Exhibit 3.1
EXECUTION COPY
________________________________________________________________________________
PLAINS AAP, L.P.
A Delaware Limited Partnership
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
June 8, 2001
________________________________________________________________________________
EXECUTION COPY
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS....................................................... 1
ARTICLE II ORGANIZATION..................................................... 8
2.1 Formation of Limited Partnership................................. 8
2.2 Name of Partnership.............................................. 8
2.3 Principal Office; Registered Office.............................. 8
2.4 Term of Partnership.............................................. 9
2.5 Purpose of Partnership........................................... 9
2.6 Actions by Partnership........................................... 9
2.7 Reliance by Third Parties........................................ 9
ARTICLE III CAPITAL......................................................... 9
3.1 Capital Contributions............................................ 9
3.2 Additional Capital Contributions................................. 9
3.3 Loans............................................................ 10
3.4 Maintenance of Capital Accounts.................................. 10
3.5 Capital Withdrawal Rights, Interest and Priority................. 11
ARTICLE IV DISTRIBUTIONS.................................................... 11
4.1 Distributions of Available Cash.................................. 11
4.2 Special Distribution............................................. 12
4.3 Persons Entitled to Distributions................................ 12
4.4 Limitations on Distributions..................................... 12
ARTICLE V ALLOCATIONS....................................................... 12
5.1 Profits.......................................................... 12
5.2 Losses........................................................... 12
5.3 Regulatory Allocations........................................... 13
5.4 Tax Allocations: Code Section 704(c)............................. 13
5.5 Change in Partnership Percentage................................. 14
5.6 Withholding...................................................... 14
ARTICLE VI MANAGEMENT....................................................... 15
6.1 Duties and Powers of the General Partner......................... 15
6.2 No Liability to Limited Partners................................. 15
6.3 Indemnification of General Partner............................... 16
6.4 Rights of Limited Partners....................................... 16
ARTICLE VII TRANSFERS OF PARTNERSHIP INTERESTS.............................. 16
7.1 Transfer of Limited Partnership Interests........................ 16
7.2 Permitted Transferees............................................ 17
7.3 Substitute Limited Partners...................................... 18
7.4 Effect of Admission as a Substitute Limited Partner.............. 19
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7.5 Consent.......................................................... 19
7.6 No Dissolution................................................... 19
7.7 Additional Limited Partners...................................... 19
7.8 Right of First Refusal........................................... 19
7.9 Transfer to Management Entity.................................... 20
ARTICLE VIII DISSOLUTION AND LIQUIDATION.................................... 20
8.1 Dissolution of Partnership....................................... 20
8.2 Final Accounting................................................. 21
8.3 Distributions Following Dissolution and Termination.............. 21
8.4 Termination of the Partnership................................... 23
8.5 No Action for Dissolution........................................ 23
ARTICLE IX ACCOUNTING; BOOKS AND RECORDS.................................... 23
9.1 Fiscal Year and Accounting Method................................ 23
9.2 Books and Records................................................ 23
9.3 Delivery to Partners; Inspection................................. 24
9.4 Financial Statements............................................. 24
9.5 Filings.......................................................... 24
9.6 Non-Disclosure................................................... 24
ARTICLE X NON-COMPETITION................................................... 25
10.1 Non-Competition.................................................. 25
10.2 Damages.......................................................... 26
10.3 Limitations...................................................... 26
ARTICLE XI GENERAL PROVISIONS............................................... 26
11.1 Waiver of Default................................................ 26
11.2 Amendment of Partnership Agreement............................... 26
11.3 No Third Party Rights............................................ 27
11.4 Severability..................................................... 27
11.5 Nature of Interest in the Partnership............................ 27
11.6 Binding Agreement................................................ 27
11.7 Headings......................................................... 27
11.8 Word Meanings.................................................... 27
11.9 Counterparts..................................................... 27
11.10 Entire Agreement................................................. 27
11.11 Partition........................................................ 28
11.12 Governing Law; Consent to Jurisdiction and Venue................. 28
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AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
PLAINS AAP, L.P.
THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT (this "Agreement")
of Plains AAP, L.P., a Delaware limited partnership (the "Partnership"), is made
and entered into as of this 8/th/ day of June, 2001 by and among Plains All
American GP LLC, a Delaware limited liability company, as the general partner,
and the Persons listed as limited partners in Schedule I hereto (the "Limited
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Partners").
This Agreement amends and restates in its entirety the original Limited
Partnership Agreement dated as of June 8, 2001 between General Partner and
Plains All American Inc.
ARTICLE I
DEFINITIONS
For purposes of this Agreement:
"Acceptance Notice" shall have the meaning set forth in Section 7.8(b).
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"Act" means the Delaware Revised Uniform Limited Partnership Act, as
amended from time to time.
"Adjusted Capital Account Deficit" means, with respect to a Partner, the
deficit balance, if any, in such Partner's Capital Account as of the end of the
relevant Taxable Year, after giving effect to the following adjustments:
(a) Credit to such Capital Account any amounts which such Partner is
obligated to restore pursuant to any provision of this Agreement or is
deemed to be obligated to restore pursuant to Regulation Sections 1.704-
1(b)(2)(ii)(c), 1.704-2(g)(1) and 1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in Regulation
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-
1(b)(2)(ii)(d)(6).
"Affiliate" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person.
"Agreement" means this Amended and Restated Limited Partnership Agreement,
as amended from time to time in accordance with its terms.
"Available Cash" means, with respect to a fiscal quarter, all cash and cash
equivalents of the Partnership at the end of such quarter less the amount of
cash reserves that is necessary or appropriate in the reasonable discretion of
the General Partner to (a) provide for the proper conduct of the business of the
Partnership (including reserves for future capital expenditures and for
anticipated future credit needs of the Partnership) subsequent to such quarter
or (b) comply
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with applicable law or 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 or Property is subject; provided, however,
that disbursements made by the Master Limited Partnership to the Partnership or
cash reserves established, increased or reduced after the expiration 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, during such
quarter if the General Partner so determines in its reasonable discretion.
"Business" means all Hydrocarbon gathering, transportation, terminalling,
storage, and marketing and all operations related thereto, including, without
limitation, (a) the acquisition, construction, installation, maintenance or
remediation and operation of pipelines, gathering lines, compressors,
facilities, storage facilities and equipment, and (b) the gathering of
Hydrocarbons from fields, interstate and intrastate transportation by pipeline,
trucks or barges, tank storage of Hydrocarbons, transferring Hydrocarbons from
pipelines and storage tanks to trucks, barges or other pipelines, acquisition of
Hydrocarbons at the well or bulk purchase at pipeline and terminal facilities
and subsequent resale thereof.
"Business Day" means any day that is not a Saturday, a Sunday or other day
on which banks are required or authorized by law to be closed in the City of New
York.
"Capital Account" means, with respect to any Partner, a separate account
established by the Partnership and maintained for each Partner in accordance
with Section 3.4 hereof.
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"Capital Contribution" means, with respect to any Partner, the amount of
money and the initial Gross Asset Value of any Property (other than money)
contributed to the Partnership with respect to the interests purchased by such
Partner pursuant to the terms of this Agreement, in return for which the Partner
contributing such capital shall receive a Partnership Interest.
"Cause" shall have the meaning set forth in the Xxxxxx Employment
Agreement.
"Certificate" means the Certificate of Limited Partnership of the
Partnership filed with the Secretary of State of Delaware, as amended or
restated from time to time.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Contributed Units" means the subordinated units in the Master Limited
Partnership contributed to the Partnership in proportion to the Unit
Percentages.
"Depreciation" means, for each Taxable Year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such Taxable Year, except that if the
Gross Asset Value of an asset differs from its adjusted basis for federal income
tax purposes at the beginning of such Taxable Year, Depreciation shall be an
amount which bears the same ratio to such beginning Gross Asset Value as the
federal income tax depreciation, amortization or other cost recovery deduction
for such Taxable Year bears to such beginning adjusted tax basis; provided,
however, that if the adjusted basis for federal income tax purposes of an asset
at the beginning of such Taxable Year is zero, Depreciation shall
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be determined with reference to such beginning Gross Asset Value using any
reasonable method selected by the General Partner.
"E-Holdings" means E-Holdings, III L.P., a Texas limited partnership.
"EnCap" shall have the meaning set forth in Section 10.1.
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"Encumbrance" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, any defect or imperfection in title, preferential
arrangement or restriction, right to purchase, right of first refusal or other
burden or encumbrance of any kind, other than those imposed by this Agreement.
"First Refusal Notice" shall have the meaning set forth in Section 7.8(a).
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"First Union" shall have the meaning set forth in Section 7.1.
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"Xxxxxx Employment Agreement" means the Employment Agreement dated May 8,
2001 between Rodeo and JCF.
"General Partner" means Plains All American GP LLC, a Delaware limited
liability company, any successor thereto, and any Persons hereafter admitted as
additional general partners, each in its capacity as a general partner of the
Partnership.
"Good Reason" shall have the meaning set forth in the Xxxxxx Registration
Rights Agreement.
"Gross Asset Value" means with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows and as otherwise
provided in Section 3.2(b):
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(a) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such
asset, as reasonably determined by the General Partner; provided, however,
that the initial Gross Asset Values of the assets contributed to the
Partnership pursuant to Section 3.1 hereof shall be as set forth in such
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section or the schedule referred to therein;
(b) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values (taking Code
Section 7701(g) into account), as reasonably determined by the General
Partner as of the following times: (i) the acquisition of an additional
interest in the Partnership by any new or existing Partner in exchange for
more than a de minimis Capital Contribution; (ii) the distribution by the
Partnership to a Partner of more than a de minimis amount of Partnership
property as consideration for an interest in the Partnership; and (iii) the
liquidation of the Partnership within the meaning of Regulation Section
1.704-1(b)(2)(ii)(g); and
(c) The Gross Asset Value of any item of Partnership assets
distributed to any Partner shall be adjusted to equal the gross fair market
value (taking Code Section
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7701(g) into account) of such asset on the date of distribution as
reasonably determined by the General Partner.
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to subparagraph (b), such Gross Asset Value shall thereafter be
adjusted by the Depreciation taken into account with respect to such asset, for
purposes of computing Profits and Losses.
"Hydrocarbons" means crude oil, natural gas, casinghead gas, condensate,
sulphur, natural gas liquids, plant products, liquefied petroleum gas and other
liquid or gaseous hydrocarbons produced in association therewith, including,
without limitation, coalbed methane and gas and CO\\2\\.
"JCF" means Xxxxx X. Xxxxxx.
"Kafu" means KAFU Holdings LP, a Delaware limited partnership.
"Xxxxx Xxxxxxxx" shall have the meaning set forth in Section 10.1.
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"Limited Partner" means any Person admitted to the Partnership as a Limited
Partner and who is shown as such on the books and records of the Partnership.
"Limited Partnership Interest" means, with respect to a Member, such
Member's limited partnership interest in the Partnership, which refers to all of
such Member's rights and interests in the Partnership in such Member's capacity
as a limited partner thereof, all as provided in the Partnership Agreement and
the Delaware Revised Uniform Limited Partnership Act.
"Liquidating Trustee" has the meaning set forth in Section 8.3(a).
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"LLC Agreement" means the Amended and Restated Agreement Limited Liability
Company Agreement of the General Partner, dated as of the date hereof, by and
among Plains All American Inc., as the initial member, Sable, Kafu, E-Holdings,
Management Entity, Raymond, Strome, Xxxxxx Hedgecap and any other Persons who
become members in the General Partner as provided therein, as amended from time
to time in accordance with the terms thereof.
"Losses" has the meaning set forth in the definition of "Profits" and
"Losses".
"Management Entity" shall mean PAA Management, L.P.
"Management Sale" shall have the meaning set forth in Section 7.9.
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"Master Limited Partnership" means Plains All American Pipeline, L.P., and
any successor thereto.
"Master Limited Partnership Agreement" means the Second Amended and
Restated Agreement of Limited Partnership of the Master Limited Partnership,
dated as of November 23,
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1998, as amended, modified, supplemented or restated from time to time in
accordance with the terms thereof.
"Member" means a record holder of a Membership Interest.
"Membership Interest" means, with respect to a Partner, such Partner's
limited liability company interest in the General Partner, which refers to all
of such Partner's rights and interests in the General Partner in such Partner's
capacity as a member thereof, all as provided in the LLC Agreement and the
Delaware Limited Liability Company Act.
"Membership Transfer" shall have the meaning set forth in Section 7.1(b).
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"Non-Purchasing Partner" shall have the meaning set forth in Section
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7.8(d).
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"Non-Selling Partner" shall have the meaning set forth in Section 7.8(b).
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"Notice" means a writing, containing the information required by this
Agreement to be communicated to a party, and shall be deemed to have been
received (a) when personally delivered or sent by telecopy, (b) one day
following delivery by overnight delivery courier, with all delivery charges pre-
paid, or (c) on the third Business Day following the date on which it was sent
by United States mail, postage prepaid, to such party at the address or fax
number, as the case may be, of such party as shown on the records of the
Partnership.
"Offer" shall have the meaning set forth in Section 7.8(a).
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"Offeror" shall have the meaning set forth in Section 7.8(a).
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"Optioned Interest" shall have the meaning set forth in Section 7.8(a).
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"Partner" means the General Partner or any of the Limited Partners, and
"Partners" means the General Partner and all of the Limited Partners.
"Partnership" shall have the meaning set forth in the preamble hereof.
"Partnership Interest" means a Partner's limited partnership or general
partnership interest in the Partnership which refers to all of a Partner's
rights and interests in the Partnership in such Partner's capacity as a Partner,
all as provided in this Agreement and the Act.
"Partnership Percentage" of a Partner means the aggregate percentage of
Partnership Interests of such Partner set forth in Schedule I hereto, as the
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same may be modified from time to time as provided herein.
"Permitted Transfer" shall mean:
(a) a Transfer of any or all of the Partnership Interest by any
Partner who is a natural person to (i) such Partner's spouse, children
(including legally adopted children and stepchildren), spouses of children
or grandchildren or spouses of grandchildren; (ii) a trust for the benefit
of the Partner and/or any of the Persons described in clause (i); or (iii)
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a limited partnership or limited liability company whose sole partners or
members, as the case may be, are the Partner and/or any of the Persons
described in clause (i) or clause (ii); provided, that in any of clauses
(i), (ii) or (iii), the Partner transferring such Partnership Interest, or
portion thereof, retains exclusive power to exercise all rights under this
Agreement;
(b) a Transfer of any or all of the Partnership Interest by any
Partner to the Partnership;
(c) a Transfer of any or all of the Partnership Interest by a Partner
to any Affiliate of such Partner; provided, however, that such transfer
shall be a Permitted Transfer only so long as such Partnership Interest, or
portion thereof, is held by such Affiliate or is otherwise transferred in
another Permitted Transfer.
Provided, however, that no Permitted Transfer shall be effective
unless and until the transferee of the Partnership Interest, or portion thereof,
so transferred complies with Sections 7.1(b). Except in the case of a Permitted
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Transfer pursuant to clause (b) above, from and after the date on which a
Permitted Transfer becomes effective, the Permitted Transferee of the
Partnership Interest, or portion thereof, so transferred shall have the same
rights, and shall be bound by the same obligations, under this Agreement as the
transferor of such Partnership Interest, or portion thereof, and shall be deemed
for all purposes hereunder a Partner and such Permitted Transferee shall, as a
condition to such Transfer, agree in writing to be bound by the terms of this
Agreement. No Permitted Transfer shall conflict with or result in any violation
of any judgment, order, decree, statute, law, ordinance, rule or regulation or
require the Company, if not currently subject, to become subject, or if
currently subject, to become subject to a greater extent, to any statute, law,
ordinance, rule or regulation, excluding matters of a ministerial nature that
are not materially burdensome to the Company.
"Permitted Transferee" shall mean any Person who shall have acquired and
who shall hold a Partnership Interest, or portion thereof, pursuant to a
Permitted Transfer.
"Person" means any individual, partnership, corporation, limited liability
company, trust, incorporated or unincorporated organization or other legal
entity of any kind.
"Profits" and "Losses" means, for each Taxable Year, an amount equal to the
Partnership's net taxable income or loss for a taxable year, determined in
accordance with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in computing such taxable income
or loss), with the following adjustments:
(a) Any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Profits or Losses
shall be added to such taxable income or loss;
(b) Any expenditures of the Partnership described in Section
705(a)(2)(B) of the Code or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Regulation Section 1.704-1(b)(2)(iv)(i), and not
otherwise taken into account in computing Profits or Losses, shall be
subtracted from such taxable income or loss;
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(c) In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to subparagraphs (b) or (c) of the definition of Gross
Asset Value, the amount of such adjustment shall be treated as an item of
gain (if the adjustment increases the Gross Asset Value of the asset) or an
item of loss (if the adjustment decreases the Gross Asset Value of the
asset) from the disposition of such asset and shall be taken into account
for purposes of computing Profits or Losses;
(d) Gain or loss resulting from any disposition of Property with
respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the Property
disposed of, notwithstanding that the adjusted tax basis of such Property
differs from its Gross Asset Value;
(e) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such Taxable Year,
computed in accordance with the definition of Depreciation; and
(f) To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
required, pursuant to Regulation Sections 1.704-1(b)(2)(iv)(m)(4) to be
taken into account in determining Capital Accounts as a result of a
distribution other than in liquidation of a Partner's interest in the
Partnership, the amount of such adjustment shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis) from the disposition of such asset and
shall be taken into account for purposes of computing Profits or Losses.
"Property" means all assets, real or intangible, that the Partnership may
own or otherwise have an interest in from time to time.
"Xxxxxxx" means Xxxx X. Xxxxxxx.
"Regulations" means the regulations, including temporary regulations,
promulgated by the United States Department of Treasury with respect to the
Code, as such regulations are amended from time to time, or corresponding
provisions of future regulations.
"Regulatory Allocations" shall have the meaning set forth in Section
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5.3(c).
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"Rodeo" means Plains Resources Inc., a Delaware corporation.
"Rodeo, Inc." means Plains All American Inc., a Delaware corporation.
"Sable" means Sable Investments, L.P.
A "Sable Change of Control" shall be deemed to occur if: any Person or
"Group" (as such term is used in Section 13(d) of the Exchange Act), other than
JCF or any entity or entities controlled by JCF, is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of (a) more
than 50% of the general or limited partnership interests in Sable or (b) stock
or other equity interests of any legal entity that controls Sable representing
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more than 50% of the voting interests entitled to vote generally for the
election of the board of directors or other governing body of such entity.
"Selling Partner" shall have the meaning set forth in Section 7.8(a).
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"Xxxxxx" means Xxxx X. Xxxxxx.
"Xxxxxx Hedgecap" means Xxxxxx Hedgecap Fund, L.P.
"Taxable Year" shall mean the calendar year.
"Transfer" or "Transferred" means to give, sell, exchange, assign,
transfer, pledge, hypothecate, bequeath, devise or otherwise dispose of or
encumber, voluntarily or involuntarily, by operation of law or otherwise. When
referring to a Partnership Interest, "Transfer" shall mean the Transfer of such
Partnership Interest whether of record, beneficially, by participation or
otherwise.
"Transfer Agreements" means those certain Unit Transfer and Contribution
Agreements, dated as of May 8, 2001, by and among PAAI LLC, Rodeo, Rodeo, Inc.
and each of (i) Sable, Sable Holdings, L.P. and JCF; (ii) E-Holdings, (iii) Kafu
Holdings, LLC, (iv) Xxxxxx, (v) Xxxxxx Hedgecap and (vi) Xxxxxxx, as may be
amended from time to time in accordance with the terms thereof.
"Unit Percentages" means the Unit Percentages set forth on Schedule I.
ARTICLE II
ORGANIZATION
2.1 Formation of Limited Partnership
The General Partner has previously formed the Partnership as a limited
partnership pursuant to the provisions of the Act and the parties hereto hereby
agree to amend and restate the original Limited Partnership Agreement of the
Partnership in its entirety. The parties hereto acknowledge that they intend
that the Partnership be taxed as a partnership and not as an association taxable
as a corporation for federal income tax purposes. No election may be made to
treat the Partnership as other than a partnership for federal income tax
purposes.
2.2 Name of Partnership
The name of the Partnership is Plains AAP, L.P. or such other name as the
General Partner may hereafter adopt from time to time. The General Partner
shall execute and file in the proper offices such certificates as may be
required by any assumed name act or similar law in effect in the jurisdictions
in which the Partnership may elect to conduct business.
2.3 Principal Office; Registered Office
The principal office address of the Partnership is located at 000 Xxxx
Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxx 00000, or such other place as the General
Partner designates from time to time.
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The registered office address and the name of the registered agent of the
Partnership for service of process on the Partnership in the State of Delaware
is as stated in the Certificate or as designated from time to time by the
General Partner.
2.4 Term of Partnership
The term of the Partnership commenced on May 21, 2001 and shall continue
until dissolved pursuant to Section 8.1 hereof. The legal existence of the
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Partnership as a separate legal entity continues until the cancellation of the
Certificate.
2.5 Purpose of Partnership
The Partnership is formed for the object and purpose of, and the nature of
the business to be conducted and promoted by the Partnership is, (a) acting as
the general partner of the Master Limited Partnership pursuant to the Master
Limited Partnership Agreement, (b) holding the GP Interest, the Incentive
Distribution Rights and the Operating Partnerships GP Interests (as such terms
are defined in the Transfer Agreement) and (c) engaging in any and all
activities necessary or incidental to the foregoing.
2.6 Actions by Partnership
The Partnership may execute, deliver and perform all contracts, agreements
and other undertakings and engage in all activities and transactions as may in
the opinion of the General Partner be necessary or advisable to carry out its
objects.
2.7 Reliance by Third Parties
Persons dealing with the Partnership are entitled to rely conclusively upon
the power and authority of the General Partner as herein set forth.
ARTICLE III
CAPITAL
3.1 Capital Contributions
(a) On or before the date of this Agreement, each Partner agrees to make,
or shall have made, a Capital Contribution consisting of cash or property as set
forth opposite such Partner's name on Schedule I hereto.
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(b) Each Partner agrees to make Capital Contributions in proportion to
such Partner's Partnership Percentage for equity issuances by the Master Limited
Partnership pursuant to Section 5.2(b) of the Master Limited Partnership
Agreement approved by the Members pursuant to the LLC Agreement.
3.2 Additional Capital Contributions
(a) No Partner shall be required to make any additional Capital
Contribution other than as required under Section 3.1.
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(b) The Partnership may offer additional Partnership Interests to any
Person with the approval of the General Partner. If any additional Capital
Contributions are made by Partners but not in proportion to their respective
Percentage Interests, the Percentage Interest of each Partner shall be adjusted
such that each Partner's revised Percentage Interest determined immediately
following each such additional Capital Contribution shall be equal to a fraction
(i) the numerator of which is the sum of (A) the positive Capital Account
balance of the Partner determined immediately preceding the date such additional
Capital Contribution is made (such Capital Account to be computed by adjusting
the book value for Capital Account purposes of each Partnership asset to equal
its Gross Asset Value as of such date, as provided in subparagraph (b) of the
definition herein of "Gross Asset Value"), and (B) such additional Capital
Contribution, if any, made by such Partner, and (ii) the denominator of which is
the sum of the positive Capital Account balances immediately preceding the date
such additional Capital Contribution is made plus additional Capital
Contributions of all Partners on the date of such additional Capital
Contribution, including Capital Contributions of any new Partners (in each case
calculated as provided in (i) above). The names, addresses and Capital
Contributions of the Partners shall be reflected in the books and records of the
Partnership.
3.3 Loans
(a) No Partner shall be obligated to loan funds to the Partnership. Loans
by a Partner to the Partnership shall not be considered Capital Contributions.
The amount of any such loan shall be a debt of the Partnership owed to such
Partner in accordance with the terms and conditions upon which such loan is
made.
(b) A Partner may (but shall not be obligated to) guarantee a loan made to
the Partnership. If a Partner guarantees a loan made to the Partnership and is
required to make payment pursuant to such guarantee to the maker of the loan,
then the amounts so paid to the maker of the loan shall be treated as a loan by
such Partner to the Partnership and not as an additional Capital Contribution.
3.4 Maintenance of Capital Accounts
(a) The Partnership shall maintain for each Partner a separate Capital
Account with respect to the Partnership Interest owned by such Partner in
accordance with the following provisions:
(i) To each Partner's Capital Account there shall be credited (A)
such Partner's Capital Contributions, (B) such Partner's share of Profits and
(C) the amount of any Partnership liabilities assumed by such Partner or which
are secured by any Property distributed to such Partner. The principal amount of
a promissory note which is not readily traded on an established securities
market and which is contributed to the Partnership by the maker of the note (or
a Partner related to the maker of the note within the meaning of Regulation
Section 1.704-1(b)(2)(ii)(c)) shall not be included in the Capital Account of
any Partner until the Partnership makes a taxable disposition of the note or
until (and only to the extent) principal payments are made on the note, all in
accordance with Regulation Section 1.704-1(b)(2)(iv)(d)(2);
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(ii) To each Partner's Capital Account there shall be debited (A) the
amount of money and the Gross Asset Value of any Property distributed or treated
as an advance distribution to such Partner pursuant to any provision of this
Agreement (including without limitation any distributions pursuant to Section
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4.1), (B) such Partner's share of Losses and (C) the amount of any liabilities
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of such Partner assumed by the Partnership or which are secured by any Property
contributed by such Partner to the Partnership;
(iii) In the event Partnership Interests are Transferred in accordance
with the terms of this Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent such Capital Account relates to the
Transferred Partnership Interests; and
(iv) In determining the amount of any liability for purposes of
Sections 3.4(a)(i) and (ii) there shall be taken into account Code Section
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752(c) and any other applicable provisions of the Code and Regulations.
(b) The foregoing Section 3.4(a) and the other provisions of this
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Agreement relating to the maintenance of Capital Accounts are intended to comply
with Regulation Section 1.704-1(b) and, to the greatest extent practicable,
shall be interpreted and applied in a manner consistent with such Regulation.
The General Partner in its discretion and to the extent otherwise consistent
with the terms of this Agreement shall (i) make any adjustments that are
necessary or appropriate to maintain equality between the Capital Accounts of
the Partners and the amount of capital reflected on the Partnership's balance
sheet, as computed for book purposes, in accordance with Regulation Section
1.704-1(b)(2)(iv)(q), and (ii) make any appropriate modifications in the event
unanticipated events might otherwise cause this Agreement not to comply with
Regulation Section 1.704-1(b).
3.5 Capital Withdrawal Rights, Interest and Priority
Except as expressly provided in this Agreement, no Partner shall be
entitled to (a) withdraw or reduce such Partner's Capital Contribution or to
receive any distributions from the Partnership, or (b) receive or be credited
with any interest on the balance of such Partner's Capital Contribution at any
time.
ARTICLE IV
DISTRIBUTIONS
4.1 Distributions of Available Cash
An amount equal to 100% of Available Cash with respect to each fiscal
quarter of the Partnership shall be distributed to the Partners in proportion to
their relative Percentage Interests within forty-five days after the end of such
quarter. Notwithstanding any other provision of this Agreement, all cash
attributable to the ownership or disposition by the Partnership of Contributed
Units shall be distributed to the Partners in proportion to their relative Unit
Percentages within forty-five days after the end of each quarter.
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4.2 Special Distribution
Upon the closing of the transactions contemplated by the Transfer
Agreements, the Partnership shall make a special distribution to Rodeo, Inc. in
an amount equal to the amount contributed by the Limited Partners other than
Rodeo, Inc. for their limited partner Partnership Interests hereunder on or
before the date of such closing.
4.3 Persons Entitled to Distributions
All distributions of Available Cash to Partners for a fiscal quarter
pursuant to Section 4.1 shall be made to the Partners shown on the records of
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the Partnership to be entitled thereto as of the last day of such quarter,
unless the transferor and transferee of any Partnership Interest otherwise agree
in writing to a different distribution and such distribution is consented to in
writing by the General Partner.
4.4 Limitations on Distributions
(a) Notwithstanding any provision of this Agreement to the contrary, no
distributions shall be made except pursuant to Article IV or Article VIII.
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(b) Notwithstanding any provision of this Agreement to the contrary, no
distribution hereunder shall be permitted if such distribution would violate
Section 17-607 of the Act or other applicable law.
ARTICLE V
ALLOCATIONS
5.1 Profits
Profits for any Taxable Year shall be allocated:
(a) first, to those Partners to which Losses have previously been allocated
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pursuant to Section 5.2(d) hereof so as to bring each such Partner's Capital
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Account to zero, pro rata in accordance with the sum of each such Partner's
Losses; and
(b) second, any remaining Profits shall be allocated among the Partners in
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proportion to their respective Percentage Interests.
5.2 Losses
Losses for any Taxable Year shall be allocated:
(a) first, to the Partners to which Profits have previously been allocated
-----
pursuant to Section 5.1(b) to the extent of such Profits;
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(b) second, among the Partners in proportion to their respective
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Percentage Interests provided; however, that no Partner shall be allocated any
-----------------
loss pursuant to this Section 5.2(b) which would result in a negative Capital
Account balance for such Partner.
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(c) third, to Partners in proportion to their positive Capital Account
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balances until such Capital Account balances have been reduced to zero; and
(d) fourth, any remaining Losses shall be allocated to the General
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Partner.
5.3 Regulatory Allocations
(a) Gross Income Allocation. In the event any Partner has an Adjusted
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Capital Account Deficit at the end of any Taxable Year, such Partner shall be
specially allocated items of Partnership income and gain in the amount of such
deficit balance as quickly as possible; provided, that, an allocation pursuant
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to this Section 5.3(a) shall be made only if and to the extent that such Partner
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would have an Adjusted Capital Account Deficit balance after all other
allocations provided for in this Article V have been made.
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(b) Qualified Income Offset. In the event any Partner unexpectedly
-----------------------
receives any adjustments, allocations or distributions described in Regulation
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-
1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
allocated to such Partner in an amount and manner sufficient to eliminate, to
the extent required by the Regulations, the Adjusted Capital Account Deficit of
such Partner as quickly as possible, provided, that, an allocation pursuant to
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this Section 5.3(b) shall be made only if and to the extent that such Partner
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would have an Adjusted Capital Account Deficit after all other allocations
provided for in this Article V have been made.
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(c) Curative Allocations. The allocations set forth in Sections 5.3(a)
-------------------- ---------------
and (b) hereof (the "Regulatory Allocations") are intended to comply with
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certain requirements of the Regulations. It is the intent of the Partners that,
to the extent possible, all Regulatory Allocations shall be offset either with
other Regulatory Allocations or with special allocations of other items of
Partnership income, gain, loss or deduction pursuant to this Section 5.3(c).
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Therefore, notwithstanding any other provision of this Article V (other than the
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Regulatory Allocations), the General Partner shall make such offsetting special
allocations of income, gain, loss or deduction in whatever manner it determines
appropriate so that, after such offsetting allocations are made, each Partner's
Capital Account balance is, to the extent possible, equal to the Capital Account
balance such Partner would have had if the Regulatory Allocations were not part
of this Agreement and all such items were allocated pursuant to Sections 5.1 and
----------------
5.2 without regard to the Regulatory Allocations.
---
(d) Special Allocation. Notwithstanding any other provision of this
------------------
Agreement, but subject to Section 5.4, all income, gain, loss and deduction
related to the Contributed Units shall be allocated to the Partners in
proportion to their relative Unit Percentages.
5.4 Tax Allocations: Code Section 704(c)
(a) Except as otherwise provided herein, for federal income tax purposes,
(i) 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 Sections 5.1 and 5.2, and (ii) each tax
credit shall be allocated to the Partners in the same manner as the receipt or
expenditure giving rise to such credit is allocated pursuant to Section 5.1 or
5.2.
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(b) In accordance with Code Section 704(c) and the Regulations thereunder,
income, gain, loss and deduction with respect to any Property contributed to the
capital of the Partnership shall, solely for tax purposes, be allocated among
the Partners so as to take account of any variation between the adjusted basis
of such Property to the Partnership for federal income tax purposes and its
initial Gross Asset Value (computed in accordance with the definition herein of
"Gross Asset Value"). The Partnership shall use the remedial method of
allocations specified in Treas. Reg. (S)1.704-3(d), or successor regulations,
unless otherwise required by law, with respect to the initial contribution
property set forth on Schedule I.
(c) In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to subparagraph (b) of the definition herein of "Gross Asset
Value", subsequent allocations of income, gain, loss and deduction with respect
to such asset shall take account of any variation between the adjusted basis of
such asset for federal income tax purposes and its Gross Asset Value in the same
manner as under Code Section 704(c) and the Regulations thereunder.
(d) Any elections or other decisions relating to such allocations shall be
made by the General Partner in any manner that reasonably reflects the purpose
and intention of this Agreement; provided, that the Partnership, in the
discretion of the General Partner, may make, or not make, "curative" or
"remedial" allocations (within the meaning of the Regulations under Code Section
704(c)) including, but not limited to, "curative" allocations which offset the
effect of the "ceiling rule" for a prior Taxable Year (within the meaning of
Regulation Section 1.704-3(c)(3)(ii)) and "curative" allocations from
disposition of contributed property (within the meaning of Regulation Section
1.704-3(c)(3)(iii)(B)). Allocations pursuant to this Section 5.4 are solely for
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purposes of federal, state, and local taxes and shall not affect, or in any way
be taken into account in computing, any Partner's Capital Account or share of
Profits, Losses, other items, or distributions pursuant to any provision of this
Agreement.
5.5 Change in Partnership Percentage
In the event that the Partners' Partnership Percentages change during a
Taxable Year, Profits and Losses shall be allocated taking into account the
Partners' varying Percentage Interests for such Taxable Year, determined on a
daily, monthly or other basis as determined by the General Partner, using any
permissible method under Code Section 706 and the Regulations thereunder.
5.6 Withholding
Each Partner hereby authorizes the Partnership to withhold from income or
distributions allocable to such Partner and to pay over any taxes payable by the
Partnership or any of its Affiliates as a result of such Partner's participation
in the Partnership; if and to the extent that the Partnership shall be required
to withhold any such taxes, such Partner shall be deemed for all purposes of
this Agreement to have received a distribution from the Partnership as of the
time such withholding is required to be paid, which distribution shall be deemed
to be a distribution to such Partner to the extent that the Partner is then
entitled to receive a distribution. To the extent that the aggregate of such
distributions in respect of a Partner for any period exceeds the distributions
to which such Partner is entitled for such period, the amount of such excess
shall be considered a demand loan from the Partnership to such Partner, with
interest at the rate of
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interest per annum that Citibank, N.A., or any successor entity thereto,
announces from time to time as its prime lending rate, which interest shall be
treated as an item of Partnership income, until discharged by such Partner by
repayment, which may be made in the sole discretion of the General Partner out
of distributions to which such Partner would otherwise be subsequently entitled.
The withholdings referred to in this Section 5.6 shall be made at the maximum
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applicable statutory rate under applicable tax law unless the General Partner
shall have received an opinion of counsel or other evidence, satisfactory to the
General Partner, to the effect that a lower rate is applicable, or that no
withholding is applicable.
ARTICLE VI
MANAGEMENT
6.1 Duties and Powers of the General Partner
(a) The business and affairs of the Partnership shall be managed by the
General Partner. Except for situations in which the approval of the Limited
Partners is expressly required by this Agreement or by nonwaivable provisions of
applicable law, the General Partner shall have full and complete authority,
power and discretion to manage and control the business, affairs and property of
the Partnership, to make all decisions regarding those matters and to perform
any and all other acts or activities customary or incident to the management of
the Partnership's business. Without limiting the generality of the foregoing,
the General Partner has full power and authority to execute, deliver and perform
such contracts, agreements and other undertakings on behalf of the Partnership,
without the consent or approval of any other Partner, and to engage in all
activities and transactions, as it may deem necessary or advisable for, or as
may be incidental to, the conduct of the business and affairs of the
Partnership.
(b) Each Limited Partner agrees to cooperate with the General Partner and
to execute and deliver such documents, agreements and instruments, and do all
such further acts, as deemed necessary or advisable by the General Partner to
give effect to the exercise of the General Partner's powers under this Section
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6.1. Without limiting the foregoing, each Limited Partner hereby irrevocably
---
appoints the General Partner as its proxy and attorney-in-fact (with full power
of substitution and resubstitution) to vote or act by written consent with
respect to its Partnership Interest as a Limited Partner as determined by the
General Partner on all matters requiring the vote, approval or consent of the
Limited Partners. The Partners acknowledge that such proxy is coupled with an
interest and is irrevocable.
(c) The General Partner is the tax matters partner for purposes of Section
6231 of the Code and analogous provisions of state law. The tax matters partner
has the exclusive authority and discretion to make any elections required or
permitted to be made by the Partnership under any provisions of the Code or any
other applicable laws.
6.2 No Liability to Limited Partners
Except in case of gross negligence or willful malfeasance of the person
(the General Partner or any of the Members, managers, directors, officers,
agents or employees of the General Partner) who is sought to be held liable,
neither the General Partner nor the Members, managers, directors, officers,
agents or employees of the General Partner will be liable to any Limited Partner
or the
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Partnership (i) for any action taken with respect to the Partnership which is
not in violation of the provisions of this Agreement, or (ii) for any action
taken by any Member, manager, director, officer, agent or employee of the
General Partner.
6.3 Indemnification of General Partner
The Partnership shall indemnify the General Partner, the members, managers,
directors, officers, agents and employees of the General Partner against any
losses, liabilities, damages and expenses to which any of such persons may
become subject, including attorneys' fees, judgments and amounts paid in
settlement, actually and reasonably incurred by them, and advance all expenses
to them, in connection with any threatened, pending or completed action, suit or
proceeding to which any of them was or is a party or is threatened to be made a
party by reason of the direct or indirect association by them with the
Partnership to the maximum extent permitted by applicable law.
6.4 Rights of Limited Partners
The Limited Partners will not be personally liable for any obligations of
the Partnership nor will they have any obligation to make contributions to the
Partnership in excess of their respective Capital Contributions required under
Section 3.1 or have any liability for the repayment or discharge of the debts
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and obligations of the Partnership except to the extent provided herein or as
required by law. The Limited Partners shall take no part in the management,
control or operation of the Partnership's business and shall have no power to
bind the Partnership and no right or authority to act for the Partnership or to
vote on matters other than the matters set forth in this Agreement or as
required by applicable law.
ARTICLE VII
TRANSFERS OF PARTNERSHIP INTERESTS
7.1 Transfer of Limited Partnership Interests
(a) No Limited Partner may Transfer all or any part of such Partner's
Partnership Interest to any Person except (i) to a Permitted Transferee pursuant
to Section 7.2, or (ii) pursuant to the terms of Section 7.8, or (iii) in the
----------- -----------
case of Kafu, a transfer of up to a 6% Partnership Interest to First Union
Investors, Inc. ("First Union") within 90 days from the date hereof; provided,
however, any such Transfer under (i) or (ii) above shall comply with the terms
of Section 7.1(b). Any purported Transfer of a Partnership Interest or a
--------------
portion thereof in violation of the terms of this Agreement shall be null and
void and of no force and effect. Except upon a Transfer of all of a Limited
Partner's Partnership Interest in accordance with Section 7.1, no Limited
-----------
Partner shall have the right to withdraw as a Partner of the Partnership.
(b) As a condition to a Transfer by a Limited Partner of all or any part
of such Partner's Partnership Interest to a transferee as permitted under
Section 7.1(a)(i) or (ii) (a "Partnership Transfer"), such Partner shall
------------------------
simultaneously Transfer (the "Membership Transfer") to such transferee an amount
of such Partner's Membership Interest equal to: (i) such Partner's Membership
Interest, multiplied by (ii) a percentage equal to (1) the portion of such
Partner's Partnership Interest to be Transferred to such transferee, divided by
(2) such Partner's Partnership Interest immediately before such Transfer. If for
any reason the
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Membership Transfer does not occur simultaneously with the Partnership Transfer,
then the Partnership Transfer shall be null and void and of no force and effect.
(c) Notwithstanding any other provision of this Agreement, no Limited
Partner may pledge, mortgage or otherwise subject its Limited Partnership
Interest to any Encumbrance.
(d) So long as it or its Permitted Transferee remains a Limited Partner,
Sable may not effect a Sable Change of Control.
(e) In the event that JCF resigns (other than for Good Reason) from his
position as Chief Executive Officer of Rodeo, or is terminated for Cause, during
the eighteen month period ending November 8, 2002, the occurrence of such event
shall be deemed a Transfer to a Non-Qualifying Transferee of the Limited
Partnership Interest of Sable Investments; provided, however, that fair market
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value, with respect to such deemed Transfer for purposes of Section 7.2, shall
not be less than Sable's initial Capital Contribution.
7.2 Permitted Transferees
(a) Notwithstanding the provisions of Section 7.8, each Limited Partner
-----------
shall, subject to Section 7.1(b), have the right to Transfer (but not to
--------------
substitute the transferee as a substitute Partner in such Partner's place,
except in accordance with Section 7.3), by a written instrument, all or any part
-----------
of a Limited Partner's Partnership Interest to a Permitted Transferee.
Notwithstanding the previous sentence, if the Permitted Transferee is such
because it was an Affiliate of the transferring Limited Partner at the time of
such Transfer or the Transfer was a Permitted Transfer under clause (a) of the
definition herein of "Permitted Transfer" and, at any time after such Transfer,
such Permitted Transferee ceases to be an Affiliate of such Limited Partner or
such Transfer or such Permitted Transferee ceases to qualify under such clause
(a) (a "Non-Qualifying Transferee"), such Transfer shall be deemed to not be a
Permitted Transfer and shall be subject to Section 7.8. Pursuant to Section 7.8,
----------- -----------
such transferring Limited Partner or such transferring Limited Partner's legal
representative shall deliver the First Refusal Notice promptly after the time
when such transferee ceases to be an Affiliate of such transferring Limited
Partner or such Transfer or such Permitted Transferee ceases to qualify under
clause (a) of the definition herein of "Permitted Transfer", and such
transferring Limited Partner shall otherwise comply with the terms of Section
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7.8 with respect to such Transfer; provided, that the purchase price for such
---
Transfer for purposes of Section 7.8 shall be an amount agreed upon by such
-----------
transferring Limited Partner and the General Partner or, if such Limited Partner
and the General Partner cannot agree on a price within five (5) Business Days
after delivery of the First Refusal Notice, such price shall be the fair market
value of the Partnership Interest transferred pursuant to the Transfer as of the
date the transferee ceased to be an Affiliate of such transferring Limited
Partner or such Transfer or such Permitted Transferee ceases to qualify under
clause (a) of the definition herein of "Permitted Transfer" (such date, the
"Non-Qualifying Date"), as determined at the Partnership's expense by a
nationally recognized investment banking firm mutually selected by such
transferring Limited Partner and the General Partner. If such transferring
Limited Partner and the General Partner are unable, within ten (10) days after
the expiration of such five (5) Business Day period, to mutually agree upon an
investment banking firm, then each of such transferring Limited Partner and the
General Partner shall choose a nationally recognized investment banking firm and
the two investment banking firms so chosen
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shall choose a third nationally recognized investment banking firm which shall
determine the fair market value of the Partnership Interest transferred pursuant
to such Transfer at the Partnership's expense. The determination of fair market
value shall be based on the value that a willing buyer with knowledge of all
relevant facts would pay a willing seller for all the outstanding equity
securities of the Partnership in connection with an auction for the Partnership
as a going concern and shall not take into account any acquisitions made by the
Partnership or its Affiliates or any other events subsequent to the Non-
Qualifying Date and shall not be subject to any discount for a sale of a
minority interest. If such transferring Limited Partner fails to comply with all
the terms of Section 7.8, such Transfer shall be null and void and of no force
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and effect. No Non-Qualifying Transferee shall be entitled to receive any
distributions from the Partnership on or after the Non-Qualifying Date and any
distributions made in respect of the Partnership Interests on or after the Non-
Qualifying Date and held by such Non-Qualifying Transferee shall be paid to the
Limited Partner who transferred such Partnership Interests or otherwise to the
rightful owner thereof as reasonably, determined by the General Partner.
(b) Unless and until admitted as a substitute Limited Partner pursuant to
Section 7.3, a transferee of a Limited Partner's Partnership Interest, in whole
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or in part, shall be an assignee with respect to such Transferred Partnership
Interest and shall not be entitled to become, or to exercise the rights of, a
Limited Partner, including the right to vote, the right to require any
information or accounting of the Partnership's business, or the right to inspect
the Partnership's books and records. Such transferee shall only be entitled to
receive, to the extent of the Partnership Interest Transferred to such
transferee, the share of distributions and profits, including distributions
representing the return of Capital Contributions, to which the transferor would
otherwise be entitled with respect to the Transferred Partnership Interest.
Subject to the provisions of Section 6.1(b), the transferor shall have the right
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to vote such Transferred Partnership Interest until the transferee is admitted
to the Partnership as a substitute Limited Partner with respect to the
Transferred Partnership Interest.
7.3 Substitute Limited Partners
No transferee of all or part of a Limited Partner's Partnership Interest
shall become a substitute Limited Partner in place of the transferor unless and
until:
(a) such Transfer is in compliance with the terms of Section 7.1;
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(b) the transferee has executed an instrument in form and substance
reasonably satisfactory to the General Partner accepting and adopting, and
agreeing to be bound by, the terms and provisions of the Certificate and this
Agreement; and
(c) the transferee has caused to be paid all reasonable expenses of the
Partnership in connection with the admission of the transferee as a substitute
Limited Partner.
Upon satisfaction of all the foregoing conditions with respect to a
particular transferee, the General Partner shall cause the books and records of
the Partnership to reflect the admission of the transferee as a substitute
Limited Partner to the extent of the Transferred Partnership Interest held by
such transferee.
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7.4 Effect of Admission as a Substitute Limited Partner
A transferee who has become a substitute Limited Partner has, to the extent
of the Transferred Partnership Interest, all the rights, powers and benefits of,
and is subject to the obligations, restrictions and liabilities of a Partner
under, the Certificate, this Agreement and the Act. Upon admission of a
transferee as a substitute Limited Partner, the transferor of the Partnership
Interest so held by the substitute Limited Partner shall cease to be a Partner
of the Partnership to the extent of such Transferred Partnership Interest.
7.5 Consent
Each Partner hereby agrees that upon satisfaction of the terms and
conditions of this Article VII with respect to any proposed Transfer, the
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transferee may be admitted as a Partner without any further action by a Partner
hereunder.
7.6 No Dissolution
If a Limited Partner Transfers all of its Partnership Interest pursuant to
this Article VII and the transferee of such Partnership Interest is admitted as
-----------
a Limited Partner pursuant to Section 7.3, such Person shall be admitted to the
-----------
Partnership as a Partner effective on the effective date of the Transfer and the
Partnership shall not dissolve pursuant to Section 8.1.
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7.7 Additional Limited Partners
Subject to Section 3.2, any Person acceptable to the General Partner may
-----------
become an additional Limited Partner of the Partnership for such consideration
as the General Partner shall determine, provided that such additional Limited
Partner complies with all the requirements of a transferee under Section 7.3(b)
--------------
and (c).
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7.8 Right of First Refusal
The Limited Partners shall have the following right of first refusal:
(a) If at any time any of the Limited Partners (a "Selling Partner") has
received and wishes to accept a bona fide offer (the "Offer") for cash from a
third party (the "Offeror") for all or part of such Selling Partner's
Partnership Interest (and a proportionate amount of such Selling Partner's
Membership Interest in accordance with Section 7.1(b)), such Selling Partner
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shall give Notice thereof (the "First Refusal Notice") to each of the other
Partners, other than any Non-Purchasing Partners (as hereinafter defined), and
the Partnership. The First Refusal Notice shall state the portion of the
Selling Partner's Partnership Interest and Membership Interest that the Selling
Partner wishes to sell (the "Optioned Interest"), the price and all other
material terms of the Offer, the name of the Offeror, and certification from the
Selling Partner affirming that the Offer is bona fide and that the description
thereof is true and correct, and that the Offeror has stated that it will
purchase the Optioned Interest if the rights of first refusal herein described
are not exercised.
(b) Each of the Limited Partners other than the Selling Partner and any
Non-Purchasing Partner (the "Non-Selling Partners") shall have the right
exercisable by Notice (an
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"Acceptance Notice") given to the Selling Partner and the Partnership within
twenty (20) days after receipt of the First Refusal Notice, to agree that it
will purchase up to 100% of the Optioned Interest on the terms set forth in the
First Refusal Notice; provided, however, if the Non-Selling Partners in the
aggregate desire to purchase more than 100% of the Optioned Interest, each such
Non-Selling Partner's right to purchase the Optioned Interest shall be reduced
(pro rata based on the percentage of the Optioned Interest for which such Non-
Selling Partner has exercised its right to purchase hereunder compared to all
other Non-Selling Partners, but not below such Non-Selling Partner's Partnership
Interest as a percentage of the aggregate Partnership Interests of all Non-
Selling Partners who have exercised their right to purchase) so that such Non-
Selling Partners purchase no more than 100% of the Optioned Interest. If a Non-
Selling Partner does not submit an Acceptance Notice within the twenty (20) day
period set forth in this Section 7.8(b), such Non-Selling Partner shall be
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deemed to have rejected the offer to purchase any portion of the Optioned
Interest.
(c) If the Non-Selling Partners do not in the aggregate exercise the right
to purchase all of the Optioned Interest by the expiration of the twenty (20)
day period set forth in Section 7.8(b), then any Acceptance Notice shall be void
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and of no effect, and the Selling Partner shall be entitled to complete the
proposed sale at any time in the thirty (30) day period commencing on the date
of the First Refusal Notice, but only upon the terms set forth in the First
Refusal Notice. If no such sale is completed in such thirty (30) day period, the
provisions hereof shall apply again to any proposed sale of the Optioned
Interest.
(d) If any Non-Selling Partner exercises the right to purchase the
Optioned Interest as provided herein and such Non-Selling Partner(s) have
elected to purchase all of the Optioned Interest, the purchase of such Optioned
Interest shall be completed within the thirty (30) day period commencing on the
date of delivery of the First Refusal Notice on the terms set forth in the First
Refusal Notice. If such Non-Selling Partner does not consummate the Purchase of
such Optioned Interest, (x) the Selling Partner shall be entitled to all
expenses of collection and (y) such Non-Selling Partner shall be deemed a "Non-
Purchasing Partner" for the duration of this Agreement.
7.9 Transfer to Management Entity
Notwithstanding any other provision of this Agreement, Rodeo, Inc. may, on
the date hereof or within ninety (90) days from the date hereof sell up to 1.98%
of the total Partnership Interests as of that date (the "Management Sale") to
the Management Entity. The Management Sale shall be on substantially the same
economic terms as the initial capital contribution of each of Sable, Kafu, E-
Holdings, Xxxxxx, Xxxxxx Hedgecap, Xxxxxxx and the Management Entity.
ARTICLE VIII
DISSOLUTION AND LIQUIDATION
8.1 Dissolution of Partnership
(a) The Partnership shall be dissolved and its affairs wound up upon the
first to occur of the following events:
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(i) the written election of the General Partner, in its sole
discretion, to dissolve the Partnership;
(ii) the occurrence of any event that results in the General Partner
ceasing to be the general partner of the Partnership under the
Act, provided that the Partnership will not be dissolved and
required to be wound up in connection with any such event if
(A) at the time of the occurrence of such event there is at
least one remaining general partner of the Partnership who is
hereby authorized to and does carry on the business of the
Partnership, or (B) within 90 days after the occurrence of such
event, all of the Limited Partners agree in writing to continue
the business of the Partnership and to the appointment,
effective as of the date of such event, if required, of one or
more additional general partners of the Partnership;
(iii) the Transfer of all or substantially all of the assets of the
Partnership and the receipt and distribution of all the
proceeds therefrom;
(iv) at any time that there are no limited partners of the
Partnership, unless the business of the Partnership is
continued in accordance with the Act; and
(v) the entry of a decree of judicial dissolution under Section 17-
802 of the Act.
(b) The withdrawal, death, dissolution, retirement, resignation,
expulsion, liquidation or bankruptcy of a Partner, the admission to the
Partnership of a new General Partner or Limited Partner, the withdrawal of a
Partner from the Partnership, or the transfer by a Partner of its Partnership
Interest to a third party shall not, in and of itself, cause the Partnership to
dissolve.
8.2 Final Accounting
Upon dissolution and winding up of the Partnership, an accounting will be
made of the accounts of the Partnership and each Partner and of the
Partnership's assets, liabilities and operations from the date of the last
previous accounting to the date of such dissolution.
8.3 Distributions Following Dissolution and Termination
(a) Liquidating Trustee. Upon the dissolution of the Partnership, such
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party as is designated by the General Partner will act as liquidating trustee of
the Partnership (the "Liquidating Trustee") and proceed to wind up the business
and affairs of the Partnership in accordance with the terms of this Agreement
and applicable law. The Liquidating Trustee will use its reasonable best efforts
to sell all Partnership assets (except cash) in the exercise of its best
judgment under the circumstances then presented, that it deems in the best
interest of the Partners. The Liquidating Trustee will attempt to convert all
assets of the Partnership to cash so long as it can do so consistently with
prudent business practice. The Partners and their respective designees will have
the right to purchase any Partnership property to be sold on liquidation,
provided that the terms on which such sale is made are no less favorable than
would otherwise be available from third parties. The gains and losses from the
sale of the Partnership assets, together with all other revenue, income, gain,
deduction, expense, loss and credit during
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the period, will be allocated in accordance with Article V. A reasonable amount
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of time shall be allowed for the period of winding up in light of prevailing
market conditions and so as to avoid undue loss in connection with any sale of
Partnership assets. This Agreement shall remain in full force and effect during
the period of winding up. In addition, upon request of the General Partner and
if the Liquidating Trustee determines that it would be imprudent to dispose of
any non-cash assets of the Partnership, such assets may be distributed in kind
to the Partners in lieu of cash, proportionately to their right to receive cash
distributions hereunder.
(b) Accounting. The Liquidating Trustee will then cause proper accounting
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to be made of the Capital Account of each Partner, including recognition of gain
or loss on any asset to be distributed in kind as if such asset had been sold
for consideration equal to the fair market value of the asset at the time of the
distribution. The Partners intend that the allocations provided herein shall
result in Capital Account balances in proportion to the Partnership Percentages
of the Partners.
(c) Liquidating Distributions. In settling accounts after dissolution of
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the Partnership, the assets of the Partnership shall be paid to creditors of the
Partnership and to the Partners in the following order:
(i) to creditors of the Partnership (including Partners) in the
order of priority as provided by law whether by payment or the
making of reasonable provision for payment thereof, and in
connection therewith there shall be withheld such reasonable
reserves for contingent, conditioned or unconditioned
liabilities as the Liquidating Trustee in its reasonable
discretion deems adequate, such reserves (or balances thereof)
to be held and distributed in such manner and at such times as
the Liquidating Trustee, in its discretion, deems reasonably
advisable; provided, however, that such amounts be maintained
in a separate bank account and that any amounts in such bank
account remaining after three years be distributed to the
Partners or their successors and assigns as if such amount had
been available for distribution under Section 8.3(c)(ii); and
------------------
then
(ii) to the Partners in proportion to the positive balances of their
Capital Accounts, as fully adjusted pursuant to Section 3.4,
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including adjustment for all gains and losses actually or
deemed realized upon disposition or distribution of assets in
connection with the liquidation and winding up of the
Partnership.
(iii) Any distribution to the Partners in liquidation of the
Partnership shall be made by the later of the end of the
taxable year in which the liquidation occurs or 90 days after
the date of such liquidation. For purposes of the preceding
sentence, the term "liquidation" shall have the same meaning as
set forth in Regulation Section 1.704-2(b)(2)(ii) as in effect
at such time and liquidating distributions shall be further
deemed to be made pursuant to this Agreement upon the event of
a liquidation as defined in such Regulation for which no actual
liquidation occurs with a deemed
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recontribution by the Partners of such deemed liquidating
distributions to the continuing Partnership pursuant to this
Agreement.
(d) The provisions of this Agreement, including, without limitation, this
Section 8.3, are intended solely to benefit the Partners and, to the fullest
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extent permitted by law, shall not be construed as conferring any benefit upon
any creditor of the Partnership, and no such creditor of the Partnership shall
be a third-party beneficiary of this Agreement, and no Partner shall have any
duty or obligation to any creditor of the Partnership to issue any call for
capital pursuant to this Agreement.
8.4 Termination of the Partnership
The Partnership shall terminate when all assets of the Partnership, after
payment or due provision for all debts, liabilities and obligations of the
Partnership, shall have been distributed to the Partners in the manner provided
for in this Article VIII, and the Certificate shall have been canceled in the
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manner required by the Act.
8.5 No Action for Dissolution
The Limited Partners acknowledge that irreparable damage would be done to
the goodwill and reputation of the Partnership if any Limited Partner should
bring an action in court to dissolve the Partnership under circumstances where
dissolution is not required by Section 8.1. Accordingly, except where the
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General Partner has failed to cause the liquidation of the Partnership as
required by Section 8.1 and except as specifically provided in Section 17-802,
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each Limited Partner hereby to the fullest extent permitted by law waives and
renounces his right to initiate legal action to seek dissolution of the
Partnership or to seek the appointment of a receiver or trustee to wind up the
affairs of the Partnership, except in the cases of fraud, violation of law, bad
faith, gross negligence, willful misconduct or willful violation of this
Agreement.
ARTICLE IX
ACCOUNTING; BOOKS AND RECORDS
9.1 Fiscal Year and Accounting Method
The fiscal year and taxable year of the Partnership shall be the calendar
year. The Partnership shall use an accrual method of accounting.
9.2 Books and Records
The Partnership shall maintain at its principal office, or such other
office as may be determined by the General Partner, all the following:
(a) A current list of the full name and last known business or residence
address of each Partner, together with information regarding the amount of cash
and a description and statement of the agreed value of any other property or
services contributed by each Partner and which each Partner has agreed to
contribute in the future, and the date on which each Partner became a Partner of
the Partnership;
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(b) A copy of the Certificate and this Agreement, including any and all
amendments to either thereof, together with executed copies of any powers of
attorney pursuant to which the Certificate, this Agreement, or any amendments
have been executed;
(c) Copies of the Partnership's Federal, state, and local income tax or
information returns and reports, if any, which shall be retained for at least
six fiscal years;
(d) The financial statements of the Partnership; and
(e) The Partnership's books and records.
9.3 Delivery to Partners; Inspection
Upon the request of any Limited Partner, for any purpose reasonably related
to such Partner's interest as a partner of the Partnership, the General Partner
shall cause to be made available to the requesting Partner the information
required to be maintained by clauses (a) through (e) of Section 9.2 and such
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other information regarding the business and affairs and financial condition of
the Partnership as any Partner may reasonably request.
9.4 Financial Statements
The General Partner shall cause to be prepared for the Partners at least
annually, at the Partnership's expense, financial statements of the Partnership,
and its subsidiaries, prepared in accordance with generally accepted accounting
principles and audited by a nationally recognized accounting firm. The
financial statements so furnished shall include a balance sheet, statement of
income or loss, statement of cash flows, and statement of Partners' equity. In
addition, the General Partner shall provide on a timely basis to the Partners
monthly and quarterly financials, statements of cash flow, any available
internal budgets or forecast or other available financial reports, as well as
any reports or notices as are provided by the Partnership, or any of its
Subsidiaries to any financial institution.
9.5 Filings
At the Partnership's expense, the General Partner shall cause the income
tax returns for the Partnership to be prepared and timely filed with the
appropriate authorities and to have prepared and to furnish to each Partner such
information with respect to the Partnership as is necessary (or as may be
reasonably requested by a Partner) to enable the Partners to prepare their
Federal, state and local income tax returns. The General Partner, at the
Partnership's expense, shall also cause to be prepared and timely filed, with
appropriate Federal, state and local regulatory and administrative bodies, all
reports required to be filed by the Partnership with those entities under then
current applicable laws, rules, and regulations. The reports shall be prepared
on the accounting or reporting basis required by the regulatory bodies.
9.6 Non-Disclosure
Each Limited Partner agrees that, except as otherwise consented to by the
General Partner in writing, all non-public and confidential information
furnished to it pursuant to this Agreement will be kept confidential and will
not be disclosed by such Partner, or by any of its agents,
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representatives, or employees, in any manner whatsoever, in whole or in part,
except that (a) each Partner shall be permitted to disclose such information to
those of its agents, representatives, and employees who need to be familiar with
such information in connection with such Partner's investment in the Partnership
(collectively, "Representatives") and are apprised of the confidential nature of
such information, (b) each Partner shall be permitted to disclose information to
the extent required by law, legal process or regulatory requirements, so long as
such Partner shall have used its reasonable efforts to first afford the
Partnership with a reasonable opportunity to contest the necessity of disclosing
such information, (c) each Partner shall be permitted to disclose such
information to possible purchasers of all or a portion of the Partner's
Partnership Interest, provided that such prospective purchaser shall execute a
suitable confidentiality agreement in a form approved by the General Partner and
containing terms not less restrictive than the terms set forth herein, and (d)
each Partner shall be permitted to disclose information to the extent necessary
for the enforcement of any right of such Partner arising under this Agreement.
Each Partner shall be responsible for any breach of this Section 9.6 by any of
its Representatives.
ARTICLE X
NON-COMPETITION
10.1 Non-Competition
Each of the Limited Partners hereby acknowledges that the Partnership and
the Master Limited Partnership operate in a competitive business and compete
with other Persons operating in the midstream segment of the oil and gas
industry for acquisition opportunities. Each of the Limited Partners agrees
that during the period that it is a Limited Partner, it shall not, directly or
indirectly, use any of the confidential information it receives as a Limited
Partner to compete, or to engage in or become interested financially in as a
principal, employee, partner, shareholder, agent, manager, owner, advisor,
lender, guarantor of any Person that competes in North America with the business
conducted by the General Partner, the Partnership and the Master Limited
Partnership Each of the Limited Partners also acknowledges that EnCap
Investments L.L.C. and Persons that it controls ("EnCap"), Xxxxx Xxxxxxxx
Capital Advisors L.P. and its Affiliates ("Xxxxx Xxxxxxxx") and First Union and
its affiliates make and manage investments in the energy industry in the
ordinary course of business (such investments "Institutional Investments"). The
Limited Partners agree that EnCap, Xxxxx Xxxxxxxx and First Union and its
affiliates may make Institutional Investments, even if such Institutional
Investments are competitive with the Partnership's and its Subsidiaries'
business, so long as such Institutional Investments are not in violation of the
provisions of Section 9.6 or the second sentence of this Section 10.1 or
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obligations owed to the Partnership under applicable law with respect to
usurption of an opportunity legally belonging to the Partnership or its
Subsidiaries. Each of the Limited Partners confirms that the restrictions in
this Section 10.1 are reasonable and valid and all defenses to the strict
enforcement thereof are hereby waived by each of the Limited Partners. The
restrictions contained in this Section 10.1 shall in no way impair the rights
granted (i) to JCF pursuant to the Xxxxxx Employment Agreement or (ii) to
Xxxxxxx pursuant to any employment agreement between Xxxxxxx and Rodeo.
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10.2 Damages
Each of the Limited Partners acknowledges that damages may not be an
adequate compensation for the losses which may be suffered by the Partnership as
a result of the breach by such Limited Partner of the covenants contained in
this Article X and that the Partnership shall be entitled to seek injunctive
---------
relief with respect to any such breach in lieu of or in addition to any recourse
in damages without the posting of a bond or other security.
10.3 Limitations
In the event that a court of competent jurisdiction decides that the
limitations set forth in Section 10.1 hereof are too broad, such limitations
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shall be reduced to those limitations that such court deems reasonable.
ARTICLE XI
GENERAL PROVISIONS
11.1 Waiver of Default
No consent or waiver, express or implied, by the Partnership or a Partner
with respect to any breach or default by the Partnership or a Partner hereunder
shall be deemed or construed to be a consent or waiver with respect to any other
breach or default by any party of the same provision or any other provision of
this Agreement. Failure on the part of the Partnership or a Partner to complain
of any act or failure to act of the Partnership or a Partner or to declare such
party in default shall not be deemed or constitute a waiver by the Partnership
or the Partner of any rights hereunder.
11.2 Amendment of Partnership Agreement
(a) Except as otherwise expressly provided elsewhere in this Agreement,
this Agreement shall not be altered, modified or changed except by an amendment
approved by the General Partner.
(b) In addition to any amendments otherwise authorized herein, the
General Partner may make any amendments to any of the Schedules to this
Agreement from time to time to reflect transfers of Partnership Interests and
issuances of additional Partnership Interests. Copies of such amendments shall
be delivered to the Partners promptly upon execution thereof.
(c) The General Partner shall cause to be prepared and filed any
amendment to the Certificate that may be required to be filed under the Act as a
consequence of any amendment to this Agreement.
(d) Any modification or amendment to this Agreement or the Certificate
made in accordance with this Section 11.2 shall be binding on all Partners.
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11.3 No Third Party Rights
Except as provided in Section 6.2 and Section 6.3, none of the provisions
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contained in this Agreement shall be for the benefit of or enforceable by any
third parties, including creditors of the Partnership.
11.4 Severability
In the event any provision of this Agreement is held to be illegal,
invalid or unenforceable to any extent, the legality, validity and
enforceability of the remainder of this Agreement shall not be affected thereby
and shall remain in full force and effect and shall be enforced to the greatest
extent permitted by law.
11.5 Nature of Interest in the Partnership
A Partner's Partnership Interest shall be personal property for all
purposes.
11.6 Binding Agreement
Subject to the restrictions on the disposition of Partnership Interests
herein contained, the provisions of this Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns.
11.7 Headings
The headings of the sections of this Agreement are for convenience only
and shall not be considered in construing or interpreting any of the terms or
provisions hereof.
11.8 Word Meanings
The words "herein", "hereinafter", "hereof", and "hereunder" refer to this
Agreement as a whole and not merely to a subdivision in which such words appear
unless the context otherwise requires. The singular shall include the plural,
and vice versa, unless the context otherwise requires. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". When verbs are used as
nouns, the nouns correspond to such verbs and vice-versa.
11.9 Counterparts
This Agreement may be executed in several counterparts, all of which
together shall constitute one agreement binding on all parties hereto,
notwithstanding that all the parties have not signed the same counterpart.
11.10 Entire Agreement
This Agreement contains the entire agreement between the parties hereto
and thereto and supersedes all prior writings or agreements with respect to the
subject matter hereof.
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11.11 Partition
The Partners agree that the Property is not and will not be suitable for
partition. Accordingly, each of the Partners hereby irrevocably waives any and
all right such Partner may have to maintain any action for partition of any of
the Property. No Partner shall have any right to any specific assets of the
Partnership upon the liquidation of, or any distribution from, the Partnership.
11.12 Governing Law; Consent to Jurisdiction and Venue
This Agreement shall be construed according to and governed by the laws
of the State of Delaware without regard to principles of conflict of laws. The
parties hereby submit to the exclusive jurisdiction and venue of the state
courts of Xxxxxx County, Texas or to the Court of Chancery of the State of
Delaware and the United States District Court for the Southern District of Texas
and of the United States District Court for the District of Delaware, as the
case may be, and agree that the Partnership or Partners may, at their option,
enforce their rights hereunder in such courts.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
GENERAL PARTNER:
PLAINS ALL AMERICAN GP LLC
By: __________________________________________
Name: __________________________________________
Title: __________________________________________
LIMITED PARTNERS:
PLAINS ALL AMERICAN INC.
By: __________________________________________
Name: __________________________________________
Title: __________________________________________
SABLE INVESTMENTS, L.P.
By: Sable Investments, LLC, its general partner
By: __________________________________________
Name: __________________________________________
Title: __________________________________________
E-HOLDINGS III, L.P.
By: E-Holdings III GP, LLC, its general partner
By: __________________________________________
Name: __________________________________________
Title: __________________________________________
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KAFU HOLDINGS, LP
By: Kafu Holdings, LLC, its general partner
By: __________________________________________
Name: __________________________________________
Title: __________________________________________
PAA MANAGEMENT L.P.
By: PAA Management LLC, its general partner
By: __________________________________________
Name: __________________________________________
Title: __________________________________________
XXXX X. XXXXXX
_________________________________________________
XXXXXX HEDGECAP FUND, L.P.
By: Xxxxxx Investment Management, L.P.,
its general partner
By: SSCO, Inc., its general partner
By: __________________________________________
Name: __________________________________________
Title: __________________________________________
XXXX X. XXXXXXX
_________________________________________________
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SCHEDULE I
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Partners, Capital Contributions and Percentage Interests
General Partner:
Initial Capital
Accounts/
Cash Total
---- Gross Capital Percentage Unit
Name and Address Contributed Asset Value Contribution Interest Percentages
----------------- ----------- ----------- ------------ ------------ -----------
Plains All American GP LLC $405,000 $345,000 $750,000 1% 0
Limited Partners:
Cash Total
---- Gross Capital Percentage Unit
Name and Address Contributed Asset Value Contribution Interest Percentages
----------------- ----------- ----------- ------------ ------------ -----------
Plains All American Inc. 0 $34,155,000 $34,155,000 45.540% 63.889%
Sable Investments, L.P. $14,107,500 $14,107,500 18.810% 13.750%
E-Holdings III, L.P. $ 6,682,500 $ 6,682,500 8.910% 6.250%
Kafu Holdings, L.P. $14,701,500 $14,701,500 19.602% 13.194%
PAA Management, L.P. $ 1,485,000 $ 1,485,000 1.980% 0
Xxxx X. Xxxxxx $ 1,584,495 $ 1,584,495 2.113% 1.482%
Xxxxxx Hedgecap Fund, L.P. $ 791,505 $ 791,505 1.055% 0.740%
Xxxx X. Xxxxxxx $ 742,500 $ 742,500 0.990% 0.694%
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