnesses,
excluding those documents and witnesses to be used for cross-examination
or rebuttal, that the complaining Partner intends to rely upon at the
arbitration;
(b) Within thirty (30) days of the service by the responding Partner
of an answering statement upon the complaining Partner, the responding
Partner shall provide a list of any witnesses it intends to call at
arbitration and a list of all documents it intends to rely on at
arbitration, excluding those documents it intends to rely on at
arbitration, excluding those documents and witnesses to be used for
cross-examination or rebuttal;
(c) Any Partner may serve written requests for information and
documents (the "Information Request") upon another Partner within thirty
(30) days of the filing of the answering statement, subject to the
following limitations:
(i) Each Partner may serve not more than one (1) set of
interrogatories limited to ten (10) items;
(ii) Each Partner may depose the other Partner's expert
witnesses, if any, who will be called to testify at the hearing,
plus four (4) fact witnesses without regard to whether they will be
called to testify. Each Partner will be entitled to a total of not
more than twenty-four (24) hours of depositions of the other
Partner's witnesses, including, but not limited to, the witnesses
referred to herein. All depositions to be taken by a Partner are to
be scheduled and completed within one hundred twenty (120) days of
the filing of the answering statement.
(d) Information Requests, except as otherwise provided herein, shall
be satisfied or objected to within twenty (20) days from the date of
service of the Information Request;
(e) Any response to objections to an Information Request shall be
served within ten (10) days of receipt of the objection;
(f) Upon the written request of a Partner whose information request
is unsatisfied, the matter will be considered by the arbitrator(s) at a
preliminary hearing held in accordance with the Commercial Arbitration
Rules.
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ARTICLE 13
GENERAL PROVISIONS
13.01 Payments and Offset. Whenever the Partnership is to pay any sum to
any Partner, any amounts that Partner owes the Partnership may be deducted from
that sum before payment. If any payment due hereunder, including any Capital
Contribution, is not made when due, it shall accrue interest at the Base
Interest Rate.
13.02 Notices. Except as expressly set forth to the contrary in this
Agreement, all notices, requests, or consents provided for or permitted to be
given under this Agreement must be in writing and must be given either by
depositing that writing in the United States mail, addressed to the recipient,
postage paid, and registered or certified with return receipt requested or by
delivering that writing to the recipient in person, by courier or by facsimile
transmission; a notice request, or consent given under these Regulations is
effective on receipt by the Person who is to receive it. Whenever any notice is
required to be given by law or this Agreement, a written waiver thereof, signed
by the Person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
If to the General Partner
or the Partnership: Millennium Pipeline Management Company,
L.L.C.
00000 Xxxx Xxxxx Xxxxxxx
X.X. Xxx 00000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxx X. Xxxxxxxx, Chairman
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Columbia: Columbia Gas Transmission Corporation
00000 Xxxx Xxxxx Xxxxxxx
X.X. Xxx 00000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to MCN: MCNIC Millennium Company
City Place I
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xx. Xxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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54
If to TransCanada: TransCanada PipeLine USA Ltd.
TransCanada PipeLines Tower
000 0xx Xxxxxx, XX
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Attn: Mr. Xxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Westcoast: Westcoast Energy (U.S.) Inc.
00 Xxxx Xxxxx Xxxxx
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Attn: Xx. Xxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
13.03 Ratification. The Limited Partners hereby ratify, approve, adopt and
confirm as an act of the Partnership, all lawful acts taken by and on behalf of
the Partnership prior to the date hereof (a) by the General Partner and (b)
pursuant to the MOU by the management committee or its members or chairman
established under the MOU, whether such action was taken in the name of the
Partnership or otherwise, including the filing of the documents pursuant to
which application was made on behalf of the Partnership for the regulatory
authorizations from the FERC for authority to construct, own, operate and
maintain the Millennium Pipeline System and for the authority to provide natural
gas transmission services using the Millennium Pipeline System.
13.04 Execution and Counterparts. This Agreement may be executed in any
number of counterparts with the same effect as if all parties hereunder had
signed the same document. All counterparts shall be construed together and shall
constitute one agreement.
13.05 Waiver of Partition. Each Partner hereby irrevocably waives during
the term of the Partnership any right that it or he may have to maintain any
action for partition with respect to any Partnership Property.
13.06 Governing Law, Successors, Severability. The internal affairs of the
Partnership and the relative rights of the parties to this Agreement shall be
governed by the laws of the State of Delaware, as such laws are applied by
Delaware courts to agreements entered into and to be performed in Delaware by
and between residents of Delaware, and shall, subject to the restrictions on
transferability set forth herein, bind and inure to the benefit of the legal
representatives, successors and assigns of the parties hereto. All other rights
and remedies shall be governed by the laws of the State of Delaware. If any
provision of this Agreement shall be held to be invalid, the remainder of this
Agreement shall not be affected thereby.
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13.07 Entire Agreement; Acknowledgment.
(a) This Agreement constitutes the entire agreement of the Partners
relating to the Partnership. This Agreement supersedes any prior agreement
or understandings among them, oral or written, including the MOU.
(b) The Limited Partners and the General Partner expressly
acknowledge that, without limiting the effect of subsection 13.07(a), the
obligations of each Limited Partner shall be limited to those expressly
contained in this Agreement, the Regulations of Millennium Pipeline
Management Company, L.L.C. and any Project Agreements to which such
Limited Partner is a party, and there are no additional express or implied
obligations or understandings of the said Limited Partner or any of its
Affiliates in respect of the Millennium Pipeline System, fiduciary or
otherwise.
13.08 No Waiver. The failure of any Partner to seek redress for violation,
or to insist on strict performance, of any covenant or condition of this
Agreement shall not prevent a subsequent act which would have constituted a
violation from having the effect of an original violation.
13.09 Legends. If certificates are issued evidencing a Limited Partner's
Interest in the Partnership, each such certificate shall bear such legends as
may be required by applicable federal and state laws, or as may be deemed
necessary or appropriate by the General Partner to reflect restrictions upon
transfer contemplated herein.
13.10 Presumptions. Any act or omission performed or omitted by the
General Partner or an Affiliate of the General Partner on advice of legal
counsel or an independent consultant who has been employed or retained by the
Partnership shall be presumed to have been performed or omitted in good faith.
The termination of any action, suit or proceeding by judgment, order or
settlement shall not, of itself, create a presumption that any such party did
not act in good faith and in the best interests of the Partnership.
13.11 Time of Essence. Time shall be of the essence in the performance of
this Agreement.
[SIGNATURE PAGES FOLLOW]
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56
IN WITNESS WHEREOF, this Agreement is executed as of the date first set
forth above.
GENERAL PARTNER:
Millennium Pipeline Management Company, L.L.C.,
a Delaware limited liability company
By:__________________________________________
Printed Name:________________________________
Title:_______________________________________
[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]
THIS IS A SIGNATURE PAGE TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
MILLENNIUM PIPELINE COMPANY, L.P.
57
IN WITNESS WHEREOF, this Agreement is executed as of the date first set
forth above.
LIMITED PARTNERS:
Columbia Gas Transmission Corporation,
a Delaware corporation
By:__________________________________________
Printed Name:________________________________
Title:_______________________________________
[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]
THIS IS A SIGNATURE PAGE TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
MILLENNIUM PIPELINE COMPANY, L.P.
58
IN WITNESS WHEREOF, this Agreement is executed as of the date first set
forth above.
MCNIC Millennium Company,
a Michigan corporation
By:__________________________________________
Printed Name:________________________________
Title:_______________________________________
[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]
THIS IS A SIGNATURE PAGE TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
MILLENNIUM PIPELINE COMPANY, L.P.
59
IN WITNESS WHEREOF, this Agreement is executed as of the date first set
forth above.
TransCanada PipeLine USA Ltd.,
a Nevada corporation
By:__________________________________________
Printed Name:________________________________
Title:_______________________________________
By:__________________________________________
Printed Name:________________________________
Title:_______________________________________
[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]
THIS IS A SIGNATURE PAGE TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
MILLENNIUM PIPELINE COMPANY, L.P.
60
IN WITNESS WHEREOF, this Agreement is executed as of the date first set
forth above.
Westcoast Energy (U.S.) Inc.,
a Delaware corporation
By:__________________________________________
Printed Name:________________________________
Title:_______________________________________
By:__________________________________________
Printed Name:________________________________
Title:_______________________________________
THIS IS A SIGNATURE PAGE TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
MILLENNIUM PIPELINE COMPANY, L.P.
61
EXHIBIT A
INITIAL PARTNERS, UNITS, PARTNERSHIP INTEREST AND INITIAL CAPITAL CONTRIBUTION
LIMITED PARTNERS
LIMITED LIMITED
LIMITED PARTNER PARTNERSHIP INITIAL CAPITAL
PARTNER UNITS INTEREST CONTRIBUTION
------- ----- -------- ------------
Columbia 4702.5 47.5% US$6,748,969
MCN 1039.5 10.5% US$1,491,877
TransCanada 2079 21.0% US$2,983,755
Westcoast 2079 21.0% US$2,983,755
------ ------
9900 100.0%*
GENERAL PARTNER
GENERAL GENERAL
GENERAL PARTNER PARTNERSHIP INITIAL CAPITAL
PARTNER UNITS INTEREST CONTRIBUTION
------- ----- -------- ------------
Millennium Pipeline 100 100.0%** US$143,519
Management Company, L.L.C.
----------
* The Limited Partners, collectively, own 99.0% of the Partnership
Interests.
** As owner of 100% of the General Partnership Interest, the General Partner
owns 1.0% of the Partnership Interests.
62
EXHIBIT B
LIMITED PARTNER OWNERS
LIMITED PARTNER LIMITED PARTNER OWNER(S) OWNERSHIP PERCENTAGE
--------------- ------------------------ --------------------
Columbia Columbia Energy Group, 100%
a Delaware corporation
MCN MCNIC Pipeline and Processing Company, 100%
a Michigan corporation
TransCanada TransCanada Pipelines Limited, 100%
a Canada corporation
Westcoast Westcoast Energy, Inc., 100%
a Delaware corporation
