THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF BJ SERVICES
EQUIPMENT II, L.P. (as the same may be amended, amended and restated,
supplemented or otherwise modified from time to time, this "Partnership
Agreement"), is dated December 15, 1999 but effective as of the Commencement
Date, by and among the general partner, BJ Services Company, U.S.A., a Delaware
corporation ("BJ USA"), and the limited partners, Xxxxxx X. Xxxxxxxx, III, as
Organizational Limited Partner, BJ SERVICES II, L.L.C., a Delaware limited
liability company, as Affiliated Partner, and First Security Trust Company of
Nevada, a Nevada banking corporation, not in its individual capacity, but solely
as Nonaffiliated Partner Trustee of BJ Services Trust No. 1999-1 ("Nonaffiliated
Partner"). In consideration of the covenants, conditions and agreements
contained herein, the parties agree as follows:
SECTION 1. DEFINITIONS.
Capitalized terms used herein and not defined herein have the meanings
assigned to them in Appendix A.
SECTION 2. ORGANIZATIONAL MATTERS.
2.1. FORMATION, CONTINUATION AND CONVERSION. General Partner and
Organizational Limited Partner have previously formed Partnership as a limited
partnership pursuant to the provisions of the Delaware Act and hereby amend and
restate the original Agreement of Limited Partnership dated as of December 10,
1999 of Partnership in its entirety. This amendment and restatement shall become
effective on the Commencement Date. This Partnership Agreement shall govern all
the rights, duties (including fiduciary duties), liabilities and obligations of
the Partners and the administration, dissolution and termination of Partnership
unless otherwise expressly provided to the contrary by the Delaware Act. The
Partnership Interest of each Partner shall be personal property for all
purposes, and a Partner has no interest in specific Partnership property.
2.2. NAME. The name of Partnership shall be "BJ SERVICES EQUIPMENT II,
L.P." Partnership's business may be conducted under such name or any other name
or names deemed necessary or appropriate by General Partner, including the name
of General Partner. The words "Limited Partnership," "L.P.," "Ltd.," or similar
words or letters shall be included in Partnership's name where necessary for the
purposes of complying with the laws of any jurisdiction that so requires.
2.3. CERTIFICATES AND FILINGS.(a) General Partner has executed and
filed a Certificate of Limited Partnership for Partnership in compliance with
the Delaware Act with the Office of the Secretary of State of the State of
Delaware and shall execute and deliver (and file, record and publish in each
jurisdiction where such filing, recordation or publication is appropriate) all
certificates and other instruments, and perform such acts consistent with the
terms of this Partnership Agreement, as may be necessary to comply with the
requirements of law for the formation and qualification of Partnership as a
limited partnership in each jurisdiction in which Partnership shall conduct
business.
(b) Each Limited Partner hereby names, constitutes and appoints
General Partner and any successor General Partner (hereinafter referred to as
an "Attorney-in-Fact"), with full power of substitution as its true and
lawful agent and attorney-in-fact, with full power and authority in its name,
place and stead, to execute, swear to, acknowledge, deliver, file, record and
publish all certificates (including, without limitation, assumed name
certificates) and other instruments and all amendments and renewals thereof
that such Attorney-in-Fact deems appropriate or necessary to comply with the
requirements of law for the formation and qualification of Partnership as a
limited partnership in each jurisdiction in which Partnership shall conduct
business. The execution by said Attorney-in-Fact of any power conferred
hereby shall be conclusive evidence of the determination by said
Attorney-in-Fact that the exercise of such power is requisite, necessary,
appropriate or advisable for all purposes of the power of attorney. Each
Partner hereby ratifies and confirms anything lawfully done or caused to be
done by said Attorney-in-Fact in the exercise of the powers conferred in this
Section 2.3 (b) and agrees to be bound by any representations made by said
Attorney-in-Fact acting in good faith and pursuant to the foregoing power of
attorney. The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive and
not be affected by the subsequent dissolution or termination of any Partner.
2.4. TERM. Partnership commenced on December 10, 1999, upon filing of
the Certificate of Limited Partnership with the Secretary of State of the State
of Delaware in accordance with the Delaware Act and shall continue until the
close of Partnership business on December 10, 2019, or until the earlier
dissolution of the Partnership in accordance with the provisions of Section 11.
The existence of Partnership as a separate legal entity for purposes of the
Delaware Act shall continue until the cancellation of the Certificate of Limited
Partnership as provided in the Delaware Act.
2.5. REGISTERED OFFICE AND AGENT: PLACE OF BUSINESS. Unless and until
changed by General Partner, the registered office of Partnership in the State of
Delaware shall be located at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, and
the registered agent for service of process on Partnership in the State of
Delaware at such registered office shall be Corporation Trust Company. The
principal place of business of Partnership shall be located at the offices of
General Partner at the address set forth in Section 13.2, or at such other place
as shall be selected from time to time by General Partner upon not less than 10
days' prior Notice to the other Partners. Partnership may maintain such other
offices at such other places as are reasonably necessary for the purposes of
Partnership.
2.6. OWNERSHIP OF PROPERTY. Legal title to all Property shall be
acquired, held and conveyed in the name of Partnership.
SECTION 3. PURPOSE.
3.1. PURPOSE. The purpose and business of Partnership shall be to
acquire the Units and the Other Equipment, to enter into and perform the Basic
Documents to which Partnership is or is to become a party, to cause the Units
and the Other Equipment to be used and maintained as provided in the Basic
Documents and to do those things that are necessary or appropriate to the
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foregoing. Except as agreed to in an amendment or supplement to this Partnership
Agreement, the Partnership shall not (i) contract for, create, incur or assume
any indebtedness (except for trade payables and fees and expenses of
professionals and agents incurred in the ordinary course of business) or
(ii) enter into any contract, agreement or instrument or conduct any other
business or activity except pursuant to and in accordance with, or as required
to effect the purposes and intent of, the Basic Documents.
3.2. POWERS. Subject to applicable law and any restrictions set forth
in this Partnership Agreement, Partnership shall be empowered to do any and all
acts and things necessary or appropriate for the furtherance and accomplishment
of the purposes described in Section 3.1 and for the protection and benefit of
Partnership.
SECTION 4. CAPITAL CONTRIBUTIONS.
4.1. ORGANIZATIONAL CONTRIBUTIONS. In connection with the formation
of Partnership under the Delaware Act, General Partner made an initial
capital contribution to Partnership in the amount of $10.00, for an interest
in the Partnership and has been admitted as General Partner of the
Partnership, and Organizational Limited Partner made an initial capital
contribution to Partnership in the amount of $990.00 for an interest in
Partnership and has been admitted as Organizational Limited Partner of
Partnership. As of the Commencement Date, the interest of Organizational
Limited Partner shall be redeemed; the initial capital contributions of
General Partner and the Organizational Limited Partner shall thereupon be
refunded; and Organizational Limited Partner shall cease to be a limited
partner of Partnership. Any interest or other profit that may have resulted
from the investment or other use of such initial capital contributions shall
be allocated and distributed 99% to Organizational Limited Partner, and the
balance thereof shall be allocated and distributed to General Partner.
4.2. CONTRIBUTION OF INITIAL UNITS AND OTHER EQUIPMENT. Prior to the
Commencement Date, General Partner has contributed the Initial Units, with a
value of approximately US$120,000,000 and Other Equipment, similar to the
Initial Units, with a value of $1,580,000, to Partnership as an additional
capital contribution, in the proportion of 1% with respect to its general
partner interest in the Partnership and 99% in exchange for a limited partner
interest in Partnership, and such limited partner interest will be transferred
by General Partner to Affiliated Partner on the Commencement Date.
4.3. CONTRIBUTION OF NONAFFILIATED PARTNER. On the Commencement Date,
Nonaffiliated Partner will contribute $120,000,000 in cash to Partnership. In
addition, on the Commencement Date, Nonaffiliated Partner will contribute, in
cash, the amount necessary to pay all Transaction Costs (estimated as of the
Commencement Date to be $2,472,000 and a Partnership Interest shall be issued to
Nonaffiliated Partner by the Partnership).
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4.4. ADDITIONAL CAPITAL CONTRIBUTIONS. (a) Except as provided in
Sections 4.1, 4.2, 4.3, clauses (b), (c) and (d) of this Section 4.4, clause (c)
of Section 6.1, clause (e) of Section 7.5 and Section 9.1, no Partner shall be
obligated to contribute or advance any cash or other property to Partnership,
and Partnership shall not require additional capital contributions or advances
from any Partner.
(b) Any capital expenditures related to, or improvements,
replacements, substitutions or enhancements of, the Units as required under or
permitted by the provisions of the Indenture or the other Basic Documents, will
be funded by a Capital Contribution (in cash or in kind) by General Partner and
Affiliated Partner in the proportion of 1% and 99%, respectively. In addition,
General Partner and Affiliated Partner will contribute, in the same ratio, cash
necessary to pay any Expenses. "Expenses" means (i) the Initial Operating
Payment and the Operating Payments paid by Partnership pursuant to Section
3.2(a) of the O&M Agreement, (ii) any Reimbursed Expenses paid by Partnership
pursuant to Section 3.2(b) of the O&M Agreement, (iii) the expenses of the
Trustees payable by Partnership, (iv) the expenses payable by Partnership
pursuant to the Participation Agreement and the Indenture and (v) in the event
that any Priority Distribution, Supplemental Priority Distribution or Special
Distribution is not made on the scheduled distribution date, an amount intended
to provide an equivalent benefit to Nonaffiliated Partner, which shall be deemed
to be the amount of such undistributed Priority Distribution, Supplemental
Priority Distribution or Special Distribution, as the case may be, multiplied by
the Late Rate under the Indenture from the scheduled distribution date to the
date such Priority Distribution, Supplemental Priority Distribution or Special
Distribution is distributed.
(c) General Partner and Affiliated Partner shall contribute to the
capital of Partnership, in the proportion of 1% and 99%, respectively, cash in
the amounts equal to the Supplemental Contributions, if any, determined as set
forth in this Section 4.4(c). "Supplemental Contribution" means, without
duplication, the following amounts: (i) with respect to any Priority
Distribution specified in Section 6.1(b)(i), to the extent that Available Cash
on any Distribution Date is not then sufficient to make the Priority
Distribution for such Distribution Date, an amount sufficient to permit such
Priority Distribution to be made on such Distribution Date; (ii) with respect to
any Supplemental Priority Distribution specified in Section 6.1(c), to the
extent that Available Cash on the date of such Supplemental Priority
Distribution is not then sufficient to make such Supplemental Priority
Distribution, an amount sufficient to permit such Supplemental Priority
Distribution to be made on the applicable date; and (iii) with respect to any
Special Distribution specified in Section 6.1(d), to the extent that Available
Cash on the date of such Special Distribution is not then sufficient to make
such Special Distribution, an amount sufficient to permit such Special
Distribution to be made on the applicable date. Such Supplemental Contribution
shall be made by General Partner and Affiliated Partner (A) on or prior to the
applicable Distribution Date in the case of clause (i) of this Section 4.4(c),
(B) on or prior to the date of the Supplemental Priority Distribution in the
case of clause (ii) of this Section 4.4(c), (C) and on or prior to the date of
the Special Distribution in the case of clause (iii) of this Section 4.4(c).
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(d) If required to effect a substitution or replacement of one or more
Units in accordance with Section 5.11 or 5.12(i) of the Participation Agreement,
respectively, and Section 5.1(b) of the Indenture, General Partner shall
contribute to the Partnership, either (i) a Replacement Unit or Replacement
Units that meet the requirements set forth in Section 5.11 or 5.12(i), as the
case may be, of the Participation Agreement or (ii) cash in an amount sufficient
to permit Operator, on behalf of Partnership, to acquire a Replacement Unit or
Replacement Units that meet the requirements set forth in Section 5.11 or
5.12(i), as the case may be, of the Participation Agreement, in each case, as
evidenced by a Partnership Agreement Supplement with respect to such Replacement
Unit or Replacement Units.
4.5. NO WITHDRAWAL; NO INTEREST. No Partner shall be entitled to
withdraw any part of its Capital Contributions or its Capital Account or to
receive any distribution from Partnership, except as specifically provided in
this Partnership Agreement. Partnership shall not be obligated to pay interest
to the Partners on their Capital Contributions to Partnership or on balances in
their Capital Accounts.
SECTION 5. CAPITAL ACCOUNTS; ALLOCATIONS.
5.1. CAPITAL ACCOUNTS. (a) Partnership shall maintain for each Partner
a separate Capital Account in accordance with the rules of Treasury Regulation
Section 1.704-1(b)(2)(iv). Such Capital Account shall (i) be increased by
(A) the cash amount or Net Agreed Value of all Capital Contributions made to
Partnership by such Partner pursuant to this Partnership Agreement and (B) all
items of Partnership income and gain (including, without limitation, income and
gain exempt from tax) computed in accordance with Section 5.1(b) and allocated
to such Partner pursuant to Section 5.2, (ii) be decreased by (A) the Net Agreed
Value of all distributions of Property made to such Partner pursuant to this
Partnership Agreement and (B) all items of Partnership deduction and loss
computed in accordance with Section 5.1(b) and allocated to such Partner
pursuant to Section 5.2.
(b) For purposes of computing the amount of any item of income, gain,
loss, deduction, realization or basis to be reflected in the Partners'
respective Capital Accounts, the determination, recognition and classification
of each such item shall be the same as its determination, recognition and
classification for federal income tax purposes (including, without limitation,
any method of depreciation, cost recovery or amortization used for that
purpose); PROVIDED that:
(i) Except as otherwise provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss
and deduction shall be made without regard to any election under Section
754 of the Code which may be made by Partnership and, as to those items
described in Section 705(a)(1)(B) or 705(a)(2)(B) of the Code, without
regard to the fact that such items are not includable in gross income or
are neither currently deductible nor capitalized for federal income tax
purposes.
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(ii) Any income, gain or loss attributable to the taxable
disposition of any Property shall be determined as if the adjusted basis
of such Property as of such date of disposition were equal in amount to
Partnership's Carrying Value with respect to such Property as of such
date.
(iii) In accordance with the requirements of Section 704(b) of
the Code, any deductions for depreciation, cost recovery or amortization
attributable to any Contributed Property shall be determined as if the
adjusted basis of such property on the date it was acquired by
Partnership were equal to the Agreed Value of such property. Upon an
adjustment pursuant to Section 5.1(d) to the Carrying Value of any
Property subject to depreciation, cost recovery or amortization, any
further deductions for such depreciation, cost recovery or amortization
attributable to such Property shall be determined (A) as if the adjusted
basis of such Property were equal to the Carrying Value of such Property
immediately following such adjustment and (B) using a rate of
depreciation, cost recovery or amortization derived from the same method
and useful life (or, if applicable, remaining useful life) as is applied
for federal income tax purposes; PROVIDED, HOWEVER, that, if such
Property has a zero adjusted basis for federal income tax purposes,
depreciation, cost recovery and amortization deductions shall be
determined using any reasonable method that General Partner may adopt.
(c) A Partner Transferee of a Partnership Interest shall succeed to a
pro rata portion of the Capital Account of the Transferor Partner relating to
the Partnership Interest so transferred; PROVIDED, HOWEVER, that, if the
Transfer causes a termination of Partnership under Section 708(b)(1)(B) of the
Code, the Property shall be deemed to have been contributed to a new partnership
and interests in such new partnership distributed in liquidation of Partnership
to the Partners (including any Partner Transferee of a Partnership Interest that
is a party to the Transfer causing such termination) pursuant to Sections 11.4
and 11.5. In such event, the Carrying Values of the Property shall be adjusted
immediately prior to such deemed contribution pursuant to Section 5.1(d), and
such Carrying Values shall then constitute the Agreed Values of such Property
upon such deemed contribution to the new partnership. The Capital Accounts of
such new partnership shall be maintained in accordance with the principles of
this Section 5.1.
(d) Immediately prior to any actual or deemed distribution to a
Partner of any Property under Section 11.5, in accordance with Treasury
Regulation Section 1.704-1(b)(2)(iv)(f), the Capital Accounts of each Partner
and the Carrying Value of the distributed Property shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss attributable to such
distributed Property, as if such Unrealized Gain or Unrealized Loss had been
recognized in a sale of such distributed Property immediately prior to such
distribution for an amount equal to its fair market value, and had been
allocated to the Partners, at such time, pursuant to Section 5.2.
(e) In the event that Partnership's items of income, gain, loss, or
deduction are adjusted by any taxing authority by reason of a transaction
between Partnership and a member of a group of
6
organizations under common ownership or control (of which Partnership is also
a member), including, but not limited to, adjustments pursuant to Section 482
of the Code or any similar provisions under state, local or foreign law (any
such adjustment referred to herein as a "Tax Adjustment) and such adjustment
results in a deemed Capital Contribution to Partnership by any Partner or a
deemed distribution by Partnership to any Partner, (i) the Capital Account of
any Partner that is deemed to make such Capital Contribution shall be
increased by the amount of such Capital Contribution, and (ii) the Capital
Account of any Partner that is deemed to receive such a deemed distribution
shall be reduced by the amount of such distribution. In general, the
adjustments to Capital Accounts pursuant to this Section 5.1(e) are intended
to cause, after taking into account the adjustments to Capital Accounts
pursuant to this Section 5.1(e), each Partner's balance in its Capital
Account, to the extent possible, to be equal to the balance such Capital
Account would have had if no Tax Adjustment had occurred.
5.2. ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES. For purposes of
maintaining the Capital Accounts and in determining the rights of the Partners
among themselves, items of Partnership income, gain, loss, deduction, amount
realized and basis (computed in accordance with Section 5.1(b)) shall be
allocated among the Partners in each Taxable Period as provided in clauses (a)
through (d) of this Section 5.2.
(a) NET INCOME. After giving effect to the allocations set forth in
Sections 5.2(c) and 5.2(d), Net Income for each Taxable Period and all items of
Partnership income, gain, loss and deduction taken into account in computing Net
Income for such Taxable Period shall be allocated as follows:
(i) First, Net Income from the Units shall be allocated 100% to
Nonaffiliated Partner until the aggregate Net Income allocated to
Nonaffiliated Partner pursuant to this Section 5.2(a)(i) for the current
Taxable Period and all previous Taxable Periods is equal to the
cumulative amount of cash distributed to Nonaffiliated Partner pursuant
to Section 6.1(b)(i) during the current and all previous Taxable Periods;
(ii) Remaining Net Income from the Units shall be allocated 1%
to General Partner and 99% to Affiliated Partner until the aggregate Net
Income allocated to each of General Partner and Affiliated Partner
pursuant to this Section 5.2(a)(ii) for the current Taxable Period and
all previous Taxable Periods is equal to the cumulative amount of cash
distributed to each of General Partner and Affiliated Partner pursuant to
Section 6.1(b)(ii) during the current and all previous Taxable Periods;
and
(iii) All Net Income from the Other Equipment shall be allocated
1% to General Partner and 99% to Affiliated Partner.
(b) NET LOSSES. After giving effect to the allocations set forth in
Sections 5.2(c) and 5.2(d), Net Losses for each Taxable Period and all items of
Partnership income, gain, loss and
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deduction taken into account in computing Net Losses for such Taxable Period
shall be allocated 1% to General Partner and 99% to Affiliated Partner.
(c) OTHER ALLOCATIONS. Notwithstanding any other provision of this
Section 5.2, the following allocations shall be made for such Taxable Period:
(i) PROTECTIVE MINIMUM GAIN CHARGEBACK. Partnership does not
intend to incur any nonrecourse liabilities. However, except as otherwise
provided in Section 1.704-2(f) of the Treasury Regulations,
notwithstanding any other provision of this Section 5, if there is a net
decrease in Partnership minimum gain (as defined in Treasury Regulation
Section 1.704-2(b)) during any Taxable Period of Partnership, each
Partner shall be allocated items of income and gain for such period (and,
if necessary, subsequent periods) in an amount equal to such Partner's
share of the net decrease in Partnership minimum gain, determined in
accordance with Treasury Regulation Section 1.704-2(g). Allocations
pursuant to the previous sentence shall be made in proportion to the
respective amounts allocable to each Partner pursuant thereto and shall
be determined in accordance with Treasury Regulation Sections 1.704-2
(f)(6) and 1.704-2(j)(2). Notwithstanding the foregoing provisions of
this Section 5.2(c)(i), for purposes of this Section 5.2(c)(i), items of
income or gain attributable to the Units shall only be allocated to the
Nonaffiliated Partner, and no item of income or gain attributable to the
Other Equipment shall be allocated to the Nonaffiliated Partner;
provided, however, that this Section 5.2(c)(i) is intended in any event
to comply with the minimum gain chargeback requirement of Treasury
Regulation 1.704-2(f) and shall be interpreted so as to be consistent
therewith.
(ii) QUALIFIED INCOME OFFSET. In the event any Partner
unexpectedly receives any adjustments, allocations or distributions
described in Treasury Regulation Sections 1.704-1 (b)(2)(ii)(d)(4),
1.704-1 (b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6), items of
Partnership income or gain shall be specially allocated to such Partner
in an amount and manner sufficient to eliminate, to the extent required
by the Treasury Regulations promulgated under Section 704(b) of the Code,
the deficit balance, if any, in its Adjusted Capital Account created by
such adjustments, allocations or distributions as quickly as possible
unless such deficit balance will otherwise be eliminated pursuant to
Section 5.2(c)(i); provided, however, that for purposes of this Section
5.2(c)(ii), items of income or gain attributable to the Units shall only
be allocated to the Nonaffiliated Partner, and no item of income or gain
attributable to the
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Other Equipment shall be allocated to the Nonaffiliated Partner.
(iii) GROSS INCOME ALLOCATIONS. In the event any Partner has a
deficit balance in its Capital Account at the end of any Taxable Period
that is in excess of the amount such Partner is deemed to be obligated to
restore pursuant to Treasury Regulation Sections 1.704-2(g) and 1.704-2
(i)(5), such Partner shall be specially allocated items of Partnership
income and gain in the amount of such excess as quickly as possible;
PROVIDED, that an allocation pursuant to this Section 5.2(c)(iii) shall
be made only if and to the extent that such Partner would have a deficit
Capital Account in excess of such amount after all other allocations
provided for in this Section 5.2(c) have been tentatively made as if this
Section 5.2(c)(iii) were not in this Partnership Agreement and, provided
further, that for purposes of this Section 5.2(c)(iii), items of income
or gain attributable to the Units shall only be allocated to the
Nonaffiliated Partner and no item of income or gain attributable to the
Other Equipment shall be allocated to the Nonaffiliated Partner.
(iv) NONRECOURSE LIABILITIES. For purposes of Treasury
Regulation Section 1.752-3(a)(3), the Partners agree that Nonrecourse
Liabilities of Partnership (and all nonrecourse deductions within the
meaning of Treasury Regulation Section 1.7042(b)(1)) shall be allocated
to Nonaffiliated Partner.
(v) CODE SECTION 754 ADJUSTMENT. To the extent an adjustment to
the adjusted tax basis of any Property pursuant to Section 734(b) or
743(b) of the Code is required, pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of such
Property) or loss (if the adjustment decreases such basis), and such item
of gain or loss shall be specially allocated to the Partners in a manner
consistent with the manner in which their Capital Accounts are required
to be adjusted pursuant to such section of the Treasury Regulations
provided, however, that for purposes of this Section 5.2(c)(v), items of
gain or loss attributable to the Units and Replacement Units shall
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only be allocated to the Nonaffiliated Partner and no item of gain or
loss attributable to the Other Equipment and Replacement Items shall be
allocated to the Nonaffiliated Partner.
(vi) DEPRECIATION, AMORTIZATION AND INTEREST.
(A) NONAFFILIATED PARTNER. Notwithstanding anything to
the contrary contained herein, Nonaffiliated Partner shall be
allocated all depreciation or other cost recovery deductions
attributable to the Initial Units and Replacement Units, all
interest deductions attributable to the liabilities described in
Section 5.2(c)(iv) and all deductions attributable to the
Transaction Costs (including organizational expenses described in
Section 8.7) to the extent funded by the Nonaffiliated Partner
with amounts described in Sections 2.2 and 2.3(a) of the
Participation Agreement.
(B) GENERAL PARTNER AND AFFILIATED PARTNER. All
depreciation or other cost recovery deductions attributable to the
Other Equipment and any Replacement Items and all other Property
other than Units and Replacement Units all deductions attributable
to Expenses shall be allocated 1% to General Partner and 99% to
Affiliated Partner.
(v) CASUALTY OR OTHER LOSS. Any casualty or other loss realized
by Partnership attributable to any Initial Unit (or Replacement Unit, to
the extent of the loss that would have been allocated to Nonaffiliated
Partner if the Initial Unit for which such Replacement Unit had been
substituted had remained as depreciable Property) shall be allocated 100%
to Nonaffiliated Partner, and any casualty or other loss realized by the
Partnership attributable to any Other Equipment, Replacement Items or
other Property shall be allocated 1% to General Partner and 99% to
Affiliated Partner.
(d) LIQUIDATION OR SALE. Upon a liquidation of Partnership pursuant
to Section 11 or a sale of an Initial Unit or Replacement Unit, all items of
income, gain, loss or deduction attributable to any Initial Unit or Replacement
Unit recognized or deemed
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recognized by Partnership therefrom shall be allocated 100% to Nonaffiliated
Partner. All other gain or loss upon liquidation of the Partnership or sale
of the Other Equipment, Replacement Items or any other Property other than an
Initial Unit or any Replacement Unit shall be allocated 1% to General Partner
and 99% to Affiliated Partner.
5.3. ALLOCATIONS FOR TAX PURPOSES. (a) Except as otherwise provided
herein, for federal income tax purposes, each item of Partnership income, gain,
loss and deduction shall be allocated among the Partners in the same manner as
its correlative item of Partnership "book" income, gain, loss or deduction is
allocated pursuant to Section 5.2.
(b) Any gain allocated to the Partners upon the sale or other taxable
disposition of any Property shall, to the extent possible, after taking into
account other required allocations of gain pursuant to this Section 5.3, be
characterized as Recapture Income in the same proportions and to the same extent
as such Partners (or their predecessors in interest) have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.
(c) All items of income, gain, loss, deduction and credit recognized
by Partnership for federal income tax purposes and allocated to the Partners in
accordance with the provisions hereof shall be determined without regard to any
election under Section 754 of the Code which may be made by Partnership;
PROVIDED, HOWEVER, that such allocations, once made, shall be adjusted as
necessary or appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
SECTION 6. DISTRIBUTIONS.
6.1. DISTRIBUTIONS OF CASH. (a) Initial Cash held by the Partnership
after the Commencement Date may be distributed to General Partner and Affiliated
Partner, if not otherwise required to be paid by Partnership or distributed in
accordance with this Section 6, but not in excess of 98.7004% of the Capital
Account of General Partner and Affiliated Partner, respectively, at the time of
such distribution.
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(b) On each Distribution Date occurring during the Transaction Term
prior to the commencement of the dissolution and liquidation of Partnership,
Available Cash and Other Available Cash shall be distributed as follows:
(i) First, Available Cash, shall be distributed 100% to
Nonaffiliated Partner in an amount equal to the Priority Distribution to
be distributed on such Distribution Date and, the balance, if any, shall
be distributed 1% to General Partner and 99% to Affiliated Partner; and
(ii) Second, Other Available Cash shall be distributed 1% to
General Partner and (ii) 99% to Affiliated Partner.
Priority Distributions shall be subject to reduction in the manner provided in
Schedule 1.
(c) On the date specified in this Section 6.1(c), Supplemental
Priority Distributions of Available Cash shall be made 100% to Nonaffiliated
Partner in an amount equal to the Supplemental Priority Distribution, if any,
that is distributable on such date. "Supplemental Priority Distribution" means,
without duplication, the following amounts: (i) with respect to any Event of
Loss as to which General Partner has made a Nonreplacement Election pursuant to
Section 7.2(c), an amount, with respect to each Unit subject to such
Nonreplacement Election, equal to the Disposition Amount thereof determined as
of such date and (ii) with respect to any Reduction Election made by General
Partner pursuant to Section 7.2(e), the sum of (A) an amount, with respect to
each Unit subject to such Reduction Election, equal to the greater of the
Disposition Value thereof determined as of such date or the Fair Market Value
thereof, determined as of such date, PLUS (B) the Adjustment Amount, plus
(C) any Premium due in accordance with the Indenture; provided that if the Fair
Market Value thereof exceeds the Disposition Amount thereof and the Adjustment
Amount is negative, as long as no BJ Event of Default is continuing,
Nonaffiliated Partner shall contribute to the Partnership for distribution 1% to
the General Partner and 99% to the Affiliated Partner, an amount equal to the
lesser of the absolute value of the Adjustment Amount (i.e., the Adjustment
Amount expressed as a positive number) therefor and such excess (such
contribution to be made with funds obtained from such Supplemental Priority
12
Distribution) and (iii) with respect to any Expenses of the kind described in
clause (v) of the definition of Expenses set forth in Section 4.4(b), the amount
of such Expenses. The amount of the Supplemental Priority Distribution
distributable pursuant to Section 6.1(c)(i) shall be reduced by the amount, if
any, of insurance proceeds and other similar amounts with respect to such Event
of Loss received by Indenture Trustee or after the Lien of the Indenture is
discharged, Nonaffiliated Partner, which shall be deemed to be distributed to
and for the benefit of Nonaffiliated Partner in connection with such Event of
Loss, and the amount of the Supplemental Priority Distribution distributable
pursuant to Section 6.1(c)(ii)(A) shall be reduced by the amount, if any, of
sales proceeds and other similar amounts with respect to such Reduction Election
received by Indenture Trustee or after the Lien of the Indenture is discharged,
Nonaffiliated Partner, which shall be deemed to be distributed to and for the
benefit of Nonaffiliated Partner in connection with such Reduction Election.
Supplemental Priority Distributions shall be made (x) in the case of an Event of
Loss as to which General Partner has made a Nonreplacement Election pursuant to
Section 7.2(c), on or prior to the date specified for such distribution pursuant
to Section 5.12 of the Participation Agreement, (y) in the case of a Reduction
Election, on or prior to the effective date for such Reduction Election and (z)
in the case of any Expenses distributable pursuant to Section 6.1(c)(iii), the
date of the actual distribution relating to or giving rise to such Expenses.
(d) During the existence of any BJ Event of Default, upon the election
by Nonaffiliated Partner to receive a distribution in the amount specified in
this Section 6.1(d) (a "Special Distribution"), a distribution shall be made to
Nonaffiliated Partner on the date specified in the notice of election (which
date shall be not earlier than 10 days after the date of such notice (the
"Special Distribution Date")), at its election of either (A) an amount equal to
the sum of (1) the Disposition Amounts of all Units determined either (x) if
such Special Distribution Date is a Distribution Date, as of such Distribution
Date or (y) otherwise, as of the immediately preceding Distribution Date, PLUS
(2) to the extent not theretofore distributed, Priority Distributions
distributable pursuant to Section 6.1(b)(i) on or before such Distribution Date,
PLUS (3) applicable Expenses, if any, or (B) a distribution in kind of all of
the Units (excluding any Severable Modifications that are
13
Optional Modifications and any Other Equipment). For the avoidance of doubt,
the distribution referred to in the foregoing clause (B) shall not be of any
Other Equipment, Replacement Items, or other Property other than the Units
(excluding any Severable Modifications that are Optional Modifications).
(e) As used in this Section 6.1, "Available Cash" means all cash and
cash equivalents of the Partnership on hand at the end of the relevant
Distribution Period, less the sum of (i) the amount of any cash attributable to
the operation or sale of any item of the Other Equipment (including Replacement
Items) (such cash and cash equivalents constituting "Other Available Cash") plus
(ii) cash reserves established by General Partner and necessary (A) to provide
for the proper conduct of the business of the Partnership (including reserves
for capital expenditures) subsequent to such Distribution Period, (B) to comply
with applicable law or the Basic Documents, and (C) to provide funds for any
Supplemental Priority Distributions and Special Distributions reasonably
expected by General Partner to become distributable prior to the next succeeding
Distribution Date.
(f) Each distribution of cash to Nonaffiliated Partner pursuant to
this Section 6.1 shall be made by Partnership on behalf of Nonaffiliated Partner
directly to Indenture Trustee in accordance with the Indenture (or, if the Lien
of the Indenture has been discharged, directly to Nonaffiliated Partner
Trustee). Each such distribution shall be made no later than 11:00 a.m. New York
City time on the applicable date for such distribution by the transfer of funds
consisting of lawful currency of the United States of America to, so long as the
Lien of the Indenture exists, Indenture Trustee at the times and in the funds of
the type specified in this Section 6.1 at the office of Indenture Trustee at
Boston, Massachusetts (ABA No. 000000000, Account No. 9903-9901, for further
credit to [BJ Services HT5660]), or at such other location in the United States
of America as Indenture Trustee may otherwise direct.
6.2. DISTRIBUTIONS IN KIND. If Nonaffiliated Partner has elected
pursuant to Section 7.5(e) to receive a distribution in kind of a Unit that is
subject to a Reduction Election, General Partner shall cause any Unit with
respect to which Nonaffiliated Partner has made such election to be distributed
to Nonaffiliated
14
Partner, PROVIDED, that (a) all amounts due and owing have been
paid under the Indenture with respect to such Reduction Election, (b) no
Supplemental Priority Distribution shall be distributable pursuant to Section
6.1(c)(ii) with respect to such Reduction Election, (c) any such distribution in
kind is reported on the federal income tax return of the Partnership in a manner
that does not require the disclosures required in Treasury Regulation Section
1.707-3(c)(2) and (d) the requirements of Section 7.5(e) have been met.
SECTION 7. MANAGEMENT AND OPERATION OF BUSINESS.
7.1. MANAGEMENT. The Limited Partners hereby unanimously appoint BJ
U.S.A. as General Partner (and General Partner hereby accepts such appointment)
and the Limited Partners further agree that, except as otherwise provided in
Sections 7.4 and 7.5 or as otherwise limited by this Partnership Agreement, the
overall management, control and policies of the business and affairs of
Partnership shall be exclusively vested in General Partner, and the Limited
Partners shall have no right of control or management power over the business
and affairs of Partnership. General Partner shall in its capacity as the general
partner of Partnership conduct the business and affairs of Partnership,
including the execution, delivery and performance of Partnership contracts. Each
decision of General Partner within the scope of its authority as provided in
this Section 7 shall bind Partnership and each Partner. The foregoing
notwithstanding and notwithstanding anything contained in this Partnership
Agreement or any other Basic Document to the contrary, it is hereby expressly
agreed and stipulated by the Limited Partners and the General Partner that
neither General Partner nor Affiliated Partner, acting alone or together, shall
at any time during the term of the Partnership be entitled to own or otherwise
have a majority vote or other majority participation in the selection of the
governing body, partners, managers or others that will control the management or
policies of Partnership.
7.2. OPERATIONS. (a) Except as otherwise provided in or limited by this
Partnership Agreement, General Partner shall be responsible for day-to-day
operations of Partnership and shall make all decisions and do all things
necessary or appropriate in the conduct thereof without the need for the consent
of the other Partners.
15
(b) In furtherance of its responsibilities and except as otherwise
provided in or limited by this Partnership Agreement (including Section 7.4),
General Partner shall have full power and authority to exercise solely for the
benefit and on behalf of Partnership the following powers:
(i) holding Property and acting for Partnership in respect of
such Property with all Government Authorities and other third parties;
(ii) disposing of any part of the Property, any interest
therein, or any interest payable therefrom for such consideration and on
such terms as General Partner determines to be in the best interests of
Partnership, in each case, in accordance with the terms of the Basic
Documents to which Partnership is a party;
(iii) bringing, defending, paying, collecting, settling, or
arbitrating lawsuits by or against Partnership, any Property, or a
Partner in the name of and on behalf of Partnership;
(iv) executing, delivering and performing its obligations as
General Partner and on behalf of the Partnership under the Basic
Documents to which Partnership is a party;
(v) surrendering or abandoning any Property, with or without
consideration therefor, in each case, in accordance with the terms of the
Basic Documents to which Partnership is a party; and
(vi) taking any other action that is necessary or appropriate
for the fulfillment of its responsibilities as General Partner and not
inconsistent with the terms of the Basic Documents.
(c)(i) Following an Event of Loss with respect to a Unit or Units and so
long as no BJ Default or BJ Event of Default exists, General Partner shall have
full power and authority, on behalf of Partnership, to elect (i) to replace or
cause the replacement of such Unit or Units or (ii) to make a Supplemental
Priority Distribution with respect to such Unit or Units in the amount
16
provided in Section 6.1(c)(i) and (iii) (a "Nonreplacement Election"), in
each case, in accordance with Section 5.12 of the Participation Agreement. If
a BJ Default or BJ Event of Default exists or if General Partner fails,
within 30 days following such Event of Loss, to comply in full with the
provisions of Sections 5.12(i) of the Participation Agreement, then General
Partner shall be deemed to have made a Nonreplacement Election.
(ii) Following an Event of Loss with respect to Other Equipment or
Replacement Items, General Partner shall have full power and authority, on
behalf of Partnership, to elect to replace or cause the replacement of such
Other Equipment or Replacement Items in accordance with Section 5.12 of the
Participation Agreement.
(d)(i) So long as no BJ Default or BJ Event of Default exists, General
Partner shall have full power and authority, on behalf of Partnership, to elect
to substitute or cause the substitution of a Unit or Units for Replacement Units
(a "Substitution Election"), PROVIDED that any such Substitution Election shall
not be effective with respect to any such Unit or Units unless and until General
Partner complies in full with the provisions of Section 5.11 of the
Participation Agreement.
(ii) General Partner shall have full power and authority, on behalf
of Partnership, to elect to substitute or cause the substitution of Other
Equipment or Replacement Items (a "Substitution Election"), PROVIDED that any
such Substitution Election shall not be effective with respect to any such Other
Equipment or Replacement Items unless and until General Partner complies in full
with the provisions of Section 5.11 of the Participation Agreement.
(e) Subject to the last sentence of Section 8.4 and so long as no BJ
Default or BJ Event of Default exists, General Partner shall have full power and
authority, on behalf of Partnership, to elect to distribute or otherwise dispose
of a Unit or Units constituting 10% or more of Total Equipment Value (as of the
Commencement Date) (a "Reduction Election"), PROVIDED that (i) Partnership makes
a Supplemental Priority Distribution with respect to such Unit or Units in the
amount provided in Section 6.1(c)(ii) and (iii), and (ii) any such Reduction
Election shall not be effective with respect to any such Unit or Units unless
and until General Partner complies in full with the provisions of Sections 5.16,
5.17 and 5.18 of the Participation Agreement, as applicable.
17
7.3. FINANCE. Except as otherwise provided in or limited by this
Partnership Agreement, General Partner shall have all powers and authority
necessary to administer and manage the finances of Partnership (other than those
functions specifically delegated to the Tax Matters Partner, if different than
General Partner), including, without limitation, the authority to establish,
maintain and close Partnership bank accounts and to manage the cash of
Partnership in accordance with the cash management practices used by General
Partner and its Affiliates in the ordinary course of their other businesses,
including, without limitation, providing loans and advances to General Partner
in amounts not then required by Partnership to make Priority Distributions,
Supplemental Priority Distributions or Special Distributions.
7.4. UNANIMOUS CONSENT OF PARTNERS. Notwithstanding any other provision
of this Partnership Agreement, other than the provisions of Section 7.5(d),
which shall govern after the occurrence and during the continuance of a BJ
Default or BJ Event of Default, and other than Section 7.5(c), a matter within
the scope of the following actions shall require the unanimous consent of all
Partners (a "Unanimous Consent"). Except in compliance with the previous
sentence, neither General Partner nor any other Partner shall take any act,
expend any sum, make any decision or incur any obligation on Partnership's
behalf with respect to any of the matters set forth in this Section 7.4:
(a) any amendment, waiver or modification of or consent under the
Services Agreement with respect to the provisions listed in Section 11.2
thereof, the O&M Agreement or any of the other Basic Documents to which
Partnership is a party;
(b) subject to Section 7.5(c), the exercise of any right or remedy,
the performance of any act or provision of any notice under the Services
Agreement, the O&M Agreement or any other Basic Document to which the
Partnership is a party;
(c) any sale or other disposition of all or substantially all of the
Units or Property other than Other Equipment or Replacement Items, which may be
sold or otherwise disposed of without the consent of any Limited Partner;
18
(d) any incurrence of any debt of Partnership for borrowed money;
(e) any grant of any lien on the Units or any other Property, other
than Permitted Liens; or
(f) any consent to assignment of the Services Agreement by Service
Taker or Partnership, or consent to assignment of the O&M Agreement by Operator
or Partnership, except that if no BJ Default or BJ Event of Default exists,
Service Taker or Operator, as the case may be, may assign its rights under the
Services Agreement and the O&M Agreement, respectively, to any U.S. Subsidiary
of Guarantor, so long as (i) Service Taker or Operator, as the case may be,
remains primarily liable under the Services Agreement or the O&M Agreement, as
the case may be, (ii) the Guaranty remains in full force and effect and
(iii) such assignment otherwise complies with the provisions of Sections 9.1 and
9.2 of the Services Agreement or Sections 19.2 and 19.3 of the O&M Agreement, as
the case may be.
7.5. RIGHTS OF NONAFFILIATED PARTNER. (a) Nonaffiliated Partner shall
have access to the Units (other than the Other Equipment and Replacement Items)
at all reasonable times at its sole risk, to inspect or observe operations, and
shall have access at reasonable times to information pertaining to the
development or operation thereof, including the Books and Records relating
thereto.
(b) If neither the ET Right nor the Special P.O. Right has been
exercised and if the General Partner has not elected to prepay the Outstanding
Notes on the ET Date as contemplated by Section 6.1(c) of the Indenture,
Nonaffiliated Partner, to the exclusion of all other Partners, will have the
right, but not the obligation, within 30 days after the termination of the
Transaction Term, to cause the dissolution of Partnership.
(c) At all times, Nonaffiliated Partner shall have the right, to the
exclusion of the other Partners, to declare and/or provide notice of a Default
or an Event of Default under the O&M Agreement, the Services Agreement and/or
any other Basic Document to which Partnership is a party.
19
(d) Notwithstanding any other provision of this Partnership Agreement,
upon the occurrence and during the continuance of a BJ Default or BJ Event of
Default (which, for the purposes of this Section 7.5(d), shall be deemed to
create an actual or potential conflict of interest as to General Partner and
Affiliated Partner), Nonaffiliated Partner shall have the sole vote and right,
to the exclusion of all other Partners, pursuant to Section 17-303(b) of the
Delaware Act, to take or to cause to be taken, on behalf of Partnership, any and
all of the acts and to make any and all of the following determinations set
forth below in this Section 7.5(d):
(i) the exercise of any option or right stated in, or the
approval, execution and delivery of any renewal, extension, amendment,
waiver or modification of or consent under, the Services Agreement, the
O&M Agreement and/or any of the other Basic Documents to which the
Partnership is a party;
(ii) any consent to assignment of the Services Agreement by
Service Taker or Partnership, or consent to assignment of the O&M
Agreement by Operator or Partnership;
(iii) any exercise of the right of Partnership to require the
surrender of the Units under the O&M Agreement;
(iv) any assertion of Partnership's rights against manufacturers
or sellers of the Units and the prosecution thereof for the benefit of
the Partnership;
(v) any exercise of the right of Partnership to enforce,
declare a default under, terminate or exercise the remedies stated in or
available under the Services Agreement, the O&M Agreement and/or any of
the other Basic Documents to which Partnership is a party;
(vi) any sale, exchange, lease, mortgage, assignment, pledge or
other transfer of, or the grant of a security interest in, one or more
Units or the Property; and
(vii) any incurrence, renewal, refinancing or payment or other
discharge of indebtedness by Partnership.
20
(e) In the event that General Partner makes a Reduction Election
pursuant to Section 7.2(e), Nonaffiliated Partner shall have the right, but not
the obligation, to elect pursuant to Section 5.18 of the Participation
Agreement, to receive a distribution in kind of each Unit subject to such
Reduction Election provided that as a condition to such distribution in kind,
Nonaffiliated Partner shall be required to make a cash capital contribution to
the Partnership on the Reduction Date equal to the Adjustment Amount (if
negative) on such Distribution Date of distribution 1% to the General Partner
and 99% to the Affiliated Partner.
(f) In no event shall Nonaffiliated Partner be deemed a general
partner or become liable for any liabilities of the Partnership by reason of
having or having exercised the rights stated in Section 7.4 and this Section
7.5.
7.6. DELEGATION OF AUTHORITY. Each Partner shall have the right to
delegate or assign any of its powers or obligations hereunder to any of its duly
authorized officers and employees and any duly appointed agents (which may
include any other Partner). Each such officer, employee and agent shall, to the
extent provided by the appointing Partner, have the full power and authority to
perform every act which is permitted or required to be taken by the appointing
Partner under this Partnership Agreement. General Partner may exercise its
powers under this Partnership Agreement on behalf of Partnership either in the
name of Partnership or in its own name, as determined by General Partner in its
sole discretion. General Partner reserves the right to act on behalf of
Partnership without disclosing its capacity as General Partner of Partnership.
7.7. DEALINGS WITH PARTNERS AND AFFILIATES. Except as otherwise
provided in this Partnership Agreement, the fact that any Person (a) engaged by
Partnership to render or perform a service for Partnership, (b) from which
Partnership may buy merchandise or property of any kind or character or (c) with
which Partnership may otherwise deal is a Partner or an Affiliate of a Partner
shall not prohibit Partnership from dealing with the same; PROVIDED, HOWEVER,
that the price and terms for such service, merchandise or other property shall
be commercially reasonable and substantially the same as those to which
unaffiliated Persons would agree.
21
7.8. LIABILITY OF LIMITED PARTNERSHIP. No Limited Partner shall be
liable for the debts, liabilities, contracts or any other obligations of
Partnership (except to the extent of such Limited Partner's Capital
Contributions made or required under Section 4), or for the debts or liabilities
of any other Partner. No Limited Partner shall be required to provide any loans
to Partnership.
SECTION 8. ACCOUNTING AND TAX MATTERS.
8.1. ACCRUAL BASIS. General Partner shall maintain the books and
records of Partnership, which shall be maintained for federal income tax
purposes in accordance with the accrual method of accounting and for financial
reporting purposes on the accrual basis in accordance with GAAP. Any Partner may
request an inspection of the facilities and records of Partnership, PROVIDED
that any such inspections shall occur during normal business hours and that
costs of any such inspections shall be paid by the inspecting Partner.
8.2. FISCAL YEAR. The fiscal year of Partnership shall be the calendar
year.
8.3. REPORTS AND CERTIFICATES. (a) As soon as practicable, but in no
event later than 120 days after the close of each fiscal year of Partnership,
General Partner shall cause to be mailed to each Partner an annual report
containing financial statements of Partnership for such fiscal year of
Partnership, presented in accordance with GAAP, including a balance sheet and
statements of operations, Partners' equity and Partners' Capital Accounts.
(b) As soon as practicable, but in no event later than 45 days after
the end of each quarter, General Partner shall cause to be mailed to each
Partner a report containing unaudited statements of operations and a balance
sheet of Partnership, and such other information as may be required by
applicable law, regulation or rule.
(c) General Partner shall cause to be mailed to Nonaffiliated Partner
the Officer's Certificates and opinions of counsel required pursuant to the
Participation Agreement.
22
8.4. PREPARATION OF TAX RETURNS. General Partner shall arrange for and
hereby initially delegates to the Tax Matters Partner the responsibility to
arrange for the preparation and timely filing of all returns of Partnership
income, gains, losses, deductions and other items required of Partnership for
federal, state and local income tax purposes. The General Partner shall also use
all reasonable efforts to furnish, on or before the June 1 following the close
of each taxable year of Partnership, the tax information reasonably required by
each Partner for federal, state and local income tax reporting purposes and to
cooperate with each Partner to reconcile any inconsistencies. The
classification, realization and recognition of Partnership income, gains, losses
and deductions and other items shall be on the accrual method of accounting for
federal income tax purposes. The taxable year of Partnership shall be the
calendar year. General Partner shall treat the distributions described in
Section 6.1(a) and 6.2, if any, on its federal income tax returns in a manner
that does not require the disclosure required in Treasury Regulation Section
1.707-3(c)(2).
8.5. TAX ELECTIONS. Except as otherwise provided herein, the Tax
Matters Partner, upon Notice to and consent by the other Partners, shall make
any available election pursuant to the Code; PROVIDED, HOWEVER, that the Tax
Matters Partner shall make the election on behalf of Partnership under Section
754 of the Code in accordance with applicable regulations thereunder. The Tax
Matters Partner, upon Notice to and consent by the other Partners, shall seek to
revoke any such election (including, without limitation, the election under
Section 754 of the Code) upon the Tax Matters Partner's determination that such
revocation is in the best interests of the Partners.
8.6. TAX CONTROVERSIES. (a) General Partner shall have the authority to
designate the Tax Matters Partner (as defined in Section 6231 of the Code).
General Partner is initially designated the Tax Matters Partner. The Tax Matters
Partner shall have the authority to extend the statute of limitations for
assessment of tax deficiencies against the Partners with respect to adjustments
to Partnership's federal, state, local or foreign tax returns, and to the extent
provided in Sections 6221 through 6231 of the Code, to represent Partnership and
the Partners before taxing authorities or courts of competent jurisdiction in
tax matters affecting Partnership and the Partners in their capacities as
partners of
23
Partnership, and to file any tax returns and execute any agreements
or other documents relating to or affecting such tax matters, including
agreements or other documents that bind the Partners with respect to such tax
matters or otherwise affect the rights of Partnership and the Partners; PROVIDED
that, to the extent any such extension, agreement, election or document might
have a material effect on any Partner, such Partner must consent in writing to
such extension, agreement, election or document and the Tax Matters Partner must
reasonably consult with such Partner in any discussions or negotiations with the
relevant taxing authority associated with such agreement or document. Each
Partner agrees to cooperate with General Partner and the Tax Matters Partner and
to do or refrain from doing any or all things reasonably required by General
Partner and the Tax Matters Partner and to conduct such proceedings.
Notwithstanding the foregoing, the Tax Matters Partner shall not be permitted to
control any contest (including at the audit level) relating to any item which
could result in a payment under the Tax Indemnity Agreement unless such Tax
Matters Partner has provided to each Beneficiary a written statement
acknowledging that none of the events described in Section 6 of the Tax
Indemnity Agreement is relevant to such contest.
(b) The Tax Matters Partner shall keep each Partner informed of all
administrative and judicial proceedings, as required by Section 6223(g) of the
Code, and shall furnish each Partner who so requests in writing a copy of each
notice or other communication related to Partnership's taxes received by the Tax
Matters Partner in its capacity as Tax Matters Partner. If any Partner intends
to file a notice of inconsistent treatment under Section 6222(b) of the Code,
such Partner shall, prior to the filing of such notice, provide Notice to the
Tax Matters Partner of such intent and the manner in which the Partner's
intended treatment of Partnership item is (or may be) inconsistent with the
treatment of that item by Partnership.
8.7. ORGANIZATIONAL EXPENSES. Partnership shall elect to deduct
expenses, if any, incurred by it in organizing Partnership ratably over a
60-month period as provided in Section 709 of the Code.
8.8. REQUESTS FOR ADMINISTRATIVE ADJUSTMENT. No Partner shall file a
request pursuant to Section 6227 of the Code for an
24
administrative adjustment of Partnership items for any Partnership Taxable
Period without first notifying all other Partners. If all other Partners
agree with the requested adjustment, the Tax Matters Partner shall file the
request for the administrative adjustment on behalf of Partnership. If
unanimous consent is not obtained from all Partners within 30 days from such
Notice, or within the period required to timely file the request for
administrative adjustment, if shorter, any Partner, including the Tax Matters
Partner, may file a request for administrative adjustment on its own behalf.
SECTION 9. RIGHTS TO PURCHASE THE PARTNERSHIP INTEREST OF NONAFFILIATED
PARTNER.
9.1. ET RIGHT. On the ET Date, so long as no BJ Default or BJ Event of
Default exists, upon irrevocable written notice given not less than 120 days
before the ET Date, General Partner or its designee will have the exclusive
right to purchase all, but not less than all, of the Partnership Interest of
Nonaffiliated Partner (the "ET Right") by paying, on the dates and in the
amounts specified on Schedule 4 hereto (which Schedule 4 shall provide that the
first payment pursuant thereto shall occur on the ET Date and shall be in an
amount at least sufficient to pay all principal and interest then due and
payable to the Holders of the Notes), the greater of (i) the ET Amount or
(ii) the amount specified in Section 6.1(c) of the Indenture so long as the Lien
of the Indenture exists directly to Indenture Trustee on behalf of Nonaffiliated
Partner in the manner set forth in Section 6.1(f) hereof and thereafter to
Nonaffiliated Partner; provided, however, that if General Partner or its
designee neither elects to exercise the ET Right as provided in this Section 9.1
nor elects to prepay the Notes on the ET Date as contemplated in Section 6.1(c)
of the Indenture, then within in 90 days after the ET Date General Partner and
Affiliated Partner shall (i) be obligated to make a contribution to the
Partnership (1% from General Partner and 99% from Affiliated Partner) in an
amount sufficient to permit the Partnership to purchase Residual Value Insurance
in form and substance satisfactory to Nonaffiliated Partner from an insurance
company having a minimum unsecured senior debt rating of at least AA from
Standard and Poors Rating Services or Xxxxx'x Investor Service, Inc., or
otherwise reasonably acceptable to Nonaffiliated Partner Trustee and (ii)
provide evidence of the purchase of such Residual Value Insurance to the
Nonaffiliated Partner Trustee.
25
9.2. [INTENTIONALLY OMITTED.]
9.3. [INTENTIONALLY OMITTED.]
9.4. SPECIAL P.O. RIGHT. On the Special P.O. Date, so long as no BJ
Default or BJ Event of Default exists, upon irrevocable written notice given not
less than 120 days before the Special P.O. Date, General Partner or its designee
shall have the exclusive right to purchase all, but not less than all, of the
Partnership Interest of Nonaffiliated Partner (the "Special P.O. Right") by
paying the greater of (i) an amount equal to the Fair Market Value of
Nonaffiliated Partner's Remaining Partnership Interest (which Fair Market Value
shall include the excess, if any, of (A) the present value as of the Special
P.O. Date of all remaining Priority Distributions scheduled until the
Transaction Term Expiration Date discounted at a rate per annum equal to the
Discount Rate over (B) the present value as of the Special P.O. Date of the Fair
Market Rental Value of the Units until the Transaction Term Expiration Date
discounted at a rate per annum equal to the Discount Rate) plus the Adjustment
Amount, (ii) the Disposition Amount of the Units owned by the Partnership on the
Special P.O. Date, or (iii) the amount specified in Section 6.1(c) of the
Indenture.
9.5. PURCHASE AND CLOSING PROCEDURES. The closing of any purchase of
the Partnership Interest of Nonaffiliated Partner in accordance with this
Section 9 shall take place on the ET Date in the case of the ET Right, and on
the Special P.O. Date in the case of the Special P.O. Right. General Partner
agrees that, without limiting Section 2.6(b) of the Participation Agreement, it
will reimburse Nonaffiliated Partner, Nonaffiliated Partner Trustee, Indenture
Trustee and each Participant for all out-of-pocket costs and expenses
(including, without limitation, reasonable legal fees and expenses) incurred by
any such Person in connection with any such exercise and purchase. On the ET
Date or the Special P.O. Date, as the case may be, subject to receipt by
Indenture Trustee (or, if the Lien of the Indenture has been discharged,
Nonaffiliated Partner Trustee) of all amounts owing to Indenture Trustee or
distributable to Nonaffiliated Partner pursuant to Sections 9.1 and 9.4 and to
the following sentence (except any such amounts representing future
distributions and obligations), Nonaffiliated Partner shall, without recourse or
warranty (except as to the absence of any Liens attributable to Nonaffiliated
26
Partner), sell and transfer all of its Partnership Interest to General Partner
or its designee, and no Priority Distributions shall be distributable in
relation to such Partnership Interest with respect to time periods occurring
after the ET Date or the Special P.O. Date, as the case may be. Simultaneously
with the payment of the ET Amount or the Special P.O. Amount, as the case may
be, distributions shall be made by Partnership on behalf of Nonaffiliated
Partner directly to Indenture Trustee in the manner set forth in Section 6.1(f)
(or if the Lien of the Indenture has been discharged, Nonaffiliated Partner
Trustee) in an amount equal to (i) all Priority Distributions attributable to
time periods occurring prior to and including the ET Date or the Special P.O.
Date, as the case may be plus (ii) with respect to any exercise of the ET Right,
Supplemental Priority Distributions equal to any applicable Expenses.
SECTION 10. TRANSFER OF THE PARTNERSHIP INTEREST; CERTIFICATES.
10.1. PERMITTED TRANSFERS.(a) Except as expressly permitted in Section
10.1(b) with respect to certain Transfers by a Partner, no Partner shall
Transfer all or any part of its Partnership Interest without the unanimous
written consent of the other Partners, and any attempt to do so shall be void.
The giving of such consent in any one or more instances shall not limit or waive
the need for such consent in any other or subsequent instances. Each of the
Partners hereby agrees that, without the unanimous written consent of all of the
Partners, it shall not otherwise assign or convey its rights under the
Partnership Agreement except as expressly permitted by and subject to the
provisions of the Basic Documents.
(b) Notwithstanding the provisions of Section 10.1(a), but subject to
the provisions of Sections 10.4 and 10.5, Affiliated Partner from time to time
may, without the consent of the other Partners, transfer all but not less than
all of its Partnership Interest to any U.S. Subsidiary of Guarantor, PROVIDED
that no BJ Default or BJ Event of Default exists and the Guaranty remains in
full force and effect, Notwithstanding the provisions of Section 10.1 (a),
but subject to the provisions of Sections 10.4 and 10.5, General Partner from
time to time may, with the written consent of the Nonaffiliated Partner,
transfer all but not less than all of its Partnership Interests to any U.S.
Subsidiary of Guarantor;
27
PROVIDED that no BJ Default or BJ Event of Default exists and the Guaranty
remains in full force and effect.
(c) Notwithstanding the provisions of Section 10.1(a), but subject to
the provisions of Sections 10.4 and 10.5, Nonaffiliated Partner from time to
time may, without the consent of the other Partners, (i) transfer all but not
less than all of its Partnership Interest to any successor trustee under the
Basic Documents and (ii) make an assignment to Indenture Trustee in accordance
with the Indenture.
10.2. RIGHTS TRANSFERRED. Any Transfer shall entitle the Partner
Transferee to receive, to the extent assigned, allocations of income or loss and
distributions of Property that would otherwise have been allocated or
distributed to the Transferor Partner, but shall not entitle the Partner
Transferee to become a substituted general partner or limited partner of
Partnership, as the case may be, or further to assign its Partnership Interest
(other than back to the Transferor Partner or to another Partner Transferee in
accordance with and subject to the provisions of this Partnership Agreement)
without the unanimous written consent of the Partners. Absent such consent of
the Partners, the Transferor Partner will be allowed to act at the direction of
the Partner Transferee in exercising all residual rights and powers attendant to
the ownership of the transferred Partnership Interest, to the extent that any
such arrangement is agreed to by such Transferor Partner.
10.3. NO RELEASE FROM OBLIGATIONS. Unless otherwise agreed to by the
unanimous written consent of the Partners, no transfer of a Partner's
Partnership Interest or any portion thereof shall release such Partner from
liability for its obligations under this Partnership Agreement.
10.4. AGREEMENTS WITH PARTNER TRANSFEREES. Notwithstanding any
provision to the contrary, no transfer of a Partnership Interest shall be made
or entitle such Partner Transferee to any benefits or rights hereunder until the
following conditions are satisfied:
(a) The proposed Partner Transferee delivers to the other Partners an
agreement in writing to assume and be bound by all the
28
obligations of the Transferor Partner and to be subject to all the
restrictions to which the Transferor Partner is subject under the terms of
this Partnership Agreement or under any further agreement with respect to
Partnership or which then requires that the Transferor Partner be or become a
party; and
(b) The Partner Transferee delivers to the other Partners a legal
opinion rendered by legal counsel, acceptable to the other Partners, that such
Transfer will not jeopardize the status of Partnership as a partnership for
federal income tax purposes, violate, or cause Partnership to violate, any
applicable law or governmental rule or regulation, including any applicable
federal or state securities law, or cause Partnership to be subject to any
reporting requirements of any applicable federal or state securities laws. In
the event that a Partner's Partnership Interest is transferred by operation of
law, and the Partner Transferee fails to comply with the provisions of this
Section 10.4 within 30 days of the date such transfer is consummated, such
failure shall entitle the other Partners to treat such failure as an Event of
Dissolution under this Partnership Agreement.
10.5. ALLOCATIONS BETWEEN TRANSFEROR PARTNER AND PARTNER TRANSFEREE. All
items of Partnership income, gain, loss and deduction attributable to any
Partnership Interest subject to a Transfer, and any distributions made with
respect thereto, shall be allocated between the Transferor Partner and the
Partner Transferee in proportion to the number of days in the Taxable Period
before and after the transfer unless such a method is not authorized under the
Code in which case the allocation shall be in accordance with any reasonable
method applied by General Partner which complies with Section 706 of the Code.
10.6. CERTIFICATES. Upon Partnership's issuance of a Partnership
Interest to any Partner, at the request of any such Partner, Partnership shall
issue one or more certificates in the name of such Partner evidencing the
Partnership Interest being so issued. Certificates shall be executed on behalf
of Partnership by an officer of the General Partner on behalf of the
Partnership.
10.7. CONSENT TO LIEN OF THE INDENTURE; EXERCISE OF REMEDIES. (a) Each
of the Partners hereby confirms that concurrently with the execution and
delivery of this Partnership
29
Agreement, Partnership, Nonaffiliated Partner and Indenture Trustee have
executed and delivered the Indenture. Pursuant to the Indenture, Partnership
assigns to Indenture Trustee, as collateral security, and grants to Indenture
Trustee a security interest in and to, the Units (among other things), and
Nonaffiliated Partner assigns to Indenture Trustee, as collateral security,
and grants to Indenture Trustee a security interest in and to Nonaffiliated
Partner's Partnership Interest and its right, title and interest under this
Partnership Agreement, including, without limitation, certain rights
Nonaffiliated Partner may exercise or cause to be exercised in accordance
with this Partnership Agreement and the right to receive Priority
Distributions, Supplemental Priority Distributions and Special Distributions
(among other things), to which assignment pursuant to the Indenture each of
the Partners hereby consents. In the event that Indenture Trustee or its
designee acquires the Partnership Interest of Nonaffiliated Partner or
Indenture Trustee forecloses on and sells or otherwise disposes of the
Partnership Interest of Nonaffiliated Partner, the Partners hereby agree that
(i) none of the restrictions on transfer of a Partnership Interest set forth
in this Section 10 shall apply to such subsequent holder of the Partnership
Interest of Nonaffiliated Partner and (ii) such subsequent holder of
Nonaffiliated Partner's Partnership Interest, upon the request of such
holder, shall be, without any further consent or approval by any Partner,
admitted to the Partnership as a limited partner and shall be entitled to
exercise all the rights of a limited partner under this Partnership Agreement.
(b) Until General Partner receives written Notice from Indenture
Trustee that the Lien of the Indenture is discharged in accordance with the
terms thereof (i) no amendment or modification of, or waiver by or consent of
Nonaffiliated Partner in respect of, any of the provisions of this Partnership
Agreement, the O&M Agreement, the Services Agreement or any of the other Basic
Documents to which Partnership is a party shall be effective unless Indenture
Trustee joins in such amendment, modification, waiver or consent or gives its
prior written consent thereto, (ii) except as otherwise expressly provided in
the Indenture, Indenture Trustee shall have the right to exercise all rights,
privileges and remedies (either in its own name or in the name of Partnership or
Nonaffiliated Partner for the use of and benefit of Indenture Trustee) which by
the terms of this Partnership Agreement or by
30
applicable law are permitted or provided to be exercised by the Partnership
or Nonaffiliated Partner and (iii) Indenture Trustee shall be provided with
all notices, reports and documents required to be provided to Nonaffiliated
Partner hereunder (except for the tax return of Nonaffiliated Partner).
SECTION 11. DISSOLUTION.
11.1. EVENTS OF DISSOLUTION. Partnership shall not be dissolved by the
admission of a Person to Partnership as a Partner or by the withdrawal of a
Partner. Except as expressly provided in Section 7.5(b) and in this Section
11.1, no Partner shall have the right to dissolve Partnership by its express
will. Partnership shall be dissolved upon the first to occur of any of the
following events (each, an "Event of Dissolution"):
(a) a BJ Event of Default occurs and is continuing and Nonaffiliated
Partner elects to dissolve Partnership;
(b) Nonaffiliated Partner elects to dissolve Partnership in accordance
with Section 7.5(b);
(c) the Partners unanimously agree to dissolve Partnership;
(d) any event occurs and is continuing that makes it unlawful for
Partnership's business to be continued and Nonaffiliated Partner elects to
dissolve Partnership; or
(e) Partnership's term expires on the date provided in Section 2.4.
To the extent permitted under the Delaware Act, the business of Partnership may
be continued by the written consent of all the Partners within 90 days following
the occurrence of any event set forth in this Section 11.1.
11.2. COVENANT NOT TO CAUSE DISSOLUTION OF PARTNERSHIP. To the fullest
extent permitted by applicable law, each Partner covenants and agrees that it
will not cause a dissolution of the Partnership, directly, or indirectly, by
(i) taking, or failing to take, any action that would result in the dissolution
or Bankruptcy of such Partner or which would permit a trustee or receiver to
31
acquire control of a Partner's affairs or (ii) breaching any provision of this
Partnership Agreement.
11.3. WINDING-UP LIQUIDATOR. (a) Upon dissolution of Partnership,
Partnership shall immediately commence to wind up its affairs and a Liquidator
approved by Nonaffiliated Partner shall promptly proceed to liquidate the
business of Partnership; provided that General Partner shall serve as the
remarketing agent for the Units and Other Equipment on behalf of the Partnership
at General Partner's expense (which shall not be reimbursed by the Partnership
or any other Partner) if so requested in writing by Nonaffiliated Partner within
180 days prior to the dissolution of the Partnership.
(b) The Liquidator shall have and may exercise, without further
authorization or consent of any of the Partners, all of the powers conferred
upon the Partners (including, without limitation, General Partner) under the
terms of this Partnership Agreement to the extent necessary or desirable in the
good faith judgment of the Liquidator to carry out the duties and functions of
the Liquidator hereunder for and during such period of time as shall be
reasonably required in the good faith judgment of the Liquidator to complete the
winding-up and liquidation of Partnership as provided for herein. The
Liquidator, if other than General Partner, shall be entitled to receive such
compensation for its services as may be approved by Nonaffiliated Partner. Each
Partner hereby waives any claim it may acquire against the Liquidator which may
arise out of the management by the Liquidator of Partnership in such
circumstances, so long as such Liquidator acts in good faith.
11.4. LIQUIDATION. The Liquidator shall liquidate the Property and
apply and distribute the proceeds from such liquidation in the following order
of priority:
(a) first, in payment of debts and obligations of Partnership owed to
its creditors (including debts and obligations of Partnership owed to Partners
and their Affiliates), in the order of priority provided by law;
(b) second, to the creation of a reserve of cash or other Property for
contingent liabilities in the amount, if any,
32
determined by the Liquidator to be appropriate for such purposes; and
(c) third, to the Partners in proportion to, and to the extent of, the
positive balances in their respective Capital Accounts, after taking into
account all Capital Account adjustments provided for in this Partnership
Agreement; provided that all remaining liquidation proceeds attributable to the
Units or Replacement Units shall be distributed to Nonaffiliated Partner and all
remaining liquidation proceeds attributable to the Other Equipment or
Replacement Items shall be distributed 1% to General Partner and 99% to
Affiliated Partner.
11.5. DISTRIBUTIONS IN KIND. Notwithstanding the provisions of Section
11.4 which require the Liquidator to liquidate the Property, the Liquidator
will, at the request of the Nonaffiliated Partner, distribute to the
Nonaffiliated Partner, in lieu of cash, Units and any Replacement Units, but
specifically not Other Equipment or Replacement Items which Other Equipment and
Replacement Items shall be distributed to General Partner and Affiliated Partner
in accordance with their respective Capital Accounts. Any such distributions in
kind shall be subject to any debts or obligations which are secured by the Units
distributed and any agreements governing the operation of such Units at such
time.
11.6. BORROWINGS. If Partnership has insufficient cash to make the
payments and distributions required by Sections 11.4, the Liquidator may, at the
request of Nonaffiliated Partner, in lieu of liquidating certain of the Units or
Replacement Units, cause Partnership to borrow money with recourse solely to
such Units or Replacement Units to be distributed in kind pursuant to Section
11.5.
11.7. REASONABLE TIME FOR WINDING-UP. A reasonable time shall be
allowed the Liquidator for the orderly winding-up of the business and affairs
of Partnership and the liquidation of the Property pursuant to Section 11.4
to the extent necessary to minimize any losses otherwise attendant upon such
winding-up.
SECTION 12. ACTIVITIES OF PARTNERS.
33
12.1. RIGHT TO ENGAGE IN INDEPENDENT CONDUCT. Each of the Partners and
each of their Affiliates reserves and retains the right to engage, directly or
indirectly, in all businesses and activities of any kind whatsoever
(irrespective of whether the same may be in competition with the business
activities of Partnership) and to acquire and own all assets, however acquired
and wherever situated, and to receive compensation or profit therefrom, for
their own respective accounts and without in any manner being obligated to
disclose such businesses, activities, assets, compensation or profit to the
other Partners or to Partnership. Neither Partnership nor any Partner shall have
any rights in or to any businesses, opportunities, activities, assets,
compensation or profits of any other Partner or any Affiliate thereof, and as a
material part of the consideration for the execution of this Partnership
Agreement, each Partner hereby waives, relinquishes and renounces any such
rights or claims of participation. No Partner shall be required to submit any
investment or business opportunities to Partnership for purposes of possible
acquisition by Partnership or otherwise. General Partner shall be required to
devote only such time to the affairs of Partnership as may be necessary or
appropriate to manage and operate Partnership.
12.2. MATTERS CONCERNING GENERAL PARTNER. (a) General Partner hereby
covenants and agrees to take all necessary or appropriate actions to cause the
distributions to Nonaffiliated Partner to be made in accordance with and
pursuant to the provisions of Section 6.
(b) General Partner may rely, and shall be protected in acting or
refraining from acting, upon any resolution, certificate, statement, instrument
opinion, report, notice, request, consent, order, bond, debenture, or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties, including, without limitation,
Nonaffiliated Partner Trustee and the Indenture Trustee.
(c) To the fullest extent permitted by applicable law, any standard
of care and duty imposed by the Delaware Act or any applicable law, rule or
regulation shall be modified, waived or limited as required to permit General
Partner to act under this Partnership Agreement or any other agreement
contemplated by this Partnership Agreement and to make any decision
pursuant to the
34
authority prescribed in this Partnership Agreement, so long as such action
is reasonably believed by General Partner to be in, or not inconsistent with,
the best interests of Partnership.
SECTION 13. GENERAL PROVISIONS.
13.1. COMPLETE AGREEMENT; AMENDMENT. This Partnership Agreement,
together with the Exhibits, Schedules and Appendices hereto, constitutes the
entire agreement between the parties with respect to the subject matter thereof
and supersedes all prior agreements, representations, warranties, statements,
promises and understandings, whether oral or written, with respect to the
subject matter hereof. Each Limited Partner hereby agrees that the General
Partner, with notice to, but without the approval of, any Limited Partner, may
execute, deliver, file and record any documents that may be required in
connection with this Partnership Agreement: (i) if necessary or advisable to
qualify or continue the qualification of the Partnership as a limited
partnership or a partnership in which the Limited Partners have limited
liability under the laws of any state or to ensure that the Partnership will
not be treated as an association taxable as a corporation or otherwise taxed as
an entity for federal income tax purposes; or (ii) if necessary or advisable to
satisfy any requirements, conditions or guidelines contained in any opinion,
directive, order, ruling or regulation of any federal or state agency, judicial
authority or other Government Authority or contained in any federal or state
statute (including the Delaware Act). Notwithstanding the foregoing, this
Partnership Agreement may not be amended, altered or modified except by a
writing signed by all of the Partners. Without limiting the generality of the
foregoing, neither the first sentence of Section 7.1 nor the last sentence of
Section 7.1 may be amended, altered or modified without the written approval of
the Nonaffiliated Partner, which approval may be evidenced by the Nonaffiliated
Partner's execution of an amendment, alteration or modification.
13.2. NOTICES. Unless otherwise expressly specified or permitted by the
terms hereof, all communications and notices provided for herein shall be in
writing, and any such notice shall become effective when received (and notices
given pursuant to clause (b) of the immediately following sentence shall be
deemed received three days after being deposited in the mail). Any written
35
notice shall be by (a) personal delivery thereof, including, without limitation
by overnight mail and courier service, (b) United States mail, certified,
postage prepaid, return receipt requested or (c) facsimile transmission, in
each case, effective upon receipt (or, in the case of clause (c), as evidenced
by the receipt of electronic confirmation of the addressee's receipt) and in
each case addressed to the following Person at its respective address set forth
below or at such other address as such Person may from time to time designate
by written notice to the other Persons listed below, forwarded in the manner
set forth in this Section 13.2:
If to General Partner:
BJ Services Company, U.S.A.
0000 Xxxxxxxxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xx. X. X. Xxxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
If to Affiliated Partner:
BJ Services II, L.L.C.
0000 Xxxxxxxxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xx. X. X. Xxxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
If to Nonaffiliated Partner:
First Security Trust Company of Nevada
as Nonaffiliated Partner Trustee
00 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Corporate Trust Department
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
With copy to Indenture Trustee:
00
Xxxxx Xxxxxx Xxxx and Trust Company
0 Xxxxxx xx Xxxxxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Promptly after Partnership or General Partner receives any notice from Operator
or Service Taker, General Partner will cause any such notice to be forwarded to
Nonaffiliated Partner.
13.3. SEVERABILITY. If any of the provisions of this Partnership
Agreement are held by any court of competent jurisdiction to contravene, or to
be invalid under, the laws of any political body having jurisdiction over the
subject matter hereof, such contravention or invalidity shall not invalidate
the entire Partnership Agreement. Instead, this Partnership Agreement shall be
construed as if it did not contain the particular provision or provisions held
to be invalid, and an equitable adjustment shall be made and necessary
provisions added so as to give effect to the intention of the Partners as
expressed in this Partnership Agreement at the time of execution of this
Partnership Agreement and of any amendments hereto.
13.4. SUCCESSOR AND ASSIGNS. Except as provided herein to the contrary
this Partnership Agreement shall be binding upon and inure to the benefit of
the parties signatory hereto, their respective heirs, executors, legal
representatives, permitted successors and permitted assigns.
13.5. GOVERNING LAW. This Partnership Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, excluding
any conflicts-of-law rule or principle that might refer the construction or
interpretation of this Partnership Agreement to the laws of another state.
13.6. WAIVER. No consent or waiver, express or implied, by a Partner
to or of any breach or default by any other Partner in the performance by such
other Partner of its obligations hereunder shall be valid unless in writing,
and no such consent or waiver shall be deemed or construed to be a consent or
waiver to or of any other breach or default in the performance by such other
Partner of the same or any other obligations of such other Partner hereunder.
37
Failure on the part of a Partner to complain of any act or failure to act of
any other Partner or to declare the other Partner in default, irrespective of
how long such failure continues, shall not constitute a waiver by such Partner
of its rights hereunder. The giving of consent by a Partner in any one instance
shall not limit or waive the necessity to obtain such Partner's consent in any
future instance.
13.7. HEADINGS & REFERENCES; INTERPRETATION. Titles of Sections are
for convenience only and neither limit nor amplify the provisions of this
Partnership Agreement. The words "hereof," "herein" and "hereunder" and words
of similar import, when used in this Partnership Agreement, shall refer to this
Partnership Agreement as a whole and not to any particular provision of this
Partnership Agreement. All references herein to Sections, Exhibits, Schedules
and Appendices shall, unless the context requires a different construction, be
deemed to be references to the Sections, Exhibits, Schedules and Appendices to
this Partnership Agreement. All personal pronouns used in this Partnership
Agreement, whether used in the masculine, feminine or neuter gender, shall
include all other genders, and the singular shall include the plural and vice
versa. The use herein of the word "including" following any general statement,
term or matter, shall not be construed to limit such statement, term or matter
to the specific items or matters, whether or not non-limiting language (such as
"without limitation" or "but not limited to," or words of similar import) is
used with reference thereto, but rather shall be deemed to refer to all other
items or matters that could reasonably fall within the broadest possible scope
of such general statement, term or matter.
13.8. COUNTERPARTS. This Partnership Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which shall constitute one and the same agreement.
13.9. FURTHER ASSURANCES. Each party hereto agrees to do all acts and
things and to make, execute and deliver such written instruments, as shall from
time to time be reasonably required to carry out the terms and provisions of
this Partnership Agreement.
13.10. NONRECOURSE. The parties hereto expressly agree that no
undertaking or agreement made in this Partnership Agreement
38
on the part of any Partner was made or intended to be made as a personal or
individual undertaking or agreement on the part of any partner, incorporator,
stockholder, director, officer or agent (past, present or future) of such
Partner, and no personal or individual liability or responsibility is assumed
by, nor shall any recourse at any time be asserted or enforced against, any
such partner, incorporator, stockholder, director, officer or agent, all of
which recourse (whether at common law, in equity, by statute or otherwise) is
hereby forever waived and released.
13.11. WAIVER OF RIGHT OF PARTITION. To the maximum extent permitted by
law, each Partner waives any right to partition the Property.
13.12. NO THIRD PARTY RIGHTS. The provisions of this Partnership
Agreement are intended to bind the Partners as to each other and are not
intended to and do not create rights in any other Person and no Person is or is
intended to be a third party beneficiary of any of the provisions of this
Partnership Agreement.
39
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Partnership Agreement as of the day and year first above written.
GENERAL PARTNER:
BJ SERVICES COMPANY, U.S.A.
By: /s/ X. X. Xxxxxxxx
X. X. Xxxxxxxx, Treasurer
S-1
NONAFFILIATED PARTNER:
FIRST SECURITY TRUST COMPANY OF
NEVADA, not in its individual
capacity, but solely as Nonaffiliated
Partner Trustee of BJ Services Trust
No. 1999-1
By: /s/ XxXxx Xxxxxx
Name: XxXxx Xxxxxx
Title: Trust Officer
S-2
AFFILIATED PARTNER:
BJ SERVICES II, L.L.C.
By: BJ Services Company, U.S.A.,
its Sole Member
By: /s/ X. X. Xxxxxxxx
X. X. Xxxxxxxx, Treasurer
S-3
ORGANIZATIONAL LIMITED PARTNER
By: /s/ X. X. Xxxxxxxx
---------------------------------
Name: X. X. Xxxxxxxx, III
S-4
EXHIBIT A
SUPPLEMENT NO. ______
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
THIS SUPPLEMENT NO.______(this "Partnership Agreement Supplement") to the
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF BJ SERVICES EQUIPMENT
II, L.P. (as the same may be amended, amended and restated, supplemented or
otherwise modified form time to time, the "Partnership Agreement") entered into
as of December 15, 1999 is made and entered into by and among BJ Services
Company, U.S.A., a Delaware corporation ("BJ USA"), as general partner, BJ
Services II, L.L.C., a Delaware limited liability company, as Affiliated
Partner, and First Security Trust Company of Nevada, not in its individual
capacity, but solely as Nonaffiliated Partner Trustee of BJ Services Trust No.
1999-1 ("Nonaffiliated Partner"). In consideration of the covenants, conditions
and agreements contained herein, the parties agree that the Units subject to the
Partnership Agreement, from and after the date hereof, shall include the Units
described in Schedule 1 to this Supplement.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Supplement as of the day and year first above written.
GENERAL PARTNER:
BJ SERVICES COMPANY, U.S.A.
By: /s/ X. X. Xxxxxxxx
----------------------------------
X. X. Xxxxxxxx, Treasurer
NONAFFILIATED PARTNER:
FIRST SECURITY TRUST COMPANY OF
NEVADA, not in its individual
capacity, but solely as Nonaffiliated
Partner Trustee of BJ Services Trust
No. 1999-1
By: /s/ Xxx X. Xxxxx
----------------------------------
Name: Xxx X. Xxxxx
Title: Trust Officer
AFFILIATED PARTNER:
BJ SERVICES II, L.L.C.
By: BJ Services Company, U.S.A.,
its Sole Member
By: /s/ X. X. Xxxxxxxx
----------------------------------
X. X. Xxxxxxxx, Treasurer
Schedule 1
Supplemental No. ___ to Amended and Restated Agreement
of Limited Partnership
[Attached]
SCHEDULE 1
To Amended and Restated Agreement of Limited Partnership
Priority Distributions
DISTRIBUTION DATE PRIORITY DISTRIBUTION
ANNEX B
To Schedule 1 of
Amended and Restate Agreement
Limited Partnership
ALLOCATIONS
THIS SCHEDULE CONSTITUTES A SPECIFIC ALLOCATION FOR
PURPOSES OF SECTION 467 OF THE CODE
SCHEDULE 4
To Amended and Restated Agreement of Limited Partnership
[Attached]
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 2. ORGANIZATIONAL MATTERS. . . . . . . . . . . . . . . . . . . . . . .1
2.1. Formation, Continuation and Conversion . . . . . . . . . . . . . . . . .1
2.2. Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
2.3. Certificates and Filings . . . . . . . . . . . . . . . . . . . . . . . .1
2.4. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.5. Registered Office and Agent: Place of Business . . . . . . . . . . . . .2
2.6. Ownership of Property. . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 3. PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
3.1. Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
3.2. Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
SECTION 4. CAPITAL CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . .3
4.1. Organizational Contributions . . . . . . . . . . . . . . . . . . . . . .3
4.2. Contribution of Initial Units and Other Equipment. . . . . . . . . . . .3
4.3. Contribution of Nonaffiliated Partner. . . . . . . . . . . . . . . . . .3
4.4. Additional Capital Contributions . . . . . . . . . . . . . . . . . . . .3
4.5. No Withdrawal; No Interest . . . . . . . . . . . . . . . . . . . . . . .5
SECTION 5. CAPITAL ACCOUNTS; ALLOCATIONS . . . . . . . . . . . . . . . . . . .5
5.1. Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
5.2. Allocations for Capital Account Purposes . . . . . . . . . . . . . . . .7
5.3. Allocations for Tax Purposes . . . . . . . . . . . . . . . . . . . . . 10
SECTION 6. DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.1. Distributions of Cash. . . . . . . . . . . . . . . . . . . . . . . . . 10
6.2. Distributions in Kind. . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 7. MANAGEMENT AND OPERATION OF BUSINESS. . . . . . . . . . . . . . . 12
7.1. Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.2. Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.3. Finance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.4. Unanimous Consent of Partners. . . . . . . . . . . . . . . . . . . . . 14
7.5. Rights of Nonaffiliated Partner. . . . . . . . . . . . . . . . . . . . 15
7.6. Delegation of Authority. . . . . . . . . . . . . . . . . . . . . . . . 17
7.7. Dealings with Partners and Affiliates. . . . . . . . . . . . . . . . . 17
7.8. Liability of Limited Partnership . . . . . . . . . . . . . . . . . . . 17
SECTION 8. ACCOUNTING AND TAX MATTERS. . . . . . . . . . . . . . . . . . . . 17
8.1. Accrual Basis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.2. Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.3. Reports and Certificates . . . . . . . . . . . . . . . . . . . . . . . 17
8.4. Preparation of Tax Returns . . . . . . . . . . . . . . . . . . . . . . 18
8.5. Tax Elections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.6. Tax Controversies. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.7. Organizational Expenses. . . . . . . . . . . . . . . . . . . . . . . . 19
8.8. Requests for Administrative Adjustment . . . . . . . . . . . . . . . . 19
SECTION 9. RIGHTS TO PURCHASE THE PARTNERSHIP INTEREST OF NONAFFILIATED
PARTNER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.1. ET Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.2. [Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . 20
9.3. [Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . 20
9.4. Special P.O. Right . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.5. Purchase and Closing Procedures. . . . . . . . . . . . . . . . . . . . 20
SECTION 10. TRANSFER OF THE PARTNERSHIP INTEREST; CERTIFICATES. . . . . . . . 21
10.1. Permitted Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.2. Rights Transferred . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.3. No Release from Obligations. . . . . . . . . . . . . . . . . . . . . . 22
10.4. Agreements with Partner Transferees. . . . . . . . . . . . . . . . . . 22
10.5. Allocations Between Transferor Partner and Partner Transferee. . . . . 22
10.6. Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.7. Consent to Lien of the Indenture; Exercise of Remedies . . . . . . . . 22
SECTION 11. DISSOLUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.1. Events of Dissolution. . . . . . . . . . . . . . . . . . . . . . . . . 23
11.2. Covenant Not to Cause Dissolution of Partnership . . . . . . . . . . . 24
11.3. Winding-Up Liquidator. . . . . . . . . . . . . . . . . . . . . . . . . 24
11.4. Liquidation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.5. Distributions in Kind. . . . . . . . . . . . . . . . . . . . . . . . . 25
11.6. Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.7. Reasonable Time for Winding-Up . . . . . . . . . . . . . . . . . . . . 25
TABLE OF CONTENTS
CONTINUED PAGE
SECTION 12. ACTIVITIES OF PARTNERS. . . . . . . . . . . . . . . . . . . . . . 25
12.1. Right to Engage in Independent Conduct . . . . . . . . . . . . . . . . 25
12.2. Matters Concerning General Partner . . . . . . . . . . . . . . . . . . 25
SECTION 13. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . 26
13.1. Complete Agreement; Amendment. . . . . . . . . . . . . . . . . . . . . 26
13.2. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.3. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
13.4. Successor and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . 28
13.5. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
13.6. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
13.7. Headings & References; Interpretation. . . . . . . . . . . . . . . . . 28
13.8. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
13.9. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . 29
13.10. Nonrecourse. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
13.11. Waiver of Right of Partition . . . . . . . . . . . . . . . . . . . . . 29
13.12. No Third Party Rights. . . . . . . . . . . . . . . . . . . . . . . . . 29
