EXHIBIT 3.4
Draft 10/21/98
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
STAR GAS PROPANE, L.P.
TABLE OF CONTENTS
ARTICLE I
ORGANIZATIONAL MATTERS
Section 1.1 Formation and Continuation.................................. 2
Section 1.2 Name........................................................ 2
Section 1.3 Registered Office; Principal Office......................... 2
Section 1.4 Power of Attorney........................................... 2
Section 1.5 Term........................................................ 4
Section 1.6 Possible Restrictions on Transfer........................... 4
ARTICLE II
DEFINITIONS
ARTICLE III
PURPOSE
SECTION 3.1 Purpose and Business........................................ 14
SECTION 3.2 Powers...................................................... 14
ARTICLE IV
CONTRIBUTIONS
Section 4.1 Initial Contributions....................................... 14
Section 4.2 Contributions at the Initial Closing Date; Contributions
at the Effective Time....................................... 15
Section 4.3 Additional Contributions.................................... 15
Section 4.4 No Preemptive Rights........................................ 15
Section 4.5 Capital Accounts............................................ 16
Section 4.6 Interest and Withdrawal..................................... 18
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ARTICLE V
DISTRIBUTIONS
Section 5.1 Allocations for Capital Account Purposes................... 18
Section 5.2 Allocations for Tax Purpose................................ 23
Section 5.3 Requirement of Distributions............................... 25
ARTICLE VI
MANAGEMENT AND OPERATION OF BUSINESS
SECTION 6.1 Management................................................. 25
SECTION 6.2 Certificate of Limited Partnership......................... 27
SECTION 6.3 Restrictions on General Partner's Authority................ 27
SECTION 6.4 Reimbursement of the General Partner....................... 28
SECTION 6.5 Outside Activities......................................... 29
SECTION 6.6 Loans from the General Partner; Contracts with Affiliates;
Certain Restrictions on the General Partner................ 29
SECTION 6.7 Indemnification............................................ 31
SECTION 6.8 Liability of Indemnitees................................... 33
SECTION 6.9 Resolution of Conflicts of Interest........................ 33
SECTION 6.10 Other Matters Concerning the General Partner............... 35
SECTION 6.11 Title to Partnership Assets................................ 35
SECTION 6.12 Reliance by Third Parties.................................. 36
ARTICLE VII
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER
Section 7.1 Limitation of Liability.................................... 37
Section 7.2 Management of Business..................................... 37
Section 7.3 Return of Capital.......................................... 37
Section 7.4 Right of the Limited Partner Relating to the Partnership... 37
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 8.1 Records and Accounting..................................... 38
Section 8.2 Fiscal Year................................................ 39
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ARTICLE IX
TAX MATTERS
Section 9.1 Preparation of Tax Returns................................ 39
Section 9.2 Tax Elections............................................. 39
Section 9.3 Tax Controversies......................................... 39
Section 9.4 Withholding............................................... 40
ARTICLE X
TRANSFER OF INTERESTS
SECTION 10.2 Transfer of the General Partner's Partnership Interest.... 40
SECTION 10.3 Transfer of the Limited Partner's Partnership Interest.... 41
ARTICLE XI
ADMISSION OF PARTNERS
Section 11.1 Admission of Star Gas as a Limited Partner................ 41
Section 11.2 Admission of Substituted Limited Partners................. 41
Section 11.3 Admission of Successor General Partner.................... 41
Section 11.4 Amendment of Agreement and Certificate of Limited
Partnership............................................... 42
Section 11.5 Admission of Additional Limited Partners.................. 42
ARTICLE XII
WITHDRAWAL OR REMOVAL OF PARTNERS
Section 12.1 Withdrawal of the General Partner......................... 42
Section 12.2 Removal of the General Partner............................ 44
Section 12.3 Interest of Departing Partner and Successor General
Partner................................................... 44
Section 12.4 Reimbursement of Departing Partner........................ 44
Section 12.5 Withdrawal of the Limited Partner......................... 44
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
Section 13.1 Dissolution............................................... 45
Section 13.2 Continuation of the Business of the Partnership
After Dissolution......................................... 45
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Section 13.3 Liquidator................................................ 46
Section 13.4 Liquidation............................................... 47
Section 13.5 Cancellation of Certificate of Limited Partnership........ 47
Section 13.6 Return of Contributions................................... 48
Section 13.7 Waiver of Partition....................................... 48
Section 13.8 Capital Account Restoration............................... 48
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT
Section 14.1 Amendment to be Adopted Solely by General Partner......... 48
Section 14.2 Amendment Procedures...................................... 49
ARTICLE XV
MERGER
Section 15.1 Authority................................................. 50
Section 15.2 Procedure for Merger or Consolidation..................... 50
Section 15.3 Approval by Limited Partner of Merger or Consolidation.... 51
Section 15.4 Certificate of Merger..................................... 51
Section 15.5 Effect of Merger.......................................... 51
ARTICLE XVI
GENERAL PROVISIONS
Section 16.1 Addresses and Notices..................................... 52
Section 16.2 References................................................ 52
Section 16.3 Pronouns and Plurals...................................... 52
Section 16.4 Further Action............................................ 53
Section 16.5 Binding Effect............................................ 53
Section 16.6 Integration............................................... 53
Section 16.7 Creditors................................................. 53
Section 16.8 Waiver.................................................... 53
Section 16.9 Counterparts.............................................. 53
Section 16.10 Applicable Law............................................ 53
Section 16.11 Invalidity of Provisions.................................. 54
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AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF STAR GAS PROPANE, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF STAR GAS
PROPANE, L. P., dated as of ____________, 1999, is entered into by and among
Star Gas LLC, a Delaware limited liability company, as the General Partner, and
Star Gas Partners, L.P., a Delaware limited partnership, as the Limited Partner,
together with any other Persons who become Partners in the Partnership as
provided herein. In consideration of the covenants, conditions and agreements
contained herein, the parties hereto hereby agree as follows:
R E C I T A L S:
- - - - - - - -
WHEREAS, Star Gas Corporation, a Delaware corporation and the initial
general partner of the Partnership (the "Initial General Partner"), and certain
other parties organized the Partnership as a Delaware limited partnership
pursuant to an Agreement of Limited Partnership dated as of December 20, 1995
(the "Original Agreement"); and
WHEREAS, the Partnership, the MLP, Petro and Mergeco have entered into that
Merger Agreement dated as of October ___, 1998 (the "Petro Merger Agreement")
providing for the merger (the "Merger") of Mergeco with and into Petro; and
WHEREAS, in order to effect the transactions contemplated by the Merger
Agreement, it is necessary to amend this Agreement as provided herein; and
WHEREAS, the Merger Agreement and the transactions contemplated thereby
(including, without limitation, the form of this Agreement and the amendments
effected hereby and the withdrawal of Star Gas as the general partner of the
Partnership and the MLP and the election of Star Gas LLC as the successor
general partner of the Partnership and the MLP) have been submitted to, and
approved by the requisite vote of, the Limited Partners; and
WHEREAS, the General Partner has the authority to adopt certain amendments
to this Agreement without the approval of any Limited Partner or limited partner
of the MLP to reflect, among other things: (i) subject to the terms of Section
4.4, any change that is necessary or desirable in connection with the
authorization for issuance of any class or series of Partnership Securities
pursuant to Section 4.4 of the MLP Agreement and (ii) a change that, in the sole
discretion of the General Partner, does not adversely affect the limited partner
of the MLP in any material respect.
NOW, THEREFORE, the Original Agreement is hereby amended and, as so
amended, is restated in its entirety as follows:
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ARTICLE I
ORGANIZATIONAL MATTERS
Section 1.1 Formation and Continuation.
The General Partner and the MLP previously formed the Partnership as a
limited partnership pursuant to the provisions of the Delaware Act. The General
Partner and the Limited Partners hereby amend and restate this Agreement in its
entirety to continue the Partnership as a limited partnership pursuant to the
provisions of the Delaware Act and to set forth the rights and obligations of
the Partners and certain matters related thereto. This amendment and
restatement shall become effective on the date of this Agreement. Except as
expressly provided to the contrary in this Agreement, the rights and obligations
of the Partners and the administration, dissolution and termination of the
Partnership shall be governed by the Delaware Act. All Partnership Interests
shall constitute personal property of the owner thereof for all purposes.
Section 1.2 Name.
The name of the Partnership is "Star Gas Propane, L.P." The Partnership's
business may be conducted under any other name or names deemed necessary or
appropriate by the General Partner, including the name of the General Partner.
The words "Limited Partnership," "L.P.," "Ltd." or similar words or letters
shall be included in the Partnership's name where necessary for the purpose of
complying with the laws of any jurisdiction that so requires. The General
Partner in its sole discretion may change the name of the Partnership at any
time and from time to time and shall notify the Limited Partner of such change
in the next regular communication to the Limited Partner.
Section 1.3 Registered Office; Principal Office.
Unless and until changed by the General Partner, the registered office of
the Partnership in the State of Delaware shall be located at 00 Xxxxxxxxxx
Xxxxxx, Xxxxx X-000, Xxxxx, Xxxxxxxx 00000, and the registered agent for service
of process on the Partnership in the State of Delaware at such registered office
shall be The Xxxxxxxx-Xxxx Corporation System, Inc. The principal office of the
Partnership shall be located at, and the address of the General Partner shall
be, 0000 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000, or such other place as
the General Partner may from time to time designate by notice to the Limited
Partner. The Partnership may maintain offices at such other place or places
within or outside the State of Delaware as the General Partner deems necessary
or appropriate.
Section 1.4 Power of Attorney.
(a) The Limited Partner hereby constitutes and appoints each of
the General Partner and, if a Liquidator shall have been selected pursuant to
Section 13.3, the Liquidator, severally (and any successor to either thereof by
merger, transfer, assignment, election or otherwise)
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and each of their authorized officers and attorneys-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:
(i) execute, swear to, acknowledge, deliver, file and record in
the appropriate public offices (A) all certificates, documents and other
instruments (including this Agreement and the Certificate of Limited
Partnership and all amendments or restatements thereof) that the General
Partner or the Liquidator deems necessary or appropriate to form, qualify
or continue the existence or qualification of the Partnership as a limited
partnership (or a partnership in which the limited partners have limited
liability) in the State of Delaware and in all other jurisdictions in which
the Partnership may conduct business or own property; (B) all certificates,
documents and other instruments that the General Partner or the Liquidator
deems necessary or appropriate to reflect, in accordance with its terms,
any amendment, change, modification or restatement of this Agreement; (C)
all certificates, documents and other instruments (including conveyances
and a certificate of cancellation) that the General Partner or the
Liquidator deems necessary or appropriate to reflect the dissolution and
liquidation of the Partnership pursuant to the terms of this Agreement; (D)
all certificates, documents and other instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant to,
or other events described in, Article X, XI, XII or XIII; (E) all
certificates, documents and other instruments relating to the determination
of the rights, preferences and privileges of any class or series of
Partnership Interests; and (F) all certificates, documents and other
instruments (including agreements and a certificate of merger) relating to
a merger or consolidation of the Partnership pursuant to Article XV; and
(ii) execute, swear to, acknowledge, deliver, file and record all
ballots, consents, approvals, waivers, certificates, documents and other
instruments necessary or appropriate, in the sole discretion of the General
Partner or the Liquidator, to make, evidence, give, confirm or ratify any
vote, consent, approval, agreement or other action that is made or given by
the Partners hereunder or is consistent with the terms of this Agreement or
is necessary or appropriate, in the sole discretion of the General Partner
or the Liquidator, to effectuate the terms or intent of this Agreement;
provided, that when the approval of the Limited Partner is required by any
provision of this Agreement, the General Partner or the Liquidator may
exercise the power of attorney made in this Section 1.4(a)(ii) only after
the necessary consent or approval of the Limited Partner is obtained.
Nothing contained in this Section 1.4(a) shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article XIV or
as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive and not
be affected by the subsequent death, incompetency, disability, incapacity,
dissolution, bankruptcy or termination of the Limited Partner
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and the transfer of all or any portion of the Limited Partner's Partnership
Interest and shall extend to the Limited Partner's heirs, successors, assigns
and personal representatives. The Limited Partner hereby agrees to be bound by
any representation made by the General Partner or the Liquidator acting in good
faith pursuant to such power of attorney; and the Limited Partner hereby waives
any and all defenses that may be available to contest, negate or disaffirm the
action of the General Partner or the Liquidator taken in good faith under such
power of attorney. The Limited Partner shall execute and deliver to the General
Partner or the Liquidator, within 15 days after receipt of the General Partner's
or the Liquidator's request therefor, such further designation, powers of
attorney and other instruments as the General Partner or the Liquidator deems
necessary to effectuate this Agreement and the purposes of the Partnership.
Section 1.5 Term.
The Partnership commenced upon the filing of the Certificate of Limited
Partnership in accordance with the Delaware Act and shall continue in existence
until the close of Partnership business on December 31, 2085 or until the
earlier dissolution of the Partnership in accordance with the provisions of
Article XIII.
Section 1.6 Possible Restrictions on Transfer.
The General Partner may impose restrictions on the transfer of Partnership
Interests if a subsequent Opinion of Counsel determines that such restrictions
are necessary to avoid a significant risk of the Partnership's becoming taxable
as a corporation or otherwise as an entity for federal income tax purposes. The
restrictions may be imposed by making such amendments to this Agreement as the
General Partner in its sole discretion may determine to be necessary or
appropriate to impose such restrictions.
ARTICLE II
DEFINITIONS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Additional Limited Partner" means a Person admitted to the Partnership as
a Limited Partner pursuant to Section 11.5 and who is shown as such on the books
and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for each
Partner as of the end of each fiscal year of the Partnership, (a) increased by
any amounts that such Partner is obligated to restore under the standards set by
Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to
restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)), and
(b) decreased by (i) the amount of all losses and deductions that, as of the end
of such fiscal year, are
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reasonably expected to be allocated to such Partner in subsequent years under
Sections 704(e)(2) and 706(d) of the Code and Treasury Regulation Section 1.751-
1(b)(2)(ii), and (ii) the amount of all distributions that, as of the end of
such fiscal year, are reasonably expected to be made to such Partner in
subsequent years in accordance with the terms of this Agreement or otherwise to
the extent they exceed offsetting increases to such Partner's Capital Account
that are reasonably expected to occur during (or prior to) the year in which
such distributions are reasonably expected to be made (other than increases as a
result of a minimum gain chargeback pursuant to Section 5.1(d)(i) or
5.1(d)(ii)). The foregoing definition of Adjusted Capital Account is intended to
comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)
and shall be interpreted consistently therewith.
"Adjusted Property" means any property the Carrying Value of which has been
adjusted pursuant to Section 4.5(d)(i) or 4.5(d)(ii).
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question. As used
herein, the term "control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.
"Agreed Allocation" means any allocation, other than a Required Allocation,
of an item of income, gain, loss or deduction pursuant to the provisions of
Section 5.1, including, without limitation, a Curative Allocation (if
appropriate to the context in which the term "Agreed Allocation" is used).
"Agreed Value" of any Contributed Property means the fair market value of
such property or other consideration at the time of contribution as determined
by the General Partner using such reasonable method of valuation as it may
adopt. Subject to Section 4.5(c)(i), the General Partner shall, in its sole
discretion, use such method as it deems reasonable and appropriate to allocate
the aggregate Agreed Value of Contributed Properties contributed to the
Partnership in a single or integrated transaction among each separate property
on a basis proportional to the fair market value of each Contributed Property.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership of Star Gas Propane, L.P.,as it may be amended, supplemented or
restated from time to time.
"Audit Committee" means a committee of the Board of Directors of the
General Partner composed entirely of two or more directors who are neither
members, officers nor employees of the General Partner or members, stockholders
(other than holders of Common Units or Senior Subordinated Units) officers,
directors or employees of any Affiliates of the General Partner.
"Available Cash" as to any Quarter ending before the Liquidation Date,
means
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(a) the sum of (i) all cash and cash equivalents of the Partnership
Group on hand at the end of such Quarter and (ii) all additional cash and cash
equivalents of the Partnership Group in hand on the date of determination of
Available Cash with respect to such Quarter resulting from Working Capital
Borrowings subsequent to the end of such quarter, less
(b) the amount of cash reserves that is necessary or appropriate in
the reasonable discretion of the General Partner to (i) provide for the proper
conduct of the business of the Partnership Group (including reserves for future
capital expenditures) subsequent to such Quarter, (ii) provide funds for
distributions under Sections 5.4(a)(i), (ii), and (iii) or 5.4(b)(i) of the MLP
Agreement in respect of any one or more of the next four Quarters, or (iii)
comply with applicable law or any debt instrument or other agreement or
obligation to which any member of the Partnership Group is a party or its assets
are subject; provided, however, that the General Partner may not establish cash
reserves for distributions pursuant to Section 5.4(a)(iii) of the MLP Agreement
unless the General Partner has determined that in its judgment the establishment
of reserves will not prevent the MLP from distributing the Minimum Quarterly
Distribution on all Common Units and any Common Unit Arrearages thereon with
respect to the next four Quarters; and, provided further, that disbursements
made by a Group Member or cash reserves established, increased or reduced after
the end of such Quarter but on or before the date of determination of Available
Cash with respect to such Quarter shall be deemed to have been made,
established, increased or reduced, for purposes of determining Available Cash,
within such Quarter if the General Partner so determines.
Notwithstanding the foregoing, "Available Cash" with respect to the Quarter
in which the Liquidation Date occurs and any subsequent Quarter shall equal
zero. Notwithstanding the foregoing (x) disbursements (including, without
limitation, contributions to an OLP Subsidiary or disbursements on behalf of an
OLP Subsidiary) made or reserves established, increased or reduced after the end
of any Quarter but on or before the date on which the Partnership makes its
distribution of Available Cash in respect of such Quarter pursuant to Section
5.3(a) shall be deemed to have been made, established, increased or reduced, for
purposes of determining Available Cash, with respect to such Quarter if the
General Partner so determines and (y) "Available Cash" with respect to any
period shall not include any cash receipts or reductions in reserves or take
into account any disbursements made or reserves established after the
Liquidation Date.
"Book-Tax Disparity" means with respect to any item of Contributed Property
or Adjusted Property, as of the date of any determination, the difference
between the Carrying Value of such Contributed Property or Adjusted Property and
the adjusted basis thereof for federal income tax purposes as of such date. A
Partner's share of the Partnership's Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the difference
between such Partner's Capital Account balance as maintained pursuant to Section
4.5 and the hypothetical balance of such Partner's Capital Account computed as
if it had been maintained strictly in accordance with federal income tax
accounting principles.
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"Business Day" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States or the
states of New York or Connecticut shall not be regarded as a Business Day.
"Capital Account" means the capital account maintained for a Partner
pursuant to Section 4.5.
"Capital Contribution" means any cash, cash equivalents or the Net Agreed
Value of Contributed Property that a Partner contributes or has contributed to
the Partnership pursuant to this Agreement and the Conveyance and Contribution
Agreements.
"Certificate of Limited Partnership" means the Certificate of Limited
Partnership filed with the Secretary of State of the State of Delaware as
referenced in Section 6.2, as such Certificate of Limited Partnership may be
amended, supplemented or restated from time to time.
"Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time. Any reference herein to a specific section or sections of
the Code shall be deemed to include a reference to any corresponding provision
of future law.
"Common Unit" means a unit representing a fractional part of the
partnership interests of all limited partners and assignees and having the
rights and obligations specified with respect to Common Units in the MLP
Agreement. [All references herein to Common Units after the expiration of the
Subordination Period shall be deemed to be references to both Class A Common
Units and Class B Common Units, unless otherwise indicated.]
"Contributed Property" means each property or other asset, in such form as
may be permitted by the Delaware Act, but excluding cash, contributed to the
Partnership. Once the Carrying Value of a Contributed Property is adjusted
pursuant to Section 4.5(d), such property shall no longer constitute a
Contributed Property, but shall be deemed an Adjusted Property.
"Conveyance and Contribution Agreements" means collectively, (i) that
certain Conveyance and Contribution Agreement, dated as of the Effective Time,
among the Partnership, the MLP, Petro and Star Gas LLC and (ii) that certain
Conveyance and Contribution Agreement among the Partnership, the MLP, Petro and
Petro Holdings, together with the additional conveyance documents and
instruments contemplated or referenced thereunder.
"Curative Allocation" means any allocation of an item of income, gain,
deduction, loss or credit pursuant to the provisions of Section 5.1(d)(x).
"Delaware Act" means the Delaware Revised Uniform Limited Partnership Act,
6 Del C. (S) 17-101, et seq., as amended, supplemented or restated from time to
time, and any successor to such statute.
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"Departing Partner" means a former General Partner, from and after the
effective date of any withdrawal or removal of such former General Partner
pursuant to Section 12.1 or Section 12.2.
"Economic Risk of Loss" has the meaning set forth in Treasury Regulation
Section 1.752-2(a).
"Effective Time" means the effective time of the Merger, which shall be the
later to occur of (i) the filing in the office of the Secretary of State of the
State of Delaware of a properly executed certificate of merger and (ii) the
filing with the Department of State of Minnesota of properly executed articles
of merger, or such later date and time as may be set forth in such certificate
of merger and articles of merger.
"Equity Registration Statement" means the Registration Statement on Form S-
3 (Registration No. - ______), as it has been or as it may be amended or
supplemented from time to time, filed by the Partnership with the Commission
under the Securities Act to register the offering and sale of the Common Units
in the Equity Offering.
"Event of Withdrawal" has the meaning assigned to such term in Section 12.
l(a).
"General Partner" means Star Gas LLC, a Delaware limited liability company,
and its successor as general partner of the Partnership.
"Group Member" means a member of the Partnership Group.
"Includes" means includes, without limitation, and "including" means
including, without limitation.
"Indemnitee" means (a) the General Partner, any Departing Partner, any
Person who is or was an Affiliate of the General Partner or any Departing
Partner, (b) any Person who is or was an officer, director, employee, partner,
agent or trustee of the General Partner or any Departing Partner or any such
Affiliate, or (c) any Person who is or was serving at the request of the General
Partner or any Departing Partner or any such Affiliate as a director, officer,
employee, partner, agent, fiduciary or trustee of another Person; provided, that
a Person shall not be an Indemnitee pursuant to this clause (c) by reason of
providing, on a fee-for-services basis, trustee, fiduciary or custodial
services.
"Initial Closing Date" means December 20,1995.
"Initial General Partner" means Star Gas Corporation, a Delaware
corporation.
"Initial Offering" means the initial offering and sale of Common Units to
the public on December 20, 1995.
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"Initial Registration Statement" means the Registration Statement on Form
S-l (Registration No. 33-98490), as amended or supplemented from time to time,
filed by the MLP with the Commission under the Securities Act to register the
offering and sale of the Initial Common Units in the Initial Offering.
"Limited Partner" means the MLP and Star Gas LLC pursuant to Section 4.2,
each Substituted Limited Partner, if any, each Additional Limited Partner and
any Departing Partner upon the change of its status from General Partner to
Limited Partner pursuant to Section 12.3, but excluding any such Person from and
after the time it withdraws from the Partnership.
"Liquidation Date" means (a) in the case of an event giving rise to the
dissolution of the Partnership of the type described in clauses (a) and (b) of
the first sentence of Section 13.2, the date on which the applicable time period
during which the Partners have the right to elect to reconstitute the
Partnership and continue its business has expired without such an election being
made, and (b) in the case of any other event giving rise to the dissolution of
the Partnership, the date on which such event occurs.
"Liquidator" means the General Partner or other Person approved pursuant to
Section 13.3 who performs the functions described therein.
"Mergeco" has the meaning assigned to such term in the Recitals to this
Agreement.
"Merger" has the meaning assigned to such term in the Recitals to this
Agreement.
"Merger Agreement" has the meaning assigned to such term in Section 15.1.
"MLP" means Star Gas Partners, L.P.,a Delaware limited partnership.
"MLP Agreement" means the Amended and Restated Agreement of Limited
Partnership of Star Gas Partners, L.P., as it may be amended, supplemented or
restated from time to time.
"National Securities Exchange" means an exchange registered with the
Commission under Section 6(a) of the Securities Exchange Act of 1934, as
amended, supplemented or restated from time to time, and any successor to such
statute, or the Nasdaq Stock Market or any successor thereto.
"Net Agreed Value" means, (a) in the case of any Contributed Property, the
Agreed Value of such property reduced by any liabilities either assumed by the
Partnership upon such contribution or to which such property is subject when
contributed, and (b) in the case of any property distributed to a Partner by the
Partnership, the Partnership's Carrying Value of such property (as adjusted
pursuant to Section 4.5(d)(ii)) at the time such property is distributed,
reduced by any indebtedness either assumed by such Partner upon such
distribution or to which such property is subject at the time of distribution,
in either case, as determined under Section 752 of the Code.
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"Net Income" means, for any taxable year, the excess, if any, of the
Partnership's items of income and gain (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnership's items of loss and deduction (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation
of Net Income shall be determined in accordance with Section 4.5(b) and shall
not include any items specially allocated under Section 5.1(d).
"Net Loss" means, for any taxable year, the excess, if any, of the
Partnership's items of loss and deduction (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnership's items of income and gain (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation
of Net Loss shall be determined in accordance with Section 4.5(b) and shall not
include any items specially allocated under Section 5.1(d).
"Net Termination Gain" means, for any taxable year, the sum, if positive,
of all items of income, gain, loss or deduction recognized by the Partnership
(including, without limitation, such amounts recognized through an OLP
Subsidiary, if applicable) after the Liquidation Date. The items included in the
determination of Net Termination Gain shall be determined in accordance with
Section 4.5(b) and shall not include any items of income, gain or loss specially
allocated under Section 5.1(d).
"Net Termination Loss" means, for any taxable year, the sum, if negative,
of all items of income, gain, loss or deduction recognized by the Partnership
(including, without limitation, such amounts recognized through an OLP
Subsidiary, if applicable) after the Liquidation Date. The items included in the
determination of Net Termination Loss shall be determined in accordance with
Section 4.5(b) and shall not include any items of income, gain or loss specially
allocated under Section 5.1(d).
"Nonrecourse Built-in Gain" means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or pledge
securing a Nonrecourse Liability, the amount of any taxable gain that would be
allocated to the Partners pursuant to Sections 5.2(b)(i)(A) and 5.2(b)(ii)(A) if
such properties were disposed of in a taxable transaction in full satisfaction
of such liabilities and for no other consideration.
"Nonrecourse Deductions" means any and all items of loss, deduction or
expenditures (described in Section 705(a)(2)(B) of the Code) that, in accordance
with the principles of Treasury Regulation Section 1.704-(2)(b), are
attributable to a Nonrecourse Liability.
"Nonrecourse Liability" has the meaning set forth in Treasury Regulation
Section 1.752-1(a)(2).
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"OLP Subsidiary" means a Subsidiary of the Partnership.
"Opinion of Counsel" means a written opinion of counsel (who may be regular
counsel to the Partnership, the General Partner or any of its Affiliates)
acceptable to the General Partner in its reasonable discretion.
"Partner Nonrecourse Debt" has the meaning set forth in Treasury Regulation
Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Treasury Regulation Section 1.704-2(i)(2).
"Partner Nonrecourse Deductions" means any and all items of loss, deduction
or expenditure (including, without limitation, any expenditure described in
Section 705(a)(2)(B) of the Code) that, in accordance with the principles of
Treasury Regulation Section 1.704-2(i), are attributable to a Partner
Nonrecourse Debt.
"Partners" means the General Partner and the Limited Partner.
"Partnership" means Star Gas Propane, L.P., a Delaware limited partnership,
and any successor thereto.
"Partnership Group" means the Partnership and its partnership Subsidiaries,
treated as a single consolidated partnership.
"Partnership Interest" means the interest of a Partner in the Partnership.
"Partnership Minimum Gain" means that amount determined in accordance with
the principles of Treasury Regulation Section 1.704-2(d).
"Percentage Interest" means (a) as to the General Partner, in its capacity
as such, 0.01% and (b) as to the Limited Partner, 99.99%.
"Person" means an individual or a corporation, partnership, trust,
unincorporated organization, association or other entity.
"Petro" means Petroleum Heat and Power Co., Inc., a Minnesota corporation,
an indirect subsidiary of the Partnership.
"Petro Class A Common Stock" means the Class A Common Stock, par value $.10
per share, of Petro.
11
"Petro Class C Common Stock" means the Class C Common Stock, par value $.10
per share, of Petro.
"Proxy Statement" means the Registration Statement on Form S-4
(Registration No. ___) as it has been or as it may be amended or supplemented
from time to time, filed jointly by the Partnership and Petro relating to the
Merger and the transactions contemplated thereby.
"Quarter" means, unless the context requires otherwise, a three-month
period of time ending on March 31, June 30, September 30, or December 31.
"Recapture Income" means any gain recognized by the Partnership (computed
without regard to any adjustment required by Sections 734 or 743 of the Code)
upon the disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"Required Allocations" means any allocation (or limitation imposed on any
allocation) of an item of income, gain, deduction or loss pursuant to (a)
Section 5.1(b)(i) or (b) Sections 5.1(d)(i), (ii), (iv)-(vii) (ix), such
allocations (or limitations thereon) being directly or indirectly required by
the Treasury regulations promulgated under Section 704(b) of the Code.
"Residual Gain" or "Residual Loss" means any item of gain or loss, as the
case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of a Contributed Property
or Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Sections 5.2(b)(i)(A) or 5.2(b)(ii)(A), respectively, to eliminate
Book-Tax Disparities.
"Securities Act" means the Securities Act of 1933, as amended, supplemented
or restated from time to time and any successor to such statute.
"Special Approval" means approval by the Audit Committee.
"Star Gas" means Star Gas Corporation, a Delaware corporation.
"Subsidiary" means, with respect to any Person, (a) a corporation of which
more than 50% of the voting power of shares entitled (without regard to the
occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly, by such
Person, by one or more Subsidiaries of such Person or a combination thereof, (b)
a partnership (whether general or limited) in which such Person or a Subsidiary
of such Person is, at the date of determination, a general or limited partner of
such partnership, but only if more than 50% of the partnership interests of such
partnership (considering all of the partnership interests of the partnership as
a single class) is owned or controlled, directly or indirectly, by such Person,
by one or more Subsidiaries of such Person, or a combination thereof, or (c) any
other Person (other than a corporation or a partnership) in which such Person,
directly or indirectly, at the date of
12
determination, has (i) at least a majority ownership interest or (ii) the power
to elect or direct the election of a majority of the directors or other
governing body of such Person.
"Substituted Limited Partner" means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 11.3 in place of and with all the
rights of a Limited Partner and who is shown as a Limited Partner on the books
and records of the Partnership.
"Surviving Business Entity" has the meaning assigned to such term in
Section 15.2(b).
"Underwriter" means each Person named as an underwriter in Schedule 1 to
the Underwriting Agreement who purchases Common Units pursuant thereto.
"Underwriting Agreement" means the Underwriting Agreement, relating to the
Equity Offering, dated ________________, among the Underwriters, the MLP and
other parties providing for the purchase of Common Units by such Underwriters.
"Unit" has the meaning assigned to such term in the MLP Agreement.
"Unrealized Gain" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the fair market
value of such property as of such date (as determined under Section 4.5(d)) over
(b) the Carrying Value of such property as of such date (prior to any adjustment
to be made pursuant to Section 4.5(d) as of such date).
"Unrealized Loss" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the Carrying Value
of such property as of such date (prior to any adjustment to be made pursuant to
Section 4.5(d) as of such date) over (b) the fair market value of such property
as of such date (as determined under Section 4.5(d)).
"Withdrawal Opinion of Counsel" has the meaning assigned to such term in
Section 12.1(b).
"Working Capital Borrowings" means borrowings pursuant to a facility or
other arrangement requiring all borrowings thereunder to be reduced to a
relatively small amount each year for an economically meaningful period of time.
It being the intent hereof, that borrowings which are not intended exclusively
for working capital purposes shall not be treated as Working Capital Borrowings.
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ARTICLE III
PURPOSE
Section 3.1 Purpose and Business.
The purpose and nature of the business to be conducted by the Partnership
shall be to (a) acquire, manage and operate the assets of the Partnership and
any similar assets or properties, and to engage directly in, or to enter into or
form any corporation, partnership, joint venture, limited liability company or
other arrangement to engage indirectly in, any type of business or activity
engaged in by Star Gas or its Affiliates immediately prior to the Initial
Closing Date and, in connection therewith, to exercise all of the rights and
powers conferred upon the Partnership pursuant to the agreements relating to
such business activity, (b) engage directly in, or enter into or form any
corporation, partnership, joint venture, limited liability company or other
arrangement to engage indirectly in, any business activity that is approved by
the General Partner and which may lawfully be conducted by a limited partnership
organized pursuant to the Delaware Act and, in connection therewith, to exercise
all of the rights and powers conferred upon the Partnership pursuant to the
agreements relating to such business activity, and (c) do anything necessary or
appropriate to the foregoing, including the making of capital contributions or
loans to the MLP or any Subsidiary of the Partnership or the MLP. The General
Partner has no obligation or duty to the Partnership or the Limited Partner to
propose or approve, and in its sole discretion may decline to propose or
approve, the conduct by the Partnership of any business.
Section 3.2 Powers.
The Partnership shall be empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described in Section
3.1 and for the protection and benefit of the Partnership.
ARTICLE IV
CONTRIBUTIONS
Section 4.1 Initial Contributions.
In connection with the formation of the Partnership under the Delaware Act,
the Initial General Partner made an initial Capital Contribution to the
Partnership and was admitted as the general partner of the Partnership, and the
MLP made an initial Capital Contribution to the Partnership and was admitted as
a limited partner of the Partnership.
14
Section 4.2 Contributions at the Initial Closing Date; Contributions at the
Effective Time.
(a) On the Initial Closing Date, Star Gas, Silgas, Inc. and
Silgas of Illinois, Inc. conveyed substantially all of their assets (other than
$83.9 million in cash and certain non-operating assets) into the Partnership and
received consideration consisting of (i) the continuation of Star Gas' general
partner interest in the Partnership consisting of a Partnership Interest
representing a 1.0101% Percentage Interest, (ii) a limited partner interest in
the Partnership, which was contributed by Star Gas, Silgas, Inc. and Silgas of
Illinois, Inc. to the MLP, and (iii) the Partnership's assumption of, or taking
of assets subject to, certain indebtedness and other liabilities, including the
Partnership's assumption of the payment obligations of certain indebtedness of
Star Gas. The Partnership Interest contributed by Star Gas, Silgas, Inc. and
Silgas of Illinois, Inc. pursuant to the provisions of Sections 4.2(a) to the
MLP, represented a 98.9899% Percentage Interest in the Partnership.
(b) On the Initial Closing Date, the MLP contributed to the
Partnership in respect of its Partnership Interest the net proceeds to the MLP
from the issuance of the Common Units pursuant to the Initial Offering.
(c) At the Effective Time and pursuant to the Conveyance and
Contribution Agreements, the General Partner contributed _________ shares of
Petro Class A Common Stock and _________ shares of Petro Class C Common Stock to
the MLP in exchange for 278,985 General Partner Units representing a 1.99%
general partner interest and _________ shares of Petro Class A Common Stock and
_________ shares of Petro Class C Common Stock to the Partnership in exchange
for a 0.01% general partner interest in the Partnership.
Section 4.3 Additional Contributions.
(a) With the consent of the General Partner, the Limited Partner
may, but shall not be obligated to, make additional Capital Contributions to the
Partnership. Contemporaneously with the making of any such additional Capital
Contributions by the Limited Partner, the General Partner may but shall not be
obligated to make an additional Capital Contribution to the Partnership in an
amount equal to 0.01% of the Net Agreed Value of the additional Capital
Contribution then made by the Limited Partner. Except as set forth in the
immediately preceding sentence and Article XIII, the General Partner shall not
be obligated to make any additional Capital Contributions to the Partnership.
(b) The Partnership may not issue additional limited partner
interests.
Section 4.4 No Preemptive Rights.
No Person shall have any preemptive, preferential or other similar right
with respect to issuance or sale of any class or series of Partnership
Interests, any option, right, warrant or appreciation rights relating thereto,
or any other type of equity interest that the Partnership may
15
lawfully issue, or any unsecured or secured debt obligation of the Partnership
that is convertible into any class or series of equity interests of the
Partnership.
Section 4.5 Capital Accounts.
(a) The Partnership shall maintain for each Partner owning a
Partnership Interest a separate Capital Account with respect to such Partnership
Interest in accordance with the rules of Treasury Regulation Section 1.704-
1(b)(2)(iv). Such Capital Account shall be increased by (i) the amount of all
Capital Contributions made to the Partnership with respect to such Partnership
Interest pursuant to this Agreement and (ii) all items of Partnership income and
gain (including, without limitation, income and gain exempt from tax) computed
in accordance with Section 4.5(b) and allocated with respect to such Partnership
Interest pursuant to Section 5.1, and decreased by (x) the amount of cash or the
Net Agreed Value of all actual and deemed distributions of cash or property made
with respect to such Partnership Interest pursuant to this Agreement and (y) all
items of Partnership deduction and loss computed in accordance with Section
4.5(b) and allocated with respect to such Partnership Interest pursuant to
Section 5.1.
(b) For purposes of computing the amount of any item of income,
gain, loss or deduction to be reflected in the Partners' Capital Accounts, the
determination, recognition and classification of any such item shall be the same
as its determination, recognition and classification for federal income tax
purposes (including, without limitation, any method of depreciation, cost
recovery or amortization used for that purpose), provided, that:
(i) Solely for purposes of this Section 4.5, the
Partnership shall be treated as owning directly its proportionate share (as
determined by the General Partner) of all property owned by any OLP
Subsidiary that is classified as a partnership for federal income tax
purposes.
(ii) All fees and other expenses incurred by the
Partnership to promote the sale of (or to sell) a Partnership Interest that
can neither be deducted nor amortized under Section 709 of the Code, if
any, shall, for purposes of Capital Account maintenance, be treated as an
item of deduction at the time such fees and other expenses are incurred and
shall be allocated among the Partners pursuant to Section 5.1.
(iii) Except as otherwise provided in Treasury Regulation
Section 1.704-1(b)(2)(iv)(m), the computation of all items of income, gain,
loss and deduction shall be made without regard to any election under
Section 754 of the Code which may be made by the Partnership and, as to
those items described in Section 705(a)(1)(B) or 705(a)(2)(B) of the Code,
without regard to the fact that such items are not includable in gross
income or are neither currently deductible nor capitalized for federal
income tax purposes.
(iv) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the
adjusted basis of such property as of such
16
date of disposition were equal in amount to the Partnership's Carrying
Value with respect to such property as of such date.
(v) In accordance with the requirements of Section 704(b)
of the Code, any deductions for depreciation, cost recovery or amortization
attributable to any Contributed Property shall be determined as if the
adjusted basis of such property on the date it was acquired by the
Partnership were equal to the Agreed Value of such property. Upon an
adjustment pursuant to Section 4.5(d) to the Carrying Value of any
Partnership property subject to depreciation, cost recovery or
amortization, any further deductions for such depreciation, cost recovery
or amortization attributable to such property shall be determined (A) as if
the adjusted basis of such property were equal to the Carrying Value of
such property immediately following such adjustment and (B) using a rate of
depreciation, cost recovery or amortization derived from the same method
and useful life (or, if applicable, the remaining useful life) as is
applied for federal income tax purposes; provided, however that, if the
asset has a zero adjusted basis for federal income tax purposes,
depreciation, cost recovery or amortization deductions shall be determined
using any reasonable method that the General Partner may adopt.
(vi) If the Partnership's adjusted basis in a depreciable or
cost recovery property is reduced for federal income tax purposes pursuant
to Section 48(q)(1) or 48(q)(3) of the Code, the amount of such reduction
shall, solely for purposes hereof, be deemed to be an additional
depreciation or cost recovery deduction in the year such property is placed
in service and shall be allocated among the Partners pursuant to Section
5.1. Any restoration of such basis pursuant to Section 48(q)(2) of the Code
shall, to the extent possible, be allocated in the same manner to the
Partners to whom such deemed deduction was allocated.
(c) A transferee of a Partnership Interest shall succeed to a pro
rata portion of the Capital Account of the transferor relating to the
Partnership in respect of its Partnership Interest so transferred.
(d) (i) Consistent with the provisions of Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), on an issuance of additional Partnership
Interests for cash or Contributed Property, the Capital Account of all
Partners and the Carrying Value of each Partnership property immediately
prior to such issuance shall be adjusted upward or downward to reflect any
Unrealized Gain or Unrealized Loss attributable to such Partnership
property, as if such Unrealized Gain or Unrealized Loss had been recognized
on an actual sale of each such property immediately prior to such issuance
and had been allocated to the Partners at such time pursuant to Section
5.1(c). In determining such Unrealized Gain or Unrealized Loss, the
aggregate cash amount and fair market value of all Partnership assets
(including, without limitation, cash or cash equivalents) immediately prior
to the issuance of additional Partnership Interests shall be determined by
the General Partner using such reasonable method of valuation as it may
adopt; provided, however, that the General Partner, in arriving at such
valuation, must take fully into account the fair market value of the
17
Partnership Interests of all Partners at such time. The General Partner
shall allocate such aggregate value among the assets of the Partnership (in
such manner as it determines in its sole discretion to be reasonable) to
arrive at a fair market value for individual properties.
(ii) In accordance with Treasury Regulation Section 1.704-
1(b)(2)(iv)(f), immediately prior to any actual or deemed distribution to a
Partner of any Partnership property (other than a distribution of cash that
is not in redemption or retirement of a Partnership Interest), the Capital
Accounts of all Partners and the Carrying Value of all Partnership property
shall be adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as if such
Unrealized Gain or Unrealized Loss had been recognized in a sale of such
property immediately prior to such distribution for an amount equal to its
fair market value, and had been allocated to the Partners, at such time,
pursuant to Section 5.1(c). Any Unrealized Gain or Unrealized Loss
attributable to such property shall be allocated in the same manner as Net
Termination Gain or Net Termination Loss pursuant to Section 5.1(c);
provided, however that, in making any such allocation, Net Termination Gain
or Net Termination Loss actually realized shall be allocated first. In
determining such Unrealized Gain or Unrealized Loss the aggregate cash
amount and fair market value of all Partnership assets (including, without
limitation, cash or cash equivalents) immediately prior to a distribution
shall (A) in the case of an actual distribution which is not made pursuant
to Section 13.4, be determined and allocated in the same manner as that
provided in Section 4.5(d)(i) or (B) in the case of a liquidating
distribution pursuant to Section 14.3 or 14.4, be determined and allocated
by the Liquidator using such reasonable method of valuation as it may
adopt.
Section 4.6 Interest and Withdrawal.
No interest shall be paid by the Partnership on Contributions, and no
Partner shall be entitled to withdraw any part of its Contributions or to
receive any distribution from the Partnership, except as provided in Articles V,
VII, XII and XIII.
ARTICLE V
DISTRIBUTIONS
Section 5.1 Allocations for Capital Account Purposes.
For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Section 4.5(b)) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided hereinbelow.
18
(a) Net Income. After giving effect to the special allocations set
forth in Section 5.1(d), Net Income for each taxable period and all items of
income, gain, loss and deduction taken into account in computing Net Income for
such taxable period shall be allocated as follows:
(i) First, 100% to the General Partner until the aggregate Net
Income allocated to the General Partner pursuant to this Section 5.1(a)(i)
for the current taxable year and all previous taxable years is equal to the
aggregate Net Losses allocated to the General Partner pursuant to Section
5.1(b)(ii) for all previous taxable years; and
(ii) Second, the balance, if any, 100% to the General Partner and
the Limited Partner in accordance with their respective Percentage
Interest s.
(b) Net Losses. After giving effect to the special allocations set
forth in Section 5.1(d), Net Losses for each taxable period and all items of
income, gain, loss and deduction taken into account in computing Net Losses for
such taxable period shall be allocated as follows:
(i) First, 100% to the General Partner and the Limited Partner
in accordance with their respective Percentage Interests; provided, that
Net Losses shall not be allocated pursuant to this Section 5.1(b)(i) to the
extent that such allocation would cause any Limited Partner to have a
deficit balance in its Adjusted Capital Account at the end of such taxable
year (or increase any existing deficit balance in its Adjusted Capital
Account); and
(ii) Second, the balance, if any, 100% to the General Partner.
(c) Net Termination Gains and Losses. After giving effect to the
special allocations set forth in Section 5.1(d), all items of income, gain, loss
and deduction taken into account in computing Net Termination Gain or Net
Termination Loss for such taxable period shall be allocated in the same manner
as such Net Termination Gain or Net Termination Loss is allocated hereunder. All
allocations under this Section 5.1(c) shall be made after Capital Account
balances have been adjusted by all other allocations provided under this Section
5.1 and after all distributions of Available Cash provided under Section 5.3
have been made with respect to the taxable period ending on the date of the
Partnership's liquidation pursuant to Sections 13.3 and 13.4.
(i) If a Net Termination Gain is recognized (or deemed
recognized pursuant to Section 4.5(d)), such Net Termination Gain shall be
allocated between the General Partner and the Limited Partner in the
following manner (and the Capital Accounts of the Partners shall be
increased by the amount so allocated in each of the following subclauses,
in the order listed, before an allocation is made pursuant to the next
succeeding subclause):
(A) First, to each Partner having a deficit balance in its
Capital Account, in the proportion that such deficit balance bears to
the total deficit balances
19
in the Capital Accounts of all Partners, until each such Partner has
been allocated Net Termination Gain equal to any such deficit balance
in its Capital Account; and
(B) Second, 100% to the General Partner and the Limited
Partner in accordance with their respective Percentage Interests.
(ii) If a Net Termination Loss is recognized (or deemed
recognized pursuant to Section 4.5(d)), such Net Termination Loss
shall be allocated to the Partners in the following manner:
(A) First, 100% to the General Partner and the Limited
Partner in proportion to, and to the extent of, the positive balances
in their respective Capital Accounts; and
(B) Second, the balance, if any, 100% to the General
Partner.
(d) Special Allocations. Notwithstanding any other provision of this
Section 5.1, the following special allocations shall be made for such taxable
period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding any
other provision of this Section 5.1, if there is a net decrease in
Partnership Minimum Gain during any Partnership taxable period, each
Partner shall be allocated items of Partnership income and gain for such
period (and, if necessary, subsequent periods) in the manner and amounts
provided in Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and
1.704-(j)(2)(i), or any successor provision. For purposes of this Section
5.1(d), each Partner's Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required hereunder shall
be effected, prior to the application of any other allocations pursuant to
this Section 5.1(d) with respect to such taxable period (other than an
allocation pursuant to Sections 5.1 (d)(v) and (vi)). This Section
5.1(d)(i) is intended to comply with the Partnership Minimum Gain
chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall
be interpreted consistently therewith.
(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain.
Notwithstanding the other provisions of this Section 5.1 (other than
Section 5.1(d)(i)), except as provided in Treasury Regulation Section
1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain during any Partnership taxable period, any Partner with a
share of Partner Nonrecourse Debt Minimum Gain at the beginning of such
taxable period shall be allocated items of Partnership income and gain for
such period (and, if necessary, subsequent periods) in the manner and
amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and
1.704(a)(2)(ii), or any successor provisions. For purposes of this Section
5.1(d), each Partner's Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required hereunder shall
be effected, prior to the application of any other allocations pursuant to
this Section 5.1(d), other than Section 5.1(d)(i) and other
20
than an allocation pursuant to Sections 5.1(d)(v) and (vi), with respect to
such taxable period. This Section 5.1(d)(ii) is intended to comply with the
chargeback of items of income and gain requirement in Treasury Regulation
Section 1.704-2(i)(4) and shall be interpreted consistently therewith.
(iii) Allocation of Deductions. This section is intentionally
deleted.
(iv) Qualified Income Offset. In the event any Partner
unexpectedly receives any adjustments, allocations or distributions
described in Treasury Regulation Sections 1.7041(b)(2)(ii)(d)(4), 1.704-
1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Partnership income
and gain shall be specifically allocated to such Partner in an amount and
manner sufficient to eliminate, to the extent required by the Treasury
Regulations promulgated under Section 704(b) of the Code, the deficit
balance, if any, in its Adjusted Capital Account created by such
adjustments, allocations or distributions as quickly as possible unless
such deficit balance is otherwise eliminated pursuant to Section 5.1(d)(i)
or (ii).
(v) Gross Income Allocations. In the event any Partner has a
deficit balance in its Capital Account at the end of any Partnership
taxable period in excess of the sum of (A) the amount such Partner is
required to restore pursuant to the provisions of this Agreement and (B)
the amount such Partner is deemed obligated to restore pursuant to Treasury
Regulation Sections 1.704-2(g) and 1.704-2(i)(5), such Partner shall be
specially allocated items of Partnership gross income and gain in the
amount of such excess as quickly as possible; provided, that an allocation
pursuant to this Section 5.1(d)(v) shall be made only if and to the extent
that such Partner would have a deficit balance in its Capital Account as
adjusted after all other allocations provided in this Section 5.1 have been
tentatively made as if this Section 5.1(d)(v) were not in this Agreement.
(vi) Nonrecourse Deductions. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in accordance with their
respective Percentage Interests. If the General Partner determines in its
good faith discretion that the Partnership's Nonrecourse Deductions must be
allocated in a different ratio to satisfy the safe harbor requirements of
the Treasury Regulations promulgated under Section 704(b) of the Code, the
General Partner is authorized, upon notice to the Limited Partner, to
revise the prescribed ratio to the numerically closest ratio that does
satisfy such requirements.
(vii) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to the Partner
that bears the Economic Risk of Loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Treasury Regulation Section 1.704-2(i). If
more than one Partner bears the Economic Risk of Loss with respect to a
Partner Nonrecourse Debt, such Partner Nonrecourse Deductions attributable
thereto shall be
21
allocated between or among such Partners in accordance with the ratios in
which they share such Economic Risk of Loss.
(viii) Nonrecourse Liabilities. For purposes of Treasury
Regulation Section 1.752-3(a)(3), the Partners agree that Nonrecourse
Liabilities of the Partnership in excess of the sum of (A) the amount of
Partnership Minimum Gain and (B) the total amount of Nonrecourse Built-in
Gain shall be allocated among the Partners in accordance with their
respective Percentage Interests.
(ix) Code Section 754 Adjustments. To the extent an adjustment to
the adjusted tax basis of any Partnership asset pursuant to Section 734(b)
or 743(b) of the Code is required, pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis), and such item of
gain or loss shall be specially allocated to the Partners in a manner
consistent with the manner in which their Capital Accounts are required to
be adjusted pursuant to such Section of the Treasury Regulations.
(x) Curative Allocation.
(A) Notwithstanding any other provision of this Section
5.1, other than the Required Allocations, the Required Allocations
shall be taken into account in making the Agreed Allocations so that,
to the extent possible, the net amount of items of income, gain, loss
and deduction allocated to each Partner pursuant to the Required
Allocations and the Agreed Allocations, together, shall be equal to
the net amount of such items that would have been allocated to each
such Partner under the Agreed Allocations had the Required Allocations
and the related Curative Allocation not otherwise been provided in
this Section 5.1. Notwithstanding the preceding sentence, Required
Allocations relating to (1) Nonrecourse Deductions shall not be taken
into account except to the extent that there has been a decrease in
Partnership Minimum Gain and (2) Partner Nonrecourse Deductions shall
not be taken into account except to the extent that there has been a
decrease in Partner Nonrecourse Debt Minimum Gain. Allocations
pursuant to this Section 5.1(d)(x)(A) shall only be made with respect
to Required Allocations to the extent the General Partner reasonably
determines that such allocations will otherwise be inconsistent with
the economic agreement among the Partners. Further, allocations
pursuant to this Section 5.1(d)(x)(A) shall be deferred with respect
to allocations pursuant to clauses (1) and (2) hereof to the extent
the General Partner reasonably determines that such allocations are
likely to be offset by subsequent Required Allocations.
(B) The General Partner shall have reasonable discretion,
with respect to each taxable period, to (1) apply the provisions of
Section 5.1(d)(x)(A) in
22
whatever order is most likely to minimize the economic distortions
that might otherwise result from the Required Allocations, and (2)
divide all allocations pursuant to Section 5.1(d)(x)(A) among the
Partners in a manner that is likely to minimize such economic
distortions.
Section 5.2 Allocations for Tax Purposes.
(a) Except as otherwise provided herein, for federal income tax
purposes, each item of income, gain, loss and deduction shall be allocated among
the Partners in the same manner as its correlative item of "book" income, gain,
loss or deduction is allocated pursuant to Section 5.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable
to a Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated for
federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in the manner
provided under Section 704(c) of the Code that takes into account the
variation between the Agreed Value of such property and its adjusted basis
at the time of contribution; and (B) any item of Residual Gain or Residual
Loss attributable to a Contributed Property shall be allocated among the
Partners in the same manner as its correlative item of "book" gain or loss
is allocated pursuant to Section 5.1.
(ii) (A) In the case of an Adjusted Property, such items
shall (1) first, be allocated among the Partners in a manner consistent
with the principles of Section 704(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to such property and the
allocations thereof pursuant to Section 4.5(d)(i) or (ii), and (2) second,
in the event such property was originally a Contributed Property, be
allocated among the Partners in a manner consistent with Section
5.2(b)(i)(A); and (B) any item of Residual Gain or Residual Loss
attributable to an Adjusted Property shall be allocated among the Partners
in the same manner as its correlative item of "book" gain or loss is
allocated pursuant to Section 5.1.
(iii) The General Partner shall apply the principles of
Treasury Regulation Section 1.704-3(d) to eliminate Book-Tax Disparities.
(c) For the proper administration of the Partnership and for the
preservation of uniformity of Units of the MLP (or any class or classes
thereof), the General Partner shall have sole discretion to (i) adopt such
conventions as it deems appropriate in determining the amount of depreciation,
amortization and cost recovery deductions; (ii) make special allocations for
federal income tax purposes of income (including, without limitation, gross
income) or deductions; and (iii) amend the provisions of this Agreement as
appropriate (x) to reflect the proposal or promulgation
23
of Treasury Regulations under Section 704(b) or Section 704(c) of the Code or
(y) otherwise to preserve or achieve uniformity of Units of the MLP (or any
class or classes thereof). The General Partner may adopt such conventions, make
such allocations and make such amendments to this Agreement as provided in this
Section 5.2(c) only if such conventions, allocations or amendments would not
have a material adverse effect on the Partners, the holders of any class or
classes of Units of the MLP issued and outstanding or the Partnership, and if
such allocations are consistent with the principles of Section 704 of the Code.
(d) The General Partner in its sole discretion may determine to
depreciate or amortize the portion of an adjustment under Section 743(b) of the
Code attributable to unrealized appreciation in any Adjusted Property (to the
extent of the unamortized Book-Tax Disparity) using a predetermined rate derived
from the depreciation or amortization method and useful life applied to the
Partnership's common basis of such property, despite the inconsistency of such
approach with Treasury Regulation Section 1.167(c)-1(a)(6) and Proposed Treasury
Regulation Section 1.197-2(g)(3). If the General Partner determines that such
reporting position cannot reasonably be taken, the General Partner may adopt
depreciation and amortization conventions under which all purchasers acquiring
Units of the MLP in the same month would receive depreciation and amortization
deductions, based upon the same applicable rate as if they had purchased a
direct interest in the Partnership's property. If the General Partner chooses
not to utilize such aggregate method, the General Partner may use any other
reasonable depreciation and amortization conventions to preserve the uniformity
of the intrinsic tax characteristics of any class or classes of Units of the MLP
that would not have a material adverse effect on the Limited Partner or the
holders of any class or classes of Units of the MLP.
(e) Any gain allocated to the Partners upon the sale or other taxable
disposition of any Partnership asset shall, to the extent possible, after taking
into account other required allocations of gain pursuant to this Section 5.2, be
characterized as Recapture Income in the same proportions and to the same extent
as such Partners (or their predecessors in interest) have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.
(f) All items of income, gain, loss, deduction and credit recognized
by the Partnership for federal income tax purposes and allocated to the Partners
in accordance with the provisions hereof shall be determined without regard to
any election under Section 754 of the Code which may be made by the Partnership;
provided, however, that such allocations, once made, shall be adjusted as
necessary or appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
(g) The General Partner may adopt such methods of allocation of
income, gain, loss or deduction between a transferor and a transferee of a
Partnership Interest as it determines necessary, to the extent permitted or
required by Section 706 of the Code and the regulations or rulings promulgated
thereunder.
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Section 5.3 Requirement of Distributions.
(a) Within 45 days following the end of (i) the period beginning
on the Initial Closing Date and ending on March 31, 1996 and (ii) each Quarter
commencing with the Quarter beginning on April 1, 1996, an amount equal to 100%
of Available Cash with respect to such period or Quarter shall be distributed in
accordance with this Article V by the Partnership to the Partners in accordance
with their respective Percentage Interests. The immediately preceding sentence
shall not require any distribution of cash if and to the extent such
distribution would be prohibited by applicable law or by any loan agreement,
security agreement, mortgage, debt instrument or other agreement or obligation
to which the Partnership is a party or by which it is bound or its assets are
subject.
(b) Notwithstanding the foregoing, in the event of the
dissolution and liquidation of the Partnership, all proceeds of such liquidation
shall be applied and distributed in accordance with, and subject to the terms
and conditions of, Section 13.4.
ARTICLE VI
MANAGEMENT AND OPERATION OF BUSINESS
Section 6.1 Management.
(a) The General Partner shall conduct, direct and manage all
activities of the Partnership. Except as otherwise expressly provided in this
Agreement, all management powers over the business and affairs of the
Partnership shall be exclusively vested in the General Partner, and the Limited
Partner shall have no right of control or management power over the business and
affairs of the Partnership. In addition to the powers now or hereafter granted a
general partner of a limited partnership under applicable law or which are
granted to the General Partner under any other provision of this Agreement, the
General Partner, subject to Section 6.3, shall have full power and authority to
do all things and on such terms as it, in its sole discretion, may deem
necessary or appropriate to conduct the business of the Partnership, to exercise
all powers set forth in Section 3.2 and to effectuate the purposes set forth in
Section 3.1, including the following:
(i) the making of any expenditures, the lending or
borrowing of money, the assumption or guarantee of, or other contracting
for, indebtedness and other liabilities, the issuance of evidences of
indebtedness and the incurring of any other obligations;
(ii) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Partnership;
25
(iii) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the assets of the
Partnership or the merger or other combination of the Partnership with or into
another Person;
(iv) the use of the assets of the Partnership (including
cash on hand) for any purpose consistent with the terms of this Agreement,
including the financing of the conduct of the operations of the Partnership, the
lending of funds to other Persons (including the MLP, the General Partner and
its Affiliates), the repayment of obligations of the Partnership and the making
of capital contributions to a Subsidiary;
(v) the negotiation, execution and performance of any
contracts, conveyances or other instruments (including instruments that
limit the liability of the Partnership under contractual arrangements to
all or particular assets of the Partnership, with the other party to the
contract to have no recourse against the General Partner or its assets
other than its interest in the Partnership, even if same results in the
terms of the transaction being less favorable to the Partnership than would
otherwise be the case);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees (including
employees having titles such as "president," "vice president," "secretary"
and "treasurer") and agents, outside attorneys, accountants, consultants
and contractors and the determination of their compensation and other terms
of employment or hiring;
(viii) the maintenance of such insurance for the benefit of
the Partnership Group and the Partners (including the assets of the
Partnership) as it deems necessary or appropriate;
(ix) the formation of, or acquisition of an interest in,
and the contribution of property and the making of loans to, any further
limited or general partnerships, joint ventures, corporations, limited
liability companies or other relationships;
(x) the indemnification of any Person against liabilities
and contingencies to the extent permitted by law; and
(xi) the control of any matters affecting the rights and
obligations of the Partnership, including the bringing and defending of
actions at law or in equity and otherwise engaging in the conduct of
litigation and the incurring of legal expense and the settlement of claims
and litigation.
(b) Notwithstanding any other provision of this Agreement, the
MLP Agreement, the Delaware Act or any applicable law, rule or regulation, each
of the Partners hereby (i) approves, ratifies and confirms the execution,
delivery and performance by the parties thereto of the MLP
26
Agreement, the Underwriting Agreement, the Equity Registration Statement, the
Conveyance and Contribution Agreements, the agreements and other documents filed
as exhibits to the Proxy Statement, and the other agreements described in or
filed as a part of the Proxy Statement; (ii) agrees that the General Partner (on
its own or through any officer of the Partnership) is authorized to execute,
deliver and perform the agreements referred to in clause (i) of this sentence
and the other agreements, acts, transactions and matters described in or
contemplated thereby on behalf of the Partnership without any further act,
approval or vote of the Partners; and (iii) agrees that the execution, delivery
or performance by the General Partner, the MLP, any Group Member or any
Affiliate of any of them, of this Agreement or any agreement authorized or
permitted under this Agreement, shall not constitute a breach by the General
Partner of any duty that the General Partner may owe the Partnership or the
Limited Partner or any other Persons under this Agreement (or any other
agreements) or of any duty stated or implied by law or equity.
Section 6.2 Certificate of Limited Partnership.
The General Partner has caused the Certificate of Limited Partnership to be
filed with the Secretary of State of the State of Delaware as required by the
Delaware Act and shall use all reasonable efforts to cause to be filed such
other certificates or documents as may be determined by the General Partner in
its sole discretion to be reasonable and necessary or appropriate for the
formation, continuation, qualification and operation of a limited partnership
(or a partnership in which the Limited Partner has limited liability) in the
State of Delaware or any other state in which the Partnership may elect to do
business or own property. To the extent that such action is determined by the
General Partner in its sole discretion to be reasonable and necessary or
appropriate, the General Partner shall file amendments to and restatements of
the Certificate of Limited Partnership and do all things to maintain the
Partnership as a limited partnership (or a partnership in which the Limited
Partner has limited liability) under the laws of the State of Delaware or of any
other state in which the Partnership may elect to do business or own property.
Subject to the terms of Section 7. 4(a), the General Partner shall not be
required, before or after filing, to deliver or mail a copy of the Certificate
of Limited Partnership, any qualification document or any amendment thereto to
the Limited Partner.
Section 6.3 Restrictions on General Partner's Authority.
(a) The General Partner may not, without written approval of the
specific act by the Limited Partner or by other written instrument executed and
delivered by the Limited Partner subsequent to the date of this Agreement, take
any action in contravention of this Agreement, including, except as otherwise
provided in this Agreement, (i) committing any act that would make it impossible
to carry on the ordinary business of the Partnership; (ii) possessing
Partnership property, or assigning any rights in specific Partnership property,
for other than a Partnership purpose; (iii) admitting a Person as a Partner;
(iv) amending this Agreement in any manner; or (v) transferring its interest as
general partner of the Partnership.
27
(b) Except as provided in Articles XIII and XV, the General
Partner may not sell, exchange or otherwise dispose of all or substantially all
of the Partnership's assets in a single transaction or a series of related
transactions without the approval of the Limited Partner; provided however that
this provision shall not preclude or limit the General Partner' s ability to
mortgage, pledge, hypothecate or grant a security interest in all or
substantially all of the Partnership's assets and shall not apply to any forced
sale of any or all of the Partnership's assets pursuant to the foreclosure of,
or other realization upon, any such encumbrance.
Section 6.4 Reimbursement of the General Partner.
(a) Except as provided in this Section 6.4 and elsewhere in this
Agreement or in the MLP Agreement, the General Partner shall not be compensated
for its services as general partner of any Group Member.
(b) The General Partner shall be reimbursed on a monthly basis,
or such other basis as the General Partner may determine in its sole discretion,
for (i) all direct and indirect expenses it incurs or payments it makes on
behalf of the Partnership (including salary, bonus, incentive compensation and
other amounts paid to any Person to perform services for the Partnership or for
the General Partner in the discharge of its duties to the Partnership) and (ii)
all other necessary or appropriate expenses allocable to the Partnership or
otherwise reasonably incurred by the General Partner in connection with
operating the Partnership's business (including expenses allocated to the
General Partner by its Affiliates). The General Partner shall determine the
expenses that are allocable to the Partnership in any reasonable manner
determined by the General Partner in its sole discretion. Reimbursements
pursuant to this Section 6.4 shall be in addition to any reimbursement to the
General Partner as a result of indemnification pursuant to Section 6.7.
(c) The General Partner, in its sole discretion and without the
approval of the Limited Partner (who shall have no right to vote in respect
thereof), may propose and adopt on behalf of the Partnership employee benefit
plans, employee programs and employee practices for the benefit of employees of
the General Partner, any Group Member, or any Affiliate, or any of them, in
respect of services performed, directly or indirectly, for the benefit of the
Partnership Group. Expenses incurred by the General Partner in connection with
any such plans, programs and practices shall be reimbursed in accordance with
Section 6.4(b). Any and all obligations of the General Partner under any
employee benefit plans, employee programs or employee practices adopted by the
General Partner as permitted by this Section 6.4(c) shall constitute obligations
of the General Partner hereunder and shall be assumed by any successor General
Partner approved pursuant to Section 12.1 or 12.2 or the transferee of or
successor to all of the General Partner's Partnership Interest as a general
partner in the Partnership pursuant to Section 11.3.
28
Section 6.5 Outside Activities.
(a) After the Initial Closing Date, the General Partner, for so
long as it is the general partner of the Partnership, shall not engage in any
business or activity or incur any debts or liabilities except in connection with
or incidental to (i) its performance as general partner of one or more Group
Members or as described in or contemplated by the Initial Registration Statement
or (ii) the acquiring, owning or disposing of debt or equity securities in any
Group Member.
(b) Certain Affiliates of the General Partner have entered into
a non-competition agreement with the Partnership and the MLP, which agreement
sets forth certain restrictions on the ability of such Affiliates to compete
with the Partnership and the Operating Partnership. Any amendments or waivers to
the non-competition agreement must be approved by the Audit Committee.
(c) Except as restricted by Sections 6.5(a) and 6.5(b), each
Indemnitee shall have the right to engage in businesses of every type and
description and other activities for profit and to engage in and possess an
interest in other business ventures of any and every type or description,
whether in businesses engaged in or anticipated to be engaged in by any Group
Member, independently or with others, including business interests and
activities in direct competition with the business and activities of any Group
Member, and none of the same shall constitute a breach of this Agreement or any
duty to any Group Member or any Partner or Assignee. Neither any Group Member,
any Limited Partner nor any other Person shall have any rights by virtue of this
Agreement, the Operating Partnership Agreement or the partnership relationship
established hereby or thereby in any business ventures of any Indemnitee.
(d) Notwithstanding anything to the contrary in this Agreement,
(i) the engaging in competitive activities by any Indemnitees in accordance with
the provisions of this Section 6.5 is hereby approved by the Partnership and all
Partners and (ii) it shall be deemed not to be a breach of the General Partner's
fiduciary duty or any other obligation of any type whatsoever of the General
Partner for the Indemnitees to engage in such business interests and activities
in preference to or to the exclusion of the Partnership (including, without
limitation, the General Partner and the Indemnitees shall have no obligation to
present business opportunities to the Partnership).
(e) The term "Affiliates" when used in this Section 6.5 with
respect to the General Partner shall not include any Group Member, the MLP or
any Subsidiary of any Group Member or the MLP.
Section 6.6 Loans from the General Partner; Contracts with Affiliates;
Certain Restrictions on the General Partner.
(a) The General Partner or any Affiliate thereof may lend to any
Group Member, and any Group Member may borrow, funds needed or desired by the
Group Member for such periods of time and in such amounts as the General Partner
may determine; provided, however, that in any
29
such case the lending party may not charge the borrowing party interest at a
rate greater than the rate that would be charged the borrowing party or impose
terms less favorable to the borrowing party than would be charged or imposed on
the borrowing party by unrelated lenders on comparable loans made on an arms'-
length basis (without reference to the lending party's financial abilities or
guarantees). The borrowing party shall reimburse the lending party for any costs
(other than any additional interest costs) incurred by the lending party in
connection with the borrowing of such funds. For purposes of this Section 6.6(a)
and Section 6.6(b), the term "Group Member" shall include any Affiliate of the
Group Member that is controlled by the Group Member. The Partnership may not
lend funds to the General Partner or any of its Affiliates.
(b) The Partnership may lend or contribute to any Group Member,
and any Group Member may borrow, funds on terms and conditions established in
the sole discretion of the General Partner; provided, however, that the
Partnership may not charge the Group Member interest at a rate greater than the
rate that would be charged to the Group Member (without reference to the General
Partner's financial abilities or guarantees), by unrelated lenders on comparable
loans. The foregoing authority shall be exercised by the General Partner in its
sole discretion and shall not create any right or benefit in favor of any Group
Member or any other Person.
(c) The General Partner may itself, or may enter into an
agreement with any of its Affiliates to, render services to the Partnership or
to the General Partner in the discharge of its duties as general partner of the
Partnership. Any services rendered to the Partnership by the General Partner or
any of its Affiliates shall be on terms that are fair and reasonable to the
Partnership; provided, however, that the requirements of this Section 6.6(c)
shall be deemed satisfied as to (i) any transaction approved by Special
Approval, (ii) any transaction, the terms of which are no less favorable to the
Partnership than those generally being provided to or available from unrelated
third parties or (iii) any transaction that, taking into account the totality of
the relationships between the parties involved (including other transactions
that may be particularly favorable or advantageous to the Partnership), is
equitable to the Partnership. The provisions of Section 6.4 shall apply to the
rendering of services described in this Section 6.6(c).
(d) The Partnership may transfer assets to joint ventures, other
partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.
(e) Neither the General Partner nor any of its Affiliates shall
sell, transfer or convey any property to, or purchase any property from, the
Partnership, directly or indirectly, except pursuant to transactions that are
fair and reasonable to the Partnership; provided, however, that the requirements
of this Section 6.6(e) shall be deemed to be satisfied as to (i) the
transactions effected pursuant to the Conveyance and Contribution Agreements and
any other transactions described in or contemplated by the Proxy Statement, (ii)
any transaction approved by Special Approval, (iii) any transaction, the terms
of which are no less favorable to the Partnership than those generally being
provided to or available from unrelated third parties, or (iv) any transaction
that, taking into account
30
the totality of the relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to the
Partnership), is equitable to the Partnership.
(f) The General Partner and its Affiliates will have no
obligation to permit any Group Member or the MLP to use any facilities or assets
of the General Partner and its Affiliates, except as may be provided in
contracts entered into from time to time specifically dealing with such use nor
shall there be any obligation on the part of the General Partner or its
Affiliates to enter into such contracts.
(g) Without limitation of Sections 6.6(a) through 6.6(f), and
notwithstanding anything to the contrary in this Agreement, the existence of the
conflicts of interest described in the Proxy Statement is hereby approved by all
Partners.
Section 6.7 Indemnification.
(a) To the fullest extent permitted by law but subject to the
limitations expressly provided in this Agreement, all Indemnitees shall be
indemnified and held harmless by the Partnership from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest, settlements and
other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, in which
any Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, by reason of its status as an Indemnitee, provided, that in each case
the Indemnitee acted in good faith and in a manner that such Indemnitee
reasonably believed to be in, or not opposed to, the best interests of the
Partnership and, with respect to any criminal proceeding, had no reasonable
cause to believe its conduct was unlawful; provided, further, no indemnification
pursuant to this Section 6.7 shall be available to the General Partner or Petro
with respect to their respective obligations incurred pursuant to the
Underwriting Agreement or the Conveyance and Contribution Agreement (other than
obligations incurred by the General Partner on behalf of the Partnership or the
MLP). The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere, or its equivalent,
shall not create a presumption that the Indemnitee acted in a manner contrary to
that specified above. Any indemnification pursuant to this Section 6.7 shall be
made only out of the assets of the Partnership, it being agreed that the General
Partner shall not be personally liable for such indemnification and shall have
no obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including
legal fees and expenses) incurred by an Indemnitee who is indemnified pursuant
to Section 6.7(a) in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by the Partnership prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
the Partnership of an undertaking by or on behalf of the Indemnitee to repay
such amount if it shall be determined that the Indemnitee is not entitled to be
indemnified as authorized in this Section 6.7.
31
(c) The indemnification provided by this Section 6.7 shall be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, both as to actions in the Indemnitee's capacity as an Indemnitee and
as to actions in any other capacity (including any capacity under the
Underwriting Agreement) and shall continue as to an Indemnitee who has ceased to
serve in such capacity and shall inure to the benefit of the heirs, successors,
assigns and administrators of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the
General Partner or its Affiliates for the cost of) insurance, on behalf of the
General Partner and such other Persons as the General Partner shall determine,
against any liability that may be asserted against or expense that may be
incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
(e) For purposes of this Section 6.7, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the Partnership
also imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute "fines" within the meaning of Section 6.7(a); and action taken
or omitted by it with respect to any employee benefit plan in the performance of
its duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is in, or not opposed to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partner to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An Indemnitee shall not be denied indemnification in whole
or in part under this Section 6.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 6.7 are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 6.7 or
any provision hereof shall in any manner terminate, reduce or impair the right
of any past, present or future Indemnitee to be indemnified by the Partnership,
nor the obligations of the Partnership to indemnify any such Indemnitee under
and in accordance with the provisions of this Section 6.7 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
32
Section 6.8 Liability of Indemnitees.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, no Indemnitee shall be liable for monetary damages to the
Partnership, the Limited Partner, or any other Persons who have acquired
interests in the Partnership, for losses sustained or liabilities incurred as a
result of any act or omission if such Indemnitee acted in good faith.
(b) Subject to its obligations and duties as General Partner set
forth in Section 6. 1 (a), the General Partner may exercise any of the powers
granted to it by this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its agents, and the General Partner
shall not be responsible for any misconduct or negligence on the part of any
such agent appointed by the General Partner in good faith.
(c) Any amendment, modification or repeal of this Section 6. 8
or any provision hereof shall be prospective only and shall not in any way
affect the limitations on the liability to the Partnership and the Limited
Partner of the General Partner, its directors, officers and employees and any
other Indemnitees under this Section 6.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.
Section 6.9 Resolution of Conflicts of Interest.
(a) Unless otherwise expressly provided in this Agreement or the
MLP Agreement, whenever a potential conflict of interest exists or arises
between the General Partner or any of its Affiliates, on the one hand, and the
Partnership, the MLP or the Limited Partner, on the other hand, any resolution
or course of action in respect of such conflict of interest shall be permitted
and deemed approved by the Limited Partner, and shall not constitute a breach of
this Agreement, of the MLP Agreement or of any agreement contemplated herein or
therein, or of any duty stated or implied by law or equity, if the resolution or
course of action is, or by operation of this Agreement is deemed to be, fair and
reasonable to the Partnership. The General Partner shall be authorized but not
required in connection with its resolution of such conflict of interest to seek
Special Approval of a resolution of such conflict or course of action. Any
conflict of interest and any resolution of such conflict of interest shall be
conclusively deemed fair and reasonable to the Partnership if such conflict of
interest or resolution is (i) approved by Special Approval, (ii) on terms no
less favorable to the Partnership than those generally being provided to or
available from unrelated third parties or (iii) fair to the Partnership, taking
into account the totality of the relationships between the parties involved
(including other transactions that may be particularly favorable or advantageous
to the Partnership). The General Partner may also adopt a resolution or course
of action that has not received Special Approval. The General Partner (including
the Audit Committee in connection with Special Approval) shall be authorized in
connection with its determination of what is "fair and reasonable" to the
Partnership and in connection with its resolution of any conflict of interest to
consider (A) the relative interests of any party to such conflict, agreement,
transaction or situation
33
and the benefits and burdens relating to such interest; (B) any customary or
accepted industry practices and any customary or historical dealings with a
particular Person; (C) any applicable generally accepted accounting or
engineering principles or practices; and (D) such additional factors as the
General Partner (including the Audit Committee) determines in its sole
discretion to be relevant, reasonable or appropriate under the circumstances.
Nothing contained in this Agreement, however, is intended to nor shall it be
construed to require the General Partner (including the Audit Committee) to
consider the interests of any Person other than the Partnership. In the absence
of bad faith by the General Partner, the resolution, action or terms so made,
taken or provided by the General Partner with respect to such matter shall not
constitute a breach of this Agreement, the MLP Agreement or any other agreement
contemplated herein or therein or a breach of any standard of care or duty
imposed herein or therein or, to the extent permitted by law, under the Delaware
Act or any other law, rule or regulation.
(b) Whenever this Agreement or any other agreement contemplated
hereby provides that the General Partner or any of its Affiliates is permitted
or required to make a decision (i) in its "sole discretion" or "discretion,"
that it deems "necessary or appropriate" or "necessary or advisable" or under a
grant of similar authority or latitude, the General Partner or such Affiliate
shall be entitled to consider only such interests and factors as it desires and
shall have no duty or obligation to give any consideration to any interest of,
or factors affecting, the Partnership, the Limited Partner or any limited
partner of the Limited Partner, (ii) it may make such decision in its sole
discretion (regardless of whether there is a reference to "sole discretion" or
"discretion") unless another express standard is provided for, or (iii) in "good
faith" or under another express standard, the General Partner or such Affiliate
shall act under such express standard and shall not be subject to any other or
different standards imposed by this Agreement, the MLP Agreement, any other
agreement contemplated hereby or under the Delaware Act or any other law, rule
or regulation. In addition, any actions taken by the General Partner or such
Affiliate consistent with the standards of "reasonable discretion" set forth in
the definition of Available Cash shall not constitute a breach of any duty of
the General Partner to the Partnership, the Limited Partner or any limited
partner of the Limited Partner. The General Partner shall have no duty, express
or implied, to sell or otherwise dispose of any asset of the Partnership Group.
No borrowing by any Group Member or the approval thereof by the General Partner
shall be deemed to constitute a breach of any duty of the General Partner to the
Partnership, the Limited Partner or any limited partner of the Limited Partner
by reason of the fact that the purpose or effect of such borrowing is directly
or indirectly to (A) enable distributions in respect of the general partner
interest under the MLP Agreement to exceed 1% of the total amount distributed by
the MLP or (B) hasten the expiration of the "Subordination Period" under the MLP
Agreement or the conversion of any "Subordinated Units" in the MLP into Common
Units.
(c) Whenever a particular transaction, arrangement or resolution
of a conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transactions.
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(d) The Limited Partner hereby authorizes the General Partner,
on behalf of the Partnership as a partner of a Group Member, to approve of
actions by the general partner of such Group Member similar to those actions
permitted to be taken by the General Partner pursuant to this Section 6.9.
Section 6.10 Other Matters Concerning the General Partner.
(a) The General Partner may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond, debenture,
or other paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties.
(b) The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers and other
consultants and advisers selected by it, and any act taken or omitted to be
taken in reliance upon the opinion (including an Opinion of Counsel) of such
Persons as to matters that the General Partner reasonably believes to be within
such Person's professional or expert competence shall be conclusively presumed
to have been done or omitted in good faith and in accordance with such opinion.
(c) The General Partner shall have the right, in respect of any
of its powers or obligations hereunder, to act through any of its duly
authorized officers, a duly appointed attorney or attorneys-in-fact or the duly
authorized officers of the Partnership.
(d) Any standard of care and duty imposed by this Agreement or
under the Delaware Act or any applicable law, rule or regulation shall be
modified, waived or limited to the extent permitted by law as required to permit
the General Partner to act under this Agreement or any other agreement
contemplated by this Agreement and to make any decision pursuant to the
authority prescribed in this Agreement, so long as such action is reasonably
believed by the General Partner to be in, or not inconsistent with, the best
interests of the Partnership.
Section 6.11 Title to Partnership Assets.
Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partner, individually or collectively, shall have any ownership
interest in such Partnership assets or any portion thereof. Title to any or all
of the Partnership assets may be held in the name of the Partnership, the
General Partner, one or more of its Affiliates or one or more nominees, as the
General Partner may determine. The General Partner hereby declares and warrants
that any Partnership assets for which record title is held in the name of the
General Partner or one or more of its Affiliates or one or more nominees shall
be held by the General Partner or such Affiliate or nominee for the use and
benefit of the Partnership in accordance with the provisions of this Agreement;
provided, however, that the General Partner shall use its reasonable efforts to
cause record title to such assets (other than those assets in respect of which
the General Partner determines that the expense and difficulty of
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conveyancing makes transfer of record title to the Partnership impracticable) to
be vested in the Partnership as soon as reasonably practicable; provided that,
prior to the withdrawal or removal of the General Partner or as soon thereafter
as practicable, the General Partner shall use reasonable efforts to effect the
transfer of record title to the Partnership and, prior to any such transfer,
will provide for the use of such assets in a manner satisfactory to the
Partnership. All Partnership assets shall be recorded as the property of the
Partnership in its books and records, irrespective of the name in which record
title to such Partnership assets is held. The General Partner covenants and
agrees that at the Initial Closing Date, the Partnership Group shall have all
licenses, permits, certificates, franchises, or other governmental
authorizations or permits necessary for the ownership of their properties or for
the conduct of their businesses, except for such licenses, permits,
certificates, franchises, or other governmental authorizations or permits,
failure to have obtained which will not, individually or in the aggregate, have
a material adverse effect on the Partnership Group.
Section 6.12 Reliance by Third Parties.
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner and any officer of the Partnership authorized by the General Partner to
act on behalf of and in the name of the Partnership has full power and authority
to encumber, sell or otherwise use in any manner any and all assets of the
Partnership and to enter into any contracts on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner or any such
officer as if it were the Partnership's sole party in interest, both legally and
beneficially. The Limited Partner hereby waives any and all defenses or other
remedies that may be available against such Person to contest, negate or
disaffirm any action of the General Partner or any such officer in connection
with any such dealing. In no event shall any Person dealing with the General
Partner or any such officer or its representatives be obligated to ascertain
that the terms of this Agreement have been complied with or to inquire into the
necessity or expedience of any act or action of the General Partner or any such
officer or its representatives. Each and every certificate, document or other
instrument executed on behalf of the Partnership by the General Partner or any
such officer or its representatives shall be conclusive evidence in favor of any
and every Person relying thereon or claiming thereunder that (a) at the time of
the execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (b) the Person executing and delivering
such certificate, document or instrument was duly authorized and empowered to do
so for and on behalf of the Partnership and (c) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
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ARTICLE VII
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER
Section 7.1 Limitation of Liability.
The Limited Partner shall have no liability under this Agreement except as
expressly provided in this Agreement or the Delaware Act.
Section 7.2 Management of Business.
The Limited Partner, in its capacity as such, shall not participate in the
operation, management or control (within the meaning of the Delaware Act) of the
Partnership's business, transact any business in the Partnership's name or have
the power to sign documents for or otherwise bind the Partnership. The
transaction of any such business by the General Partner, any of its Affiliates
or any officer, director, employee, partner, agent or trustee of the General
Partner or any of its Affiliates, in its capacity as such, shall not affect,
impair or eliminate the limitations on the liability of the Limited Partner
under this Agreement.
Section 7.3 Return of Capital.
The Limited Partner shall not be entitled to the withdrawal or return of
its Contribution, except to the extent, if any, that distributions made pursuant
to this Agreement or upon termination of the Partnership may be considered as
such by law and then only to the extent provided for in this Agreement.
Section 7. Right of the Limited Partner Relating to the Partnership.
(a) In addition to other rights provided by this Agreement or by
applicable law, and except as limited by Section 7.4(b), the Limited Partner
shall have the right, for a purpose reasonably related to the Limited Partner's
interest as a limited partner in the Partnership, upon reasonable demand and at
the Limited Partner's own expense:
(i) to obtain true and full information regarding the
status of the business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of
the Partnership's federal, state and local tax returns for each year;
(iii) to have furnished to it, upon notification to the
General Partner, a current list of the name and last known business,
residence or mailing address of each Partner;
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(iv) to have furnished to it, upon notification to the
General Partner, a copy of this Agreement and the Certificate of Limited
Partnership and all amendments thereto, together with a copy of the
executed copies of all powers of attorney pursuant to which this Agreement,
the Certificate of Limited Partnership and all amendments thereto have been
executed;
(v) to obtain true and full information regarding the amount
of cash and a description and statement of the Net Agreed Value of any
other Capital Contribution by each Partner and which each Partner has
agreed to contribute in the future, and the date on which each became a
Partner; and
(vi) to obtain such other information regarding the affairs of
the Partnership as is just and reasonable.
(b) The General Partner may keep confidential from the Limited Partner
for such period of time as the General Partner deems reasonable, (i) any
information that the General Partner reasonably believes to be in the nature of
trade secrets or (ii) other information the disclosure of which the General
Partner in good faith believes (A) is not in the best interests of the
Partnership Group, (B) could damage the Partnership Group or (C) that the
Partnership Group is required by law or by agreements with third parties to keep
confidential (other than agreements with Affiliates the primary purpose of which
is to circumvent the obligations set forth in this Section 7.4).
ARTICLE VII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 8.1 Records and Accounting.
The General Partner shall keep or cause to be kept at the principal office
of the Partnership appropriate books and records with respect to the
Partnership's business, including all books and records necessary to provide to
the Limited Partner any information required to be provided pursuant to Section
7.4(a). Any books and records maintained by or on behalf of the Partnership in
the regular course of its business, including books of account and records of
Partnership proceedings, may be kept on, or be in the form of, computer disks,
hard drives, punch cards, magnetic tape, photographs, micrographics or any other
information storage device, provided, that the books and records so maintained
are convertible into clearly legible written form within a reasonable period of
time. The books of the Partnership shall be maintained, for financial reporting
purposes, on an accrual basis in accordance with generally accepted accounting
principles.
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Section 8.2 Fiscal Year.
The fiscal year of the Partnership shall be October 1 to September 30.
ARTICLE IX
TAX MATTERS
Section 9.1 Preparation of Tax Returns.
The General Partner shall timely file all returns of the Partnership that
are required for federal, state and local income tax purposes on the basis of
the accrual method and a taxable year ending on December 31. The tax
information reasonably required by the Record Holders for federal and state
income tax reporting purposes with respect to a taxable year shall be furnished
to them within 90 days of the close of the calendar year in which the
partnership's taxable year ends. The classification, realization, and
recognition of income, deductions and other items shall be on the accrual method
of accounting for federal income tax purposes.
Section 9.2 Tax Elections.
(a) The Partnership shall make the election under Section 754 of
the Code in accordance with applicable regulations thereunder, subject to the
reservation of the right to seek to revoke any such election upon the General
Partner's determination that such revocation is in the best interests of the
Limited Partners.
(b) The Partnership shall elect to deduct expenses incurred in
organizing the Partnership ratably over a sixty-month period as provided in
Section 709 of the Code.
(c) Except as otherwise provided herein, the General Partner
shall determine whether the Partnership should make any other elections
permitted by the Code.
Section 9.3 Tax Controversies.
Subject to the provisions hereof, the General Partner is designated as the
Tax Matters Partner (as defined in Section 6231 of the Code) and is authorized
and required to represent the Partnership (at the Partnership's expense) in
connection with all examinations of the Partnership's affairs by tax
authorities, including resulting administrative and judicial proceedings, and to
expend Partnership funds for professional services and costs associated
therewith. Each Partner agrees to cooperate with the General Partner and to do
or refrain from doing any or all things reasonably required by the General
Partner to conduct such proceedings.
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Section 9.4 Withholding.
Notwithstanding any other provision of this Agreement, the General Partner
is authorized to take any action that it determines in its sole discretion to be
necessary or appropriate to cause the Partnership to comply with any withholding
requirements established under the Code or any other federal, state or local law
including, without limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of
the Code. To the extent that the Partnership is required to withhold and pay
over to any taxing authority any amount resulting from the allocation or
distribution of income to any Partner (including, without limitation, by reason
of Section 1446 of the Code), the amount withheld shall be treated as a
distribution of cash pursuant to Section 5.3 in the amount of such withholding
from such Partner.
ARTICLE X
TRANSFER OF INTERESTS
10.1 Transfer
(a) The term "transfer, "when used in this Article X with
respect to a Partnership Interest, shall be deemed to refer to a transaction by
which a Partner assigns its Partnership Interest to another Person and includes
a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange
or any other disposition by law or otherwise.
(b) No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article X. Any transfer or purported transfer of a Partnership Interest not made
in accordance with this Article X shall be null and void.
(c) Nothing contained in this Article X shall be construed to
prevent a disposition by the parent entity of the General Partner of any or all
of the issued and outstanding capital stock of the General Partner.
Section 10.2 Transfer of the General Partner's Partnership Interest.
If the general partner of the MLP transfers its partnership interest as the
general partner therein to any Person in accordance with the provisions of the
MLP Agreement, the General Partner shall contemporaneously therewith transfer
its Partnership Interest as the general partner of the Partnership to such
Person, and the Limited Partner hereby expressly consents to such transfer.
Except as set forth in the immediately preceding sentence, or in connection with
any pledge of (or any related foreclosure on) the General Partner's general
partner interest in the Partnership solely for the purpose of securing, directly
or indirectly, indebtedness of the Partnership or the MLP or the General
Partner's guarantee obligations under that certain Guarantee Agreement dated
December 13, 1995 between the General Partner and Marine Midland Bank, as such
agreement may be
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amended, supplemented, refinanced or modified from time to time, the General
Partner may not transfer all or any part of its Partnership Interest as the
general partner in the Partnership.
Section 10.3 Transfer of the Limited Partner's Partnership Interest.
If the Limited Partner merges, consolidates or otherwise combines with or
into any other Person or transfers all or substantially all of its assets to
another Person, such Person may become a Substituted Limited Partner pursuant to
Article XI. Except as set forth in the immediately preceding sentence, or in
connection with any pledge of (or any related foreclosure on) the Limited
Partner's limited partner interest in the Partnership solely for the purpose of
securing, directly or indirectly, indebtedness of the Partnership or the MLP,
and except for the transfers contemplated by Sections 4.2 and 11.1, the Limited
Partner may not transfer all or any part of its Partnership Interest or withdraw
from the Partnership.
ARTICLE XI
ADMISSION OF PARTNERS
Section 11.1 Admission of Star Gas as a Limited Partner.
Upon the making by Star Gas of the Capital Contributions described in
Section 4.2, Star Gas was admitted to the Partnership as a limited partner.
Upon the transfer by Star Gas of its Partnership Interest as limited partner to
the MLP, Star Gas shall withdraw and cease to be a limited partner of the
Partnership.
Section 11.2 Admission of Substituted Limited Partners.
Any person that is the successor in interest to a Limited Partner as
described in Section 10.3 shall be admitted to the Partnership as a limited
partner upon (a) furnishing to the General Partner (i) acceptance in form
satisfactory to the General Partner of all of the terms and conditions of this
Agreement and (ii) such other documents or instruments as may be required to
effect its admission as a limited partner in the Partnership and (b) obtaining
the consent of the General Partner, which consent may be given or withheld in
the General Partner's sole discretion. Such Person shall be admitted to the
Partnership as a limited partner immediately prior to the transfer of the
Partnership Interest, and the business of the Partnership shall continue without
dissolution.
Section 11.3 Admission of Successor General Partner.
A successor General Partner approved pursuant to Section 12.1 or 12.2 or
the transferee of or successor to all of the General Partner's Partnership
Interest as the general partner in the Partnership pursuant to Section 10.2 who
is proposed to be admitted as a successor General Partner shall, subject to
compliance with the terms of Section 12.3, if applicable, be admitted to the
Partnership as the successor General Partner, effective immediately prior to the
withdrawal or
41
removal of the General Partner pursuant to Section 12.1 or 12.2 or the transfer
of the General Partner's Partnership Interest as the general partner of the
Partnership pursuant to Section 10.2. Any such successor shall, subject to the
terms hereof, carry on the business of the Partnership without dissolution. In
each case, the admission of such successor General Partner to the Partnership
shall, subject to the terms hereof, be subject to the successor General Partner
executing and delivering to the Partnership an acceptance of all of the terms
and conditions of this Agreement and such other documents or instruments as may
be required to effect such admission.
Section 11.4 Amendment of Agreement and Certificate of Limited Partnership.
To effect the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Delaware Act to
amend the records of the Partnership to reflect such admission and, if
necessary, to prepare as soon as practical an amendment of this Agreement and,
if required by law, to prepare and file an amendment to the Certificate of
Limited Partnership, and the General Partner may for this purpose, among others,
exercise the power of attorney granted pursuant to Section 1.4.
Section 11.5 Admission of Additional Limited Partners.
(a) A Person (other than the General Partner, the MLP or a
Substituted Limited Partner) who makes a Capital Contribution to the Partnership
in accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the General Partner (i)
evidence of acceptance in form satisfactory to the General Partner of all of the
terms and conditions of this Agreement, including the granting of the power of
attorney granted in Section 1.4, and (ii) such other documents or instruments as
may be required in the discretion of the General Partner to effect such Person's
admission as an Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section
11.5, no Person shall be admitted as an Additional Limited Partner without the
consent of the General Partner, which consent may be given or withheld in the
General Partner's sole discretion. The admission of any Person as an Additional
Limited Partner shall become effective on the date upon which the name of such
Person is recorded as such in the books and records of the Partnership,
following the consent of the General Partner to such admission.
ARTICLE XII
WITHDRAWAL OR REMOVAL OF PARTNERS
Section 12.1 Withdrawal of the General Partner.
(a) The General Partner shall be deemed to have withdrawn from
the Partnership upon the occurrence of any one of the following events (each
such event herein referred to as an "Event of Withdrawal");
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(i) the General Partner voluntarily withdraws from the
Partnership by giving written notice to the Limited Partner;
(ii) the General Partner transfers all of its rights as General
Partner pursuant to Section 10.2;
(iii) the General Partner is removed pursuant to Section 12.2; or
(iv) the general partner of the MLP withdraws from, or is
removed as the general partner of, the MLP.
If an Event of Withdrawal specified in Section 12.1(a)(iv) occurs, the
withdrawing General Partner shall give notice to the Limited Partner within 30
days after such occurrence. The Partners hereby agree that only the Events of
Withdrawal described in this Section 12.1 shall result in the withdrawal of the
General Partner from the Partnership.
(b) Withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal shall not constitute a breach of this
Agreement under the following circumstances: (i) at any time during the period
beginning on the Initial Closing Date and ending at 12:00 midnight, Eastern
Standard Time, on December 31, 2005, the General Partner voluntarily withdraws
by giving at least 90 days' advance notice of its intention to withdraw to the
Limited Partner, provided that prior to the effective date of such withdrawal,
the Limited Partner approves such withdrawal and the General Partner delivers to
the Partnership an Opinion of Counsel ("Withdrawal Opinion of Counsel") that
such withdrawal (following the selection of the successor General Partner) would
not result in the loss of the limited liability of the Limited Partner, any
limited partner of the Limited Partner, or any limited partner of any Group
Member, or cause the Limited Partner or any Group Member to be treated as an
association taxable as a corporation or otherwise to be taxed as an entity for
federal income tax purposes; (ii) at any time after 12:00 midnight, Eastern
Standard Time, on December 31, 2005, the General Partner voluntarily withdraws
by giving at least 90 days' advance notice to the Limited Partner, such
withdrawal to take effect on the date specified in such notice; (iii) at any
time that the General Partner ceases to be the General Partner pursuant to
Section 12.1(a)(ii), (iii) or (iv). If the General Partner gives a notice of
withdrawal pursuant to Section 12. l(a)(i) or Section 13.1(a)(i) of the MLP
Agreement, the Limited Partner may, prior to the effective date of such
withdrawal or removal, elect a successor General Partner, provided that such
successor shall be the same Person, if any, that is elected by the limited
partners of the MLP pursuant to Section 13.1 of the MLP Agreement as the
successor to the General Partner in its capacity as general partner of the MLP.
If, prior to the effective date of the General Partner's withdrawal, a successor
is not selected by the Limited Partner as provided herein or the Partnership
does not receive a Withdrawal Opinion of Counsel, the Partnership shall be
dissolved in accordance with Section 13.1. Any successor General Partner elected
in accordance with the terms of this Section 12.1 shall be subject to the
provisions of Section 11.3.
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Section 12.2 Removal of the General Partner.
The General Partner shall be removed if such General Partner is removed as
a general partner of the MLP pursuant to Section 13.2 of the MLP Agreement.
Such removal shall be effective concurrently with the effectiveness of the
removal of such General Partner as the general partner of the MLP pursuant to
the terms of the MLP Agreement. If a successor General Partner is elected in
connection with the removal of such General Partner as a general partner of the
MLP, such successor General Partner shall, upon admission pursuant to Article
XI, automatically become a successor General Partner of the Partnership. The
admission of any such successor General Partner to the Partnership shall be
subject to the provisions of Section 11.3.
Section 12.3 Interest of Departing Partner and Successor General Partner..
The Partnership Interest of a Departing Partner departing as a result of
withdrawal or removal pursuant to Section 12.1 or 12.2 shall (unless it is
otherwise required to be converted into Common Units pursuant to Section 13.3(b)
of the MLP Agreement) be purchased by the successor to the Departing Partner for
cash in the manner specified in the MLP Agreement. Such purchase (or conversion
into Common Units, as applicable) shall be a condition to the admission to the
Partnership of the successor as the General Partner. Any successor General
Partner shall indemnify the Departing General Partner as to all debts and
liabilities of the Partnership arising on or after the effective date of the
withdrawal or removal of the Departing Partner.
Section 12.4 Reimbursement of Departing Partner.
The Departing Partner shall be entitled to receive all reimbursements due
such Departing Partner pursuant to Section 6.4, including any employee-related
liabilities (including severance liabilities), incurred in connection with the
termination of any employees employed by such Departing Partner for the benefit
of the Partnership.
Section 12.5 Withdrawal of the Limited Partner.
Without the prior consent of the General Partner, which may be granted or
withheld in its sole discretion, and except as provided in Section 11.1, the
Limited Partner shall not have the right to withdraw from the Partnership.
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ARTICLE XIII
DISSOLUTION AND LIQUIDATION
Section 13.1 Dissolution.
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the removal or withdrawal of the General Partner, any successor General Partner
shall continue the business of the Partnership. The Partnership shall dissolve
and, subject to Section 13.2, its affairs should be wound up, upon:
(a) the expiration of its term as provided in Section 1.5;
(b) an Event of Withdrawal of the General Partner as provided in
Section 12.1(a) (other than Section 12.1(a)(ii)), unless a successor is elected
and an Opinion of Counsel is received as provided in Section 12.1(b) or 12.2 and
such successor is admitted to the Partnership pursuant to Section 11.3;
(c) an election to dissolve the Partnership by the General
Partner that is approved by the Limited Partner;
(d) entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Delaware Act;
(e) the sale of all or substantially all of the assets and
properties of the Partnership Group; or
(f) the dissolution of the MLP.
Section 13.2 Continuation of the Business of the Partnership After
Dissolution.
Upon (a) dissolution of the Partnership following an Event of Withdrawal
caused by the withdrawal or removal of the General Partner as provided in
Section 12.1(a)(i) or (iii) and following a failure of the Limited Partner to
appoint a successor General Partner as provided in Section 12.1 or 12.2, then
within 90 days thereafter, or (b) dissolution of the Partnership upon an event
constituting an Event of Withdrawal as defined in Section 13.1(a)(iv), (v) or
(vi) of the MLP Agreement, then within 180 days thereafter, the Limited Partner
may elect to reconstitute the Partnership and continue its business on the same
terms and conditions set forth in this Agreement by forming a new limited
partnership on terms identical to those set forth in this Agreement and having
as a general partner a Person approved by the Limited Partner. In addition,
upon dissolution of the Partnership pursuant to Section 13.1(f), if the MLP is
reconstituted pursuant to Section 14.2 of the MLP Agreement, the reconstituted
MLP may, within 180 days after such event of dissolution,
45
as the Limited Partner, elect to reconstitute the Partnership in accordance with
the immediately preceding sentence. Upon any such election by the Limited
Partner, all Partners shall be bound thereby and shall be deemed to have
approved same. Unless such an election is made within the applicable time period
as set forth above, the Partnership shall conduct only activities necessary to
wind up its affairs. If such an election is so made, then:
(i) the reconstituted Partnership shall continue until the
end of the term set forth in Section 1.5 unless earlier dissolved in
accordance with this Article XIII;
(ii) if the successor General Partner is not the former
General Partner, then the interest of the former General Partner shall be
purchased by the successor General Partner or converted into Common Units
of the MLP as provided in the MLP Agreement; and
(iii) all necessary steps shall be taken to cancel this
Agreement and the Certificate of Limited Partnership and to enter into and,
as necessary, to file a new partnership agreement and certificate of
limited partnership, and the successor General Partner may for this purpose
exercise the powers of attorney granted the General Partner pursuant to
Section 1.4; provided, that the right to approve a successor General
Partner and to reconstitute and to continue the business of the Partnership
shall not exist and may not be exercised unless the Partnership has
received an Opinion of Counsel that (x) the exercise of the right would not
result in the loss of limited liability of the Limited Partner or any
limited partner of the Limited Partner and (y) neither the Partnership, the
reconstituted limited partnership nor any Group Member would be treated as
an association taxable as a corporation or otherwise be taxable as an
entity for federal income tax purposes upon the exercise of such right to
continue.
Section 13.3 Liquidator.
Upon dissolution of the Partnership, unless the Partnership is continued
under an election to reconstitute and continue the Partnership pursuant to
Section 13.2, the General Partner, or in the event the dissolution is the result
of an Event of Withdrawal, a liquidator or liquidating committee approved by the
Limited Partner, shall be the Liquidator. The Liquidator (if other than the
General Partner) shall be entitled to receive such compensation for its services
as may be approved by the Limited Partner. The Liquidator shall agree not to
resign at any time without 15 days' prior notice and (if other than the General
Partner) may be removed at any time, with or without cause, by notice of removal
approved by the Limited Partner. Upon dissolution, removal or resignation of
the Liquidator, a successor and substitute Liquidator (who shall have and
succeed to all rights, powers and duties of the original Liquidator) shall
within 30 days thereafter be approved by the Limited Partner. The right to
approve a successor or substitute Liquidator in the manner provided herein shall
be deemed to refer also to any such successor or substitute Liquidator approved
in the manner herein provided. Except as expressly provided in this Article
XIII, the Liquidator approved in the manner provided herein shall have and may
exercise, without further authorization or consent of any of the parties hereto,
all of the powers conferred upon the General Partner under the terms of this
46
Agreement (but subject to all of the applicable limitations, contractual and
otherwise, upon the exercise of such powers, other than the limitation on sale
set forth in Section 6.3(b)) to the extent necessary or desirable in the good
faith judgment of the Liquidator to carry out the duties and functions of the
Liquidator hereunder for and during such period of time as shall be reasonably
required in the good faith judgment of the Liquidator to complete the winding-up
and liquidation of the Partnership as provided for herein.
Section 13.4 Liquidation.
The Liquidator shall proceed to dispose of the assets of the Partnership,
discharge its liabilities, and otherwise wind up its affairs in such manner and
over such period as the Liquidator determines to be in the best interest of the
Partners, subject to the following:
(a) Disposition of Assets. The assets may be disposed of by
public or private sale or by distribution in kind to one or more Partners on
such terms as the Liquidator and such Partner or Partners may agree. If any
property is distributed in kind, the Partner receiving the property shall be
deemed for purposes of Section 13.4(c) to have received cash equal to its fair
market value; and contemporaneously therewith, appropriate cash distributions
must be made to the other Partners.
(b) Discharge of Liabilities. Liabilities of the Partnership
include amounts owed to Partners otherwise in respect of their distribution
rights under Article V. With respect to any liability that is contingent or is
otherwise not yet due and payable, the Liquidator shall either settle such claim
for such amount as it thinks appropriate or establish a reserve of cash or other
assets to provide for its payment. When paid, any unused portion of the reserve
shall be distributed as additional liquidation proceeds.
(c) Liquidation Distributions. All property and all cash in
excess of that required to discharge liabilities as provided in Section 13.4(b)
shall be distributed to the Partners in accordance with the positive balances in
their respective Capital Accounts, as determined after taking into account all
Capital Account adjustments (other than those made by reason of this clause) for
the taxable year of the Partnership during which the liquidation of the
Partnership occurs (with the date of such occurrence being determined pursuant
to Treasury Regulation Section 1.704-1 (b)(2)(ii)(g)); and such distribution
shall be made by the end of such taxable year (or, if later, within 90 days
after said date of such occurrence).
Section 13.5 Cancellation of Certificate of Limited Partnership.
Upon the completion of the distribution of Partnership cash and property as
provided in Sections 13.3 and 13.4 in connection with the liquidation of the
Partnership, the Partnership shall be terminated and the Certificate of Limited
Partnership and all qualifications of the Partnership as a foreign limited
partnership in jurisdictions other than the State of Delaware shall be canceled
and such other actions as may be necessary to terminate the Partnership shall be
taken.
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Section 13.6 Return of Contributions.
The General Partner shall not be personally liable for, and shall have no
obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate, the return of the Contributions of the Limited Partner,
or any portion thereof, it being expressly understood that any such return shall
be made solely from Partnership assets.
Section 13.7 Waiver of Partition.
Each Partner hereby waives any right to partition of the Partnership
property.
Section 13.8 Capital Account Restoration.
No Limited Partner shall have any obligation to restore any negative
balance in its Capital Account upon liquidation of the Partnership. The General
Partner shall be obligated to restore any negative balance in its Capital
Account upon liquidation of its interest in the Partnership by the end of the
taxable year of the Partnership during which such liquidation occurs, or, if
later, within 90 days after the date of such liquidation.
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT
Section 14.1 Amendment to be Adopted Solely by General Partner.
The Limited Partner agrees that the General Partner (pursuant to its powers
of attorney from the Limited Partner), without the approval of the Limited
Partner, may amend any provision of this Agreement, and execute, swear to,
acknowledge, deliver, file and record whatever documents may be required in
connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the
principal place of business of the Partnership, the registered agent of the
Partnership or the registered office of the Partnership;
(b) admission, substitution, withdrawal or removal of Partners
in accordance with this Agreement;
(c) a change that, in the sole discretion of the General
Partner, is necessary or advisable to qualify or continue the qualification of
Partnership as a limited partnership or a partnership in which the limited
partners have limited liability under the laws of any state or to ensure that
neither the Partnership nor the MLP will be treated as an association taxable as
a corporation or otherwise be taxable as an entity for federal income tax
purposes;
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(d) a change that, in the sole discretion of the General
Partner, (i) does not adversely affect the Limited Partner in any material
respect, (ii) is 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 or judicial authority or contained in any federal
or state statute (including the Delaware Act), compliance with any of which the
General Partner determines in its sole discretion to be in the best interests of
the Partnership and the Limited Partner, (iii) is required to effect the intent
of the provisions of this Agreement or is otherwise contemplated by this
Agreement or (iv) is required to conform the provisions of this Agreement with
the provisions of the MLP Agreement as the provisions of the MLP Agreement may
be amended, supplemented or restated from time to time;
(e) a change in the fiscal year and taxable year of the
Partnership and any changes that, in the sole discretion of the General Partner,
are necessary or advisable as a result of a change in the fiscal year and
taxable year of the Partnership, including, if the General Partner shall so
determine, a change in the definition of "Quarter" and the dates on which
distributions are to be made by the Partnership;
(f) an amendment that is necessary, in the Opinion of Counsel,
to prevent the Partnership or the General Partner or its directors or officers
from in any manner being subjected to the provisions of the Investment Company
Act of 1940, as amended, the Investment Advisers Act of 1940, as amended, or
"plan asset" regulations adopted under the Employee Retirement Income Security
Act of 1974, as amended, regardless of whether such are substantially similar to
plan asset regulations currently applied or proposed by the United States
Department of Labor;
(g) any amendment expressly permitted in this Agreement to be
made by the General Partner acting alone;
(h) an amendment effected, necessitated or contemplated by a
Merger Agreement approved in accordance with Section 15.3;
(i) an amendment that, in the sole discretion of the General
Partner, is necessary or advisable to reflect, account for and deal with
appropriately the formation by the Partnership of, or investment by the
Partnership in, any corporation, partnership, joint venture, limited liability
company or other entity, in connection with the conduct by the Partnership of
activities permitted by the terms of Section 3.1; or
(j) any other amendments substantially similar to the foregoing.
Section 14.2 Amendment Procedures.
Except with respect to amendments of the type described in Section 14.1,
all amendments to this Agreement shall be made in accordance with the following
requirements. Amendments to this Agreement may be proposed only by or with the
consent of the General Partner. Each such
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proposal shall contain the text of the proposed amendment. A proposed amendment
shall be effective upon its approval by the Limited Partner.
ARTICLE XV
MERGER
Section 15.1 Authority.
The Partnership may merge or consolidate with one or more corporations,
business trusts or associations, real estate investment trusts, common law
trusts or unincorporated businesses, including a general partnership or limited
partnership, formed under the laws of the State of Delaware or any other state
of the United States of America, pursuant to a written agreement of merger or
consolidation ("Merger Agreement") in accordance with this Article XV.
Section 15.2 Procedure for Merger or Consolidation.
Merger or consolidation of the Partnership pursuant to this Article XV
requires the prior approval of the General Partner. If the General Partner
shall determine, in the exercise of its sole discretion, to consent to the
merger or consolidation, the General Partner shall approve the Merger Agreement,
which shall set forth:
(a) The names and jurisdictions of formation or organization of
each of the business entities proposing to merge or consolidate;
(b) The name and jurisdictions of formation or origination of
the business entity that is to survive the proposed merger or consolidation (the
"Surviving Business Entity");
(c) The terms and conditions of the proposed merger or
consolidation;
(d) The manner and basis of exchanging or converting the equity
securities of each constituent business entity for, or into, cash, property or
general or limited partner interests, rights, securities or obligations of the
Surviving Business Entity; and (i) if any general or limited partner interests,
securities or rights of any constituent business entity are not to be exchanged
or converted solely for, or into, cash, property or general or limited partner
interests, rights, securities or obligations of the Surviving Business Entity,
the cash, property or general or limited partner interests, rights, securities
or obligations of any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity) which the holders of such general or
limited partner interests, securities or rights are to receive in exchange for,
or upon conversion of, their general or limited partner interests, securities or
rights, and (ii) in the case of securities represented by certificates, upon the
surrender of such certificates, which cash, property or general or limited
partner interests, rights, securities or obligations of the Surviving Business
Entity or any general or limited
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partnership, corporation, trust or other entity (other than the Surviving
Business Entity), or evidences thereof, are to be delivered;
(e) A statement of any changes in the constituent documents or
the adoption of new constituent documents (the articles or certificate of
incorporation, articles of trust, declaration of trust, certificate or agreement
of limited partnership or other similar charter or governing document) of the
Surviving Business Entity to be effected by such merger or consolidation;
(f) The effective time of the merger, which may be the date of
the filing of the certificate of merger pursuant to Section 15.4 or a later date
specified in or determinable in accordance with the Merger Agreement (provided,
that if the effective time of the merger is to be later than the date of the
filing of the certificate of merger, the effective time shall be fixed no later
than the time of the filing of the certificate of merger and stated therein);
and
(g) Such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or appropriate by the General Partner.
Section 15.3 Approval by Limited Partner of Merger or Consolidation.
(a) The General Partner, upon its approval of the Merger
Agreement, shall direct that a copy or a summary of the Merger Agreement be
submitted to the Limited Partner for its approval.
(b) The Merger Agreement shall be approved upon receiving the
approval of the Limited Partner. After such approval by the Limited Partner, and
at any time prior to the filing of the certificate of merger pursuant to Section
15.4, the merger or consolidation may be abandoned pursuant to provisions
therefor, if any, set forth in the Merger Agreement.
Section 15.4 Certificate of Merger.
Upon the required approval by the General Partner and the Limited Partner
of a Merger Agreement, a certificate of merger shall be executed and filed with
the Secretary of State of the State of Delaware in conformity with the
requirements of the Delaware Act.
Section 15.5 Effect of Merger.
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the
business entities that has merged or consolidated, and all property, real,
personal and mixed, and all debts due to any of those business entities and
all other things and causes of action belonging to each of those business
entities shall be vested in the Surviving Business Entity and after the
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merger or consolidation shall be the property of the Surviving Business
Entity to the extent they were of each constituent business entity;
(ii) the title to any real property vested by deed or otherwise
in any of those constituent business entities shall not revert and is not
in any way impaired because of the merger or consolidation;
(iii) all rights of creditors and all liens on or security
interests in property of any of those constituent business entities shall
be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent
business entities shall attach to the Surviving Business Entity, and may be
enforced against it to the same extent as if the debts, liabilities and
duties had been incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this Article shall
not be deemed to result in a transfer or assignment of assets or liabilities
from one entity to another having occurred.
ARTICLE XVI
GENERAL PROVISIONS
Section 16.1 Addresses and Notices.
Any notice, demand, request or report required or permitted to be given or
made to a Partner under this Agreement shall be in writing and shall be deemed
given or made when received by it at the principal office of the Partnership
referred to in Section 1.3.
Section 16.2 References.
Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
Section 16.3 Pronouns and Plurals.
Whenever the context may require, any pronoun used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns, pronouns and verbs shall include the plural and vice versa.
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Section 16.4 Further Action.
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 16.5 Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 16.6 Integration.
This Agreement constitutes the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto.
Section 16.7 Creditors.
None of the provisions of this Agreement shall be for the benefit of, or
shall be enforceable by, any creditor of the Partnership.
Section 16.8 Waiver.
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
Section 16.9 Counterparts.
This Agreement may be executed in counterparts, all of which together shall
constitute an agreement binding on all the parties hereto, notwithstanding that
all such parties are not signatories to the original or the same counterpart.
Each party shall become bound by this Agreement immediately upon affixing its
signature hereto, independently of the signature of any other party.
Section 16.10 Applicable Law.
This Agreement shall be construed in accordance with and governed by the
laws of the State of Delaware, without regard to the principles of conflicts of
law.
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Section 16.11 Invalidity of Provisions.
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
GENERAL PARTNER:
STAR GAS LLC
By:___________________________________
Name:
Title:
LIMITED PARTNER:
STAR GAS PARTNERS, L.P.
By:___________________________________
Star Gas Corporation, as General
Partner
By:___________________________________
Name:
Title:
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