CONTRIBUTION AGREEMENT
by and among
VULCAN INTERMEDIARY, L.L.C.,
NEW VULCAN COAL HOLDINGS, L.L.C.,
ATLAS PIPELINE PARTNERS GP, LLC,
ATLAS PIPELINE PARTNERS, L.P.
and
RESOURCE AMERICA, INC.
January 18, 2002
CONTRIBUTION AGREEMENT
This Contribution Agreement (this "Agreement") is made and entered into as
of January 18, 2002, by and among Vulcan Intermediary, L.L.C., a Delaware
limited liability company ("Intermediary"), New Vulcan Coal Holdings, L.L.C., a
Delaware limited liability company ("NVCH" and, together with Intermediary, the
"Contributors"), Atlas Pipeline Partners, L.P., a Delaware limited partnership
(the "MLP"), Atlas Pipeline Partners GP, LLC, a Delaware limited liability
company (the "General Partner"), and Resource America, Inc., a Delaware
corporation ("Resource America").
W I T N E S S E T H:
WHEREAS, the Contributors are the record and beneficial owners
of all of the outstanding limited liability company membership interests (the
"Triton Interests") of Triton Coal Company, LLC, a Delaware limited liability
company ("Triton"); and
WHEREAS, in connection with the Triton Reorganization (as
defined in Section 6.20 below) it is contemplated that, prior to the Closing
hereof, Triton will be reorganized as a Delaware limited partnership; and
WHEREAS, the Contributors desire to contribute to the MLP, and
the MLP desires to accept from the Contributors, the Triton Interests in
consideration for the issuance by the MLP of common units, subordinated units
and deferred participation rights to purchase subordinated units, on the terms
and subject to the conditions set forth in this Agreement; and
WHEREAS, concurrently with, and as a condition to, the
execution and delivery of this Agreement, AIC, Inc. ("AIC"), Viking Resources
Corporation ("Viking"), Resource Energy, Inc. ("Resource Energy"), Atlas Energy
Group, Inc. ("Atlas Energy"), Atlas Resources, Inc. ("Atlas Resources") and
REI-NY, Inc. ("REI-NY", and collectively with AIC, Viking, Resource Energy,
Atlas Energy and Atlas Resources, the "Sellers") and NVCH have entered into that
certain Purchase Agreement, dated as of the date hereof (the "GP Purchase
Agreement"), pursuant to which, among other things, NVCH (or an affiliate
thereof) will purchase and the Sellers will sell, transfer and dispose of, all
of the membership interests and other equity interests, if any, of the General
Partner.
NOW, THEREFORE, in consideration of the premises and the
respective representations, warranties, covenants, agreements and conditions
contained herein, the parties hereto agree as follows:
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ARTICLE I
CONTRIBUTION
1.1 Contribution.
On the terms and subject to the conditions of this Agreement, on the
Closing Date (as hereinafter defined), the Contributors shall (x) contribute,
assign, transfer and convey the Triton Interests to the MLP or its designee,
which shall be Atlas Pipeline Operating Partnership, L.P., a Delaware limited
partnership (the "OLP") or a subsidiary thereof and (y) contribute $6,000,000 in
cash to the MLP plus an amount equal to $3.70 multiplied by the number of Common
Units outstanding at closing in excess of 1,621,159.
1.2 Consideration.
The MLP will acquire the Triton Interests in consideration of the issuance
to the Contributors of:
(a) 7,101,818 common limited partnership units of the MLP (the "New Common
Units");
(b) 4,058,182 subordinated limited partnership units of the MLP (the "New
Subordinated Units"), which New Subordinated Units will automatically convert
into common units representing limited partnership units of the MLP (the "Common
Units") as set forth in the form of Second Amended and Restated Agreement of
Limited Partnership of the MLP (the "MLP Agreement Amendment"), the form of
which is attached hereto as Exhibit A; and
(c) 18,000,000 deferred participation limited partnership units of the MLP
(the "Deferred Participation Units"), which Deferred Participation Units will
have such terms and conditions as are set forth in the MLP Agreement Amendment.
The New Common Units, the New Subordinated Units and the Deferred Participation
Units are referred to herein collectively as the "New Equity."
ARTICLE II
CLOSING
2.1 Closing.
Subject to the satisfaction or waiver of the conditions to closing set
forth in Article VII, the closing (the "Closing") of the contribution of the
Triton Interests, the issuance of the New Equity and the other transactions
contemplated by the Constituent Documents shall occur at the offices of
X'Xxxxxxxx LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx, xx the third business
day following such satisfaction or waiver, or at such other place, date and time
as may be agreed upon in writing by the parties hereto. The "Closing Date," as
referred to herein, shall mean the date of the Closing.
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2.2 Deliveries at the Closing.
At or before the Closing:
(a) the Contributors shall deliver, or cause to be delivered, to the
General Partner the following:
(i) transfer documents in such form as shall be reasonably
satisfactory to the MLP to transfer ownership of the Triton Interests;
(ii) the officer's certificate referred to in Section 7.2(c);
(iii) duly executed counterparts to the Registration Rights Agreement,
which agreement shall be in the form attached hereto as Exhibit B (the
"Registration Rights Agreement");
(iv) the company minute books and members register/transfer ledgers of
Triton; and
(v) all the other documents, certificates and other instruments
required to be delivered, or caused to be delivered, by the
Contributors pursuant hereto.
(b) the Atlas Entities, Resource America and the Resource America Entities
shall deliver, or cause to be delivered, to the Contributors the following:
(i) certificates representing the New Common Units, the New
Subordinated Units and the Deferred Participation Units in the
aggregate amounts set forth in Section 1.2, which, with respect to
each of the Contributors, shall be allocated to the Contributors as
the Contributors shall set forth in writing prior to the closing;
(ii) the officer's certificates referred to in Section 7.3(c);
(iii) the applicable Atlas Entities, Resource America and Resource
America Entities shall have duly executed and delivered the Amended
and Restated Master Natural Gas Gathering Agreement, which agreement
shall be in the form attached hereto as Exhibit C;
(iv) the applicable Atlas Entities, Resource America and Resource
America Entities shall have duly executed and delivered the Transition
Services Agreement, which agreement shall be in a form reasonably
acceptable to the Contributors and Resource America;
(v) the applicable Atlas Entities and Resource America Entities shall
have duly executed and delivered the Registration Rights Agreement;
(vi) the General Partner shall have duly executed and delivered the
MLP Agreement Amendment;
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(vii) the General Partner and the MLP shall have duly executed and
delivered the Second Amended and Restated Agreement of Limited
Partnership of the OLP, which agreement shall be in the form attached
hereto as Exhibit D (the "OLP Agreement Amendment");
(viii) the Opinion of Counsel required to be delivered pursuant to
Section 6.8; and
(ix) all the other documents, certificates and other instruments
required to be delivered or caused to be delivered, by the General
Partner, the MLP, Resource America and the entities other than the
Contributors pursuant hereto.
(c) At the Closing, the General Partner shall cause the MLP to exchange all
of the subordinated limited partnership units of the MLP outstanding immediately
prior to Closing (the "Subordinated Units") held by the General Partner for
1,481,026 newly issued Common Units to be issued in the name of, and delivered
to, Resource America or its affiliates (the "Resource America Common Units").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CONTRIBUTOR
The Contributors hereby represent and warrant to the General Partner and
the MLP that, as of the date hereof:
3.1 Existence of the Contributors.
Each of the Contributors is a limited liability company duly formed,
validly existing and in good standing under the laws of the State of Delaware.
Each of the Contributors has all requisite limited liability company power and
authority to own and hold the properties and assets it now owns and holds, and
to carry on its business as and where such properties are now owned or held and
such business is now conducted. Each of the Contributors is duly licensed or
qualified to do business as a foreign limited liability company and is in good
standing in the states in which the character of the properties and assets now
owned or held by it or the nature of the business now conducted by it requires
it to be so licensed or qualified, except where the failure to be so qualified
or in good standing is not reasonably likely to have a material adverse effect
on the ability of the Contributors to consummate the transactions contemplated
by this Agreement and the documents, instruments and other agreements
specifically referred to herein or delivered pursuant hereto, including the
schedules and exhibits hereto (collectively, the "Constituent Documents") (a
"Contributor Material Adverse Effect").
3.2 Existence of Triton.
Triton is a limited liability company duly formed, validly existing and in
good standing under the laws of the State of Delaware. Triton has all requisite
limited liability company power and authority to own and hold the properties and
assets it now owns and holds, and to carry on its business as and where such
properties are now owned or held and such business is now conducted. Triton is
duly licensed or qualified to do business as a foreign limited liability
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company and is in good standing in those jurisdictions as shall be specified on
Schedule 3.2, which are the only jurisdictions in which the character of the
properties and assets now owned or held by it or the nature of the business now
conducted by it requires it to be so licensed or qualified, except where the
failure to be so qualified or in good standing is not reasonably likely to have
a Triton Material Adverse Effect. As used herein, "Triton Material Adverse
Effect" shall mean an event, occurrence or change that is materially adverse to
the business, financial condition or results of operations of Triton, except
that Triton Material Adverse Effect shall not include, and none of the following
shall be taken into account in determining whether a Triton Material Adverse
Effect shall have occurred: (i) any adverse event, occurrence or change to the
extent attributable to the announcement or pendency of the transactions
contemplated by this Agreement or any other Constituent Document; or (ii) any
adverse event, occurrence or change attributable to conditions generally
affecting the coal industry (including, without limitation, changes in price of
coal), the United States economy (or any regional economy) or the financial or
commodities markets.
3.3 Authority.
Each of the Contributors has the limited liability company power and
authority to execute and deliver this Agreement and the other Constituent
Documents to which it is or will be a party, to consummate the transactions
contemplated thereby, and to perform all the terms and conditions thereof to be
performed by it. The execution and delivery by such Contributor of this
Agreement and the other Constituent Documents to which it is a party, the
performance by such Contributor of all the terms and conditions thereof to be
performed by it, and the consummation of the transactions contemplated hereby
and thereby have been duly authorized and approved by all requisite limited
liability company action of such Contributor. This Agreement constitutes (and,
as of the Closing Date, the Constituent Documents, as applicable, shall
constitute) the valid and binding obligation of such Contributor, enforceable in
accordance with their terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors' rights generally and by general principles
of equity (whether applied in a proceeding at law or in equity). The
Contributors shall furnish or cause to be furnished to the MLP, no later than
the Closing Date, true and correct copies of the Certificate of Formation of
Triton and the Second Amended and Restated Limited Liability Company Agreement
of Triton.
3.4 Capitalization.
Except as set forth on Schedule 3.4:
(a) The authorized capitalization of Triton consists of the Triton
Interests, of which all of the Triton Interests are outstanding and
held of record on the date hereof as set forth on Schedule 3.4(a). The
Triton Interests are duly authorized, validly issued, fully paid and
nonassessable (except as such nonassessability may be affected by
certain provisions of the Delaware Limited Liability Company Act).
Each Contributor owns the Triton Interests held by it, beneficially
and of record, free and clear of all liens, security interests,
claims, charges, encumbrances, rights, options to purchase, voting
trusts or other voting agreement and calls and commitments of every
kind affecting Triton ("Liens").
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(b) There are no outstanding subscriptions, options, convertible
securities, warrants, calls, rights or agreements or commitments of
any kind (issued or granted by, or binding upon, either of the
Contributors or Triton) to purchase or otherwise acquire any security
of or equity interest in Triton. Each Contributor has full legal right
to sell, assign and transfer the Triton Interests owned by it to the
MLP and will, upon delivery of the Triton Interests to the MLP
pursuant to the terms hereof, transfer to the MLP good and marketable
title to the Triton Interests free and clear of all Liens. With
respect to such Liens as set forth on Schedule 3.4, all such Liens
will be released, discharged or terminated prior to Closing and such
schedule shall be deemed to be amended at Closing to exclude all Liens
with respect to the Triton Interests.
(c) Triton has no subsidiaries nor does it own any stock, partnership
interest, joint venture interest or any other investment in any other
entity.
3.5 No Conflicts.
Except as set forth on Schedule 3.5 or as contemplated by this Agreement,
the execution and delivery by each of the Contributors of this Agreement does
not (and, in the case of the Constituent Documents, will not, as of the Closing
Date), and the performance by such Contributor of its obligations under this
Agreement and the consummation of the transactions contemplated hereby will not
(and, in the case of the Constituent Documents, the performance by such
Contributor of its obligations thereunder and the consummation of the
transactions contemplated thereby will not, as of the Closing Date):
(a) conflict with any of, or require the consent of, any person or
entity under the terms, conditions or provisions of the charter
documents or bylaws or equivalent governing instruments of such
Contributor or Triton;
(b) violate any provision of any law, statute, ordinance, rule or
regulation or any judicial, administrative or arbitration order,
award, judgment, writ, injunction or decree applicable to the
Contributors or Triton, except for those which in the aggregate are
not reasonably likely to have a Contributor Material Adverse Effect or
a Triton Material Adverse Effect;
(c) conflict with, result in a breach of, constitute a default under
(whether with notice or the lapse of time or both), or accelerate or
permit the acceleration of the performance required by or any remedies
or any rights of termination or cancellation or the loss of benefits
or change in the rights or obligations of any party, or require any
consent, authorization or approval under any indenture, mortgage or
lien, or any agreement, contract, commitment or other instrument to
which such Contributor or Triton is a party or by which any of them is
bound or to which any property of such Contributor or Triton is
subject, except for those which in the aggregate, are not reasonably
likely to have a Contributor Material Adverse Effect or a Triton
Material Adverse Effect; or
(d) result in the creation of any Lien on the Triton Interests or the
assets of such Contributor under any indenture, mortgage, agreement,
contract, commitment or other instrument to which such Contributor or
Triton is bound.
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3.6 Governmental Approvals and Filings.
Except as set forth on Schedule 3.6 and, other than compliance with and
filings under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX
Xxx"), if necessary, and as otherwise contemplated in this Agreement, no
consent, approval, license, permit, action, order, authorization of, or
registration, declaration or filing with, or notice to any court, tribunal,
arbitrator, authority, agency, commission, official, department, commission,
board, bureau, agency or instrumentality of the United States or any state,
county, city or other political subdivision thereof ("Governmental Authority")
or other person or entity on the part of either Contributor or Triton is
required in connection with the execution, delivery and performance of this
Agreement or the Constituent Documents or the consummation of the transactions
contemplated hereby or thereby, except (i) where the failure to obtain any such
consent, approval or action, to make any such filing or to give any such notice
is not reasonably likely to have a Contributor Material Adverse Effect or a
Triton Material Adverse Effect, and (ii) those as would be required solely as a
result of the identity or the legal or regulatory status of the MLP or any
person or entity that directly, or indirectly through one of more
intermediaries, controls or is controlled by or is under common control with the
MLP, with "control" meaning the power, direct or indirect, to direct or cause
the direction of the management and policies of the applicable person or entity
whether by contract or otherwise ("MLP Affiliates").
3.7 Books and Records.
The minute books and other similar governance records of Triton, true and
complete copies of which shall be made available to the MLP no later than the
Closing Date, contain a true and complete record, in all material respects, of
all material action taken at all meetings and by all written consents in lieu of
meetings of the members, the board of managers, and committees of the management
of Triton.
3.8 Financial Statements.
The Contributors have made available to the MLP true and complete copies of
the following financial statements (the "Triton Financial Statements"):
(a) the audited balance sheet of Triton as of June 30, 2000, and the
related audited statement of operations, shareholders' equity and cash
flows for the fiscal year then ended;
(b) the audited balance sheet of Triton as of June 30, 2001, and the
related audited statements of operations, shareholders' equity and
cash flows for the fiscal year then ended; and
(c) the unaudited balance sheet of Triton as of October 31, 2001, and
the related unaudited statements of operations and cash flows for the
period then ended.
Except as set forth in the notes thereto and as set forth on Schedule 3.8,
the Triton Financial Statements were prepared from the books and records of
Triton in accordance with generally accepted accounting principles, consistently
applied throughout the specified period and in the immediately prior comparable
period ("GAAP") (except as noted therein, and except, in the case of unaudited
interim financial statements, for normal year-end adjustments) and fairly
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present in all material respects (i) the financial condition of Triton as and at
the respective dates and (ii) the results of operations of Triton for the
respective periods covered thereby.
3.9 No Adverse Change.
Except as set forth on Schedule 3.9, since November 30, 2001, there have
been no changes in (a) the assets, liabilities or financial condition of Triton
from that set forth in the balance sheet dated November 30, 2001 (the "Triton
Balance Sheet"), or (b) the business, financial condition or results of
operations of Triton, except for changes that are not reasonably likely to have
a Triton Material Adverse Effect.
3.10 Default and Liabilities.
(a) Except as set forth on Schedule 3.10(a), Triton is not in default
under, and, to the knowledge of the Contributors, no condition exists that with
notice or lapse of time or both would constitute a default under (i) any
mortgage, loan agreement, indenture, evidence of indebtedness or other
instrument evidencing borrowed money to which it or any of its properties are
bound, (ii) any writ, judgment, decree, injunction or other order of any
Governmental Authority (in each such case whether preliminary or final) (an
"Order"), or (iii) any other agreement, except, in each case, for such defaults
and conditions that, individually or in the aggregate, are not reasonably likely
to have a Triton Material Adverse Effect.
(b) Except as set forth on Schedule 3.10(b) or as otherwise set forth on
the Triton Balance Sheet or reflected in the notes thereto, Triton has no
obligations or liabilities (whether accrued, absolute, contingent, unliquidated
or otherwise, whether due or to become due) that, individually or in the
aggregate, are reasonably likely to have a Triton Material Adverse Effect.
3.11 Taxes.
(a) For purposes of this Agreement, "Tax" or "Taxes" means all taxes,
however denominated, including any interest, penalties or other additions to tax
that may become payable with respect thereto, imposed by any federal, state,
local or foreign government or any agency or political subdivision of any such
government, which taxes shall include, without limiting the generality of the
foregoing, all income or profits taxes (including, but not limited to, federal
income taxes and state income taxes), gross receipts taxes, net proceeds taxes,
alternative or add-on minimum, sales taxes, use taxes, real property gains or
transfer taxes, ad valorem taxes, property taxes, value-added taxes, franchise
taxes, production taxes, severance taxes, windfall profit taxes, withholding
taxes, payroll taxes, employment taxes, excise taxes and other obligations of
the same or similar nature to any of the foregoing.
(b) Except as set forth on Schedule 3.11 or as is not reasonably likely to
have a Triton Material Adverse Effect, (i) all tax returns, all reports,
estimates, declarations of estimated tax, information statements, claims for
refund and returns relating to, or required to be filed in connection with, any
Taxes, including information returns or reports with respect to backup
withholding and other payments to third parties, including any schedule or
attachment thereto or amendment thereof (collectively, "Tax Returns"), required
to be filed by or with respect to Triton and any affiliated, consolidated,
combined, unitary or similar group of which Triton is or was a member have been
duly filed on a timely basis (taking into account all
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extensions of due dates); (ii) all items of income, gain, loss, deduction and
credit or other items ("Tax Items") required to be included in each such Tax
Return have been so included and all such Tax Items and any other information
provided in each such Tax Return are true, correct and complete; (iii) all Taxes
owed by Triton and any affiliated, consolidated, combined, unitary or similar
group of which is or was a member which are or have become due have been timely
paid in full; (iv) no penalty, interest or other charge is or will become due
with respect to the late filing of any such Tax Return or late payment of any
such Tax; (v) Triton withheld and paid over all Taxes required to have been
withheld and paid over, and complied with all information reporting and backup
withholding requirements in connection with amounts paid or owing to any
employee, creditor, independent contractor or other third party; (vi) there are
no Liens on any of the assets of Triton that arose in connection with any
failure (or alleged failure) to pay any Tax other than Liens for Taxes not yet
due payable; (vii) there is not in force any extension of time with respect to
the due date for the filing of any Tax Return of or with respect to Triton or
any affiliated, consolidated, combined, unitary or similar group of which Triton
is or was a member, nor are there any outstanding agreements or waivers by or
with respect to Triton, extending the period for assessment or collection of any
Taxes; and (viii) there is no pending action, proceeding or investigation for
assessment or collection of Taxes and no Tax assessment, deficiency or
adjustment has been asserted or proposed with respect to Triton.
(c) Except as set forth on Schedule 3.11 or as is not reasonably likely to
have a Triton Material Adverse Effect, no claim that Triton is or may be subject
to taxation has ever been made by an authority in a jurisdiction where Triton,
or any affiliated, consolidated, combined, unitary or similar group of which
Triton is or was a member, do not file Tax Returns.
(d) Except as set forth on Schedule 3.11 or as is not reasonably likely to
have a Triton Material Adverse Effect, the total amounts set up as liabilities
for current and deferred Taxes in the Triton Financial Statements (as adjusted
for operations and transactions in the Ordinary Course of Business since the
date of the Triton Financial Statements) will be sufficient to cover the payment
of all Taxes, whether or not assessed or disputed, which are, or are hereafter
found to be, or to have been, due by or with respect to Triton up to and through
the periods ending on the dates thereof.
(e) Schedule 3.11 contains a true and complete copy of each written Tax
allocation or sharing agreement and a true and complete description of each
unwritten Tax allocation or sharing arrangement affecting Triton. Such
agreements will be terminated effective as of the Closing Date, and no payments
will become due by Triton thereafter.
(f) Triton does not own any interest in any controlled foreign corporation
(as defined in Section 957 of the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder (the "Code")), foreign personal
holding company (as defined in Section 552 of the Code), passive foreign
investment company (as defined in Section 1297 of the Code) or other entity the
income of which is or could be required to be included in the income of Triton.
(g) None of the property of Triton is subject to a safe-harbor lease
(pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954 as in effect
after the Economic Recovery Tax Act of 1981 and before the Tax Reform Act of
1986) or is "tax-exempt use
9
property" (within the meaning of Section 168(h) of the Code) or "tax-exempt bond
financed property" (within the meaning of Section 168(g) of the Code).
(h) Triton has not made any payments, is not obligated to make any
payments, and is not a party to any agreement that under certain circumstances
could obligate it to make any payments that would not be deductible under
Section 280G of the Code.
(i) Except as set forth on Schedule 3.11, Triton (i) has not been a member
of an affiliated group filing a consolidated federal income Tax Return or (ii)
has no liability for the Taxes of any person or entity under Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local, or foreign law), as
a transferee or successor, by contract or otherwise.
(j) Triton has not entered into any agreement or arrangement, with respect
to any Tax, with any Governmental Authority that imposes such Tax, or the agency
(if any) charged with the collection of such Tax for such Governmental
Authority, including any governmental or quasi-governmental entity or agency
that imposes, or is charged with collecting, social security or similar charges
or premiums, which agreement or arrangement (i) requires Triton to take any
action or to refrain from taking any action or (ii) waives any statute of
limitations relating to the payment of Taxes.
(k) Triton is, and has been, from the date of its organization through the
Closing, classified as a partnership or as a disregarded entity for federal and
applicable state income Tax purposes and Triton has not taken any position
contrary to such treatment.
(l) There are no changes in the tax accounting methods subject to Section
481(a) of the Code that have an ongoing effect on Triton.
3.12 Legal Proceedings; Compliance With Laws and Orders.
Except as set forth on Schedule 3.12 or as disclosed in Section 3.19:
(a) there are no actions, suits, proceedings, claims, fines, demands,
complaints, arbitrations or Governmental Authority investigations
("Actions or Proceedings") pending or, to the knowledge of the
Contributors, threatened in writing against, relating to or affecting
the Contributors or Triton or any of their respective assets and
properties that are reasonably likely (i) to result in the issuance of
an any Order restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by
this Agreement or any of the Constituent Documents, or (ii)
individually or in the aggregate with other such Actions or
Proceedings, to have a Triton Material Adverse Effect;
(b) there are no Orders outstanding against Triton that, individually
or in the aggregate with other such Orders, are reasonably likely to
have a Triton Material Adverse Effect; and
(c) neither of the Contributors nor Triton is in violation of or in
default under any laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of any Governmental
Authority which violation or default, individually or in the
aggregate, is reasonably likely to have a Triton Material Adverse
Effect.
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3.13 Benefit Plans; ERISA.
(a) Schedule 3.13(a) sets forth a true and complete list of each bonus,
incentive compensation, deferred compensation, pension, profit sharing,
retirement, equity purchase, equity option, equity ownership, equity
appreciation rights, phantom equity, leave of absence, layoff, vacation, day or
dependent care, legal services, cafeteria, life, health, accident, disability,
workmen's compensation or other insurance, severance, separation or other
employee benefit plan, practice, policy or arrangement of any kind, whether
written or oral, including, but not limited to, any "employee benefit plan"
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended, and the rules and regulations promulgated thereunder
(each, a "Plan") established by Triton, or any predecessor or affiliate of
Triton, existing as of the date hereof (or at any time within the five (5) year
period prior thereto for a Plan subject to Title IV of the Employee Retirement
Income Security Act of 1974, as amended, and the rules and regulations
promulgated thereunder ("ERISA")) to which Triton contributes or has
contributed, or under which any employee, former employee or director of Triton
or any beneficiary thereof is covered, is eligible for coverage or has benefit
rights (each, a "Triton Benefit Plan") and identifies each of the Triton Benefit
Plans that is intended to qualify under Section 401 of the Code (each, a "Triton
Qualified Plan");
(b) Schedule 3.13(b) sets forth a true and complete list of each employee
of Triton whose annual salary is $75,000 or more as of December 31, 2001;
(c) Except as set forth on Schedule 3.13(c), Triton does not maintain, and
is not obligated to provide, benefits under any life, medical or health plan
(other than as an incidental benefit under a Triton Qualified Plan) that
provides benefits to retirees or other terminated employees other than benefit
continuation rights under the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
(d) Except as set forth on Schedule 3.13(d), Triton is not controlled by,
or under common control with, any other entity within the meaning of Section
4001 of ERISA that has at any time contributed to any "multiemployer plan," as
that term is defined in Section 4001 of ERISA.
(e) Each of the Triton Benefit Plans is, and its administration is and has
been since inception, in compliance with its terms and, where applicable, with
ERISA and the Code in all respects, except for such failures to comply which,
individually or in the aggregate, are not reasonably likely to have a Triton
Material Adverse Effect.
(f) Except as set forth on Schedule 3.13(f), all contributions and other
payments required to be made by Triton to any Triton Benefit Plan with respect
to any period ending before or at or including the Closing Date have been made
or reserves adequate for such contributions or other payments have been set
aside therefor and have been reflected in the Triton Financial Statements in
accordance with GAAP.
(g) Except as set forth on Schedule 3.13(g), there are no pending claims by
or on behalf of any Triton Benefit Plan, by any employee of Triton (or a
beneficiary of such an
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employee), which allege violations of law that, individually or in the
aggregate, are reasonably likely to result in a Triton Material Adverse Effect.
(h) Except as set forth on Schedule 3.13(h), complete and correct copies of
the following documents have been made available to the MLP prior to the
execution of this Agreement:
(i) the Triton Benefit Plans and any related trust agreements and
insurance contracts;
(ii) current summary plan descriptions of each Triton Benefit Plan
subject to ERISA;
(iii) the most recent Form 5500 and Schedules thereto for each Triton
Benefit Plan subject to ERISA reporting requirements;
(iv) the most recent determination of the United States Internal
Revenue Service with respect to the qualified status of each Triton
Qualified Plan; and
(v) the most recent actuarial report of the qualified actuary of any
Triton Benefit Plan which is subject to Part 3 of Title I of ERISA,
Section 412 of the Code or Title IV of ERISA or any other Triton
Benefit Plan with respect to which actuarial valuations are conducted.
3.14 Assets Other than Real Property Interests.
(a) Triton has good and marketable title to all material assets reflected
on the Triton Balance Sheet or thereafter acquired, except those sold or
otherwise disposed of since June 30, 2001, in the Ordinary Course of Business
and not in violation of this Agreement, and such assets will be, as of the
Closing, free and clear of all Liens except (i) such as set forth on Schedule
3.14, (ii) mechanics', carriers', workmen's, repairmen's or other like Liens
arising or incurred in the Ordinary Course of Business, Liens arising under
original purchase price conditional sales contracts and equipment leases with
third parties entered into in the Ordinary Course of Business, and Liens for
Taxes that are not due and payable or that may thereafter be paid without
penalty, (iii) Liens that secure debt that is reflected as a liability on the
Triton Balance Sheet and the existence of which is indicated in the notes
thereto, and (iv) other imperfections of title or encumbrances, if any, that,
individually or in the aggregate, would not reasonable be expected to have a
Triton Material Adverse Effect (the Liens described in clauses (i) through (iv)
above are hereinafter referred to collectively as "Triton Permitted Liens").
(b) All the material tangible personal property of Triton has been
maintained in accordance with generally accepted industry practice and is in
good operating condition and repair, ordinary wear and tear excepted, in each
case except such as is not reasonably likely to have a Triton Material Adverse
Effect. This Section 3.14 does not relate to real property or interests in real
property, such items being the subject of Section 3.15.
(c) As used in this Agreement, "Ordinary Course of Business", with respect
to any Person, shall be construed broadly, and shall include, without
limitation, all aspects of the
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commercial operations of the business of such Person (and the management and
oversight thereof) customarily engaged in by such Person.
3.15 Title to Real Property.
(a) Triton has:
(i) good and marketable title in fee to all real property and
interests in real property purported to be owned in fee by Triton
(individually, a "Triton Owned Property") and set forth on Schedule
3.15(a)(i) is a list of each Triton Owned Property; and
(ii) sufficient title or leasehold interest to the leasehold estates
in all real property and interests in real property owned or purported
to be leased by Triton to permit the operation of the properties in
the manner contemplated under Triton's current mine plans
(individually, a "Triton Leased Property") and set forth on Schedule
3.15(a)(ii) is a list of each Triton Leased Property,
and in the case of both clause (i) and (ii), free and clear of all Liens,
except:
(1) Liens as set forth on Schedule 3.15(a);
(2) leases, subleases and similar agreements as set forth on
Schedule 3.15(b);
(3) Triton Permitted Liens;
(4) easements, covenants, rights-of-way and other similar
restrictions of record;
(5) any conditions that may be shown by a current, accurate
survey or physical inspection of any Triton Owned Property or
Triton Leased Property made prior to Closing; and
(6) (A) zoning, building and other similar restrictions, (B)
Liens, easements, covenants, rights-of-way and other similar
restrictions that have been placed by any developer, landlord or
other third party on property over which Triton has easement
rights or on any Triton Leased Property, and (C) unrecorded
easements, covenants, rights-of-way and other similar
restrictions, none of which items set forth in clauses (A), (B)
and (C), individually or in the aggregate, is reasonably likely
to have a Triton Material Adverse Effect.
Those items set forth in clauses (1)-(6) above are herein referred to as
the "Triton Permitted Encumbrances".
(iii) The Triton Permitted Encumbrances do not materially interfere
with or adversely impact upon the operations of the business of
Triton.
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(b) With respect to easements, rights of way, licenses and land use permits
used by Triton (collectively, the "Triton Easements"), Triton has (i) title to
or interest in the Triton Easements free and clear of the claims of those
claiming by, through, or under Triton and not otherwise, and (ii) indefeasible
title to or interest in the Triton Easements sufficient to enable Triton to use
and operate its assets and conduct its business in a reasonable and customary
manner and without interference arising from defects in title, except for the
Triton Permitted Encumbrances.
(c) Except as set forth on Schedule 3.15(c), none of the Contributors nor
any of their affiliates (other than Triton) have any equipment or property
located on or within the Triton Owned Property, the Triton Leased Property or
the Triton Easements.
(d) Except as set forth on Schedule 3.15(d), Triton does not have any
equipment or property located on or within the real property, easements or
leased property owned or controlled by Contributor or its affiliates (other than
Triton).
3.16 Contracts.
(a) Schedule 3.16 sets forth (with paragraph references corresponding to
those set forth below) a true and complete list of the following written
contracts, plans, licenses, undertakings, commitments, instruments or agreements
("Contracts") to which Triton is a party or is bound as of the date hereof, as
follows:
(i) all Contracts (excluding Triton Benefit Plans) providing for a
commitment of employment for a specified or unspecified term or otherwise
relating to employment, the termination of employment, severance, personal
services, consulting or indemnification for officers, directors or the
like;
(ii) all Contracts containing any provision or covenant prohibiting or
materially limiting the ability of Triton to engage in any business
activity or to compete with any person or entity or prohibiting or
materially limiting the ability of any person or entity to engage in any
business activity or to compete with Triton;
(iii) all material partnership, joint venture, shareholders' or other
similar Contracts with any person or entity;
(iv) all Contracts providing for the lending of money, whether as borrower,
lender or guarantor that, individually or in the aggregate, exceed $50,000
and all related security agreements or similar agreements associated
therewith that survive Closing;
(v) all Contracts (including so-called take-or-pay or keepwell agreements),
under which Triton has directly or indirectly guaranteed indebtedness,
liabilities or obligations of any person or entity (in each case other than
endorsements for the purpose of collection in the Ordinary Course of
Business) that, individually or in the aggregate, exceed $50,000;
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(vi) all Contracts pending for the acquisition or disposition, directly or
indirectly (by merger or otherwise) of assets (other than coal) that
individually exceed $1,000,000;
(vii) all continuing Contracts for the future purchase or lease of
materials, supplies or equipment (other than purchase contracts and orders
for inventory in the Ordinary Course of Business) that individually have an
aggregate future liability that exceeds $1,000,000;
(viii) all Contracts pertaining to the ownership, operation or maintenance
of any and all facilities of Triton having a term greater than 90 days,
which individually exceed $4,000,000;
(ix) any other agreement (not expressly covered by one of the other clauses
of this Section 3.16(a)) of Triton (other than financing agreements and
coal contracts) that requires annual payments to be made or received in
excess of $50,000 and that is not cancelable with ninety (90) days notice;
(x) all Contracts between Triton, on one hand, and either Contributor or
any affiliate of such Contributor, on the other hand;
(xi) all material Contracts relating to the purchase, sale or transport of
coal and all agreements with coal brokers (in each case, other than
purchase orders);
(xii) all Contracts for coal treatment and tippling;
(xiii) all material Contracts relating in whole or in part to the
intellectual property of Triton;
(xiv) all collective bargaining or similar labor Contracts;
(xv) all guarantees, indemnities, letters of credit, letters of comfort,
surety bonds, self-bonds, other bonds, including reclamation bonds,
financial guaranty bonds, performance bonds and other obligations obtained
or issued by the Contributors or Triton or their affiliates for the benefit
of Triton or otherwise in force with respect to Triton (collectively, the
"Guarantees");
(xvi) all Contracts (other than this Agreement and its governing documents)
that survive the Closing and that (A) limit or contain restrictions on the
ability of Triton to declare or make distributions with respect to, or to
issue or purchase, redeem or otherwise acquire, its Triton Interests, to
incur indebtedness, to incur or suffer to exist any Lien, to purchase or
sell any assets and properties, to change the lines of business in which it
participates or engages or to engage in any merger or other business
combination or (B) require Triton to maintain specified financial ratios or
levels of net worth or other indicia of financial condition; and
(xvii) to the extent not otherwise set forth on Schedule 3.16, any other
Contract the primary purpose of which is to indemnify or otherwise make
whole any
15
person or entity with an indemnification or make whole obligation having a
value that exceeds $50,000.
(b) True copies of the written Contracts identified in Schedule 3.16 have
been made available to the MLP prior to the execution of this Agreement. Except
as set forth on Schedule 3.16, Triton is not and, to the knowledge of the
Contributors, no other party is in default under, or in breach or violation of
(and no event has occurred which, with notice or the lapse of time or both,
would constitute a default under, or a breach or violation of) any term,
condition or provision of any Contract identified on Schedule 3.16, except for
defaults, breaches, violations or events which, individually or in the
aggregate, are not reasonably likely to have a Triton Material Adverse Effect.
(c) Other than Contracts that have terminated or expired in accordance with
their terms, each of the Contracts identified on Schedule 3.16 constitutes
valid, binding and enforceable obligations of Triton to the extent it is a party
thereto and, to the knowledge of the Contributors, enforceable obligations of
any other party thereto, in accordance with its terms (subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered on a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing) and is in full force and
effect, except where such failure is not reasonably likely to have a Triton
Material Adverse Effect.
(d) No event has occurred that either entitles, or would, upon notice or
lapse of time or both, entitle the holder of any indebtedness for borrowed money
affecting Triton to accelerate, or that does accelerate, the maturity of any
indebtedness affecting Triton.
3.17 Intellectual Property.
Schedule 3.17 sets forth all material patents, trademarks (registered and
unregistered), service marks, trade names, copyrights and applications therefor
owned, used, filed by or licensed to Triton as of the date hereof. To the
knowledge of the Contributors, Triton is not infringing, in any material
respect, on any valid patent right, trademark, service xxxx, trade name or
copyright of others, except for any of the foregoing that are not reasonably
likely to have a Triton Material Adverse Effect. Except as set forth on Schedule
3.17, Triton owns and has the right to use, execute, reproduce, display,
perform, modify, enhance, distribute, prepare derivative works of and
sublicense, without payment to any other person or entity, all intellectual
property set forth on Schedule 3.17, as applicable. The consummation of the
transactions contemplated by this Agreement and the other Constituent Documents
will not conflict with, alter or impair any such intellectual property rights,
in each case, except as such, individually or in the aggregate, not reasonably
likely to have a Triton Material Adverse Effect.
3.18 Labor Relations.
Except as set forth on Schedule 3.18, to the knowledge of the Contributors,
there are no threatened or contemplated attempts to organize for collective
bargaining purposes any of the employees of Triton. There has been no work
stoppage, labor strike, slowdown, stoppage, lockout or other concerted action
pending, or the knowledge of the Contributors, threatened
16
against Triton which is reasonably likely to have a Triton Material Adverse
Effect. Triton is in material compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment, wages,
hours of work and occupational safety and health, and are not engaged in any
unfair labor practices as defined in the National Labor Relations Act or other
applicable law, except where the failure to comply is not reasonably likely to
have a Triton Material Adverse Effect.
3.19 Environmental Matters.
(a) As used in this Agreement:
(i) "Environmental Claim" means any and all written administrative,
regulatory or judicial actions, suits, demands, demand letters,
claims, liens, investigations, proceedings or notices of noncompliance
or violation by any person or entity (including any Governmental
Authority) alleging potential liability (including, without
limitation, potential liability for enforcement, investigative costs,
damages, contribution, indemnification, cost recovery, compensation,
injunctive relief, cleanup costs, governmental resource costs, removal
costs, remedial costs, natural resource damages, property damages,
personal injuries or penalties) arising out of, based on or resulting
from (1) the presence, or Release or threatened Release into the
environment, of any Hazardous Materials at any location operated,
leased or managed by the applicable entity; or (2) any violation of
any Environmental Law; or (3) any and all claims by any third party
resulting from the presence or release of any Hazardous Materials.
(ii) "Environmental Laws" means all federal, state and local laws,
rules and regulations relating to pollution or protection of human
health or safety or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws and regulations relating
to Releases or threatened Releases of Hazardous Materials, or
otherwise relating to the pipeline safety, manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of Hazardous Materials or reclamation of mine sites.
(iii) "Hazardous Materials" means (1) any petroleum or petroleum
products, radioactive materials, friable asbestos, urea formaldehyde
foam insulation, transformers or other equipment that contained
dielectric fluid containing polychlorinated biphenyls and natural gas
or natural gas liquids; and (2) any chemicals, materials or substances
which are now defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," or words of similar meaning and effect under any
Environmental Law; and (3) any other chemical material, substances or
waste, exposure to which is now prohibited, limited or regulated under
Environmental Law in a jurisdiction in which the applicable entity
operates.
(iv) "Releases" means any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching or
migration into the atmosphere, soil, surface water, groundwater or
property.
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(b) Except as set forth on Schedule 3.19 and except as is not reasonably
likely to have a Triton Material Adverse Effect, individually or in the
aggregate:
(i) Triton is in compliance with all applicable Environmental Laws.
Triton has not received any written communication that alleges that
Triton is not in compliance with applicable Environmental Laws. To the
knowledge of the Contributors, Triton has not used any waste disposal
site, or otherwise disposed of, or transported, or arranged for the
transportation of, any Hazardous Materials to any location in
violation of any Environmental Law.
(ii) (A) Triton has obtained or has applied for all environmental,
health and safety permits and authorizations (collectively, the
"Environmental Permits") necessary for the construction of its
facilities or the conduct of its operations, and all such permits are
in good standing or, where applicable, a renewal application has been
timely filed and is pending agency approval, and (B) Triton is in
material compliance with all terms and conditions of the Environmental
Permits. Schedule 3.19(ii) sets forth a list of all material
Environmental Permits.
(iii) There is no Environmental Claim pending (i) against Triton, (ii)
against any person or entity whose liability for any Environmental
Claim Triton has retained or assumed either contractually or by
operation of law, or (iii) against any real or personal property or
operations that Triton owns, leases or manages, in whole or in part.
(iv) There have been no Releases of any Hazardous Material that are
reasonably likely to form the basis of any Environmental Claims
against Triton or against any person or entity whose liability for any
Environmental Claim Triton has retained or assumed either
contractually or by operation of law.
(v) With respect to any predecessor of Triton, to the knowledge of the
Contributors, there is no Environmental Claim pending or threatened,
or any Release of Hazardous Materials that is reasonably likely to
form the basis of any Environmental Claim.
(vi) With respect to Triton, the Contributors have no knowledge of any
material facts that the Contributors reasonably believe would form the
basis of a Triton Material Adverse Effect arising from (i) the cost of
pollution control equipment currently required or known to be required
in the future, or (ii) current remediation costs or remediation costs
known to be required in the future.
(vii) There have been no material environmental investigations,
studies, audits, tests, reviews or other analyses conducted by, or
that are in the possession of, Triton with respect to any site or
facility now or previously owned, operated or leased by Triton that
have not been made available to the MLP prior to the execution of this
Agreement.
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3.20 Licenses, Permits, Approvals.
Triton possesses all licenses, franchises, permits, certificates and
governmental approvals and authorizations that are required for the lawful
operation of its business as currently operated, other than those which the
failure to possess is not reasonably likely to have a Triton Material Adverse
Effect.
3.21 Insurance.
Schedule 3.21 lists all policies of fire, liability, or other material
forms of third-party insurance issued in the name of Triton. Triton is insured
with financially responsible insurers in such amounts and against such risks and
losses as are customary in all material respects for entities conducting the
businesses conducted by Triton. Triton has not received any notice of
cancellation or termination with respect to any material insurance policy. To
the knowledge of the Contributors, all of such insurance policies are valid and
enforceable policies in all material respects.
3.22 Brokers.
Neither the Contributors nor Triton have entered (directly or indirectly)
into any agreement with any person, firm or corporation that would obligate
Resource America or any of the Atlas Entities, to pay any commission, brokerage
or "finder's fee," or any other fee in connection with this Agreement or the
transactions contemplated herein other than agreements with Rothschild, Inc.,
Xxxxxxxx Xxxxxxx & Company and Banc of America Securities LLC (and any
affiliates thereof), the fees, commissions and expenses of which shall be paid
by Triton.
3.23 Utility Status.
Triton is not (i) an "investment company," or a company "controlled by" an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, (ii) a "holding company," a "public utility company," a "gas utility
company" or a "subsidiary company" of a "holding company" or an "affiliate"
thereof within the meaning of the Public Utility Holding Company Act of 1935, as
amended, (iii) a "natural gas company" under the Natural Gas Act, as amended, or
(iv) a public utility or public service company (or similar designation) by any
state in the United States or by any foreign country.
3.24 Information Supplied.
None of the information supplied or to be supplied by the Contributors or
Triton in writing or otherwise approved in writing by the Contributors or Triton
for inclusion in the Proxy Statement will, at the date it is first mailed to the
MLP's unit holders or at the time of the MLP Unit Holders' Meeting, contain any
statement which, in the light of the circumstances under which such statement is
made, is false or misleading with respect to any material fact, or omit to state
any material fact necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of any proxy for the MLP Unit Holders' Meeting
or any amendment or supplement thereto.
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3.25 Securities Laws.
(a) Contributor acknowledges that, upon issuance, each certificate
representing the New Common Units, the New Subordinated Units and the Deferred
Participation Units shall bear a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS ("ACTS").
THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR OFFERED
FOR SALE, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE ACTS OR PURSUANT
TO A TRANSACTION FOR WHICH SUCH REGISTRATION IS NOT REQUIRED, AND THEN ONLY IN
COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN THE SECOND AMENDED AND
RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF THE MLP, AS AMENDED, A COPY OF
WHICH MAY BE OBTAINED FROM THE MLP AT ITS PRINCIPAL EXECUTIVE OFFICE.
(b) Each Contributor is an accredited investor within the meaning of Rule
501(a) under the Securities Act of 1933, as amended (the "Securities Act"), and,
except as described herein, the New Common Units, the New Subordinated Units and
the Deferred Participation Units to be issued to it pursuant to this Agreement
are being acquired for its own account and not with a view toward, or for sale
in connection with, any distribution thereof except in compliance with
applicable United States federal and state securities laws; provided that the
parties acknowledge that the Contributors may, in their discretion, distribute
the New Common Units, the New Subordinated Units and the Deferred Participation
Units to direct and/or indirect beneficial owners so long as such distribution
is in compliance with applicable United States federal and state securities
laws. Each Contributor is aware that no Governmental Authority has made any
finding or determination as to the fairness of an investment in the New Common
Units, the New Subordinated Units and the Deferred Participation Units, nor any
recommendation or endorsement with respect thereto. Each Contributor
acknowledges that the issuance of the New Common Units, the Subordinated Units
and the Deferred Participation Units has not been registered under the
Securities Act in reliance on an exemption therefrom.
(c) Each Contributor has such knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks of its
investment in the new Common Units, the New Subordinated Units and the Deferred
Participation Units, and is capable of bearing the economic risks of such
investment.
(d) Each Contributor (i) has had the opportunity to ask questions of
officers of the General Partner with respect to the Atlas Entities, and (ii) has
received copies of the MLP's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000, Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 31, 2001, June 30, 2001 and September 30, 2001, and all Current
Reports on Form 8-K filed after December 31, 2000.
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(e) Each Contributor's principal executive office is located in New York,
New York and the offer of the New Common Units, the New Subordinated Units and
the Deferred Participation Units is made in that state.
3.26 Qualifications as Lessee; Coal Acreage Limitations.
(a) Triton is qualified in every material respect, including limitations
and parameters imposed in 43 C.F.R. Part 3400, to take, hold, own and control
federal coal and mineral leases.
(b) Triton does not exceed the coal acreage lease or permit limit set forth
in 30 U.S.C. Section 183.
(c) Triton is qualified to hold coal and mineral leases issued by the State
of Wyoming pursuant to Wyo. Stat. 36-6-101, et seq., and the regulations
promulgated pursuant to that statute.
(d) Triton is in substantial compliance with all applicable laws relating
to mine-safety and operation and has not received any written communication that
alleges that Triton is not in compliance with applicable laws, except to the
extent such noncompliance is not reasonably likely to have a Triton Material
Adverse Effect.
3.27 Permit Blocking.
Neither the Contributors nor Triton has been notified (nor is there any
pending or threatened notification) by the United States Office of Surface
Mining, Reclamation and Enforcement or the agency of any state administering the
Surface Mining Control and Reclamation Act, as amended, 30 U.S.C. ss. 1201, et
seq., any rule or regulation promulgated thereunder, and any similar state law
or regulation ("SMCRA") that such Contributor or Triton is (i) ineligible to
receive surface mining permits, or (ii) under investigation to determine whether
its eligibility to receive a SMCRA permit should be revoked, or (iii) otherwise
permit blocked.
3.28 Exon-Xxxxxx.
Contributor is not a "foreign person" for purposes of the Section 721 of
the Defense Production Act of 1950, as amended, and any successor thereto and
the regulations issued pursuant thereto or in consequence thereof.
3.29 Hedging.
Except as set forth on Schedule 3.29, Triton does not engage in any natural
gas or other futures or options trading and, other than SO2 allowances and
interest rate swaps with respect to Triton's outstanding indebtedness) is not a
party to any price swaps, xxxxxx, futures or similar instruments.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE
GENERAL PARTNER AND THE MLP
The General Partner and the MLP, hereby represent and warrant to the
Contributors that as of the date hereof:
4.1 Existence.
(a) The General Partner is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware. The
General Partner has all requisite limited liability company power and authority
to own and hold the properties and assets it now owns and holds, and to carry on
its business as and where such properties are now owned or held and such
business is now conducted. The General Partner is duly licensed or qualified to
do business as a foreign limited liability company and is in good standing in
those jurisdictions specified on Schedule 4.1, which are the only jurisdictions
in which the character of the properties and assets now owned or held by it or
the nature of the business now conducted by it requires it to be so licensed or
qualified, except where the failure to be so qualified or in good standing is
not reasonably likely (i) to have a material adverse effect (1) on the business,
condition (financial or otherwise) or results of operations of the General
Partner, the MLP, the OLP or the Subsidiaries, other than (x) any adverse event,
occurrence or change to the extent attributable to the announcement or pendency
of the transactions contemplated by this Agreement or any other Constituent
Document, or (y) any adverse event, occurrence or change attributable to
conditions generally affecting the natural gas industry (including, without
limitation, changes in price of natural gas), the United States economy (or any
regional economy) or the financial or commodities markets, or (2) the ability of
Resource America or any of the Resource America Entities, the General Partner or
the MLP to consummate the transactions contemplated by this Agreement or any of
the Constituent Documents, or (ii) to subject the limited partners of the MLP to
any material liability or disability (together, clauses (i) and (ii) are
referred to as an "Atlas Material Adverse Effect").
(b) The MLP is a limited partnership duly formed, validly existing and in
good standing under the laws of the State of Delaware. The MLP has all requisite
limited partnership power and authority to own and hold the properties and
assets it now owns and holds, and to carry on its business as and where such
properties are now owned or held and such business is now conducted. The MLP is
duly licensed or qualified to do business as a foreign limited partnership and
is in good standing in those jurisdictions specified on Schedule 4.1, which are
the only jurisdictions in which the character of the properties and assets now
owned or held by it or the nature of the business now conducted by it requires
it to be so licensed or qualified, except where the failure to be so qualified
or in good standing is not reasonably likely to have an Atlas Material Adverse
Effect.
(c) The OLP is a limited partnership duly formed, validly existing and in
good standing under the laws of the State of Delaware. The OLP has all requisite
limited partnership power and authority to own and hold the properties and
assets it now owns and holds and to carry on its business as and where such
properties are now owned or held and such business is
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now conducted. The OLP is duly licensed or qualified to do business as a foreign
limited partnership and is in good standing in those jurisdictions specified on
Schedule 4.1, which are the only jurisdictions in which the character of the
properties and assets now owned or held by it or the nature of the business now
conducted by it requires it to be so licensed or qualified, except where the
failure to be so qualified or in good standing is not reasonably likely to have
an Atlas Material Adverse Effect.
4.2 Authority.
The General Partner has the limited liability company power and authority
and the MLP has the partnership power and authority to execute and deliver this
Agreement and the other Constituent Documents to which they are or will be a
party, to consummate the transactions contemplated hereby and thereby (subject,
in the case of the MLP, to the approval of the unitholders of the MLP as
specified in Section 6.7), and to perform all the terms and conditions thereof
to be performed by them. The execution and delivery by the General Partner and
the MLP of this Agreement and the performance by the General Partner and the MLP
of all the terms and conditions hereof to be performed by each of them have been
duly authorized and approved by all requisite limited liability company action
of the General Partner (including approval of the conflicts committee of the
Board of Managers of the General Partner (the "Conflicts Committee") and receipt
of the MLP Fairness Opinion) and limited partnership action of the MLP (other
than the approval of the unit holders of the MLP as specified in Section 6.7).
The execution and delivery by the General Partner and the MLP of the Constituent
Documents, the performance by the General Partner and the MLP of all the terms
and conditions thereof to be performed by them and the consummation of the
transactions contemplated thereby, have been duly authorized and approved by all
requisite limited liability company action of the General Partner and limited
partnership action of the MLP (other than the approval of the unit holders of
the MLP as specified in Section 6.7). This Agreement constitutes (and, as of the
Closing Date, the Constituent Documents, as applicable, shall constitute) the
valid and binding obligation of the General Partner and the MLP enforceable in
accordance with their terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors' rights generally and by general principles
of equity (whether applied in a proceeding at law or in equity). The General
Partner has delivered true and correct copies of the organizational documents of
the General Partner, the MLP and the OLP, in effect as of the date hereof and as
shall be in effect as of the Closing Date.
4.3 Subsidiaries.
(a) Except for its interests in the MLP and the OLP, the General Partner
has no subsidiaries, nor does it own any stock, partnership interest, joint
venture interest or any other security or ownership interest issued by any other
corporation, organization or entity.
(b) Except for its 98.9899% limited partnership interest in the OLP, the
MLP has no subsidiaries, nor does it own any stock, partnership interest, joint
venture interest or any other security or ownership interest issued by any other
corporation, organization or entity.
(c) Schedule 4.3 sets forth a true and correct list of (i) the OLP's direct
or indirect investment or interest in or control over any other corporation,
partnership, joint venture, limited
23
liability company or other business entity, whether incorporated or
unincorporated (the "Subsidiaries"), (ii) the jurisdiction of incorporation or
formation for each of the Subsidiaries, and (iii) each foreign jurisdiction
where each of the Subsidiaries is duly licensed or qualified to do business as a
foreign corporation or partnership, as applicable.
(d) Each of the Subsidiaries is an entity duly formed, validly existing and
in good standing under the laws of the state in which it was formed, and has
full power and authority to own and hold the properties and assets it now owns
and holds and to carry on its business as and where such properties and assets
are now owned or held and such business is now conducted. Each of the
Subsidiaries is duly qualified and in good standing in the states in which the
character of the properties and assets now owned or held by it or the nature of
the business now conducted by it requires it to be so licensed or qualified,
except where the failure to be so qualified or in good standing is not
reasonably likely to have an Atlas Material Adverse Effect. Except as set forth
on Schedule 4.3, the equity interests in all Subsidiaries are wholly-owned by
the OLP, free and clear of all liens, security interests, claims, charges,
encumbrances, rights, options to purchase, voting trusts or other voting
agreement and calls and commitments of every kind affecting the Subsidiary
(other than such that may be contained in an applicable partnership agreement
for a Subsidiary with respect to a partnership interest in that Subsidiary) and
the OLP has good and marketable title to such interests.
(e) The General Partner has furnished to the Contributors true and correct
copies of the organizational documents of each of the Subsidiaries, in effect as
of the date hereof and as of the Closing Date.
4.4 Capitalization.
(a) The General Partner is the sole general partner of the MLP, with a
general partner interest in the MLP of 1.0101%; such general partner interest
has been duly authorized and validly issued and is fully paid and
non-assessable; and the General Partner owns such general partner interest,
beneficially and of record.
(b) The General Partner is the sole general partner of the OLP, with a
general partner interest in the OLP of 1.0101 %; such general partner interest
has been duly authorized and validly issued and is fully paid and
non-assessable; and the General Partner owns such general partner interest
beneficially and of record.
(c) The MLP is the sole limited partner of the OLP, with a limited partner
interest of 98.9899%; such limited partner interest has been duly authorized by
the limited partnership agreement of the OLP, and was validly issued and is
fully paid and non-assessable; and except as set forth on Schedule 4.4, the MLP
owns such limited partner interest in the OLP, beneficially and of record, free
and clear of all Liens.
(d) All outstanding Common Units, Subordinated Units and Incentive
Distribution Rights and the limited partner interests represented thereby have
been duly authorized and validly issued and are fully paid and non-assessable.
All of the outstanding Subordinated Units are owned by the General Partner,
beneficially and of record.
24
(e) The New Equity (including the Subordinated Units issuable upon
conversion of the Deferred Participation Units and Common Units issuable upon
conversion of Subordinated Units (including Subordinated Units received upon
conversion of the Deferred Participation Units)) to be issued to the
Contributors and the limited partner interests represented thereby will, upon
receipt of unitholder approval, be duly authorized and, when issued and
delivered against exchange therefor as provided herein or in the MLP Agreement
Amendment, as the case may be, will be validly issued, fully paid,
non-assessable, free and clear of all Liens.
(f) Other than in the governing documents of the Atlas Entities, there are
no preemptive rights applicable to, nor any restriction upon the voting or
transfer of, any equity interests of any Atlas Entity in any agreement or other
instrument to which the MLP, the OLP or any of the Subsidiaries is a party or by
which any of them may be bound.
(g) As of the date hereof, there are 1,621,159 Common Units outstanding and
1,641,026 Subordinated Units outstanding. Other than this Agreement or as set
forth on Schedule 4.4, there are no outstanding subscriptions, options,
convertible securities, warrants, calls, rights or agreements or commitments of
any kind (issued or granted by, or binding upon, the MLP, the OLP or the
Subsidiaries) to purchase or otherwise acquire any security of or equity
interest in MLP, the OLP or the Subsidiaries.
4.5 No Conflicts.
Except as set forth on Schedule 4.5 or as contemplated by this Agreement,
the execution and delivery by the applicable Atlas Entity of this Agreement does
not (and, in the case of the Constituent Documents, will not, as of the Closing
Date), and the performance by the applicable Atlas Entity of its obligations
under this Agreement and the consummation of the transactions contemplated
hereby will not (and, in the case of the Constituent Documents, the performance
by the applicable Atlas Entity of its obligations thereunder and the
consummation of the transactions contemplated thereby will not, as of the
Closing Date):
(a) conflict with any of, or require the consent of any person or entity
under, the terms, conditions or provisions of the charter documents or
bylaws or equivalent governing instruments of the General Partner, the MLP,
the OLP or the Subsidiaries (collectively, the "Atlas Entities") other than
unitholder approval;
(b) violate any provision of any law, statute, ordinance, rule or
regulation or any judicial, administrative or arbitration order, award,
judgment, writ, injunction or decree applicable to the Atlas Entities,
except for those which in the aggregate are not reasonably likely to have
an Atlas Material Adverse Effect;
(c) conflict with, result in a breach of, constitute a default under
(whether with notice or the lapse of time or both), or accelerate or permit
the acceleration of the performance required by or any remedies or any
rights of termination or cancellation or the loss of benefits or change in
the rights or obligations of any party, or require any consent,
authorization or approval under any indenture, mortgage or lien, or any
agreement, contract, commitment or other instrument to which any of the
Atlas Entities is a party or by which any of them is bound or to
25
which any property of any of the Atlas Entities is subject, except for
those which in the aggregate are not reasonably likely to have an Atlas
Material Adverse Effect; or
(d) result in the creation of any Lien on the New Equity or the assets of
any of the Atlas Entities under any indenture, mortgage, agreement,
contract, commitment or other instrument to which any of the Atlas Entities
is bound.
4.6 Governmental Approvals and Filings.
Except as set forth on Schedule 4.6 and other than compliance with and
filings under the HSR Act, if necessary, and as otherwise contemplated in this
Agreement, no consent, approval, license, permit, action, order, authorization
of, or registration, declaration or filing with, or notice to any Governmental
Authority on the part of the Atlas Entities is required in connection with the
execution, delivery and performance of this Agreement or any of the Constituent
Documents or the consummation of the transactions contemplated hereby or
thereby, except (i) where the failure to obtain any such consent, approval or
action, to make any such filing or to give any such notice is not reasonably
likely to have an Atlas Material Adverse Effect, and (ii) those as would be
required solely as a result of the identity or the legal or regulatory status of
Triton or any person or entity that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
Triton ("Triton Affiliates").
4.7 Books and Records.
The minute books and other similar governance records of the Atlas
Entities, true and complete copies of which shall be made available to the
Contributors no later than the Closing Date, contain a true and complete record,
in all material respects, of all material action taken at all meetings and by
all written consents in lieu of meetings of the members, the partners, the board
of managers, the board of directors and committees of the management of the
Atlas Entities, as applicable.
4.8 SEC Filings.
The MLP closed its initial public offering for the Common Units on February
2, 2000 (the "IPO Date"). Prior to such date, the MLP was not a reporting
company under Sections 13 of 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The MLP has made all filings required to be made
by the Securities Act and the Exchange Act; all filings by the MLP with the
Securities and Exchange Commission (the "SEC"), at the time filed (in the case
of documents filed pursuant to the Exchange Act) or when declared effective by
the SEC (in the case of registration statements filed under the Securities Act)
complied in all material respects with the applicable requirements of the
Securities Act and Exchange Act; no such filing, at the time filed, contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein in order to make the statements contained therein,
not misleading; and all financial statements contained or incorporated by
reference therein complied as to form when filed in all material respects with
the rules and regulations of the SEC with respect thereto, were prepared from
the books and records of the MLP in accordance with GAAP (except as noted
therein, and except, in the case of unaudited interim financial statements, for
normal year-end adjustments) and fairly present in all material respects (i) the
consolidated
26
financial condition of the MLP as and at the respective dates and
(ii) the results of operations of the MLP for the respective periods covered
thereby.
4.9 No Adverse Change.
Except as disclosed on Schedule 4.9, since the date of the most recent
quarterly report of the MLP filed with the SEC, there have been no changes in
(a) the assets, liabilities or financial condition of the Atlas Entities from
that set forth in the balance sheet included in the financial statements of the
MLP contained in that quarterly report (the "MLP Balance Sheet"), or (b) the
business, condition (financial or otherwise) or results of operations of the
MLP, the OLP or the Subsidiaries, in each case, that are reasonably likely to
have an Atlas Material Adverse Effect.
4.10 Default and Liabilities.
(a) Except as set forth on Schedule 4.10(a), the Atlas Entities are not in
default under, and, to the knowledge of the Atlas Entities, no condition exists
that with notice or lapse of time or both would constitute a default under (i)
any mortgage, loan agreement, indenture, evidence of indebtedness or other
instrument evidencing borrowed money to which they or any of their properties
are bound, (ii) any Order, or (iii) any other agreement, except, in each case,
for such defaults and conditions that, individually or in the aggregate, are not
reasonably likely to have an Atlas Material Adverse Effect.
(b) Except as set forth on Schedule 4.10(b) or as otherwise set forth on
the MLP Balance Sheet or reflected in the notes thereto, the Atlas Entities have
no obligations or liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise, whether due or to become due) that, individually or
in the aggregate, are reasonably likely to have an Atlas Material Adverse
Effect.
4.11 Taxes.
(a) Except as set forth on Schedule 4.11(a) or as is not reasonably likely
to have an Atlas Material Adverse Effect, (i) all Tax Returns required to be
filed by or with respect to the Atlas Entities and any affiliated, consolidated,
combined, unitary or similar group of which any of the Atlas Entities is or was
a member have been duly filed on a timely basis (taking into account all
extensions of due dates); (ii) all Tax Items required to be included in each
such Tax Return have been so included and all such Tax Items and any other
information provided in each such Tax Return are true, correct and complete;
(iii) all Taxes owed by any of the Atlas Entities and any affiliated,
consolidated, combined, unitary or similar group of which any of the Atlas
Entities is or was a member which are or have become due have been timely paid
in full; (iv) no penalty, interest or other charge is or will become due with
respect to the late filing of any such Tax Return or late payment of any such
Tax; (v) the Atlas Entities have withheld and paid over all Taxes required to
have been withheld and paid over, and have complied with all information
reporting and backup withholding requirements in connection with amounts paid or
owing to any employee, creditor, independent contractor or other third party;
(vi) there are no Liens on any of the assets of any of the Atlas Entities that
arose in connection with any failure (or alleged failure) to pay any Tax on any
of the assets of the Atlas Entities, with respect to Taxes, other than Liens for
Taxes not yet due payable; (vii) there is not in force any extension of time
with respect to the
27
due date for the filing of any Tax Return of or with respect to the Atlas
Entities or any affiliated, consolidated, combined, unitary or similar group of
which any of the Atlas Entities is or was a member, nor are there any
outstanding agreements or waivers by or with respect to any of the Atlas
Entities, extending the period for assessment or collection of any Taxes; and
(viii) there is no pending action, proceeding or investigation for assessment or
collection of Taxes and no Tax assessment, deficiency or adjustment has been
asserted or proposed with respect to the Atlas Entities.
(b) Except as set forth on Schedule 4.11(b) or as is not reasonably likely
to have an Atlas Material Adverse Effect, no claim that any of the Atlas
Entities is or may be subject to taxation has ever been made by an authority in
a jurisdiction where any of the Atlas Entities, or any affiliated, consolidated,
combined, unitary or similar group of which any of the Atlas Entities is or was
a member, do not file Tax Returns.
(c) Except as set forth on Schedule 4.11(c) or as is not reasonably likely
to have an Atlas Material Adverse Effect, the total amounts set up as
liabilities for current and deferred Taxes in the Atlas Financial Statements (as
defined below) (as adjusted for operations and transactions in the Ordinary
Course of Business since the date of the MLP Financial Statements) will be
sufficient to cover the payment of all Taxes, whether or not assessed or
disputed, which are, or are hereafter found to be, or to have been, due by or
with respect to the Atlas Entities up to and through the periods ending on the
dates thereof.
(d) Schedule 4.11(d) contains a true and complete copy of each written Tax
allocation or sharing agreement and a true and complete description of each
unwritten Tax allocation or sharing arrangement affecting the Atlas Entities. To
the extent such Tax allocation or sharing arrangements are not with another of
the Atlas Entities, such agreements will be terminated effective as of the
Closing Date, and no payments will become due by the Atlas Entities thereafter.
(e) None of the Atlas Entities owns any interest in any controlled foreign
corporation (as defined in Section 957 of the Code), foreign personal holding
company (as defined in Section 552 of the Code), passive foreign investment
company (as defined in Section 1297 of the Code) or other entity the income of
which is or could be required to be included in the income of any of the Atlas
Entities.
(f) None of the property of the Atlas Entities is subject to a safe-harbor
lease (pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954 as in
effect after the Economic Recovery Tax Act of 1981 and before the Tax Reform Act
of 1986) or is "tax-exempt use property" (within the meaning of Section 168(h)
of the Code) or "tax-exempt bond financed property" (within the meaning of
Section 168(g) of the Code).
(g) None of the Atlas Entities have made any payments, are obligated to
make any payments, or are a party to any agreement that under certain
circumstances could obligate any of them to make any payments that would not be
deductible under Section 280G of the Code.
28
(h) Except as set forth on Schedule 4.11(h), none of the Atlas Entities (i)
have been a member of an affiliated group filing a consolidated federal income
Tax Return or (ii) have any liability for the Taxes of any person or entity
under Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local, or foreign law), as a transferee or successor, by contract or otherwise.
(i) None of the Atlas Entities have entered into any agreement or
arrangement, with respect to any Tax, with any Governmental Authority that
imposes such Tax, or the agency (if any) charged with the collection of such Tax
for such Governmental Authority, including any governmental or
quasi-governmental entity or agency that imposes, or is charged with collecting,
social security or similar charges or premiums, which agreement or arrangement
(i) requires any of the Atlas Entities to take any action or to refrain from
taking any action or (ii) waives any statute of limitations relating to the
payment of Taxes.
(j) Each of the Atlas Entities is, and has been, from the date of its
organization through the Closing, classified as a partnership or as a
disregarded entity for federal and applicable state income Tax purposes; no
election has ever been filed to cause any of the Atlas Entities to be taxed as a
corporation for federal or state income Tax purposes; and none of the Atlas
Entities have taken any position contrary to such treatment.
(k) There are no changes in the tax accounting methods subject to Section
481(a) of the Code that have an ongoing effect on any of the Atlas Entities.
4.12 Legal Proceedings; Compliance With Laws and Orders.
Except as set forth on Schedule 4.12 or as disclosed in Section 4.18:
(a) there are no Actions or Proceedings pending or, to the knowledge of the
General Partner, threatened in writing against, relating to or affecting
the Atlas Entities or any of their respective assets and properties that
are reasonably likely (i) to result in the issuance of an Order
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or
the Constituent Documents, or (ii) individually or in the aggregate with
other such Actions or Proceedings, to have an Atlas Material Adverse
Effect;
(b) there are no Orders outstanding against any of the Atlas Entities that,
individually or in the aggregate with other such Orders, are reasonably
likely to have an Atlas Material Adverse Effect; and
(c) none of the Atlas Entities are in violation of or in default under any
laws, statutes, rules, regulations, ordinances and other pronouncements
having the effect of law of any Governmental Authority which violation or
default, individually or in the aggregate, is reasonably likely to have an
Atlas Material Adverse Effect.
4.13 Benefit Plans; ERISA.
None of the MLP, the OLP or any of the Subsidiaries has any employees or
has established any Plan. In addition, none of the Atlas Entities has now, and
will not have prior to
29
Closing, any liability or obligation (x) arising under or related to any Plan,
(y) otherwise in respect of any person for, or in respect of, in any manner,
salary, wages, commissions, bonuses, employee benefits, pension benefits,
severance, termination pay or other similar obligations or liabilities or (z)
arising under or related to any laws relating to employees or any of the other
items set forth in clauses (x) and (y).
4.14 Assets Other than Real Property Interests.
(a) The MLP, the OLP and the Subsidiaries have good and marketable title to
all material assets reflected on the MLP Balance Sheet or thereafter acquired,
except those sold or otherwise disposed of since June 30, 2001, in the Ordinary
Course of Business and not in violation of this Agreement, in each case free and
clear of all Liens except (i) such as set forth on Schedule 4.14, (ii)
mechanics', carriers', workmen's, repairmen's or other like Liens arising or
incurred in the Ordinary Course of Business, Liens arising under original
purchase price conditional sales contracts and equipment leases with third
parties entered into in the Ordinary Course of Business and Liens for Taxes that
are not due and payable or that may thereafter be paid without penalty, (iii)
Liens that secure debt that is reflected as a liability on the Atlas Financial
Statements and the existence of which is indicated in the notes thereto, and
(iv) other imperfections of title or encumbrances, if any, that, individually or
in the aggregate, would not reasonably be expected to have an Atlas Material
Adverse Effect (the Liens described in clauses (i) through (iv) above are
hereinafter referred to collectively as "Atlas Permitted Liens").
(b) All the material tangible personal property, including pipelines,
meters, compressors and other equipment or fixtures used in the gas gathering
business, of all of the MLP, OLP or the Subsidiaries has been maintained in
accordance with generally accepted industry practice and is in good operating
condition and repair, ordinary wear and tear excepted, in each case except such
as is not reasonably likely to have an Atlas Material Adverse Effect. This
Section 4.14 does not relate to real property or interests in real property,
such items being the subject of Section 4.15.
4.15 Title to Real Property.
(a) The MLP, OLP or the Subsidiaries have (or will have at Closing):
(i) good and marketable title in fee to all real property and
interests in real property, owned or purported to be owned in fee by
the MLP, the OLP or the Subsidiaries (individually, an "Atlas Owned
Property"); and set forth on Schedule 4.15(a)(i) is a list of each
Atlas Owned Property; and
(ii) good and marketable title to the leasehold estates in all real
property and interests in real property purported to be leased by the
MLP, the OLP or the Subsidiaries (individually, an "Atlas Leased
Property"); and set forth on Schedule 4.15(a)(ii) is a list of each
Atlas Leased Property;
and in the case of both clause (i) and (ii), free and clear of all
Liens, except:
(1) Liens as set forth on Schedule 4.15(a);
30
(2) leases, subleases and similar agreements set forth on
Schedule 4.15(a);
(3) Atlas Permitted Liens;
(4) easements, covenants, rights-of-way and other similar
restrictions of record;
(5) any conditions that may be shown by a current, accurate
survey or physical inspection of any Atlas Owned Property or
Atlas Leased Property made prior to Closing; and
(6) (A) zoning, building and other similar restrictions, (B)
Liens, easements, covenants, rights-of-way and other similar
restrictions that have been placed by any developer, landlord or
other third party on property over which any of the Atlas
Entities have easement rights or on any Atlas Leased Property,
and (C) unrecorded easements, covenants, rights-of-way and other
similar restrictions, none of which items set forth in clauses
(A), (B) and (C), individually or in the aggregate, is reasonably
likely to have an Atlas Material Adverse Effect.
Those items set forth in clauses (1)-(6) above are herein referred to as the
"Atlas Permitted Encumbrances".
(iii) The Atlas Permitted Encumbrances do not materially interfere
with or adversely impact upon the operations of the business of the
Atlas Entities.
(b) With respect to easements, rights of way, licenses and land use permits
used by the Atlas Entities (collectively, the "Atlas Easements"), the MLP, the
OLP or the Subsidiaries, as the case may be, have (i) title to or interest in
the Atlas Easements free and clear of the claims of those claiming by, through,
or under the MLP, the OLP or the Subsidiaries, as the case may be, and not
otherwise, and (ii) indefeasible title to or interest in the Atlas Easements
sufficient to enable the MLP, the OLP or the Subsidiaries, as the case may be,
to use and operate their assets and conduct their business in a reasonable and
customary manner and without interference arising from defects in title, except
for the Atlas Permitted Encumbrances. Except as set forth on Schedule 4.15(b),
all Atlas Easements originally held by Resource America, the Resource America
Entities or any of the MLP Affiliates of which title was not held by the MLP,
the OLP or any of the Subsidiaries on the date of the MLP's initial public
offering and in the prospectus for such offering that were described as to be
conveyed to the MLP, the OLP or the Subsidiaries, as applicable, have been so
conveyed.
(c) Schedule 4.15(c)(i) includes a list of each Atlas Owned Property and
Atlas Leased Property representing a real property interest in a compressor site
(each, a "Compressor Property Interest"). Schedule 4.15(c)(ii) includes a list
of each Atlas Owned Property and Atlas Leased Property representing a real
property interest in a gas meter site (each, a "Meter Property Interest"). The
Atlas Entities have (or will have at Closing) good and marketable title or
leasehold interest in and to each Compressor Property Interest and Meter
Property Interest. The Compressor Property Interests and Meter Property
Interests constitute all of the compressor sites
31
and meter sites, respectively, necessary to conduct the business of Atlas
Entities as currently conducted.
(d) Except as set forth on Schedule 4.15(d), neither Resource America nor
any of the MLP Affiliates (other than the MLP, the OLP and the Subsidiaries)
have any equipment or property located on or within the Atlas Owned Property,
the Atlas Leased Property or the Atlas Easements nor any claim to an interest in
such property.
(e) Except as set forth on Schedule 4.15(e), neither the MLP, the OLP or
any of the Subsidiaries have any equipment or property located on or within the
real property, easements or leased property owned or controlled by Resource
America or any of the MLP Affiliates (other than the MLP, the OLP and the
Subsidiaries).
(f) Set forth on Schedule 4.15(f) is a list of all Atlas Owned Property and
Atlas Leased Property acquired by the Atlas Entities since the IPO Date. Except
as set forth on Schedule 4.15(f), since the IPO Date, none of the Atlas Entities
have acquired any real property or interests in real property, and none of
Resource America or any Resource America Entity owns or has interest in or to
any real or personal property or assets used by the Atlas Entities in the
Ordinary Course of Business of the Atlas Entities.
4.16 Contracts.
(a) Schedule 4.16 sets forth (with paragraph references corresponding to
those set forth below) a true and complete list of the following Contracts to
which any of the Atlas Entities is a party or is bound as of the date hereof, as
follows:
(i) all Contracts providing for a commitment of employment for a
specified or unspecified term or otherwise relating to employment, the
termination of employment, severance, personal services, consulting or
indemnification for officers, directors or the like;
(ii) all Contracts containing any provision or covenant prohibiting or
materially limiting the ability of any of the Atlas Entities to engage
in any business activity or to compete with any person or entity or
prohibiting or materially limiting the ability of any person or entity
to engage in any business activity or to compete with any of the Atlas
Entities;
(iii) all material partnership, joint venture, shareholders' or other
similar Contracts with any person or entity;
(iv) all Contracts providing for the lending of money, whether as
borrower, lender or guarantor, which, individually or in the
aggregate, exceed $50,000, and all related security agreements or
similar agreements associated therewith;
(v) all Contracts (including so-called take-or-pay or keepwell
agreements) under which any of the Atlas Entities have directly or
indirectly guaranteed indebtedness, liabilities or obligations of any
person or entity (in each case other than endorsements for
32
the purpose of collection in the Ordinary Course of Business) that,
individually or in the aggregate, exceed $50,000;
(vi) all Contracts pending for the acquisition or disposition,
directly or indirectly (by merger or otherwise) of assets in any such
case that individually exceed $50,000;
(vii) all continuing Contracts for the future purchase or lease of
materials, supplies or equipment (other than purchase contracts and
orders for inventory in the Ordinary Course of Business) that have an
aggregate future liability that exceed $50,000 and that are not
terminable by any of the Atlas Entities by notice of not more than 60
days for an aggregate cost that is less than an amount as shall be set
forth in Schedule 4.16;
(viii) all Contracts pertaining to the ownership, operation, or
maintenance of any and all facilities of any of the Atlas Entities
having a term greater than 90 days that individually exceed $50,000;
(ix) any other agreement (not expressly covered by one of the other
clauses of this Section 4.16(a) of any of the Atlas Entities that
requires annual payments to be made or received in excess of $50,000,
and that is not cancelable with ninety (90) days notice;
(x) (1) all Contracts pertaining to the purchase and sale of natural
gas in all its forms and all other hydrocarbons (including liquid
products) having a term of more than twenty-seven days or involving
the payment or receipt of an amount per month of cash or other value
in excess of $50,000; (2) all Contracts pertaining to the processing,
treating, compression, gathering, storage, exchange, transportation or
transmission of natural gas in all its forms and all other
hydrocarbons (including liquid products) involving the payment or
receipt of an amount per month of cash or other value in excess of
$50,000;
(xi) to the extent not otherwise as set forth on Schedule 4.16, any
Contract the primary purpose of which is to indemnify or otherwise
make whole any person or entity with an indemnification or make whole
obligation having a value that exceeds $50,000;
(xii) all Contracts between any of the Atlas Entities, on one hand,
and any of the other Atlas Entities or any of the Resource America
Entities or any affiliate of the Atlas Entities or the Resource
America Entities, on the other hand;
(xiii) all material Contracts relating in whole or in part to the
intellectual property of any of the Atlas Entities;
(xiv) all collective bargaining or similar labor Contracts;
(xv) all guarantees, indemnities, letters of credit, letters of
comfort, surety bonds, self-bonds, other bonds, including reclamation
bonds, performance bonds and
33
other obligations obtained or issued by any of the Atlas Entities or
their affiliates for the benefit of any of the Atlas Entities or
otherwise in force with respect to any of the Atlas Entities; and
(xvi) all Contracts (other than this Agreement and its governing
documents) that (A) limit or contain restrictions on the ability of
any of the Atlas Entities to declare or make distributions with
respect to or to issue or purchase, redeem or otherwise acquire any of
the equity of the Atlas Entities, to incur indebtedness, to incur or
suffer to exist any Lien, to purchase or sell any assets and
properties, to change the lines of business in which it participates
or engages or to engage in any merger or other business combination or
(B) require any of the Atlas Entities to maintain specified financial
ratios or levels of net worth or other indicia of financial condition.
(b) True copies of the written Contracts identified in Schedule 4.16 have
been made available to the Contributors prior to the execution of this
Agreement. Except as set forth on Schedule 4.16, none of the Atlas Entities are
and, to the knowledge of the General Partner, no other party is in default
under, or in breach or violation of (and no event has occurred which, with
notice or the lapse of time or both, would constitute a default under, or a
breach or violation of) any term, condition or provision of any Contract
identified on Schedule 4.16 except for defaults, breaches, violations or events
which, individually or in the aggregate, are not reasonably likely to have an
Atlas Material Adverse Effect.
(c) Other than Contracts that have terminated or expired in accordance with
their terms, each of the Contracts identified on Schedule 4.16 constitutes
valid, binding and enforceable obligations of the Atlas Entities to the extent
it is a party thereto and, to the knowledge of the General Partner, enforceable
obligations of any other party thereto, in accordance with its terms (subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered on a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing) and is
in full force and effect, except where such failure is not reasonably likely to
have an Atlas Material Adverse Effect.
(d) No event has occurred which either entitles, or would, upon notice or
lapse of time or both, entitle the holder of any indebtedness for borrowed money
affecting any of the Atlas Entities to accelerate, or which does accelerate, the
maturity of any indebtedness affecting any of the Atlas Entities.
4.17 Intellectual Property.
Schedule 4.17 sets forth all material patents, trademarks (registered and
unregistered), service marks, trade names, copyrights and applications therefor
owned, used, filed by or licensed to any of the Atlas Entities as of the date
hereof. To the knowledge of the General Partner, none of the Atlas Entities are
infringing, in any material respect, on any valid patent right, trademark,
service xxxx, trade name or copyright of others, except for any of the foregoing
that are not reasonably likely to have an Atlas Material Adverse Effect. Except
as set forth on Schedule 4.17, the Atlas Entities own and have the right to use,
execute, reproduce, display, perform, modify, enhance, distribute, prepare
derivative works of and sublicense, without
34
payment to any other person or entity, all intellectual property set forth on
Schedule 4.17, as applicable. The consummation of the transactions contemplated
by this Agreement or any of the Constituent Documents will not conflict with,
alter or impair any such rights, in each case, except such as, individually or
in the aggregate, are not reasonably likely to have an Atlas Material Adverse
Effect.
4.18 Environmental Matters.
Except as set forth on Schedule 4.18 and except as is not reasonably likely
to have an Atlas Material Adverse Effect, individually or in the aggregate:
(a) The Atlas Entities are in compliance with all applicable
Environmental Laws. None of the Atlas Entities have received any
written communication that alleges that any of the Atlas Entities are
not in compliance with applicable Environmental Laws. To the knowledge
of the General Partner, none of the Atlas Entities have used any waste
disposal site, or otherwise disposed of, or transported, or arranged
for the transportation of, any Hazardous Materials to any location in
violation of any Environmental Law.
(b) (i) The Atlas Entities have obtained or have applied for all
Environmental Permits necessary for the construction of their
facilities or the conduct of their operations, and all such permits
are in good standing or, where applicable, a renewal application has
been timely filed and is pending agency approval, and (ii) the Atlas
Entities are in material compliance with all terms and conditions of
the Environmental Permits. Schedule 4.18(b) also sets forth a list of
all categories of material Environmental Permits.
(c) There is no Environmental Claim pending (i) against any of the
Atlas Entities, (ii) against any person or entity whose liability for
any Environmental Claim any of the Atlas Entities has retained or
assumed either contractually or by operation of law, or (iii) against
any real or personal property or operations that any of the Atlas
Entities own, lease or manage, in whole or in part.
(d) There have been no Releases of any Hazardous Material that are
reasonably likely to form the basis of any Environmental Claims
against any of the Atlas Entities or against any person or entity
whose liability for any Environmental Claim any of the Atlas Entities
have retained or assumed either contractually or by operation of law.
(e) With respect to any predecessor of any of the Atlas Entities,
there is no Environmental Claim pending or threatened, or any Release
of Hazardous Materials that is reasonably likely to form the basis of
any Environmental Claim.
(f) With respect to any of the Atlas Entities, the General Partner has
no knowledge of any material facts that the General Partner reasonably
believes would form the basis of an Atlas Material Adverse Effect
arising from (i) the cost of pollution control equipment currently
required or known to be required in the future, or (ii) current
remediation costs or remediation costs known to be required in the
future.
(g) There have been no material environmental investigations, studies,
audits, tests, reviews or other analyses conducted by, or that are in
the possession of, any of the Atlas
35
Entities with respect to any site or facility now or previously owned,
operated or leased by any of the Atlas Entities that have not been
made available to Contributor prior to the execution of this
Agreement.
4.19 Licenses, Permits, Approvals.
Each of the Atlas Entities possess all licenses, franchises, permits,
certificates and governmental approvals and authorizations, that are required
for the lawful operation of its business as currently operated, other than those
the failure to possess of which is not reasonably likely to have an Atlas
Material Adverse Effect.
4.20 Insurance.
Schedule 4.20 lists all policies of fire, liability or other material forms
of third-party insurance issued in the name of any of the Atlas Entities. The
Atlas Entities are insured with financially responsible insurers in such amounts
and against such risks and losses as are customary in all material respects for
entities conducting the businesses conducted by the Atlas Entities. None of the
Atlas Entities has received any notice of cancellation or termination with
respect to any material insurance policy. To the knowledge of the General
Partner, all of such insurance policies are valid and enforceable policies in
all material respects.
4.21 Brokers.
None of the Atlas Entities, Resource America nor the Resource America
Entities has entered (directly or indirectly) into any agreement with any
person, firm or corporation that would obligate any of the Contributors, Triton
or any of their respective affiliates to pay any commission, brokerage or
"finder's fee" or other fee in connection with this Agreement or the
transactions contemplated herein other than agreements with Xxxxxxxx Xxxxxxxx,
Xxxxxx & Co., Inc., the fees, commissions and expenses of which shall be paid by
the MLP.
4.22 Utility Status.
None of the Atlas Entities are (i) an "investment company," or a company
"controlled by" an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, (ii) a "holding company," a "public utility
company," a "gas utility company" or a "subsidiary company" of a "holding
company" or an "affiliate" thereof within the meaning of the Public Utility
Holding Company Act of 1935, as amended, (iii) a "natural gas company" under the
Natural Gas Act, as amended, or (iv) a public utility or public service company
(or similar designation) by any state in the United States or by any foreign
country.
4.23 Information Supplied.
None of the information supplied or to be supplied by any of the Atlas
Entities, Resource America or any Resource America Entity and any of their
respective affiliates in writing or otherwise approved in writing by any of the
Atlas Entities, Resource America or Resource America Entities and any of their
respective affiliates for inclusion in the Proxy Statement will, at the date it
is first mailed to the MLP's unit holders or at the time of the MLP Unit
Holders' Meeting, contain any statement which, in the light of the circumstances
under which such
36
statement is made, is false or misleading with respect to any material fact, or
omit to state any material fact necessary in order to make the statements
therein not false or misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of any proxy for the MLP
Unit Holders' Meeting or any amendment or supplement thereto. The Proxy
Statement, shall, at all times, comply as to form in all material respects with
the requirements of the Exchange Act and the rules and regulations promulgated
thereunder, except that no representation is made by the General Partner or the
MLP with respect to statements made or incorporated by reference therein based
on information supplied by either Contributor or Triton for inclusion or
incorporation by reference in the Proxy Statement.
4.24 Securities Laws.
(a) Assuming that the Contributors' representations and warranties
contained in Section 3.25 are true as of the time of such offer, sale, issuance
and delivery, the offer, sale, issuance and delivery of the New Equity to the
Contributors pursuant to this Agreement and the issuance and delivery to the
Contributors of (x) the Common Units upon conversion of the New Subordinated
Units, (y) the issuance of Subordinated Units upon the conversion of the
Deferred Participation Units and (z) the issuance of Common Units upon
conversion of Subordinated Units received upon conversion of the Deferred
Participation Units are (or with respect to the Common Units issuable upon the
conversion of the New Subordinated Units, Subordinated Units issued upon the
conversion of the Deferred Participation Units, or Common Units issued upon
conversion of Subordinated Units received upon conversion of Deferred
Participation Units, will be) exempt from the registration and prospectus
delivery requirements of the Securities Act and are (or with respect to the
Common Units issuable upon the conversion of the New Subordinated Units,
Subordinated Units issued upon the conversion of the Deferred Participation
Units, or Common Units issued upon conversion of Subordinated Units received
upon conversion of Deferred Participation Units, will be) exempt from
registration and qualification under the registration, permit or qualification
requirements of all the blue sky and securities laws of any state having
jurisdiction with respect thereto (except that the MLP may be required to
prepare and file relevant forms in New York), and none of the Atlas Entities has
taken or will take any action that would cause the loss of such exemption.
(b) The MLP is an accredited investor within the meaning of Rule 501(a)
under the Securities Act and the Triton Interests to be contributed to it
pursuant to this Agreement are being acquired for its own account and not with a
view toward, or for sale in connection with, any distribution thereof except in
compliance with applicable United States federal and state securities laws. The
General Partner and the MLP are aware that no Governmental Authority has made
any finding or determination as to the fairness of an investment in the Triton
Interests, nor any recommendation or endorsement with respect thereto. The
General Partner and the MLP acknowledge that the contribution of the Triton
Interests has not been registered under the Securities Act in reliance on an
exemption therefrom.
(c) The General Partner and the MLP have such knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of the MLP's investment in the Triton Interests and the MLP is capable of
bearing the economic risks of such investment.
37
(d) The General Partner and the MLP have had the opportunity to ask
questions of officers of Triton and the Contributors with respect to Triton and
the Contributors, and have obtained such additional information as the General
Partner and the MLP have desired regarding the business, financial condition and
affairs of Triton; provided, however, that this representation shall not obviate
any breach of any of the representations or warranties of the Contributors
herein.
(e) The MLP's principal executive office is located in Philadelphia,
Pennsylvania and the offer of the Triton Interests is made in that state.
4.25 Permit Blocking.
None of the Atlas Entities have been notified (nor is there any pending or
threatened notification) by the United States Office of Surface Mining,
Reclamation and Enforcement or the agency of any state administering the SMCRA
that any of the Atlas Entities is (i) ineligible to receive surface mining
permits, or (ii) under investigation to determine whether its eligibility to
receive a SMCRA permit should be revoked, or (iii) otherwise permit blocked.
4.26 Exon-Xxxxxx.
The MLP is not a "foreign person" for purposes of the Section 721 of the
Defense Production Act of 1950, as amended, and any successor thereto and the
regulations issued pursuant thereto or in consequence thereof.
4.27 Hedging.
Except as set forth on Schedule 4.27, none of the Atlas Entities engage in
any natural gas or other futures or options trading and is not a party to any
price swaps, xxxxxx, futures or similar instruments.
4.28 Other Regulations.
The Atlas Entities (i) are primarily engaged in the business of gathering
gas, (ii) are not subject to regulation under the Natural Gas Act by the Federal
Energy Regulatory Commission, (iii) are exempt from regulation as a public
utility by the Public Utility Commission of Ohio (and such exemption will not be
affected by the consummation of the transactions contemplated in this Agreement
or any of the Constituent Documents), (iv) are not regulated by the New York
Public Service Commission (and the consummation of the transactions contemplated
in this Agreement and in the Constituent Documents will not cause the Atlas
Entities to be regulated by the New York Public Service Commission), and (v) are
not subject to the Pennsylvania Public Utility Commission's regulatory authority
and (vi) are not a "public utility" under any federal or state laws or
regulations, and, in the case of each of the foregoing, no fact exists to
indicate otherwise.
4.29 Opinion of Financial Advisor; Recommendation of Conflicts Committee.
The Board of Managers of the General Partner has received the opinion of
McDonald Investments, Inc., the financial advisor to the Conflicts Committee, to
the effect that
38
the transactions contemplated by this Agreement and the Constituent Documents,
including, but not limited to, those matters to be approved at the MLP Unit
Holders' Meeting, are fair from a financial point of view to the limited
partners of the MLP (the "MLP Fairness Opinion"). Based on, among other things,
the receipt of the MLP Fairness Opinion, the Conflicts Committee has approved
this Agreement and the transactions contemplated hereby, and the other matters
to be approved at the MLP Unit Holders' Meeting, and has agreed to recommend all
such matters to the unit holders of the MLP in the Proxy Statement and has not
taken or resolved to take any action adverse to such approval and/or
recommendation.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
RESOURCE AMERICA
5.1 Existence.
Resource America is a corporation duly formed, validly existing and in good
standing under the laws of the State of Delaware. Resource America has all
requisite corporate power and authority to own and hold the properties and
assets it now owns and holds, and to carry on its business as and where such
properties are now owned or held and such business is now conducted.
5.2 Authority.
Resource America and its applicable energy subsidiaries other than the
General Partner, the MLP, the OLP and the Subsidiaries (such subsidiaries being
referred to as the "Resource America Entities") have the corporate power and
authority to execute and deliver this Agreement and the other Constituent
Documents to which they are or will be a party, to consummate the transactions
contemplated hereby and thereby and to perform all the terms and conditions
thereof to be performed by them. The execution and delivery of this Agreement by
Resource America and the performance by Resource America and the Resource
America Entities of all the terms and conditions hereof to be performed by each
of them have been authorized and approved by all requisite corporate action. The
execution and delivery by Resource America and the Resource America Entities of
the Constituent Documents to which they are a party, the performance by Resource
America and the Resource America Entities of all the terms and conditions
thereof to be performed by them and the consummation of the transactions
contemplated thereby, have been duly authorized and approved by all requisite
corporate action of Resource America and the Resource America Entities. This
Agreement constitutes (and, as of the Closing Date, the Constituent Documents,
as applicable, shall constitute) the valid and binding obligation of Resource
America and the Resource America Entities enforceable in accordance with their
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting enforcement of
creditors' rights generally and by general principles of equity (whether applied
in a proceeding at law or in equity).
39
5.3 No Conflicts.
Except as set forth on Schedule 5.3 or as contemplated by this Agreement,
the execution and delivery by Resource America of this Agreement does not, and
the performance by Resource America of its obligations under this Agreement and
the consummation of the transactions contemplated hereby will not (and, in the
case of the Constituent Documents to which they are a party, the performance by
Resource America and the Resource America Entities of their obligations
thereunder and the consummation of the transactions contemplated thereby will
not, as of the Closing Date):
(a) conflict with any of, or require the consent of any person or entity
under, the terms, conditions or provisions of the charter documents or
bylaws of Resource America or the Resource America Entities;
(b) violate any provision of any law, statute, ordinance, rule or
regulation or any judicial, administrative or arbitration order, award,
judgment, writ, injunction or decree applicable to Resource America or the
Resource America Entities, except for those which in the aggregate are not
reasonably likely to have an Atlas Material Adverse Effect; or
(c) conflict with, result in a breach of, constitute a default under
(whether with notice or the lapse of time or both), or accelerate or permit
the acceleration of the performance required by or any remedies or any
rights of termination or cancellation or the loss of benefits or change in
the rights or obligations of any party, or require any consent,
authorization or approval under any indenture, mortgage or lien, or any
agreement, contract, commitment or other instrument to which any of
Resource America or the Resource America Entities is a party or by which
any of them is bound or to which any property of any of Resource America or
the Resource America Entities is subject, except for those which in the
aggregate are not reasonably likely to have an Atlas Material Adverse
Effect.
5.4 Governmental Approvals and Filings.
Except as set forth on Schedule 5.4 and other than compliance with and
filings under the HSR Act, if necessary, and as otherwise contemplated in this
Agreement, no consent, approval, license, permit, action, order, authorization
of, or registration, declaration or filing with, or notice to any Governmental
Authority or other person or entity on the part of Resource America or the
Resource America Entities is required in connection with the execution, delivery
and performance of this Agreement or any of the Constituent Documents or the
consummation of the transactions contemplated hereby or thereby, except where
the failure to obtain any such consent, approval or action, to make any such
filing or to give any such notice is not reasonably likely to have an Atlas
Material Adverse Effect.
5.5 Permit Blocking.
None of Resource America or any Resource America Entity has been notified
(nor is there any pending or threatened notification) by the United States
Office of Surface Mining, Reclamation and Enforcement or the agency of any state
administering the SMCRA that any of the Atlas Entities is (i) ineligible to
receive surface mining permits, or (ii) under investigation to
40
determine whether its eligibility to receive a SMCRA permit should be revoked,
or (iii) otherwise permit blocked.
ARTICLE VI
ADDITIONAL AGREEMENTS,
COVENANTS, RIGHTS AND OBLIGATIONS
6.1 Access to Information.
From the date of this Agreement to the Closing, the Contributors shall
provide and shall cause Triton to provide to the General Partner and its
authorized representatives, and the General Partner shall provide and shall
cause the MLP, the OLP and each of the Subsidiaries to provide to the
Contributors and their respective authorized representatives, reasonable access
to all of the books, records, assets, properties and employees, and shall
furnish or cause to be furnished, as applicable, to the applicable other party
hereto such information as such other party may reasonably request, unless any
such access and disclosure would violate the terms of any agreement to which any
such party is bound or any applicable law or regulation. Each of the parties
hereto will use its reasonable business efforts to secure all requisite consents
for the examination by the party and its representatives of all information
covered by confidentiality agreements. Each of the parties hereto shall allow
the other party access to and consultation with the lawyers, accountants and
other professionals employed by or used by such parties for all purposes under
this Agreement. Any such consultation shall occur under circumstances
appropriate to maintain intact the attorney-client privilege as to privileged
communications and attorney work product. The Contributors shall cause Triton to
provide to the General Partner, and the General Partner shall cause the MLP to
provide to the Contributors, unaudited financial statements for Triton and the
MLP, respectively, within 30 days of the end of each month prior to the Closing.
6.2 Confidentiality.
Until the Closing Date, the confidentiality of any data or information
acquired pursuant to Section 6.1 shall be maintained by each of the above-named
parties and their representatives pursuant to the terms of that Confidentiality
Agreement dated November 1, 2001, between Triton and the MLP (the
"Confidentiality Agreement"), which each of the Contributors, the General
Partner, the MLP and Resource America hereby acknowledge is binding on it and
Triton, the OLP, the Subsidiaries and the Resource America Entities, as
applicable, and their respective representatives in accordance with its terms
and applicable to all information disclosed by either Contributor and Triton, on
one hand, or the General Partner, the MLP and Resource America, on the other,
whether disclosed before or after the date hereof.
6.3 Restrictions on Conduct of the Atlas Entities Prior to Closing.
Without first obtaining the written consent of the Contributors, which
consent shall not be unreasonably withheld or delayed, from the date hereof
until the Closing, except as set forth on Schedule 6.3 or as otherwise
contemplated by this Agreement or required by applicable law, rule or
regulation, the General Partner covenants that it will not (and Resource America
shall cause
41
the General Partner not to), and the General Partner shall cause each of the
MLP, the OLP and the Subsidiaries not to:
(a) make any material change in the conduct of their businesses and
operations or their financial reporting and accounting methods;
(b) other than in the Ordinary Course of Business, enter into any material
Contract or terminate or amend in any material respect any Contract listed
on Schedule 4.16 to which it is a party, or be in default in any material
respect thereunder;
(c) except for dividends or distributions from the General Partner, the
MLP, the OLP or the Subsidiaries to their respective partners or members in
accordance with Section 6.21, declare, set aside or pay any dividends or
make any distributions with respect to its equity securities, or split,
combine or reclassify any of its equity securities or issue or authorize
the issuance of any other securities with respect to, in lieu of or in
substitution for any of its equity securities, or purchase, redeem or
otherwise acquire, directly or indirectly, any such securities;
(d) merge into or with or consolidate with any other entity or acquire all
or substantially all of the business, securities or assets of any person or
entity;
(e) make any change in any of their governing documents;
(f) purchase any securities of any person or entity, except short-term debt
securities of governmental entities and banks, or make any investment in
any entity, joint venture or other business enterprise;
(g) incur any indebtedness for borrowed money;
(h) sell, lease or otherwise dispose of their assets other than in the
Ordinary Course of Business pursuant to existing contracts;
(i) except as otherwise permitted hereunder, purchase, lease or otherwise
acquire any property of any kind whatsoever other than in the Ordinary
Course of Business or make any capital expenditure in excess of the MLP's
existing budget;
(j) issue, deliver or sell or authorize or propose the issuance, delivery
or sale of, any of its equity securities or other equity interests or
securities or other equity interests convertible into or exchangeable or
exercisable for its equity securities or other equity interests, or
subscriptions, rights, warrants or options to acquire or other agreements
or commitments of any character obligating it to issue any such securities
or other equity interests;
(k) implement or adopt any change in its tax methods, principles or
elections;
(l) hire any employees (other than in the Ordinary Course of Business) or
any officer, enter into any employment agreement or enter into any
collective bargaining or labor agreements or adopt any benefit plan;
42
(m) permit any of its assets to become subject to any material Lien,
covenant, right-or-way or other similar restriction of any nature
whatsoever, except in the Ordinary Course of Business;
(n) cancel any material indebtedness (individually or in the aggregate) or
waive any claims or rights of substantial value;
(o) except for intercompany transactions in the Ordinary Course of
Business, pay, loan or advance any amount to, or sell, transfer or lease
any of its assets to, or enter into any Contract with, any of the other
Atlas Entities or Resource America Entities or any of their respective
affiliates, officers, directors, partners, managers, members, shareholders,
employees or any related person or entity;
(p) enter into, agree upon or implement any settlement or compromise of
pending litigation or other pending proceedings (other than ministerial
actions) related to any claim, demand, lawsuit or Governmental Authority
proceeding;
(q) except as may be required by this Agreement or in the Ordinary Course
of Business, to make any application, filing, or other request for approval
from any Governmental Authority with respect to any new rates, services,
terms and conditions of service or construction of facilities; or
(r) commit to do or take any action in furtherance of any of the foregoing.
6.4 Restrictions on Conduct of Triton's Business Before Closing.
Without first obtaining the written consent of the General Partner, which
consent shall not be unreasonably withheld or delayed, from the date hereof
until the Closing, except as set forth on Schedule 6.4 or as otherwise
contemplated by this Agreement, or required by law, rules or regulations, the
Contributors covenant that they shall cause Triton not to:
(a) make any material change in the conduct of Triton's business and
operations, or its financial reporting and accounting methods;
(b) other than in the Ordinary Course of Business, enter into any material
Contract or terminate or amend in any material respect any Contract listed
on Schedule 3.16 to which it is a party, or be in default in any material
respect thereunder (for avoidance of doubt, the parties acknowledge that
this Section 6.4(b) shall not apply to (x) Contracts for the purchase, sale
or transportation of coal having quantities and payment terms not
materially greater than any existing or past Contracts to which Triton is
or was a party, (y) equipment leases and (z) a Financing Transaction);
(c) except for dividends or distributions from Triton to its members (x) to
eliminate intercompany payables under Section 6.10, (y) in respect of taxes
or (z) in connection with a Financing Transaction as permitted under
Section 6.13, declare, set aside or pay any dividends or make any
distributions with respect to its equity securities, or split, combine or
reclassify any of its equity securities or issue or authorize the issuance
of any other securities
43
with respect to, in lieu of or in substitution for any of its equity
securities, or purchase, redeem or otherwise acquire, directly or
indirectly, any such securities;
(d) merge into or with or consolidate with any other entity or acquire all
or substantially all of the business, securities or assets of any person or
entity;
(e) make any change in its governing documents;
(f) purchase any securities of any person or entity, except short-term debt
securities of governmental entities and banks, or make any investment in
any entity, joint venture or other business enterprise, other than
purchases similar to those made previously and in the same business in
which Triton currently operates, and that do not exceed in purchase price
$1 million individually, or $5 million, in the aggregate (including any
indemnification obligations);
(g) incur indebtedness for borrowed money, other than the incurrence of
indebtedness in the Ordinary Course of Business or pursuant to a Financing
Transaction;
(h) except as otherwise permitted hereunder, purchase, lease (other than
equipment leases) or otherwise acquire any property of any kind whatsoever
other than in the Ordinary Course of Business or make any capital
expenditure in excess of Triton's existing budget for fiscal year 2002.
(i) sell, lease or otherwise dispose of their assets other than in the
Ordinary Course of Business;
(j) issue, deliver or sell or authorize or propose the issuance, delivery
or sale of, any of its equity securities or securities convertible into its
equity securities, or subscriptions, rights, warrants or options to acquire
or other agreements or commitments of any character obligating it to issue
any such securities, except in connection with a Financing Transaction;
(k) implement or adopt any material change in Triton's tax methods,
principles or elections;
(l) except in connection with a Financing Transaction, permit any of its
assets to become subject to any material Lien, covenant, right-or-way or
other similar restriction of any nature whatsoever, except in the Ordinary
Course of Business;
(m) enter into any collective bargaining or labor agreements or adopt any
Plan;
(n) cancel any material indebtedness (individually or in the aggregate) or
waive any claims or rights of substantial value or than relating to
arrangements or agreements with customers;
(o) except for intercompany transactions in the Ordinary Course of
Business, pay, loan or advance any amount to, or sell, transfer or lease
any of its assets to, or enter into any Contract with, the Contributors or
any of their affiliates;
44
(p) enter into, agree upon or implement any settlement or compromise of
pending litigation or other pending proceedings (other than ministerial
actions) related to any claim, demand, lawsuit or Governmental Authority
proceeding that (x) with respect to claims, demands, lawsuits or
proceedings existing as of the date hereof, shall not result in liability
in excess of the amount in controversy thereof (which amount in controversy
shall include any fees, expenses, interest and penalties related thereto)
and (y) with respect to claims, demands, lawsuits or proceedings arising
after the date hereof, are not reasonably likely to result in a Triton
Material Adverse Effect;
(q) except as may be required by this Agreement or in the Ordinary Course
of Business, to make any application, filing, or other request for approval
from any Governmental Authority with respect to any new rates, services,
terms and conditions of service or construction of facilities; or
(r) commit to do any of the foregoing.
(s) notwithstanding the foregoing, nothing in this Section 6.4 shall in any
manner limit or restrict the ability of Triton or the Contributors (or any
other person) to take, or cause to be taken, any action, in furtherance of
a Financing Transaction.
6.5 Operations.
From the date hereof until Closing, the General Partner covenants that it
shall, and shall cause the MLP, the OLP and the Subsidiaries to, and the
Contributors covenant that they will cause Triton to:
(a) maintain their respective assets and properties and operate their
respective business in the Ordinary Course of Business as was being
conducted before the date hereof;
(b) use reasonable business efforts to preserve substantially their
business organization and keep available the services of their current
employees and preserve their current relationships with customers,
contractual parties and other persons and entities with whom they have
significant business relations;
(c) file on a timely basis all notices, reports or other filings necessary
or required for the continuing operation of its business to be filed with
or reported to any Governmental Authority; and
(d) file on a timely basis all complete and correct applications or other
documents necessary to maintain, renew or extend any permit, variance or
any other approval required by any Governmental Authority necessary or
required for the continuing operation of its business, whether or not such
approval would expire before or after the Closing Date.
6.6 Certain Filings.
As promptly as practicable following the execution of this Agreement:
45
(a) if applicable, the parties shall prepare and file with the Federal
Trade Commission and the Department of Justice, the appropriate filings and
any supplemental information that may be reasonably requested therewith
under the HSR Act, it being agreed that the General Partner and Triton
shall each pay one-half of the required filing fees related to filings for
the transactions contemplated by the Constituent Documents;
(b) the MLP and the Contributors shall prepare and the MLP shall file with
the SEC as soon as practicable after the date hereof, a proxy statement
with respect to the MLP Unit Holders' Meeting (the "Proxy Statement"). The
MLP and the Contributors will cause the Proxy Statement to comply as to
form in all material respects with the applicable provisions of the
Exchange Act. Each of the parties agrees that the information provided by
it for inclusion in the Proxy Statement and each amendment or supplement
thereto, at the time of mailing thereof to the MLP's unit holders, at the
time of the MLP Unit Holders' Meeting and at the time it is filed, will not
include any untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The MLP will advise the Contributors promptly after it receives
notice of any request by the SEC for amendment to the Proxy Statement or
any other correspondence with the SEC. The parties will provide each other
with reasonable opportunity to review and comment on any amendments or
supplements to the Proxy Statement prior to filing such amendments or
supplements with the SEC (including comment and review of any
correspondence with the SEC, including without limitation comment letters),
and further agree that each party will be provided with such number of
copies of all filings made with the SEC as such party shall reasonably
request. No filings of the Proxy Statement (or any amendments or
supplements to either of them) shall be made without the approval of both
parties (which consent shall not be unreasonably withheld); and
(c) the parties shall make all required filings under applicable state
securities and blue sky laws, and under all federal and state laws related
to the transactions contemplated herein.
6.7 The MLP Unit Holders' Meeting.
The MLP shall take (and the General Partner shall cause the MLP to take)
all necessary action in accordance with and subject to applicable law and its
agreement of limited partnership to call, give notice of, convene and hold a
meeting of the holders of its limited partner units (the "MLP Unit Holders'
Meeting") as promptly as practicable after the date of this Agreement to
consider and vote upon the approval and adoption of (a) this Agreement and the
transactions contemplated hereby, (b) the issuance of the New Equity pursuant to
this Agreement, (c) the conversion of the Subordinated Units contemplated by
Section 2.2(c) of this Agreement, (d) the approval and adoption of the MLP
Agreement Amendment, (e) the approval and adoption of the OLP Agreement
Amendment and (f) all other matters that are required to be submitted to the
MLP's unitholders in order to consummate the transactions contemplated by this
Agreement. Approval of the foregoing matters shall require the favorable vote of
(x) holders of a majority of the outstanding Common Units entitled to vote at
the MLP Unit Holders' Meeting and (y) holders of a majority of the outstanding
Subordinated Units entitled to vote at the MLP Unit Holders' Meeting. The Board
of Managers of the General Partner and the Conflicts Committee of the MLP shall
recommend that the unit holders of the MLP vote in favor of the approval and
46
adoption of the matters to be submitted to them in accordance with this
Agreement and Section 6.7 hereof, and such recommendation shall be included in
the Proxy Statement, together with a copy of the MLP Fairness Opinion; provided,
however, that nothing contained in this Section 6.7 shall require the Board of
Managers of the General Partner or the Conflicts Committee of the MLP to refrain
from making any recommendation with respect to an Atlas Superior Transaction,
which would result in a breach of its fiduciary duty under applicable law in
accordance with Section 6.13. The Atlas Entities shall take all lawful action
necessary or advisable to solicit the approval of the MLP's unit holders
including, without limitation, timely mailing to the unit holders the Proxy
Statement as promptly as practicable after the date hereof.
6.8 Opinion of Counsel to Atlas.
In accordance with Section 13.3(d) of the limited partnership agreement of
the MLP, the General Partner shall obtain an Opinion of Counsel, as defined in
the limited partnership agreement of the MLP, to the effect that the amendments
to the limited partnership agreement of the MLP proposed to be approved at the
MLP Unit Holders' Meeting will not affect the limited liability of any limited
partner of the MLP under applicable law.
6.9 Reasonable Business Efforts.
(a) The Contributors, the General Partner and Resource America shall use
their reasonable business efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable in
accordance with applicable laws and regulations (i) to determine which notices,
reports or filings are required to be made prior to the Closing, and which
waivers, consents, approvals or authorizations are required to be obtained prior
to the Closing in connection with the execution and delivery of this Agreement
and the Constituent Documents and the consummation of the transactions
contemplated hereby and thereby, (ii) to timely making all such notices, reports
or filings and timely seeking all waivers, consents, approval or authorizations
required by or necessary for the transactions contemplated by this Agreement and
the Constituent Documents and the transactions contemplated hereby and thereby,
and (iii) to ensure that all of the conditions to the obligations of the parties
hereto contained in Sections 7.1, 7.2 and 7.3 are satisfied timely.
(b) Nothing in this Section 6.9 or elsewhere in the Constituent Documents
shall require any party hereto to hold separate or make any divestiture of any
asset, and no waivers, consents, approvals or other authorizations shall be
deemed to be obtained for purposes of this Agreement if such waiver, consent,
approval or other authorization contains any restriction on their operations or
other materially burdensome condition that would in any such case be material to
the assets, liabilities or business of any of the Contributors, Triton, the
Atlas Entities (taken as a whole) or Resource America, as applicable, in order
to obtain any consent or approval or other clearance required by this Agreement;
provided, further, that such reasonable actions shall not include any
requirement to offer or grant financial accommodations to any third party or to
remain secondarily liable with respect to any liability.
(c) Subject to the other provisions of this Agreement, in furtherance of
the foregoing, if any administrative or judicial action, proceeding or
investigation is instituted (or threatened to be instituted) challenging any of
the transactions contemplated by this Agreement
47
or the Constituent Documents as violating or conflicting with any law or
contract, each of the parties shall cooperate in all respects with each other
and use its respective reasonable business efforts to (x) resolve any such
matters so as to permit consummation of the transactions contemplated by this
Agreement and the Constituent Documents, and (y) contest and resist any such
action or proceeding and to have vacated, lifted, reversed or overturned any
decree, judgment, injunction or other Order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents, restricts or delays
consummation of the transactions contemplated by this Agreement and the
Constituent Documents. Each of the parties agrees to cooperate with each other
in connection with the matters described in this Section 6.9, including, without
limitation, (i) to promptly keep each other informed of any communications or
other information received by such party and (ii) to consult with and to permit
the other party to review and participate with respect to any communications,
correspondence or meetings, in each such case, relating to any such matter.
(d) The Atlas Entities, Resource America and the Resource America Entities
shall use their reasonable business efforts, prior to and after Closing, to have
transferred or otherwise assigned, or caused to be transferred or otherwise
assigned, to the MLP, the OLP or a Subsidiary, as the case may be, all Atlas
Easements, rights, contracts, agreements, permits and other assets (including,
without limitation, all Atlas Owned Property, Atlas Leased Property, Compressor
Property Interests and Meter Property Interests) used by the Atlas Entities or
necessary for use in the business of the Atlas Entities, but not previously
obtained by, transferred or otherwise assigned to the MLP, OLP or such
Subsidiary prior to the date hereof (in each case, without cost or penalty to
the Atlas Entities).
6.10 Intercompany Accounts.
Prior to or on the Closing Date (a) Triton shall pay all outstanding
payables owed to the Contributors or any of their respective affiliates, (b) the
Contributors and any of their respective affiliates shall pay or eliminate all
outstanding payables owed to Triton, (c) Resource America and the Resource
America Entities shall pay all outstanding payables owed to the Atlas Entities
except for the net of trade accounts payable in the Ordinary Course of Business
under the existing Master Natural Gas Gathering Agreement over trade accounts
receivable, which shall be paid in the Ordinary Course of Business consistent
with the timing of past payments, and (d) the Atlas Entities shall pay all
outstanding payables owed to Resource America and the Resource America Entities.
6.11 Transfer Restrictions.
(a) From and after the Closing, the Common Units or other interests in the
MLP owned by Resource America or any of its affiliates (including any Resource
America Entity or affiliate thereof) shall not be transferable by Resource
America or any such affiliate except to Resource America or any affiliate of
Resource America (provided such transferee agrees in writing to be bound by this
Section 6.11(a)) without the prior written consent of the MLP until the earlier
of (x) the first anniversary of the Closing Date and (y) the sale by the
Contributors of $50 million in proceeds of the New Common Units in any
registered offering, except that Resource America and such affiliates may (a)
participate in pro rata redemptions or distributions to all holders of Common
Units or a sale of the MLP involving the acquisition of the Common
48
Units of the public holders thereof; (b) offer and sell Common Units in the
Public Offering (defined below) in accordance with and as permitted by Section
6.23; and (c) pledge such interests in connection with a bona fide financing
transaction.
(b) From and after the Closing, the New Common Units or other interests in
the MLP owned by the Contributors or any affiliates thereof shall not be
transferable by the Contributors or any such affiliate except to the
Contributors or any affiliate thereof (provided such transferee agrees in
writing to be bound by this Section 6.11(b)) until the first anniversary of the
Closing Date or pursuant to a registered offering, except that the Contributors
and such affiliates may (a) participate in pro rata redemptions or distributions
to all holders of Common Units or a sale of the MLP involving the acquisition of
the Common Units of the public holders thereof; (b) offer and sell Common Units
in the Public Offering (defined below) in accordance with and as permitted by
Section 6.23; and (c) pledge such interests in connection with a bona fide
financing transaction.
(c) In addition, in connection with the Public Offering, Resource America,
the Contributors and their respective affiliates agree that, if so requested by
the managing underwriters thereof, each of them shall deliver a lock-up
agreement consistent with the terms of this Section 6.11. Resource America and
the Contributors agree (and shall cause their respective affiliates to agree)
that any transfer of Common Units or other interests of the MLP otherwise than
in accordance with this Agreement and the MLP Agreement Amendment shall be null
and void.
6.12 No Solicitation.
(a) Subject to Section 6.13 below (including, without limitation, a
Financing Transaction), each of the Contributors (on behalf of itself and
Triton) agrees that upon execution of this Agreement, it shall terminate and
shall cause Triton to terminate all discussions and negotiations with third
parties (other than the Atlas Entities, Resource America and the Resource
America Entities) regarding a sale or other transaction involving (i) the Triton
Interests, (ii) the assets (other than in the Ordinary Course of Business),
business or securities of Triton, or (iii) any other transaction similar to the
transactions contemplated by this Agreement and the Constituent Documents
(collectively, the "Triton Alternative Transactions"), and thereafter will not,
directly or indirectly, nor shall they authorize or permit any of the
Contributors' or Triton's officers, directors or employees, or any investment
banker, financial advisor, attorney, accountant or other representative retained
by them, so long as this Agreement remains in effect (1) to solicit, initiate,
encourage (including by way of furnishing information or assistance), conduct
discussions with or engage in negotiations with or take any action to
facilitate, any inquiries, or the making of any proposal which constitutes or is
reasonably likely to lead to a Triton Alternative Transaction, (2) to enter into
any agreement with any person or entity, other than the Atlas Entities, Resource
America or the Resource America Entities in respect of a Triton Alternative
Transaction, or (3) to make or authorize any statement, recommendation or
solicitation in support of any Triton Alternative Transaction by any person or
entity, other than by the Atlas Entities, Resource America or the Resource
America Entities.
(b) Subject to Section 6.13 below, the General Partner (on its own behalf
and on behalf of the Atlas Entities) and Resource America (on behalf of itself
and on behalf of the
49
Resource America Entities) agree that upon execution of this Agreement, they
shall terminate and shall cause the Atlas Entities, Resource America and the
Resource America Entities to terminate all discussions and negotiations with
others regarding a sale or other transaction involving (i) any of the Atlas
Entities, (ii) the assets (other than in the Ordinary Course of Business),
business or securities of any of the Atlas Entities or direct or indirect
control of any of the Atlas Entities or the Board of Managers of the General
Partner or the Conflicts Committee of the General Partner, (iii) the General
Partner, or (iv) any other transaction similar to the transactions contemplated
by this Agreement and the Constituent Documents (collectively, the "Atlas
Alternative Transactions"), and thereafter will not, directly or indirectly, nor
shall they authorize or permit any of the Atlas Entities', Resource America's or
the Resource America Entities' officers, directors or employees, or any
investment banker, financial advisor, attorney, accountant or other
representative retained by them, so long as this Agreement remains in effect (1)
to solicit, initiate, encourage (including by way of furnishing information or
assistance), conduct discussions with or engage in negotiations with or take any
action to facilitate, any inquiries, or the making of any proposal which
constitutes or is reasonably likely to result in an Atlas Alternative
Transaction, (2) to enter into any agreement with any person or entity, other
than the Contributors, Triton or their respective affiliates in respect of an
Atlas Alternative Transaction, or (3) to make or authorize any statement,
recommendation or solicitation in support of any Atlas Alternative Transaction
by any person or entity, other than by the Contributors, Triton or their
respective affiliates.
6.13 Permitted Actions.
(a) Triton Permitted Actions. Notwithstanding the provisions of Section
6.12 above, the Contributors, Triton and their respective affiliates,
representatives and other parties restricted by Section 6.12(a) shall be
entitled to take any action that Contributor is otherwise prohibited by Section
6.12 from taking in response to any third party inquiry, contact or proposal
received by it if (i) the initial inquiry, contact or proposal from any third
party was not received in violation of Section 6.12 above, and (ii)
Contributors' Board of Managers shall have determined, in its good faith
judgment, that any such otherwise prohibited action would result in the
negotiation and consummation of a Triton Superior Transaction; provided,
however, that Contributor may not execute a binding agreement on behalf of
Triton to effect a Triton Superior Transaction unless this Agreement has first
been terminated as provided in Section 9.1(i). The Contributors agree that they
will notify the General Partner immediately if any inquiry, contact or proposal
is received by, any such information is requested from, or any such discussions
or negotiations are sought to be initiated or continued with, the Contributors
or Triton or their representatives, and thereafter shall keep the General
Partner informed, on a current basis, on the status of any such inquiry, contact
or proposal and the status of any such negotiations or discussions. Prior to
taking any action in respect of a Triton Superior Transaction, the Contributors,
Triton and their respective affiliates shall agree to negotiate in good faith
with the Atlas Entities, Resource America and the Resource America Entities for
a period of 5 business days exclusively to reach an agreement that the parties
determine, in light of the circumstances, would be more favorable than such
Triton Superior Transaction giving rise to such exclusive negotiations.
For purposes of this Agreement, a "Triton Superior Transaction" means any
Triton Alternative Transaction (i) pursuant to which a third party (other than
the Atlas Entities or
50
any of their respective affiliates) would acquire, for consideration consisting
of cash and/or marketable securities, (x) more than 50% of the Triton Interests
or (y) substantially all of the assets of Triton, taken as a whole, and (ii)
which the Boards of Managers of the Contributors determine in good faith, after
consultation with counsel and their financial advisor, to be more favorable to
the holders of the Triton Interests generally (based on, among other
considerations as the Board of Managers shall deem relevant, the likelihood,
timeliness and ease of completion) and from a financial perspective than the
transactions contemplated by this Agreement, and for which the financing, if
applicable, is then committed or which, in the good faith determination of the
Board of Managers, is reasonably capable of being obtained.
Notwithstanding anything herein to the contrary, one or more Financing
Transactions will not be prohibited or restricted and will not be deemed for any
purpose hereunder a Triton Alternative Transaction or a Triton Superior
Transaction. For purposes of this Agreement, a "Financing Transaction" means any
transaction involving the issuance, sale or other disposition of equity
(including, without limitation, securities or interests convertible or
exchangeable into or exercisable for equity interests) or the incurrence of
indebtedness (including subordinated debt with equity-like components,
including, without limitation, convertible debt, warrants, options or other
rights) intended as a bridge or similar financing source, in order to satisfy,
replace or refinance obligations or liabilities of Triton, the Contributors or
any of their respective subsidiaries or affiliates existing as of the date of
the Triton Balance Sheet or incurred after such date in the Ordinary Course of
Business; provided, however, that no such financing shall result in the
acquisition by any party not affiliated with the Contributors in form or
substance of 35% or more of the voting or economic interests or assets of
Triton. For avoidance of doubt, the parties agree that an amount equal to the
lesser of (i) $20.5 million or (ii) the amount of the equity contribution to
Triton by Intermediary on or about December 28, 2001 or December 31, 2001, for
all purposes hereunder, shall be deemed a Financing Transaction and such amount
shall be repaid in full at the Closing out of the proceeds of the Bank
Financing.
(b) Atlas Permitted Actions. Notwithstanding the provisions of Section 6.12
above, the General Partner (with respect to the Atlas Entities) shall be
entitled to take any action that the General Partner is otherwise prohibited by
Section 6.12 from taking in response to any third party inquiry, contact or
proposal received by it if (i) the initial inquiry, contact or proposal from any
third party was not received in violation of Section 6.12 above, (ii) the
Conflicts Committee shall have determined, in its good faith judgment, that any
such otherwise prohibited action would result in the negotiation and
consummation of an Atlas Superior Transaction, and (iii) the Conflicts Committee
and the General Partner shall have both determined, after consultation with and
based on the advice of their respective legal counsel, that the failure to take
such action would be inconsistent with the General Partner's or its Board of
Managers' fiduciary duties to the holders of the MLP's Common Units and
Subordinated Units under applicable law; provided, that the General Partner may
not execute a binding agreement on behalf of any of the Atlas Entities to effect
an Atlas Superior Transaction unless this Agreement has first been terminated as
provided in Section 9.1(j). The General Partner agrees that it will notify the
Contributors immediately if any inquiry, contact or proposal is received by, any
such information is requested from, or any such discussions or negotiations are
sought to be initiated or continued with, any of the Atlas Entities or their
representatives, and thereafter shall keep the Contributors informed, on a
current basis, on the status of any such inquiry, contact or proposal and the
status
51
of any such negotiations or discussions. Prior to taking any action in respect
of an Atlas Superior Transaction, the Atlas Entities, Resource America and the
Resource America Entities shall agree to negotiate in good faith with the
Contributors, Triton and their respective affiliates for a period of 5 business
days exclusively to reach an agreement that the parties determine, in light of
the circumstances, would be more favorable than such Atlas Superior Transaction
giving rise to such exclusive negotiations.
For purposes of this Agreement, an "Atlas Superior Transaction" means any
Atlas Alternative Transaction (i) pursuant to which a third party (other than
the Contributors, Triton or any of their respective affiliates) would acquire,
for consideration consisting of cash and/or marketable securities, (x) more than
50% of the Common Units and the Subordinated Units or (y) substantially all of
the assets of the Atlas Entities, taken as a whole, and (ii) which the Conflicts
Committee determines in good faith, after consultation with counsel and its
financial advisor, to be more favorable to the holders of the MLP's Common Units
and Subordinated Units (based on, among other considerations as the Conflicts
Committee shall deem relevant, the likelihood, timeliness and ease of
completion) and from a financial perspective than the transactions contemplated
by this Agreement, and for which the financing, if applicable, is then committed
or which, in the good faith determination of the Conflicts Committee, is
reasonably capable of being obtained.
6.14 Public Announcement.
Immediately upon the execution of this Agreement, the parties hereto shall
issue a press release with respect to the execution hereof and the transactions
contemplated by the Constituent Documents, which press release shall be
reasonably satisfactory to the General Partner, Resource America and the
Contributors. No party hereto shall issue any other press release or make any
other public announcement concerning this Agreement, the Constituent Documents
or the transactions contemplated hereby or thereby without the prior approval of
the General Partner, Resource America or the Contributors, as applicable (other
than as may be required by law or by obligations pursuant to any listing
agreement with the American Stock Exchange or the NASDAQ Stock Market, in which
event the party making the public announcement or press release shall notify the
General Partner or the Contributors, as applicable, in advance of such public
announcement or press release), which approval shall not be unreasonably
withheld or delayed.
6.15 Covenant to Vote.
Unless this Agreement is terminated pursuant to Section 9.1, Resource
America and the General Partner hereby agree to take or cause to be taken (for
their own behalf and on behalf of any other Resource America Entities) the
following actions: (i) to appear at the MLP Unit Holders' Meeting (or any
adjournment or postponement thereof); (ii) to vote or cause to be voted all of
the Common Units and Subordinated Units or other interests in the MLP owned by
any of them or their affiliates (including, without limitation, the Resource
America Entities) in favor of the proposals to be set forth in the Proxy
Statement; (iii) not to support and to vote against any other transaction that
would constitute an Atlas Alternative Transaction; and (iv) not to tender or
exchange any such interests in the MLP pursuant to any tender or exchange offer
that would constitute an Atlas Alternative Transaction.
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6.16 Guarantees and Bonds; Replacement of Guarantees.
Prior to the Closing, the MLP shall cooperate with the Contributors and
each of them shall use their reasonable best efforts to cause Triton, the MLP or
a Subsidiary to be substituted in all respects for the Contributors, Vulcan
Capital Management, Vulcan Associates, L.L.C., Vulcan Coal Holdings, L.L.C.
(collectively, the "Guarantor Entities") or any affiliate thereof (other than
Triton), effective as of the Closing, with respect to all liabilities and other
obligations of the Guarantor Entities or any affiliate thereof (other than
Triton) under the Guarantees, and to cause the Guarantor Entities or any
affiliate thereof (other than Triton) to be fully released and discharged with
respect thereto. With respect to any Guarantees that are not, as of the Closing
Date, so replaced with Guarantees of the MLP or Triton in a manner reasonably
satisfactory to the Contributors or with respect to which the Guarantor Entities
or any affiliate thereof (other than Triton) is not fully released and
discharged, the MLP shall continue to use its reasonable best efforts to replace
such Guarantees and to cause the Guarantor Entities or any affiliate thereof
(other than Triton) to be fully released and discharged from their respective
liabilities and other obligations thereunder. In furtherance thereof, the MLP
shall post a replacement letter of credit or other surety bond or other
instrument for the benefit of the beneficiaries of such undischarged Guarantees
in form and substance reasonably satisfactory to the Contributors and the
relevant regulators, which letters of credit, surety bond or other instrument
shall be issued by a financial institution or institutions reasonably
satisfactory to the Contributors. The MLP agrees to indemnify and hold harmless
the Guarantor Entities and their respective affiliates (other than Triton and,
after the Closing, the MLP, the OLP or any Subsidiary) from all liabilities,
obligations, costs and expenses in any way arising from or related to the
Guarantees. Notwithstanding the foregoing provisions of this Section 6.16, none
of the Atlas Entities, Resource America or the Resource America Entities will
contact any party to any Guarantee or any underlying obligation without the
prior consent of the Contributors, which consent shall not be unreasonably
withheld.
6.17 Use of Name.
Resource America, on behalf of itself and the Resource America Entities,
consents to the Atlas Entities' use after the Closing of the name "Atlas
Pipeline", "Atlas Natural Resources" and reasonable likenesses thereto, or
derivations therefrom, as well as any other name or names upon which the parties
may agree in writing, as names for any of the Atlas Entities and/or their
subsidiaries or controlled entities. In furtherance thereof, Resource America,
on behalf of itself and the Resource America Entities, hereby grants to the
Atlas Entities (and any subsidiaries or affiliates of any of them, now or
hereafter existing) a perpetual, royalty-free license anywhere in the world to
use the foregoing names from and after the date hereof without interruption or
cost to any of the Atlas Entities or such affiliates thereof, without limitation
or restriction.
6.18 Tax Matters.
For Tax purposes, the General Partner, the MLP and the Contributors agree
to treat the contribution contemplated by this Agreement as a contribution of
the Triton Interests to the MLP in return for the consideration described in
Section 1.2 pursuant to Section 721 of the Code.
53
6.19 Headquarters.
The parties agree that as of the Closing Date, the headquarters of the
Atlas Entities shall be the headquarters of Triton, located at 000 X. Xxxxxxxx
Xxxxxx, Xxxxxxxx, Wyoming.
6.20 Triton Reorganization.
Notwithstanding anything herein to the contrary, the parties agree that
after the date hereof and prior to the Closing, at the option of the
Contributors, Triton shall be converted into a Delaware limited partnership in
accordance with applicable law (the "Triton Reorganization"). In connection with
and as a result of the Triton Reorganization, the Contributors shall receive a
general partner interest representing 1.0101% of the aggregate partnership
interests of Triton and limited partner interests representing 98.9899% of the
aggregate partnership interests of Triton, provided that, the Contributors shall
not contribute, but shall retain and, at the Closing transfer (by way of merger,
consolidation, sale or other disposition as the Contributors may determine) such
general partner interest and a limited partner interest representing 1% of the
aggregate partnership interests of Triton (collectively with such general
partner interest, the "Retained Interests") to the General Partner. Upon
consummation of the Triton Reorganization, the term "Triton Interests" as used
herein, shall be modified automatically to refer to the partnership interests of
the reorganized Triton limited partnership, other than the Retained Interests,
all of which will be owned by the Contributors. Upon consummation of the Triton
Reorganization, the terms of this Agreement and any Constituent Document
(including, without limitation, the representations and warranties of the
Contributors hereunder) shall be deemed modified with all necessary or
appropriate changes to give effect to and to reflect the Triton Reorganization,
including, without limitation, a proportionate reduction of the consideration to
be received pursuant to Section 1.2 to reflect the Retained Interests. Upon the
consummation of the Triton Reorganization, the Contributors shall furnish to the
MLP true and correct copies of the certificate of limited partnership and
agreement of limited partnership of Triton and an updated Schedule 3.4. The
parties hereto agree to cooperate with each other in all respects to complete
the Triton Reorganization.
6.21 Quarterly Dividend Payments.
The Atlas Entities and the Resource America Entities agree that the regular
quarterly dividend of the MLP to be paid to all of its outstanding Common Units
and Subordinated Units for the quarter ended December 31, 2001 was declared on
December 31, 2001 and shall be $0.58. The General Partner shall set aside and
pay such dividend in a manner consistent with past practice. For any quarterly
period thereafter through the Closing, the General Partner shall continue to
declare, set aside and pay regular quarterly dividends in accordance with past
practice, provided that the amount of such dividend shall not exceed $0.60. In
the event the General Partner determines to or is required, in accordance with
the terms and restrictions set forth in the limited partnership agreement of the
MLP, to reduce the quarterly dividend for any such quarterly period, the General
Partner shall promptly consult with the Contributors. In no event shall the
General Partner cause any Atlas Entity to incur any indebtedness which is used,
directly or indirectly, to pay any dividend payment permissible hereunder.
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6.22 Bank Financing.
The Atlas Entities and the Resource America Entities agree to cooperate
with and to use their reasonable business efforts to take or cause to be taken
such necessary or appropriate actions in order to assist the Contributors with
the negotiation and consummation of the Bank Financing (as defined below) and
the termination and repayment, satisfaction in full and discharge of the
existing indebtedness of Triton and the Contributors. The Contributors agree to
make available to the Atlas Entities all correspondence relating to the Bank
Financing and shall provide regular updates concerning the process for obtaining
the Bank Financing and to use their reasonable business efforts to take or cause
to be taken such necessary or appropriate actions in order to consummate the
Bank Financing.
6.23 Public Offering.
From and after the date hereof, each of the Atlas Entities and Resource
America agrees to use their reasonable business efforts to take (or cause to be
taken) all actions necessary or appropriate in order to effectuate the
registration and sale pursuant to a public offering (which may be underwritten
or otherwise) by the Contributors and the MLP of up to all of the New Common
Units and, if applicable, a customary underwriter's overallotment (the "Public
Offering"), which Public Offering shall be commenced after the Closing
hereunder. In the event the Contributors and their affiliates (other than Triton
or any Atlas Entity) shall have offered and sold in the Public Offering all of
the New Common Units, Resource America and any of its affiliates owning Common
Units shall then be entitled to participate in the Public Offering and may offer
and sell Resource America Common Units having an aggregate offering price not to
exceed $20 million, upon the terms and subject to the conditions of such Public
Offering as may be required by the managing underwriters therefor. In
furtherance of the Public Offering, each of the Atlas Entities, Resource America
and the Resource America Entities shall make available (x) their respective
books, records, documents and properties reasonably necessary to enable any
necessary or appropriate due diligence investigations in respect of the Public
Offering, and (y) such of their respective employees, officers, directors,
managers, agents, attorneys and other responsible parties as may be reasonably
requested by the MLP, the Contributors or their respective advisors in
connection with the Public Offering, including, without limitation,
participation in any "road show" or other selling efforts relating to the Public
Offering. In the event the Public Offering is underwritten, the Contributors
agree to consult with Resource America in connection with all aspects of the
Public Offering.
6.24 Cash Collateral Refund.
At such time as, and to the extent that, the cash collateral currently held
by Southwestern Electric Power Company under that certain Coal Contract between
Triton, American Electric Power Service Corp., as agent for Southwestern
Electric Power Company for the period from January 1, 2002 through December 31,
2003 is refunded to Triton by Southwestern Electric Power Company, Triton shall
and the MLP shall cause Triton to refund such cash, plus any interest actually
credited to the cash collateral account, to the Contributors promptly upon the
release of such amounts under such collateral arrangement.
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6.25 Other Registration Rights.
The Atlas Entities and/or Resource America shall make written requests to
each of Kingston Oil Corporation and American Refining and Exploration Company
prior to Closing to request a reasonable subordination and waiver of their
registration rights (without cost or penalty to the Atlas Entities) granted to
such companies.
6.26 Unit Escrow.
(a) The parties acknowledge that summary judgment has been granted to
Pacificorp in connection with that certain litigation captioned Triton Coal
Company, LLC v. PacifiCorp, in the United States District Court for the District
of Wyoming, docket number 01-CV-94-J (the "Pacificorp Litigation"). From and
after the Closing Date, the Contributors agree to place in escrow pursuant to an
escrow agreement, the terms of which will be agreed upon between the
Contributors and the General Partner prior to the Closing Date (the "Escrow
Agreement"), a number of New Common Units equal to the product of (a) 1.1 times
(b) a fraction, the numerator of which shall be $5.8 million (or a judgment for
damages is entered in the Pacificorp litigation prior to the Closing Date, such
other amount constituting the actual judgment amount in the Pacificorp
Litigation), and the denominator of which is $23.70 (such Common Units, the
"Escrowed Units").
(b) The Escrow Agreement shall provide (i) that any distributions in
respect of the Escrowed Units shall be deposited into escrow pursuant to the
Escrow Agreement, (ii) that upon any sale of the Escrowed Units, the proceeds
thereof shall be included in the escrow, (iii) that upon final disposition in
the Pacificorp Litigation (pursuant to a final, non-appealable order of a court
of competent jurisdiction), after payment of the judgment or settlement together
with all costs and expenses paid by or incurred on behalf of Triton or the MLP
in connection with the Pacificorp Litigation, from and after the date hereof,
all remaining Escrowed Units and other cash, securities or other assets held in
escrow under the Escrow Agreement shall be unconditionally released to the
Contributors, and (iv) such other terms as the parties shall mutually agree
upon. The parties agree that the Escrowed Units shall constitute the first
Common Units sold or otherwise transferred by the Contributors, whether pursuant
to the Public Offering or otherwise; provided, however, that the proceeds from
the sale of such Escrowed Units shall be treated in accordance with clause (ii)
above.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions to Each Party's Obligations.
The obligations of the parties hereto to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, on or prior to
the Closing Date, of all of the following conditions, any one or more of which
may be waived in writing, in whole or in part, by an agreement in writing
executed by the General Partner and the Contributors:
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(a) each of the items required to be submitted to the unit holders of the
MLP at the MLP Unit Holders' Meeting shall have been approved by the
required vote as specified in Section 6.7;
(b) all of the conditions precedent to the parties' respective obligations
under the GP Purchase Agreement shall have been satisfied or duly waived;
(c) all material necessary approvals under state securities or "blue sky"
laws relating to the issuance of the New Equity shall have been obtained;
(d) the parties shall have received all other consents or approvals of any
Governmental Authority, the absence of which would be reasonably likely to
have an Atlas Material Adverse Effect or a Triton Material Adverse Effect;
and
(e) there shall not be in effect any temporary restraining order,
preliminary injunction, injunction or other Order prohibiting the Closing
of the transactions contemplated by this Agreement or the Constituent
Documents.
7.2 Conditions to the Obligations of the Atlas Entities.
The obligation of the Atlas Entities and Resource America to consummate the
transactions contemplated by this Agreement is subject to the satisfaction, on
or prior to the Closing Date, of all of the following conditions, any one or
more of which may be waived in writing, in whole or in part, by the General
Partner:
(a) the representations and warranties of the Contributors made in this
Agreement shall be true and correct as of the Closing Date, except for such
failures to be true and correct that do not have a Triton Material Adverse
Effect or a Contributor Material Adverse Effect (in each case, giving no
effect to any Material Adverse Effect or other materiality qualifiers
contained in such representations and warranties);
(b) the Contributors and Triton shall have performed or complied in all
material respects with all obligations and covenants required by this
Agreement to be performed or complied with by the Contributors and Triton
by the time of the Closing;
(c) the Contributors shall have delivered to the General Partner a
certificate dated the Closing Date and signed by an authorized officer
confirming the foregoing matters set forth in Section 7.2(a) and (b);
(d) there shall not have occurred and be continuing any Triton Material
Adverse Effect;
(e) the Contributors shall have received all other consents and approvals
of any Governmental Authority and all third party consents necessary for
the consummation of the transactions contemplated by this Agreement, the
absence of which would be reasonably likely to have a Triton Material
Adverse Effect;
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(f) the outstanding indebtedness of the MLP under the PNC loan facility,
and the outstanding indebtedness of Triton under its existing secured
credit agreements with UBS Warburg, LLC and the other lenders thereto shall
have been refinanced and Liens listed on Schedule 3.4 have been released or
a consent obtained from the new lender thereof; and
(g) the Contributors shall have delivered or caused to be delivered the
closing deliveries specified in Section 2.2(a).
7.3 Conditions to the Obligation of the Contributors.
The obligation of the Contributors to consummate the transactions
contemplated by this Agreement is subject to the satisfaction, on or prior to
the Closing Date, of all of the following conditions, any one or more of which
may be waived in writing, in whole or in part, by the Contributors:
(a) the representations and warranties of the General Partner, the MLP and
Resource America made in this Agreement shall be true and correct as of the
Closing Date, except for such failures to be true and correct that do not
have an Atlas Material Adverse Effect (giving no effect to any Material
Adverse Effect or other materiality qualifiers contained in such
representations and warranties);
(b) the Atlas Entities, Resource America and the Resource America Entities
shall have performed or complied in all material respects with all
obligations and covenants required by this Agreement to be performed or
complied with by them by the time of the Closing;
(c) each of the General Partner and Resource America shall have delivered
to the Contributors a certificate dated the Closing Date and signed by an
authorized officer of the General Partner or Resource America, as the case
may be, confirming the foregoing matters set forth in Section 7.3(a) and
(b);
(d) the Atlas Entities and Resource America shall have received all other
consents and approvals of any Governmental Authority and all third party
consents necessary for the consummation of the transactions contemplated by
this Agreement, the absence of which would be reasonably likely to have an
Atlas Material Adverse Effect;
(e) the Contributors shall have received an opinion dated as of the Closing
Date of Ledgewood Law Firm, P.C., counsel to the MLP, that (i) (based on
certain customary factual representations), immediately prior to and after
the Closing Date, and for all taxable years of its existence, the MLP (and
each other partnership or limited liability company in which the MLP owns a
direct or indirect interest) has been classified as a partnership and not
as an association (or as a publicly-traded partnership) taxable as a
corporation for federal income tax purposes, and (ii) the Proxy Statement
accurately sets forth the material federal income tax consequences to the
holders of the Common Units in the MLP of the transactions contemplated by
the Constituent Documents. Such opinions and representations shall be
reasonably satisfactory in form and substance to the Contributors, and no
such opinion shall have been withdrawn or modified in any material respect;
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(f) Triton and/or the MLP shall have (x) received at least $225 million in
proceeds from the financing of new indebtedness of Triton and/or the MLP
(and their respective subsidiaries, if applicable) to be used to (and which
shall) discharge and satisfy in full the indebtedness of Triton and the MLP
outstanding prior to the Closing, refinance or replace in full any
Financing Transactions and pay any and all expenses relating to the
transactions contemplated by this Agreement and the other Constituent
Documents and (y) an available line of credit under a revolving credit
facility in an amount as the Contributors shall determine to be reasonably
adequate for the conduct of the business of the MLP after the Closing
(after giving effect to the transactions contemplated hereby) in the manner
contemplated hereby and in the Constituent Documents (clauses (x) and (y)
collectively, the "Bank Financing"), which Bank Financing shall be on terms
reasonably satisfactory to the Contributors;
(g) the General Partner shall have delivered to the Contributors
resignation letters, effective as of the Closing, of each member of the
Board of Managers of the General Partner except for one managing board
member (and one member of each committee thereof (which committee does not
require the presence of an independent director for the purposes of such
committee under applicable law, regulation or otherwise)) of the General
Partner to be designated by Resource America in writing prior to the
Closing and who shall be reasonably acceptable to the Contributors (who the
parties agree shall be Xxxxxxxx Xxxxx), in accordance with the GP Purchase
Agreement;
(h) there shall not have occurred and be continuing any Atlas Material
Adverse Effect;
(i) the Atlas Entities, Resource America and the Resource America Entities
shall have delivered or caused to be delivered the closing deliveries
specified in Section 2.2(b);
(j) the Atlas Entities shall have either (i) caused to be terminated,
discharged and forever released in full all security interests, pledges and
guaranties held by PNC Bank, National Association and First Union National
Bank disclosed on Schedules 4.3, 4.4, 4.14, 4.15 and 4.16(v) or required to
be disclosed thereon and shall have provided written documentation
reasonably satisfactory to the Contributors evidencing such termination,
discharge and release or obtained the consent of the agent and the lenders
pursuant to the Bank Financing for all such security interests, pledges and
guaranties not terminated, discharged and released prior to the Closing to
remain outstanding after the Closing in accordance with the terms of such
Bank Financing; and
(k) the Atlas Entities, Resource America and the Resource America Entities
shall have transferred or otherwise assigned, or caused to be transferred
or otherwise assigned, to the MLP, the OLP or a Subsidiary, as the case may
be, all Atlas Easements, rights, contracts, agreements, permits and other
assets (including, without limitation, all Atlas Owned Property, Atlas
Leased Property, Compressor Property Interests and Meter Property
Interests) used by the Atlas Entities or necessary for use in the business
of the Atlas Entities, but not previously obtained by, transferred or
otherwise assigned to the MLP, OLP or such Subsidiary prior to the date
hereof (in each case, without cost or penalty to the Atlas Entities) except
where the failure to do any of the foregoing is not reasonably likely,
either individually or in the aggregate, to have an Atlas Material Adverse
Effect.
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7.4 Requisite Efforts.
It shall be a condition to each party's right to refuse to close, based on
the assertion of the failure of a condition for which such party's obligations
hereunder are subject, that the party asserting the failure of such condition
shall have acted with the requisite efforts of that party required under this
Agreement to be undertaken by such party in accordance with the terms of this
Agreement.
ARTICLE VIII
INVESTIGATION; LIMITATIONS
8.1 Independent Investigation.
The parties hereto acknowledge that in making the decision to enter into
this Agreement and to consummate the transactions contemplated hereby and by the
Constituent Documents, they have relied solely on the basis of their own
independent investigation of Triton or the Atlas Entities, as applicable, and
upon the express written representations, warranties and covenants in this
Agreement and the Constituent Documents. Without diminishing the scope of the
express written representations, warranties and covenants of the parties in this
Agreement and the Constituent Documents and without affecting or impairing their
right to rely thereon, THE PARTIES HERETO ACKNOWLEDGE THAT NONE OF THEM HAVE
MADE, AND EACH OF THEM HEREBY EXPRESSLY DISCLAIM AND NEGATE ANY OTHER
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, RELATING TO THE ASSETS AND
OPERATIONS OF THE ATLAS ENTITIES AND TRITON, AS APPLICABLE (INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS).
8.2 Survival.
The representations, warranties, covenants and agreements shall terminate
as of the time of Closing or upon the termination of this Agreement pursuant to
Section 9.1, as the case may be, except for such covenants and agreements which,
by their terms are to be performed in whole or in part after the Closing.
ARTICLE IX
TERMINATION
9.1 Events of Termination.
This Agreement may be terminated at any time prior to the Closing:
(a) by mutual written consent of the General Partner and the
Contributors;
(b) by either the General Partner or the Contributors in writing on or
after May 15, 2002, if the Closing has not occurred by such date,
provided that as of such date the
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terminating party is not in material default under this Agreement and
provided, further, that if (x) the Bank Financing cannot be
consummated by May 15, 2002 and (y) the Proxy Statement has already
been mailed at such time to the unitholders of the MLP, either the
General Partner or the Contributors may, by written notice to the
other party, extend the date of termination pursuant to this
subsection until June 30, 2002;
(c) by either the General Partner or the Contributors in writing
(without prejudice to other rights and remedies that the terminating
party or its affiliates may have, and provided the terminating party
or its affiliates are not otherwise in material default or breach of
this Agreement), if the other party or its affiliates (i) materially
fail to perform their covenants or agreements contained herein
required to be performed on or prior to the Closing Date, or (ii)
breach or have breached any of their representations or warranties
contained herein, which breach has had a Triton Material Adverse
Effect (with respect to the Contributors) or an Atlas Material Adverse
Effect (with respect to Atlas), as the case may be, in each case,
giving no effect to Material Adverse Effect or other materiality
qualifiers contained in such representations and warranties; provided,
however, that in the case of clause (i) or (ii), the defaulting party
shall have a period of ten (10) days following written notice from the
nondefaulting party to cure any breach of this Agreement, if such
breach is curable;
(d) by either the General Partner or the Contributors in writing, if
there shall be any Order of any Governmental Authority binding on the
Atlas Entities, Resource America, the Resource America Entities,
Triton or the Contributors, which prohibits any of those parties from
consummating the transactions contemplated by this Agreement or the
Constituent Documents, provided that those parties shall have used
their reasonable business efforts to have any such Order lifted and
the same shall not have been lifted within 30 days after entry by any
such Governmental Authority;
(e) by either the General Partner or the Contributors, in writing, if
the Financial Advisor to the Conflicts Committee shall have amended,
modified, withdrawn or rescinded in any materially adverse manner the
MLP Fairness Opinion.
(f) by the Contributors, in writing, if, the Board of Managers of the
General Partner or the Conflicts Committee (x) shall withdraw or
modify in any manner adverse to the Contributors their respective
approval or recommendation of this Agreement and the transactions
contemplated hereby, (y) shall approve or recommend any Atlas
Alternative Transaction or (z) shall resolve to take any such action,
whether or not, such action is permitted pursuant to the terms of this
Agreement;
(g) by the General Partner, in writing, if the Contributors shall
approve or recommend any Triton Alternative Transaction or resolve to
take any such action, whether or not such action is permitted pursuant
to the terms of this Agreement;
(h) by either the General Partner or the Contributors, in writing, if
the required approval and adoption of this Agreement or any of the
other matters set forth in the Proxy Statement to be voted upon at the
MLP Unit Holders' Meeting shall not have been obtained at a duly
called and held meeting of the unit holders of the MLP for the purpose
of obtaining such approval, including any adjournments or
postponements thereof;
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(i) by the Contributors, in writing, in accordance with Section
6.13(a), if they determine that a Triton Alternative Transaction would
constitute a Triton Superior Transaction; provided that, in order for
the termination of this Agreement pursuant to this Section 9.1(i) to
be deemed effective, the Contributors shall have complied with all
provisions contained in Sections 6.12 and 6.13, and with the
applicable requirements of Section 9.2, including the payment of the
Triton Termination Fee; or
(j) by the General Partner, in writing, in accordance with Section
6.13(b), if the Conflicts Committee determines that an Atlas
Alternative Transaction would constitute an Atlas Superior
Transaction; provided that, in order for the termination of this
Agreement pursuant to this Section 9.1(j) to be deemed effective, the
General Partner and the Conflicts Committee, and their respective
affiliates (including the Atlas Entities, Resource America and the
Resource America Entities) shall have complied with all provisions
contained in Sections 6.12 and 6.13, and with the applicable
requirements of Section 9.2, including the payment of the Atlas
Termination Fee.
9.2 Effect of Termination.
(a) In the event of the termination of this Agreement by a party, as
provided in Section 9.1(a), (b), (c), (d), (e) or (h) above, this Agreement
shall thereafter become void and of no effect and with no liability on the part
of any party except for the obligations set forth in this Section 9.2 and
Section 10.1 hereof. Nothing in this Section 9.2 shall be deemed to release
either party from any liability for any breach by such party of the terms and
provisions of this Agreement or to impair the right of either party to compel
specific performance by the other party of its obligations under this Agreement.
(b) Break-up Fees. If this Agreement is terminated:
(i) by the Contributors pursuant to Section 9.1(f) or by the General
Partner pursuant to Section 9.1(j), then the MLP shall pay, and the
General Partner shall cause the MLP to pay or cause to be paid, to
NVCH a termination fee of $4,000,000 (the "Atlas Termination Fee"),
which amount shall be payable by wire transfer of immediately
available funds to an account to be designated by NVCH in writing;
provided, however, that such fee shall not be payable in the event of
a termination pursuant to Section 9.1(f)(x), if, prior to such
termination, the Financial Advisor to the Conflicts Committee shall
have amended, modified, withdrawn or rescinded in any materially
adverse manner the MLP Opinion. No obligations of any of the Atlas
Entities, Resource America or the Resource America Entities shall be
deemed terminated until such payment has been made and received by
NVCH.
(ii) by the General Partner pursuant to Section 9.1(g) or by the
Contributors pursuant to Section 9.1(i), then Triton shall, and the
Contributors shall cause Triton to, pay to the General Partner a
termination fee of $8,000,000 (the "Triton Termination Fee"), which
amount shall be payable by wire transfer of immediately available
funds to an account to be designated by the General Partner in
writing. No obligations of the Contributors or Triton shall be deemed
terminated until such payment has been made and received by the
General Partner.
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(c) If, as of June 30, 2002, no Bank Financing has been obtained and this
Agreement is terminated, then, so long as no Atlas Termination Fee or Triton
Termination Fee has been paid or is payable, the Contributors shall, upon
written request from the General Partner, promptly pay to the Resource America
Entities, the General Partner and the MLP (A) the reasonable out-of-pocket
expenses of all of them paid in connection with the transactions contemplated
hereby (including reasonable attorneys' fees, but excluding any fees paid or
incurred in respect of the MLP Fairness Opinion), in an amount not to exceed
$1,000,000 in the aggregate (the "Expense Reimbursement") and (B) 50% of the
fees paid by the General Partner in respect of the MLP Fairness Opinion, such
amount not to exceed $187,500 (the "Financial Advisor Fee") provided that the
amounts set forth in classes (A) and (B) shall not be payable if (v) the MLP
Unit Holders shall have failed to provide the approvals specified in Section
6.7, provided that, the Contributors have not ceased to continue to pursue the
Bank Financing prior to the earlier to occur of such date and a vote of "no" by
the MLP Unit Holders; (w) there has occurred an Atlas Material Adverse Effect;
(x) the Atlas Entities, Resource America or the Resource America Entities have
materially breached a covenant, provided that, the Contributors have not ceased
to continue to pursue the Bank Financing prior to the date of such breach, (y)
there shall have been issued and in effect any restraining order, injunction or
Order prohibiting the Closing; (z) the Bank Financing shall have failed to be
obtained as a result of a failure of the condition in Section 7.3(k) to be
satisfied. In connection with any such written request, the General Partner
shall provide to the Contributors reasonable written documentation evidencing
such Expense Reimbursement. In the event (i) the financial advisor to the
Conflicts Committee shall have amended, modified, withdrawn or rescinded in any
materially adverse manner the MLP Fairness Opinion due to material event or
circumstance arising after the date hereof (other than an event or circumstance
arising from a breach of this Agreement by any Atlas Entity or Resource America
and/or that would constitute an Atlas Material Adverse Event) and (ii) this
Agreement is then terminated, then (and so long as the Contributors are not
otherwise required pursuant to pay the Expense Reimbursement or the Financial
Advisor Fee) the Contributors shall, upon written request from the General
Partner, promptly pay to the General Partner the Expense Reimbursement and the
Financial Advisor Fee.
(d) Specific Performance. The parties hereto acknowledge that the
transactions contemplated by this Agreement and the other Constituent Documents
are unique and specifically identifiable. Accordingly, the parties hereto
further agree and stipulate that, subject to the ability to terminate pursuant
to Sections 9.1(e), (f), (g), (h), (i) and (j), if the Closing does not occur
because of the willful failure of the Contributors, on the one hand, or the MLP,
the General Partner or Resource America, on the other, to perform their
obligations hereunder (i) monetary damages and any other remedy at law will not
be adequate, (ii) the non-defaulting party shall be entitled to specific
performance as the remedy for such breach, (iii) each party hereto agrees to
waive any objection to the remedy of specific performance, (iv) each party
agrees that the granting of specific performance by any court will not be deemed
to be harsh or oppressive to the party who is ordered specifically to perform
its obligations under this Agreement, and (v) in connection with any action for
specific performance, the prevailing party shall be entitled to reasonable
attorney's fees and other costs of prosecuting or defending such action.
(e) Other remedies. The right to seek specific performance hereunder shall
not preclude any party from seeking any other remedy at law or in equity.
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ARTICLE X
MISCELLANEOUS
10.1 Expenses.
Regardless of whether the transactions contemplated by this Agreement and
the Constituent Documents are consummated, each party hereto shall pay its own
expenses incident to this Agreement and all action taken in preparation for
carrying this Agreement into effect, other than as set forth in Section 6.6(a)
or Section 9.2(c).
10.2 Knowledge.
When a representation or warranty contained herein or in any certificate or
document delivered in connection herewith is made to the knowledge of a person
or entity, that phrase means the actual awareness of factual information,
without independent investigation, of the officers of the entity to which such
knowledge is imputed.
10.3 Construction of Certain Terms and Phrases.
Unless the context of this Agreement otherwise requires (a) words of any
gender include the other gender; (b) words using the singular or plural number
also include the plural or singular number, respectively; (c) the terms
"hereof," "herein," "hereby" and derivative or similar words refer to this
entire Agreement; and (d) the terms "Article" or "Section" refer to the
specified Article or Section of this Agreement. Whenever this Agreement refers
to a number of days, such number shall refer to calendar days unless business
days are specified, which business day shall mean a day on which commercial
banks are open for business in New York, New York. All accounting terms used
herein and not expressly defined herein shall have the meanings given to them
under GAAP.
10.4 Notices.
Any notice, request, instruction, or correspondence or other document to be
given hereunder by either party to the other (herein collectively called
"Notice") shall be in writing and delivered in person or by courier service
requiring acknowledgement of receipt of delivery or mailed by certified mail,
postage prepaid and return receipt requested, or by telecopier, as follows:
If to the Contributors, addressed to:
Kisco Management Corporation
000 Xxxxx Xxxxxx
Xx. Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
DuPont Capital Management
Xxx Xxxxxxx Xxxxxxx
00
Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
Telecopy: (000) 000-0000
Harbourton Enterprises
00 Xxxxxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Telecopy: (000) 000-0000
and:
Vulcan Capital Management
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx
Xxxxx Xxxxx
Telecopy: (000) 000-0000
with a copy to:
X'Xxxxxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxx
Telecopy: (000) 000-0000
If to the Atlas Entities (prior to Closing) or Resource America,
addressed to:
Resource America, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxx
Telecopy: (000) 000-0000
with a copy to:
Ledgewood Law Firm, P.C.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX
Attention: Xxxxxxx X. Abt
Telecopy: (000) 000-0000
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Notice given by personal delivery, courier service or mail shall be
effective upon actual receipt. Notice given by telecopier shall be effective
upon actual receipt if received during the recipient's normal business hours, or
at the beginning of the recipient's next business day after receipt if not
received during the recipient's normal business hours. Any party may change any
address to which Notice is to be given to it by giving Notice as provided above
of such change of address.
10.5 Governing Law.
All questions concerning the construction, interpretation and validity of
this Agreement shall be governed by and construed and enforced in accordance
with the internal law of the State of Delaware, without giving effect to any
choice or conflict of law provision or rule (whether in the State of Delaware or
any other jurisdiction) that would cause the application of the law of any
jurisdiction other than the State of Delaware. In furtherance of the foregoing,
the internal law of the State of Delaware will control the interpretation and
construction of this Agreement, even if under such jurisdiction's choice of law
or conflict of law analysis, the internal law of some other jurisdiction would
ordinarily or necessarily apply.
10.6 Form of Payment.
All payments hereunder shall be made in United States dollars and, unless
the parties making and receiving such payments shall agree otherwise or the
provisions hereof provide otherwise, shall be made by wire or interbank transfer
of immediately available funds by 12:00 Noon New York, New York time on the date
such payment is due to such account as the party receiving payment may designate
in writing.
10.7 Entire Agreement; Amendments and Waivers.
This Agreement and the Constituent Documents (a) shall constitute the
entire agreement between the parties with respect to the subject matter hereof,
and shall supersede all prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof (except for
the Confidentiality Agreement, which shall remain in effect); and (b) are not
intended to confer upon any other person or entity any rights or remedies
hereunder. Each party to this Agreement agrees that (i) no other party to this
Agreement (including its agents and representatives) has made any
representation, warranty, covenant or agreement to or with such party relating
to this Agreement or the Constituent Documents or the transactions contemplated
hereby or thereby, other than those expressly set forth in this Agreement or the
Constituent Documents and (ii) such party has not relied upon any
representation, warranty, covenant, or agreement relating to the transactions
contemplated by this Agreement or the Constituent Documents, other than those
referred to in clause (i) above. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by each party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (regardless of whether
similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly provided.
66
10.8 Binding Effect and Assignment.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective permitted successors and assigns; but
neither this Agreement nor any of the rights, benefits or obligations hereunder
shall be assigned, by operation of law or otherwise, by any party hereto without
the prior written consent of the other parties; provided, however, that (x) the
obligations of either Contributor hereunder may be performed by the other
Contributor or any affiliate of either Contributor (provided, however, that no
such action shall relieve the assigning Contributor of its liability hereunder)
and (y) the Contributors may assign the right to receive the New Equity (subject
to Section 3.25) or any Atlas Termination Fee to its affiliates. Nothing in this
Agreement, express or implied, is intended to confer upon any person or entity
other than the parties hereto and their respective permitted successors and
assigns, any rights, benefits or obligations hereunder.
10.9 Severability.
If any provision of the Agreement is rendered or declared illegal or
unenforceable by reason of any existing or subsequently enacted legislation or
by decree of a court of last resort, the Contributors and the General Partner
shall promptly meet and negotiate substitute provisions for those rendered or
declared illegal or unenforceable, but all of the remaining provisions of this
Agreement shall remain in full force and effect.
10.10 Interpretation.
The parties agree that they have been represented by counsel during the
negotiation and execution of this Agreement and, therefore waive the application
of any law, regulation, holding or rule of construction providing that
ambiguities in an agreement or other document will be construed against the
party drafting such agreement or document.
10.11 Headings and Schedules.
The headings of the several Articles and Sections herein are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement. The schedules referred to
herein are attached hereto and incorporated herein by this reference, and unless
the context expressly requires otherwise, such schedules are incorporated in the
definition of "Agreement."
10.12 Multiple Counterparts.
This Agreement may be executed in one or more original or facsimile
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
67
EXECUTED as of the date first set forth above.
ATLAS PIPELINE PARTNERS, L.P.
By Atlas Pipeline Partners GP, LLC,
its general partner
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------------
Xxxxxxx X. Xxxxxxx
President and Chief Operating Officer
ATLAS PIPELINE PARTNERS GP, LLC
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------------
Xxxxxxx X. Xxxxxxx
President and Chief Operating Officer
RESOURCE AMERICA, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
-----------------------------------------------
Title: Senior V.P & C.F.O.
----------------------------------------------
VULCAN INTERMEDIARY, LLC
By: /s/ Xxxxxx Xxxxxx
-------------------------------------------------
Name: Xxxxxx Xxxxxx
-----------------------------------------------
Title: Vice President
----------------------------------------------
NEW VULCAN COAL HOLDINGS, L.L.C.
By: /s/ Xxxxxx Xxxxxx
-------------------------------------------------
Name: Xxxxxx Xxxxxx
-----------------------------------------------
Title: Vice President
----------------------------------------------
68
TABLE OF CONTENTS
Page
----
Article I CONTRIBUTION.......................................................2
1.1 Contribution.......................................................2
1.2 Consideration......................................................2
Article II CLOSING...........................................................2
2.1 Closing............................................................2
2.2 Deliveries at the Closing..........................................3
Article III REPRESENTATIONS AND WARRANTIES OF CONTRIBUTOR....................4
3.1 Existence of the Contributors......................................4
3.2 Existence of Triton................................................4
3.3 Authority..........................................................5
3.4 Capitalization.....................................................5
3.5 No Conflicts.......................................................6
3.6 Governmental Approvals and Filings.................................7
3.7 Books and Records..................................................7
3.8 Financial Statements...............................................7
3.9 No Adverse Change..................................................8
3.10 Default and Liabilities............................................8
3.11 Taxes..............................................................8
3.12 Legal Proceedings; Compliance With Laws and Orders................10
3.13 Benefit Plans; ERISA..............................................11
3.14 Assets Other than Real Property Interests.........................12
3.15 Title to Real Property............................................13
3.16 Contracts.........................................................14
3.17 Intellectual Property.............................................16
3.18 Labor Relations...................................................16
3.19 Environmental Matters.............................................17
3.20 Licenses, Permits, Approvals......................................19
3.21 Insurance.........................................................19
3.22 Brokers...........................................................19
3.23 Utility Status....................................................19
3.24 Information Supplied..............................................19
3.25 Securities Laws...................................................20
3.26 Qualifications as Lessee; Coal Acreage Limitations................21
3.27 Permit Blocking...................................................21
3.28 Exon-Xxxxxx.......................................................21
3.29 Hedging...........................................................21
Article IV REPRESENTATIONS AND WARRANTIES OF THE GENERAL PARTNER
AND THE MLP.................................................................22
4.1 Existence.........................................................22
4.2 Authority.........................................................23
i
4.3 Subsidiaries......................................................23
4.4 Capitalization....................................................24
4.5 No Conflicts......................................................25
4.6 Governmental Approvals and Filings................................26
4.7 Books and Records.................................................26
4.8 SEC Filings.......................................................26
4.9 No Adverse Change.................................................27
4.10 Default and Liabilities...........................................27
4.11 Taxes.............................................................27
4.12 Legal Proceedings; Compliance With Laws and Orders................29
4.13 Benefit Plans; ERISA..............................................29
4.14 Assets Other than Real Property Interests.........................30
4.15 Title to Real Property............................................30
4.16 Contracts.........................................................32
4.17 Intellectual Property.............................................34
4.18 Environmental Matters.............................................35
4.19 Licenses, Permits, Approvals......................................36
4.20 Insurance.........................................................36
4.21 Brokers...........................................................36
4.22 Utility Status....................................................36
4.23 Information Supplied..............................................36
4.24 Securities Laws...................................................37
4.25 Permit Blocking...................................................38
4.26 Exon-Xxxxxx.......................................................38
4.27 Hedging...........................................................38
4.28 Other Regulations.................................................38
4.29 Opinion of Financial Advisor; Recommendation of
Conflicts Committee...............................................38
Article V REPRESENTATIONS AND WARRANTIES OF.................................39
5.1 Existence.........................................................39
5.2 Authority.........................................................39
5.3 No Conflicts......................................................40
5.4 Governmental Approvals and Filings................................40
5.5 Permit Blocking...................................................40
Article VI ADDITIONAL AGREEMENTS, COVENANTS, RIGHTS AND OBLIGATIONS.........41
6.1 Access to Information.............................................41
6.2 Confidentiality...................................................41
6.3 Restrictions on Conduct of the Atlas Entities Prior to Closing....41
6.4 Restrictions on Conduct of Triton's Business Before Closing.......43
6.5 Operations........................................................45
6.6 Certain Filings...................................................45
6.7 The MLP Unit Holders' Meeting.....................................46
6.8 Opinion of Counsel to Atlas.......................................47
6.9 Reasonable Business Efforts.......................................47
6.10 Intercompany Accounts.............................................48
6.11 Transfer Restrictions.............................................48
ii
6.12 No Solicitation...................................................49
6.13 Permitted Actions.................................................50
6.14 Public Announcement...............................................52
6.15 Covenant to Vote..................................................52
6.16 Guarantees and Bonds; Replacement of Guarantees...................53
6.17 Use of Name.......................................................53
6.18 Tax Matters.......................................................53
6.19 Headquarters......................................................54
6.20 Triton Reorganization.............................................54
6.21 Quarterly Dividend Payments.......................................54
6.22 Bank Financing....................................................55
6.23 Public Offering...................................................55
6.24 Cash Collateral Refund............................................55
6.25 Other Registration Rights.........................................56
6.26 Unit Escrow.......................................................56
Article VII CONDITIONS TO CLOSING...........................................56
7.1 Conditions to Each Party's Obligations............................56
7.2 Conditions to the Obligations of the Atlas Entities...............57
7.3 Conditions to the Obligation of the Contributors..................58
7.4 Requisite Efforts.................................................60
Article VIII INVESTIGATION; LIMITATIONS.....................................60
8.1 Independent Investigation.........................................60
8.2 Survival..........................................................60
Article IX TERMINATION......................................................60
9.1 Events of Termination.............................................60
9.2 Effect of Termination.............................................62
Article X MISCELLANEOUS.....................................................64
10.1 Expenses..........................................................64
10.2 Knowledge.........................................................64
10.3 Construction of Certain Terms and Phrases.........................64
10.4 Notices...........................................................64
10.5 Governing Law.....................................................66
10.6 Form of Payment...................................................66
10.7 Entire Agreement; Amendments and Waivers..........................66
10.8 Binding Effect and Assignment.....................................67
10.9 Severability......................................................67
10.10 Interpretation..................................................67
10.11 Headings and Schedules..........................................67
10.12 Multiple Counterparts...........................................67
iii
SCHEDULES
Schedule 3.2 - Triton Jurisdictions
Schedule 3.4 - Triton Capitalization
Schedule 3.5 - Triton Conflicts
Schedule 3.6 - Triton Governmental Consents
Schedule 3.8 - Triton Financial Statements
Schedule 3.9 - No Adverse Change in Triton
Schedule 3.10 - Triton
- (a) Triton Defaults
- (b) Triton Obligations
Schedule 3.11 - Triton Taxes
Schedule 3.12 - Legal Proceedings
Schedule 3.13 - ERISA
- (a) Triton Plans
- (b) Triton Salaried Employees (>$75,000)
- (b) Triton Benefit Plan
- (c) Triton Multi-Employer Plan Affiliates
- (f) Triton Contributions
- (g) Triton Pending Claims
- (h) Triton Documents Not Made Available
Schedule 3.14 - Liens on Triton Assets Other Than Real Property
Schedule 3.15 - Real Property
- (a)(i) Triton Owned Property
- (a)(ii) Triton Leased Property
- (a) Real Property Liens
- (b) Leases
iv
- (c) Contributor Equipment on Triton Owned Property
- (d) Triton Equipment on Contributor Real Property
Schedule 3.16 - Triton Contracts
Schedule 3.17 - Triton Intellectual Property Rights
Schedule 3.18 - Triton Labor Relations
Schedule 3.19 - Environmental Matters
- (c) Environmental Permits
Schedule 3.21 - Triton Insurance Policies
Schedule 3.29 - Triton Hedging Activities
Schedule 4.1 - MLP, OLP & General Partner Jurisdictions
Schedule 4.3 - Subsidiaries of the OLP
Schedule 4.4 - General Partner And MLP Capitalization
Schedule 4.5 - MLP or General Partner Conflicts
Schedule 4.6 - Atlas Entities Governmental Consents
Schedule 4.9 - No Adverse Change of Atlas Entities
Schedule 4.10 - Atlas Entities
- (a) Atlas Entities' Defaults
- (b) Atlas Entities' Obligations
Schedule 4.11 - Taxes
- (a) Atlas Entities' Tax Return Matters
- (b) Tax Claims
- (c) Tax Liabilities
- (d) Tax Allocations
- (h) Affiliated Group Filings
Schedule 4.12 - Legal Proceedings
v
Schedule 4.14 - Liens on Atlas Entities Assets Other Than Real
Property Interests
Schedule 4.15 - Atlas Entities Real Property
- (a) Liens and Leases
- (a)(i) Atlas Owned Property
- (a)(ii) Atlas Leased Property
- (b) Easements Not Conveyed
- (c)(i) Compressor Property Interests
- (c)(ii) Meter Property Interests
- (d) Resource America Equipment on Atlas Real
Property
- (e) MLP, OLP or Subsidiary Equipment Resource
America Real Property
- (f) Atlas Property Acquire Post IPO
Schedule 4.16 - Atlas Entities Contracts
Schedule 4.17 - Atlas Entities Intellectual Property Rights
Schedule 4.18 - Environmental Matters
- (b) Environmental Permits
Schedule 4.20 - Atlas Entities Insurance Policies
Schedule 4.27 - Atlas Entities Hedging
Schedule 5.3 - Resource America Entities Conflicts
Schedule 5.4 - Resource America Entities Government Approvals
Schedule 6.3 - Atlas Entities Distributions
Schedule 6.4 - Tritons Actions Before Closing
vi
EXHIBITS
Exhibit A - Form of Second Amended and Restated Agreement of Limited
Partnership of the MLP
Exhibit B - Form of Registration Rights Agreement
Exhibit C - Form of Amended and Restated Natural Gas Gathering
Agreement
Exhibit D - Form of Second Amended and Restated Agreement of Limited
Partnership of the OLP
vii
DEFINITIONS
Actions or Proceedings.................................................3.12
Acts...................................................................3.25
Agreement..........................................................preamble
AIC................................................................preamble
Atlas Alternative Transaction..........................................6.12
Atlas Easements........................................................4.15
Atlas Energy.......................................................preamble
Atlas Entities..........................................................4.5
Atlas Leased Property..................................................4.15
Atlas Material Adverse Effect...........................................4.1
Atlas Owned Property...................................................4.15
Atlas Permitted Encumbrances...........................................4.15
Atlas Permitted Liens..................................................4.14
Atlas Resources....................................................preamble
Atlas Superior Transaction.............................................6.13
Atlas Termination Fee...................................................9.2
Bank Financing..........................................................7.3
Closing Date............................................................2.1
Closing.................................................................2.1
Code...................................................................3.11
Common Units............................................................1.2
Compressor Property Interest...........................................4.15
Confidentiality Agreement...............................................6.2
Conflicts Committee.....................................................4.2
Constituent Documents...................................................3.1
Contracts..............................................................3.16
Contributor Material Adverse Effect.....................................3.1
Contributor........................................................preamble
Deferred Participation Units............................................1.2
Environmental Claim....................................................3.19
Environmental Laws.....................................................3.19
Environmental Permits..................................................3.19
Escrow Agreement.......................................................6.26
Escrowed Units.........................................................6.26
Expense Reimbursement................................................9.2(c)
ERISA..................................................................3.13
Exchange Act............................................................4.8
Financial Advisor Fee...................................................9.2
Financing Transaction..................................................6.13
GAAP....................................................................3.8
General Partner....................................................preamble
Governmental Authority..................................................3.6
GP Purchase Agreement..............................................preamble
Guarantees.............................................................3.16
viii
Guarantor Entities.....................................................6.16
Hazardous Materials....................................................3.19
HSR Act.................................................................3.6
Intermediary.......................................................preamble
IPO Date................................................................4.8
Liens...................................................................3.4
Meter Property Interest................................................4.15
MLP Affiliates..........................................................3.6
MLP Agreement Amendment.................................................1.2
MLP Balance Sheet.......................................................4.9
MLP Fairness Opinion...................................................4.29
MLP Unit Holders' Meeting...............................................6.7
MLP................................................................preamble
New Common Units........................................................1.2
New Equity..............................................................1.2
New Subordinated Units..................................................1.2
Notice.................................................................10.4
NVCH...............................................................preamble
OLP Agreement Amendment.................................................2.2
OLP.....................................................................1.1
Order..................................................................3.10
Ordinary Course of Business............................................3.14
Pacificorp Litigation..................................................6.26
Plan...................................................................3.13
Proxy Statement.........................................................6.6
Public Offering........................................................6.23
Registration Rights Agreement...........................................2.2
REI-NY.............................................................preamble
Releases...............................................................3.19
Resource America Common Units...........................................2.2
Resource America Entities...............................................5.2
Resource America...................................................preamble
Resource Energy....................................................preamble
Retained Interests.....................................................6.20
SEC.....................................................................4.8
Securities Act.........................................................3.25
Sellers............................................................preamble
SMCRA..................................................................3.27
Subordinated Units......................................................2.2
Subsidiaries............................................................4.3
Tax Items..............................................................3.11
Tax or Taxes...........................................................3.11
Tax Returns............................................................3.11
Triton Affiliates.......................................................4.6
Triton Alternative Transaction.........................................6.12
Triton Balance Sheet....................................................3.9
ix
Triton Benefit Plan....................................................3.13
Triton Easements.......................................................3.15
Triton Financial Statements.............................................3.8
Triton Interests...................................................preamble
Triton Leased Property.................................................3.15
Triton Material Adverse Effect..........................................3.2
Triton Owned Property..................................................3.15
Triton Permitted Encumbrances..........................................3.15
Triton Permitted Liens.................................................3.14
Triton Qualified Plan..................................................3.13
Triton Reorganization..................................................6.20
Triton Superior Transaction............................................6.13
Triton Termination Fee..................................................9.2
Triton.............................................................preamble
Viking.............................................................preamble
x
Exhibit A to Contribution Agreement
SECOND AMENDED AND RESTATED AGREEMENT
OF
LIMITED PARTNERSHIP
OF
ATLAS NATURAL RESOURCES, L.P.
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
ATLAS NATURAL RESOURCES, L.P.
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
ATLAS NATURAL RESOURCES, L.P. dated as of ______________, 2002, is entered into
by and among Atlas Natural Resources GP, LLC, a Delaware limited liability
company, as the General Partner, and the Persons who are Limited Partners in the
Partnership as of the date hereof, together with any other Persons who become
Partners in the Partnership or parties hereto as provided herein. In
consideration of the covenants, conditions and agreements contained herein, the
parties hereto hereby agree as follows:
RECITALS
WHEREAS, the General Partner and the Organizational Limited Partner
organized the Partnership as a Delaware limited partnership on May 6, 1999;
WHEREAS, the General Partner and the Organizational Limited Partner
executed and entered into the First Amended and Restated Agreement of Limited
Partnership of Atlas Pipeline Partners, L.P. dated February 2, 2000 (the
"Amended Partnership Agreement");
WHEREAS, Vulcan Intermediary, L.L.C., a Delaware limited liability
company, and New Vulcan Holdings, L.L.C., a Delaware limited liability company
(together, the "Contributors"), the Partnership, the General Partner and
Resource America, Inc. entered into a Contribution Agreement dated as of January
18, 2002, relating to the contribution to the Partnership by the Contributors of
limited partnership interests in Triton Coal Company, LP, a Delaware limited
partnership ("Triton" and the interests therein, the "Triton Interests"), in
consideration for the issuance by the Partnership of Common Units, Subordinated
Units and Deferred Participation Units (the "Contribution Agreement");
WHEREAS, this Agreement shall become effective as of the date hereof
(the "Effective Date") simultaneously with the closing of the transactions
contemplated by the Contribution Agreement, which closing occurred after the
affirmative vote of a "Unit Majority" (as such term is defined in the Amended
Partnership Agreement) approving such transactions; and
WHEREAS, upon the Effective Date (a) the Initial Subordinated Units
shall automatically convert into Common Units, (b) the Initial Subordination
Period shall end, and (c) the Subordination Period shall begin.
NOW, THEREFORE, the Amended Partnership Agreement is hereby amended and
restated in its entirety as follows:
-1-
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Acquisition" means any transaction in which any Group Member acquires
(through an asset acquisition, merger, stock acquisition or other form of
investment) control over all or a portion of the assets, properties or business
of another Person for the purpose of increasing the operating capacity or net
revenues of the Partnership Group from the operating capacity or net revenues of
the Partnership Group existing immediately prior to such transaction.
"Additional Book Basis" means the portion of any remaining Carrying
Value of an Adjusted Property that is attributable to positive adjustments made
to such Carrying Value as a result of Book-Up Events. For purposes of
determining the extent that Carrying Value constitutes Additional Book Basis:
(a) Any negative adjustment made to the Carrying Value of an Adjusted
Property as a result of either a Book-Down Event or a Book-Up Event shall first
be deemed to offset or decrease that portion of the Carrying Value of such
Adjusted Property that is attributable to any prior positive adjustments made
thereto pursuant to a Book-Up Event or Book-Down Event.
(b) If Carrying Value that constitutes Additional Book Basis is reduced
as a result of a Book-Down Event and the Carrying Value of other property is
increased as a result of such Book-Down Event, an allocable portion of any such
increase in Carrying Value shall be treated as Additional Book Basis; provided
that the amount treated as Additional Book Basis pursuant hereto as a result of
such Book-Down Event shall not exceed the amount by which the Aggregate
Remaining Net Positive Adjustments after such Book-Down Event exceeds the
remaining Additional Book Basis attributable to all of the Partnership's
Adjusted Property after such Book-Down Event (determined without regard to the
application of this clause (b) to such Book-Down Event).
"Additional Book Basis Derivative Items" means any Book Basis
Derivative Items that are computed with reference to Additional Book Basis. To
the extent that the Additional Book Basis attributable to all of the
Partnership's Adjusted Property as of the beginning of any taxable period
exceeds the Aggregate Remaining Net Positive Adjustments as of the beginning of
such period (the "Excess Additional Book Basis"), the Additional Book Basis
Derivative Items for such period shall be reduced by the amount that bears the
same ratio to the amount of Additional Book Basis Derivative Items determined
without regard to this sentence as the Excess Additional Book Basis bears to the
Additional Book Basis as of the beginning of such period.
"Additional Limited Partner" means a Person admitted to the Partnership
as a Limited Partner pursuant to Section 10.4 and who is shown as such on the
books and records of the Partnership.
-2-
"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each fiscal year of the Partnership:
(a) increased by any amounts that such Partner is obligated to restore
under the standards set by Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or
is deemed obligated to restore under Treasury Regulation Sections 1.704-2(g) and
1.704-2(i)(5)); and
(b) decreased by:
(i) the amount of all losses and deductions that, as of the
end of such fiscal year, are reasonably expected to be allocated to
such Partner in subsequent years under Sections 704(b)(2) and 706(d) of
the Code and Treasury Regulation Section 1.751-1(b)(2)(ii); and
(ii) the amount of all distributions that, as of the end of
such fiscal year, are reasonably expected to be made to such Partner in
subsequent years in accordance with the terms of this Agreement or
otherwise to the extent they exceed offsetting increases to such
Partner's Capital Account that are reasonably expected to occur during
(or prior to) the year in which such distributions are reasonably
expected to be made (other than increases as a result of a minimum gain
chargeback pursuant to Section 6.1(d)(i) or 6.1(d)(ii)).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith. The Adjusted Capital Account of a Partner in
respect of a Partnership Security or any other specified interest in the
Partnership shall be the amount which such Adjusted Capital Account would be if
such Partnership Security or any other specified interest in the Partnership
were the only interest in the Partnership held by a Partner from and after the
date on which such Partnership Security or other specified interest in the
Partnership was first issued. The Adjusted Capital Account in respect of an
Outstanding Deferred Participation Unit shall at all times be zero.
"Adjusted Operating Surplus" means, with respect to any period,
Operating Surplus generated during such period:
(a) less (i) any net increase in Working Capital Borrowings during such
period and (ii) any net reduction in cash reserves for Operating Expenditures
during such period not relating to an Operating Expenditure made during such
period;
(b) plus (i) any net decrease in Working Capital Borrowings during such
period and (ii) any net increase in cash reserves for Operating Expenditures
during such period required by any debt instrument for the repayment of
principal, interest or premium.
Adjusted Operating Surplus does not include that portion of Operating Surplus
included in clause (a)(i) of the definition of Operating Surplus.
"Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Section 5.6.
-3-
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question. As used
herein, the term "control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.
"Aggregate Remaining Net Positive Adjustments" means, as of the end of
any taxable period, the sum of the Remaining Net Positive Adjustments of all the
Partners.
"Agreed Allocation" means any allocation, other than a Required
Allocation, of an item of income, gain, loss or deduction pursuant to the
provisions of Section 6.1, including, without limitation, a Curative Allocation
(if appropriate to the context in which the term "Agreed Allocation" is used).
"Agreed Value" of any Contributed Property means the fair market value
of such property or other consideration at the time of contribution as
determined by the General Partner using such reasonable method of valuation as
it may adopt. The General Partner shall, in its discretion, use such method as
it deems reasonable and appropriate to allocate the aggregate Agreed Value of
Contributed Properties contributed to the Partnership in a single or integrated
transaction among each separate property on a basis proportional to the fair
market value of each Contributed Property.
"Agreement" means this Second Amended and Restated Agreement of Limited
Partnership of Atlas Natural Resources, L.P., as it may be amended, supplemented
or restated from time to time.
"Amended Partnership Agreement" has the meaning assigned to such term
in the recitals hereto.
"Assignee" means a Non-citizen Assignee or a Person to whom one or more
Limited Partner Interests have been transferred in a manner permitted under this
Agreement and who has executed and delivered a Transfer Application as required
by this Agreement, but who has not been admitted as a Substituted Limited
Partner.
"Associate" means, when used to indicate a relationship with any
Person, (a) any corporation or organization of which such Person is a director,
officer or partner or is, directly or indirectly, the owner of 20% or more of
any class of voting stock or other voting interest; (b) any trust or other
estate in which such Person has at least a 20% beneficial interest or as to
which such Person serves as trustee or in a similar fiduciary capacity; and (c)
any relative or spouse of such Person, or any relative of such spouse, who has
the same principal residence as such Person.
"Atlas America" means Atlas America, Inc., a Delaware corporation.
"Available Cash" means, with respect to any Quarter ending prior to the
Liquidation Date:
(a) the sum of:
-4-
(i) all cash and cash equivalents of the Partnership Group on
hand at the end of such Quarter from all sources; and
(ii) all additional cash and cash equivalents of the
Partnership Group on hand on the date of determination of Available
Cash with respect to such Quarter resulting from Working Capital
Borrowings made subsequent to the end of such Quarter;
(b) less the amount of any cash reserves that is necessary or
appropriate in the reasonable discretion of the General Partner to:
(i) provide for the proper conduct of the business of the
Partnership Group (including reserves for future capital expenditures
and for anticipated future credit needs of the Partnership Group)
subsequent to such Quarter;
(ii) comply with applicable law or any loan agreement,
security agreement, mortgage, debt instrument or other agreement or
obligation to which any Group Member is a party or by which it is bound
or its assets are subject; and
(iii) provide funds for distributions under Sections 6.4 or
6.5 in respect of any one or more of the next four Quarters;
provided, however, that the General Partner may not establish cash reserves
pursuant to (b)(iii) above if the effect of such reserves would be that the
Partnership is unable to distribute the Minimum Quarterly Distribution on all
Common Units, plus any Cumulative Common Unit Arrearage on all Common Units,
with respect to such Quarter; and, provided further, that disbursements made by
a Group Member or cash reserves established, increased or reduced after the end
of such Quarter but on or before the date of determination of Available Cash
with respect to such Quarter shall be deemed to have been made, established,
increased or reduced, for purposes of determining Available Cash, within such
Quarter if the General Partner so determines. Notwithstanding the foregoing,
Available Cash with respect to the Quarter in which the Liquidation Date occurs
and any subsequent Quarter shall equal zero.
Taxes paid by the Partnership on behalf of, or amounts withheld with respect to,
all or less than all of the Partners shall not be considered cash disbursements
of the Partnership that reduce Available Cash, but the payment or withholding
thereof shall be deemed to be a distribution of Available Cash to the applicable
Partners. Alternatively, in the discretion of the General Partner, such taxes
(if pertaining to all Partners) may be considered to be cash disbursements of
the Partnership which reduce Available Cash, but the payment or withholding
thereof shall not be deemed to be a distribution of Available Cash to such
Partners.
"Book Basis Derivative Items" means any item of income, deduction, gain
or loss included in the determination of Net Income or Net Loss that is computed
with reference to the Carrying Value of an Adjusted Property (e.g.,
depreciation, depletion, or gain or loss with respect to an Adjusted Property).
"Book-Down Event" means an event which triggers a negative adjustment
to the Capital Accounts of the Partners pursuant to Section 5.6(d).
-5-
"Book-Tax Disparity" means with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Section 5.5 and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
"Book-Up Event" means an event which triggers a positive adjustment to
the Capital Accounts of the Partners pursuant to Section 5.6(d).
"Business Day" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States of
America or the states of New York or Wyoming shall not be regarded as a Business
Day.
"Capital Account" means the capital account maintained for a Partner
pursuant to Section 5.6. The "Capital Account" of a Partner in respect of a
Partnership Security or any other specified interest in the Partnership shall be
the amount which such Capital Account would be if such Partnership Security or
any other specified interest in the Partnership were the only interest in the
Partnership held by a Partner from and after the date on which such Partnership
Security or any other specified interest in the Partnership was first issued.
The Capital Account in respect of an Outstanding Deferred Participation Unit
shall at all times be zero.
"Capital Contribution" means any cash, cash equivalents or the Net
Agreed Value of Contributed Property that a Partner contributes to the
Partnership pursuant to this Agreement, the Contribution and Conveyance
Agreement or the Contribution Agreement.
"Capital Improvement" means any (a) addition or improvement to the
capital assets owned by any Group Member or (b) acquisition of existing, or the
construction of new, capital assets (including, without limitation, coal mines,
preparation plants and related assets), in each case if such addition,
improvement, acquisition or construction is made for the purpose of increasing
the operating capacity or net revenues of the Partnership Group from the
operating capacity or net revenues of the Partnership Group existing immediately
prior to such addition, improvement, acquisition or construction.
"Capital Interests" means, with respect to any corporation, any and all
shares, participations, rights or other equivalent interests in the capital of
the corporation, and with respect to any partnership or limited liability
company, any and all partnership or membership interests (whether general or
limited) and any other interests or participations that confer on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, such partnership or limited liability company.
"Capital Surplus" has the meaning assigned to such term in Section
6.3(a).
"Carrying Value" means (a) with respect to a Contributed Property, the
Agreed Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions charged to the Partners' and
Assignees' Capital Accounts in respect of such Contributed Property, and (b)
with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
Notwithstanding the previous sentence, the Carrying Value of any property shall
be adjusted from time to time in accordance with Section 5.6 and to reflect
changes, additions or other adjustments to the Carrying Value for dispositions
and acquisitions of Partnership properties, as deemed appropriate by the General
Partner.
-6-
"Cause" means a court of competent jurisdiction has entered a final,
non-appealable judgment finding the General Partner liable for actual fraud,
gross negligence or willful or wanton misconduct in its capacity as general
partner of the Partnership.
"Certificate" means a certificate (a) substantially in the form of
Exhibit A to this Agreement with respect to Common Units, (b) substantially in
the form of Exhibit B to this Agreement with respect to Subordinated Units, (c)
substantially in the form of Exhibit C to this Agreement with respect to
Deferred Participation Units, (d) issued in global or book entry form in
accordance with the rules and regulations of the Depositary, (e) in such other
form as may be adopted by the General Partner in its discretion, issued by the
Partnership evidencing the ownership of one or more Common Units, Subordinated
Units or Deferred Participation Units or (f) in such other form as may be
adopted by the General Partner in its discretion, issued by the Partnership
evidencing ownership of one or more other Partnership Securities.
"Certificate of Limited Partnership" means the Certificate of Limited
Partnership of the Partnership filed with the Secretary of State of the State of
Delaware as referenced in Section 2.7, as such Certificate of Limited
Partnership may be amended, supplemented or restated from time to time.
"Citizenship Certification" means a properly completed certificate in
such form as may be specified by the General Partner by which an Assignee or a
Limited Partner certifies that he (and if he is a nominee holding for the
account of another Person, that to the best of his knowledge such other Person)
is an Eligible Citizen.
"Claim" has the meaning assigned to such term in Section 7.12(c).
"Closing Price" means for any Trading Day, the last sale price on such
day, regular way, or in case no such sale takes place on such day, the average
of the closing bid and asked prices on such day, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted for trading on the principal National
Securities Exchange (other than the Nasdaq Stock Market) on which such Limited
Partner Interests of such class are listed or admitted to trading or, if such
Limited Partner Interests of such class are not listed or admitted to trading on
any National Securities Exchange (other than the Nasdaq Stock Market), the last
quoted price on such day or, if not so quoted, the average of the high bid and
low asked prices on such day in the over-the-counter market, as reported by the
Nasdaq Stock Market or such other system then in use, or, if on any such day
such Limited Partner Interests of such class are not quoted by any such
organization, the average of the closing bid and asked prices on such day as
furnished by a professional market maker making a market in such Limited Partner
Interests of such class selected by the General Partner, or if on any such day
no market maker is making a market in such Limited Partner Interests of such
class, the fair value of such Limited Partner Interests on such day as
determined reasonably and in good faith by the General Partner.
-7-
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time. Any reference herein to a specific section or sections
of the Code shall be deemed to include a reference to any corresponding
provision of successor law.
"Combined Interest" has the meaning assigned to such term in Section
11.3(a).
"Commission" means the United States Securities and Exchange
Commission.
"Common Capital Account" has the meaning assigned to such term in
Section 5.6(e)(i).
"Common Unit" means a Partnership Security representing a fractional
part of the Partnership Interests of all Limited Partners and Assignees and of
the General Partner (other than the Partnership Interests represented by
Deferred Participation Units, General Partner Units and Incentive Distribution
Rights) and having the rights and obligations specified with respect to Common
Units in this Agreement. The term "Common Unit" does not refer to a Subordinated
Unit prior to its conversion into a Common Unit pursuant to Section 5.10.
"Common Unit Arrearage" means, with respect to any Common Unit,
whenever issued, and as to any Quarter, the excess, if any, of (a) the Minimum
Quarterly Distribution with respect to a Common Unit in respect of such Quarter
over (b) the sum of all Available Cash distributed with respect to a Common Unit
in respect of such Quarter pursuant to Section 6.4(a)(i)(A) or Section
6.4(b)(i), as applicable. Any Common Unit Arrearage shall accrue without
interest.
"Conflicts Committee" means a committee of the Board of Directors of
the General Partner composed entirely of two or more directors who are
"independent" in accordance with the rules (and exclusions thereto) of the
principal National Securities Exchange on which the Common Units trade.
"Contributed Property" means each property or other asset, in such form
as may be permitted by the Delaware Act, but excluding cash, contributed to the
Partnership (or deemed contributed to a new partnership on termination of the
Partnership pursuant to Section 708 of the Code). Once the Carrying Value of a
Contributed Property is adjusted pursuant to Section 5.6(d), such property shall
no longer constitute a Contributed Property, but shall be deemed an Adjusted
Property.
"Contribution Agreement" has the meaning assigned to such term in the
recitals hereto.
"Contribution and Conveyance Agreement" means that certain
Contribution, Conveyance and Assumption Agreement, dated as of the Initial
Closing Date, among the General Partner, the Partnership and the Operating
Partnership, together with certain other instruments contemplated or referenced
thereunder.
"Contributors" has the meaning assigned to such term in the recitals
hereto.
-8-
"Cumulative Common Unit Arrearage" means, with respect to any Common
Unit, whenever issued, and as of the end of any Quarter, the excess, if any, of
(a) the sum resulting from adding together the Common Unit Arrearage as to an
Initial Common Unit for each of the Quarters ending on or before the last day of
such Quarter, over (b) the sum of any distributions theretofore made with
respect to an Initial Common Unit pursuant to Section 6.4(a)(i)(B) or Section
6.4(b)(ii), as the case may be, and Section 6.5(b) (including any distributions
to be made in the last of such Quarter). Any Cumulative Common Unit Arrearage
shall accrue without interest.
"Curative Allocation" means any allocation of an item of income, gain,
deduction, loss or credit pursuant to the provisions of Section 6.1(d)(xi).
"Current Market Price" means, as of any date of any class of Limited
Partner Interests listed or admitted to trading on any National Securities
Exchange, the average of the daily Closing Prices per limited partner interest
of such class for the 20 consecutive Trading Days immediately prior to such
date.
"Deferred Participation Unit" means a Limited Partner Interest issued
to the Contributors by the Partnership in connection with their contribution to
the Partnership of the Triton Interests pursuant to Section 5.4 and any Limited
Partner Interests designated as such issued thereafter. A Deferred Participation
Unit shall confer upon the holder thereof only the rights and obligations
specifically provided in this Agreement with respect to Deferred Participation
Units and no other rights otherwise available to or other obligations of a
holder of a Partnership Interest shall be conferred upon the holder thereof.
Notwithstanding anything in this Agreement to the contrary, the holder of a
Deferred Participation Unit shall not be entitled to vote such Deferred
Participation Unit on any Partnership matter except as expressly set forth in
this Agreement nor will such holder be entitled to any distributions from the
Partnership.
"Delaware Act" means the Delaware Revised Uniform Limited Partnership
Act, 6 Del C. Sections 17-101, et seq., as amended, supplemented or restated
from time to time, and any successor to such statute.
"Departing Partner" means a former General Partner from and after the
effective date of any withdrawal or removal of such former General Partner
pursuant to Section 11.1 or 11.2.
"Depositary" means, with respect to any Units issued in global or book
entry form, The Depository Trust Company and its successors and permitted
assigns.
"Economic Risk of Loss" has the meaning set forth in Treasury
Regulation Section 1.752-2(a).
"Effective Date" has the meaning assigned to such term in the recitals
hereto.
"Eligible Citizen" means a Person qualified to own interests in real
property and federal coal leases in jurisdictions in which any Group Member does
business or proposes to do business from time to time, and whose status as a
Limited Partner or Assignee does not or would not subject such Group Member to a
significant risk of cancellation or forfeiture of any of its properties, coal
leases or any interests therein.
-9-
"Estimated Maintenance Capital Expenditures" means an estimate made in
good faith by the board of directors of the General Partner (with the
concurrence of the Conflicts Committee) of the average quarterly Maintenance
Capital Expenditures that the Partnership will incur over the long term. The
board of directors of the General Partner will be permitted to make such
estimate in any manner it determines reasonable in its sole discretion. The
estimate will be made annually and whenever an event occurs that is likely to
result in a material adjustment to the amount of Maintenance Capital
Expenditures on a long term basis. The Partnership shall disclose to its
Partners the amount of Estimated Maintenance Capital Expenditures. Except as
provided in the definition of Subordination Period, any adjustments to Estimated
Maintenance Capital Expenditures shall be prospective only.
"Event of Withdrawal" has the meaning assigned to such term in Section
11.1(a).
"Expansion Capital Expenditures" means cash capital expenditures for
Acquisitions or Capital Improvements. Where cash capital expenditures are made
in part for Acquisitions or Capital Improvements and in part for other purposes,
the General Partner's good faith allocation thereof between the portion used for
Acquisitions or Capital Improvements and the portion used for other purposes
shall be conclusive. Expansion Capital Expenditures shall not include
Maintenance Capital Expenditures.
"First Deferred Target Distribution" means $0.61 per Unit per Quarter,
subject to adjustment in accordance with Sections 6.6 and 6.10.
"First Liquidation Target Amount" has the meaning assigned to such term
in Section 6.1(c)(i)(D).
"First Target Distribution" means $0.52 per Unit per Quarter (or, with
respect to the period commencing on the Initial Closing Date and ending on March
31, 2000, it means the product of $0.52 multiplied by a fraction of which the
numerator is the number of days in such period, and of which the denominator is
92), subject to adjustment in accordance with Sections 6.6 and 6.9.
"Fourth Deferred Target Distribution" means $0.70 per Unit per Quarter,
subject to adjustment in accordance with Sections 6.6 and 6.10.
"General Partner" means Atlas Natural Resources GP, LLC and its
successors and permitted assigns as general partner of the Partnership.
"General Partner Interest" means the ownership interest of the General
Partner in the Partnership (in its capacity as a general partner without
reference to any Limited Partner Interest held by it) which is evidenced by
General Partner Units and includes any and all benefits to which the General
Partner is entitled as provided in this Agreement, together with all obligations
of the General Partner to comply with the terms and provisions of this
Agreement.
"General Partner Unit" means a Partnership Security representing a
fractional part of the General Partner Interest and having the rights and
obligations specified with respect to General Partner Units in this Agreement.
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"Group" means a Person that with or through any of its Affiliates or
Associates has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting (except voting pursuant to a revocable proxy or
consent given to such Person in response to a proxy or consent solicitation made
to 10 or more Persons) or disposing of any Partnership Securities with any other
Person that beneficially owns, or whose Affiliates or Associates beneficially
own, directly or indirectly, Partnership Securities.
"Group Member" means a member of the Partnership Group.
"Holder" as used in Section 7.12, has the meaning assigned to such term
in Section 7.12(a).
"Incentive Distribution Right" means a non-voting Limited Partner
Interest issued to the General Partner in connection with the transfer of
substantially all of its general partner interest in the Operating Partnership
to the Partnership pursuant to Section 5.2. An Incentive Distribution Right will
confer upon the holder thereof only the rights and obligations specifically
provided in this Agreement with respect to Incentive Distribution Rights (and no
other rights otherwise available to or other obligations of a holder of a
Partnership Interest). Notwithstanding anything in this Agreement to the
contrary, the holder of an Incentive Distribution Right shall not be entitled to
vote such Incentive Distribution Right on any Partnership matter except as may
otherwise be required by law.
"Incentive Distributions" means any amount of cash distributed to the
holder of the Incentive Distribution Rights pursuant to Sections
6.4(a)(i)(D)-(F) and 6.4(b)(iii)-(v).
"Indemnified Persons" has the meaning assigned to such term in Section
7.12(c).
"Indemnitee" means (a) the General Partner, (b) any Departing Partner,
(c) any Person who is or was an Affiliate of the General Partner or any
Departing Partner, (d) any Person who is or was a member, partner, officer,
director, employee, agent or trustee of any Group Member, the General Partner or
any Departing Partner or any Affiliate of any Group Member, the General Partner
or any Departing Partner, (e) any Person who is or was serving at the request of
the General Partner or any Departing Partner or any Affiliate of the General
Partner or any Departing Partner as an officer, director, employee, agent or
trustee of any Group member, the General Partner or any Departing Partner or any
Affiliate of any Group Member, the General Partner or any Departing Partner, and
(f) any Person who is or was serving at the request of the General Partner or
any Departing Partner or any Affiliate of the General Partner or any Departing
Partner as an officer, director, employee, member, partner, agent, fiduciary or
trustee of another Person; provided, that a Person shall not be an Indemnitee by
reason of providing, on a fee-for-services basis, trustee, fiduciary or
custodial services.
"Initial Closing Date" means February 2, 2000.
"Initial Common Units" means the Common Units sold in the Initial
Offering.
"Initial Limited Partners" means the General Partner (with respect to
the Common Units, Initial Subordinated Units and the Incentive Distribution
Rights received by it pursuant to Section 5.2) and the Underwriters, in each
case upon being admitted to the Partnership in accordance with Section 10.1.
-11-
"Initial Offering" means the initial offering and sale of Initial
Common Units to the public, as described in the Registration Statement.
"Initial Subordinated Unit" means a Unit having the rights and
obligations specified with respect to "Subordinated Units" in the Amended
Partnership Agreement. On the Effective Date, all Outstanding Initial
Subordinated Units automatically converted into Common Units. Immediately upon
such conversion, the holder of a converted Initial Subordinated Unit became a
Unitholder of an Outstanding Common Unit with all of the rights and obligations
of a Unitholder holding a Common Unit hereunder. The term Initial Subordinated
Unit as used herein does not include a Subordinated Unit.
"Initial Subordination Period" means the period that commenced on the
Initial Closing Date and ended upon the Effective Date.
"Initial Unit Price" means (a) with respect to the Common Units and the
Initial Subordinated Units, the initial public offering price per Common Unit at
which the Underwriters offered the Initial Common Units to the public for sale
as set forth on the cover page of the prospectus included as part of the
Registration Statement and first issued at or after the time the Registration
Statement first became effective or (b) with respect to the Subordinated Units,
the Deferred Participation Units or any other class or series of Units, the
price per Unit at which such class or series of Units is initially sold by the
Partnership, as determined by the General Partner, in each case adjusted as the
General Partner determines to be appropriate to give effect to any distribution,
subdivision or combination of Units.
"Interim Capital Transactions" means the following transactions if they
occur prior to the Liquidation Date: (a) borrowings, refinancings or refundings
of indebtedness and sales of debt securities (other than Working Capital
Borrowings and other than for items purchased on open account in the ordinary
course of business) by any Group Member; (b) sales of equity interests by any
Group Member (including the Common Units sold to the Underwriters pursuant to
the exercise of their over-allotment option); and (c) sales or other voluntary
or involuntary dispositions of any assets of any Group Member other than (i)
sales or other dispositions of inventory, accounts receivable and other assets
in the ordinary course of business, and (ii) sales or other dispositions of
assets as part of normal retirements or replacements.
"Issue Price" means the price at which a Unit is purchased from the
Partnership, after taking into account any sales commission or underwriting
discount charged to the Partnership.
"Lien" means, with respect to any Outstanding Incentive Distribution
Rights held by the General Partner or its Affiliates, any interest in all or a
portion of the Outstanding Incentive Distribution Rights that secures an
obligation or debt owed to, or a claim by, a Person other than the holder of
such Outstanding Incentive Distribution Rights, whether such interest is based
on common law, statute or contract (including the security interest arising from
a security agreement, mortgage, pledge, conditional sale or trust receipt or a
lease, consignment or bailment for security purposes) which in each case secures
a monetary debt or obligation of the holder of such Outstanding Incentive
Distribution Rights.
-12-
"Limited Partner" means, unless the context otherwise requires, (a) the
Organizational Limited Partner prior to its withdrawal from the Partnership,
each Initial Limited Partner, each Substituted Limited Partner, each Additional
Limited Partner and any Partner upon the change of its status from General
Partner to Limited Partner pursuant to Section 11.3 or (b) solely for purposes
of Articles V, VI, VII and IX and Sections 12.3 and 12.4, each Assignee;
provided, however, that when the term "Limited Partner" is used herein in the
context of any vote or other approval, including without limitation Articles
XIII and XIV, such term shall not, solely for such purpose, include any holder
of an Incentive Distribution Right or Deferred Participation Unit except as
expressly set forth in this Agreement or as may otherwise be required by law.
"Limited Partner Interest" means the ownership interest of a Limited
Partner or Assignee in the Partnership, which may be evidenced by Common Units,
Subordinated Units, Deferred Participation Units, Incentive Distribution Rights
or other Partnership Securities or a combination thereof or interest therein and
includes any and all benefits to which such Limited Partner or Assignee is
entitled as provided in this Agreement, together with all obligations of such
Limited Partner or Assignee to comply with the terms and provisions of this
Agreement; provided, however, a Limited Partner Interest does not include any
other options, rights, warrants and appreciation rights relating to or
convertible into an equity interest in the Partnership; and provided further,
that when the term Limited Partner Interest is used herein in the context of any
vote or other approval, including without limitation Articles XIII and XIV, such
term shall not, solely for such purpose, include any holder of an Incentive
Distribution Right or Deferred Participation Unit except as expressly set forth
in this Agreement or as may otherwise be required by law. A Limited Partner
Interest shall not include any General Partner Units.
"Liquidation Date" means (a) in the case of an event giving rise to the
dissolution of the Partnership of the type described in clauses (a) and (b) of
the first sentence of Section 12.2, the date on which the applicable time period
during which the holders of Outstanding Units have the right to elect to
reconstitute the Partnership and continue its business has expired without such
an election being made, and (b) in the case of any other event giving rise to
the dissolution of the Partnership, the date on which such event occurs.
"Liquidator" means one or more Persons selected by the General Partner
to perform the functions described in Section 12.3 as liquidating trustee of the
Partnership within the meaning of the Delaware Act.
"Maintenance Capital Expenditures" means cash capital expenditures
(including expenditures for the addition or improvement to the capital assets
owned by any Group Member or for the acquisition of existing, or the
construction of new, capital assets (including, without limitation, coal mines,
pipelines, compressor stations and related assets)) if such expenditure is made
to maintain the operating capacity of the capital assets of the Partnership
Group, as such assets existed at the time of such expenditure. Where cash
capital expenditures are made in part to maintain the operating capacity
referred to in the immediately preceding sentence and in part for other
purposes, the General Partner's good faith allocation thereof between the
portion used to maintain such operating capacity and the portion used for other
purposes shall be conclusive. Maintenance Capital Expenditures shall not include
Expansion Capital Expenditures.
-13-
"Master Natural Gas Gathering Agreement" means that Master Natural Gas
Gathering Agreement, dated as of the Initial Closing Date, among Atlas America,
Resource Energy, Viking Resources, the Partnership and the Operating
Partnership, as amended and restated as of the Effective Date, and as such
agreement may be amended, supplemented or restated from time to time.
"Merger Agreement" has the meaning assigned to such term in Section
14.1.
"Minimum Quarterly Distribution" means $0.42 per Unit per Quarter (or
with respect to the period commencing on the Initial Closing Date and ending on
March 31, 2000, it means the product of $0.42 multiplied by a fraction of which
the numerator is the number of days in such period and of which the denominator
is 92), subject to adjustment in accordance with Sections 6.6 and 6.10.
"National Securities Exchange" means an exchange registered with the
Commission under Section 6(a) of the Securities Exchange Act of 1934, as
amended, supplemented or restated from time to time, and any successor to such
statute, or the Nasdaq Stock Market, Inc. or any successor thereto.
"Net Agreed Value" means, (a) in the case of any Contributed Property,
the Agreed Value of such property reduced by any liabilities either assumed by
the Partnership upon such contribution or to which such property is subject when
contributed, and (b) in the case of any property distributed to a Partner or
Assignee by the Partnership, the Partnership's Carrying Value of such property
(as adjusted pursuant to Section 5.6(d)(ii)) at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner or
Assignee upon such distribution or to which such property is subject at the time
of distribution, in either case, as determined under Section 752 of the Code.
"Net Income" means, for any taxable period, the excess, if any, of the
Partnership's items of income and gain (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable period over the Partnership's items of loss and deduction (other
than those items taken into account in the computation of Net Termination Gain
or Net Termination Loss) for such taxable period. The items included in the
calculation of Net Income shall be determined in accordance with Section 5.6(b)
and shall not include any items specially allocated under Section 6.1(d);
provided that the determination of the items that have been specially allocated
under Section 6.1(d) shall be made as if Section 6.1(d)(xii) were not in this
Agreement.
"Net Loss" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable period over the Partnership's items of income and gain (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable period. The items included in the calculation
of Net Loss shall be determined in accordance with Section 5.6(b) and shall not
include any items specially allocated under Section 6.1(d); provided that the
determination of the items that have been specially allocated under Section
6.1(d) shall be made as if Section 6.1(d)(xii) were not in this Agreement.
-14-
"Net Positive Adjustments" means, with respect to any Partner, the
excess, if any, of the total positive adjustments over the total negative
adjustments made to the Capital Account of such Partner pursuant to Book-Up
Events and Book-Down Events.
"Net Termination Gain" means, for any taxable year, the sum, if
positive, of all items of income, gain, loss or deduction recognized by the
Partnership after the Liquidation Date or any Unrealized Gain deemed recognized
by the Partnership pursuant to Section 5.6(d). The items included in the
determination of Net Termination Gain shall be determined in accordance with
Sections 5.6(b) and 5.6(d) and shall not include any items of income, gain or
loss specially allocated under Section 6.1(d).
"Net Termination Loss" means, for any taxable year, the sum, if
negative, of all items of income, gain, loss or deduction recognized by the
Partnership after the Liquidation Date or any Unrealized Loss deemed recognized
by the Partnership pursuant to Section 5.6(d). The items included in the
determination of Net Termination Loss shall be determined in accordance with
Sections 5.6(b) and 5.6(d) and shall not include any items of income, gain or
loss specially allocated under Section 6.1(d).
"Non-citizen Assignee" means a Person whom the General Partner has
determined in its discretion does not constitute an Eligible Citizen and as to
whose Partnership Interest the General Partner has become the Substituted
Limited Partner, pursuant to Section 4.9.
"Nonrecourse Built-in Gain" means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or pledge
securing a Nonrecourse Liability, the amount of any taxable gain that would be
allocated to the Partners pursuant to Sections 6.2(b)(i)(A), 6.2(b)(ii)(A) and
6.2(b)(iii) if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.
"Nonrecourse Deductions" means any and all items of loss, deduction or
expenditures (described in Section 705(a)(2)(B) of the Code) that, in accordance
with the principles of Treasury Regulation Section 1.704-2(b), are attributable
to a Nonrecourse Liability.
"Nonrecourse Liability" has the meaning set forth in Treasury
Regulation Section 1.752-1(a)(2).
"Notice of Election to Purchase" has the meaning assigned to such term
in Section 15.1(b).
"Operating Expenditures" means all Partnership Group expenditures,
including, but not limited to, taxes, reimbursements of the General Partner,
repayment of Working Capital Borrowings, debt service payments and capital
expenditures, subject to the following:
(a) Payments (including prepayments) of principal of and premium on
indebtedness other than Working Capital Borrowings shall not constitute
Operating Expenditures;
-15-
(b) Operating Expenditures shall not include Expansion Capital
Expenditures, or actual Maintenance Capital Expenditures but shall include
Estimated Maintenance Capital Expenditures; and
(c) Operating Expenditures shall not include (i) payment of transaction
expenses relating to Interim Capital Transactions or (ii) distribution to
partners.
"Operating Partnership" means Atlas Natural Resources Operating
Partnership, L.P., a Delaware limited partnership, and any successors thereto;
provided, however, that unless the context requires otherwise, any references
herein to the term Operating Partnership shall also be deemed to include, to the
extent of the Partnership's ownership therein, any partnerships, limited
liability companies, joint ventures or other entities formed or acquired by the
Partnership in connection with the conduct by the Partnership of the business
and activities permitted by the terms of Section 2.4, including, without
limitation, Triton Coal Company, LP.
"Operating Partnership Agreement" means the Limited Partnership
Agreement of the Operating Partnership, as it may be amended, supplemented or
restated from time to time; provided, however, that unless the context otherwise
requires, any references to the term Operating Partnership Agreement shall also
be deemed to include the partnership agreement or other governing charter
agreement for any partnership, limited liability company, joint venture or other
entity formed or acquired by the Partnership in connection with the conduct by
the Partnership of business and activities permitted by the terms of Section
2.4, including, without limitation, Triton Coal Company, LP.
"Operating Surplus" means, with respect to any period ending prior to
the Liquidation Date, on a cumulative basis and without duplication,
(a) the sum of:
(i) all cash and cash equivalents of the Partnership Group on
hand as of the close of business on the Initial Closing Date;
(ii) all cash receipts of the Partnership Group for the period
beginning on the Initial Closing Date and ending with the last day of
such period, other than cash receipts from Interim Capital Transactions
(except to the extent specified in Section 6.5); and
(iii) all cash receipts of the Partnership Group after the end
of such period but on or before the date of determination of Operating
Surplus with respect to such period resulting from Working Capital
Borrowings,
(b) less the sum of:
(i) Operating Expenditures for the period beginning on the
Initial Closing Date and ending with the last day of such period; and
(ii) the amount of cash reserves that is necessary or
advisable in the reasonable discretion of the General Partner to
provide funds for future Operating Expenditures.
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Notwithstanding the foregoing, Operating Surplus with respect to the Quarter in
which the Liquidation Date occurs and any subsequent Quarter shall equal zero.
Taxes paid by the Partnership on behalf of, or amounts withheld with respect to,
all or less than all of the Partners shall not be considered cash operating
expenditures of the Partnership that reduce Operating Surplus, but the payment
or withholding thereof shall be deemed to be a distribution of Available Cash to
such Partners. Alternatively, in the discretion of the General Partner, such
taxes (if pertaining to all Partners) may be considered to be cash operating
expenditures of the Partnership which reduce Operating Surplus, but the payment
or withholding thereof shall not be deemed to be a distribution of Available
Cash to such Partners.
"Opinion of Counsel" means a written opinion of counsel (who may be
regular counsel to the Partnership or the General Partner or any of their
Affiliates) acceptable to the General Partner in its reasonable discretion.
"Organizational Limited Partner" means Resource Energy in its capacity
as the organizational limited partner of the Partnership pursuant to this
Agreement.
"Outstanding" means:
(a) with respect to Partnership Securities, all Partnership Securities
that are issued by the Partnership and reflected as outstanding on the
Partnership's books and records as of the date of determination; provided,
however, that if at any time any Person or Group (other than the General Partner
or its Affiliates) beneficially owns 20% or more of any Outstanding Partnership
Securities of any class then Outstanding, all Partnership Securities owned by
such Person or Group shall not be voted on any matter and shall not be
considered to be Outstanding when:
(i) sending notices of a meeting of Limited Partners to vote
on any matter (unless otherwise required by law);
(ii) calculating required votes;
(iii) determining the presence of a quorum; or
(iv) for other similar purposes under this Agreement;
except that Common Units so owned shall be considered to be Outstanding for
purposes of Section 11.1(b)(iv) (such Common Units shall not, however, be
treated as a separate class or series of Partnership Securities for purposes of
this Agreement); and
(b) the foregoing limitation shall not apply to:
(i) any Person or Group who acquired 20% or more of any
Outstanding Partnership Securities of any class then Outstanding
directly from the General Partner or its Affiliates;
(ii) any Person or Group who acquired 20% or more of any
Outstanding Partnership Securities of any class then Outstanding
directly or indirectly from a Person or Group described in clause
(b)(i) provided that the General Partner shall have notified such
Person or Group in writing that such limitation shall not apply; and
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(iii) the Contributors or any Person that is a direct or
indirect beneficial owner of one or more of the Contributors as of the
Effective Date; provided, however, that this clause (b)(iii) applies
only with respect to those Partnership Securities (and any Partnership
Securities into which such securities may convert) issued pursuant to
the Contribution Agreement and held by such Contributors or Persons.
"Over-Allotment Option" means the over-allotment option granted to the
Underwriters by the Partnership pursuant to the Underwriting Agreement.
"Parity Units" means Common Units and all other Units having rights to
distributions or in liquidation ranking on a parity with the Common Units.
"Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Treasury Regulation Section 1.704-2(i)(2).
"Partner Nonrecourse Deductions" means any and all items of loss,
deduction or expenditure (including, without limitation, any expenditure
described in Section 705(a)(2)(B) of the Code) that, in accordance with the
principles of Treasury Regulation Section 1.704-2(i), are attributable to a
Partner Nonrecourse Debt.
"Partners" means the General Partner and the Limited Partners.
"Partnership" means Atlas Natural Resources, L.P., a Delaware limited
partnership, and any successors thereto.
"Partnership Group" means the Partnership, any Operating Partnership
and any Subsidiary of any such entity, treated as a single consolidated entity.
"Partnership Interest" means an interest in the Partnership, which
shall include the General Partner Interest and Limited Partner Interests.
"Partnership Minimum Gain" means that amount determined in accordance
with the principles of Treasury Regulation Section 1.704-2(d).
"Partnership Security" means any class or series of equity interest in
the Partnership, including, without limitation, Common Units, Subordinated
Units, General Partner Units, Deferred Participation Units and Incentive
Distribution Rights; provided, however, a "Partnership Security" does not
include any other options, rights, warrants and appreciation rights relating to
or convertible into an equity interest in the Partnership.
"Percentage Interest" means as of any date of determination:
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(a) as to any Unitholder or Assignee holding Units, the product
obtained by multiplying (i) 100% less the percentage applicable to clause (b) by
(ii) the quotient obtained by dividing (A) the number of Units held by such
Unitholder or Assignee by (B) the total number of all Outstanding Units; and
(b) as to the holders of additional Partnership Securities issued by
the Partnership in accordance with Section 5.7, the percentage established as a
part of such issuance.
The Percentage Interests with respect to an Incentive Distribution Right and a
Deferred Participation Unit shall at all times be zero.
"Person" means an individual or a corporation, limited liability
company, partnership, joint venture, trust, unincorporated organization,
association, government agency or political subdivision thereof or other entity.
"Per Unit Capital Amount" means, as of any date of determination, the
Capital Account, stated on a per Unit basis, underlying any Unit held by a
Person other than the General Partner or any Affiliate of the General Partner
who holds Units.
"Per Unit Capital Ratio" means, as of any date of determination, the
ratio that the Per Unit Capital Amount for Common Units bears to the Per Unit
Capital Amount for Subordinated Units.
"Pro Rata" means (a) when modifying Units or any class thereof,
apportioned equally to each such Unit, (b) when modifying Unitholders, Partners
or Assignees, apportioned among such Unitholders, Partners or Assignees in
accordance with their relative Percentage Interests and (c) when modifying
holders of Incentive Distribution Rights or Deferred Participation Units,
apportioned equally among such holders in accordance with the relative number of
Incentive Distribution Rights or Deferred Participation Units held by each such
holder.
"Purchase Date" means the date determined by the General Partner as the
date for purchase of all Outstanding Units of a certain class (other than Units
owned by the General Partner and its Affiliates) pursuant to Article XV.
"Quarter" means, unless the context requires otherwise, a fiscal
quarter of the Partnership.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Section 734 or Section
743 of the Code) upon the disposition of any property or asset of the
Partnership, which gain is characterized as ordinary income because it
represents the recapture of deductions previously taken with respect to such
property or asset.
"Record Date" means the date established by the General Partner for
determining (a) the identity of the Record Holders entitled to notice of, or to
vote at, any meeting of Limited Partners or entitled to vote by ballot or give
approval of Partnership action in writing without a meeting or entitled to
exercise rights in respect of any lawful action of Limited Partners or (b) the
identity of Record Holders entitled to receive any report or distribution or to
participate in any offer.
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"Record Holder" means the Person in whose name a Common Unit is
registered on the books of the Transfer Agent as of the opening of business on a
particular Business Day, or with respect to other Partnership Securities, the
Person in whose name any such other Partnership Security is registered on the
books which the General Partner has caused to be kept as of the opening of
business on such Business Day.
"Redeemable Interests" means any Partnership Interests for which a
redemption notice has been given, and has not been withdrawn, pursuant to
Section 4.10.
"Registration Statement" means the Registration Statement on Form S-1
(Registration No. 333-85193) as it has been or as it may be amended or
supplemented from time to time, filed by the Partnership with the Commission
under the Securities Act to register the offering and sale of the Initial Common
Units in the Initial Offering.
"Remaining Net Positive Adjustments" means as of the end of any taxable
period:
(a) with respect to the Unitholders holding Common Units, General
Partner Units or Subordinated Units, the excess of (i) the Net Positive
Adjustments of the Unitholders holding Common Units, General Partner Units or
Subordinated Units as of the end of such period over (ii) the sum of those
Partners' Share of Additional Book Basis Derivative Items for each prior taxable
period;
(b) with respect to the holders of Incentive Distribution Rights, the
excess of (i) the Net Positive Adjustments of the holders of Incentive
Distribution Rights as of the end of such period over (ii) the sum of the Share
of Additional Book Basis Derivative Items of the holders of the Incentive
Distribution Rights for each prior taxable period.
"Required Allocations" means (a) any limitation imposed on any
allocation of Net Losses or Net Termination Losses under Section 6.1(b) or
6.1(c)(ii) and (b) any allocation of an item of income, gain, loss or deduction
pursuant to Section 6.1(d)(i), 6.1(d)(ii), 6.1(d)(iv), 6.1(d)(vii) or
6.1(d)(ix).
"Residual Gain" or "Residual Loss" means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of a Contributed Property
or Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 6.2(b)(i)(A) or 6.2(b)(ii)(A), respectively, to eliminate
Book-Tax Disparities.
"Resource Energy" means Resource Energy, Inc., a Delaware corporation
and an Affiliate of Atlas America.
"Second Deferred Target Distribution" means $0.64 per Unit per Quarter,
subject to adjustment in accordance with Sections 6.6 and 6.10.
"Second Target Distribution" means $0.60 per Unit per Quarter (or, with
respect to the period commencing on the Initial Closing Date and ending on
December 31, 1999, it means the product of $0.60 multiplied by a fraction of
which the numerator is equal to the number of days in such period and of which
the denominator is 92), subject to adjustment in accordance with Sections 6.6
and 6.10.
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"Securities Act" means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to such statute.
"Share of Additional Book Basis Derivative Items" means in connection
with any allocation of Additional Book Basis Derivative Items for any taxable
period, (a) with respect to the Unitholders holding Common Units, General
Partner Units or Subordinated Units, the amount that bears the same ratio to
such Additional Book Basis Derivative Items as the Unitholders' Remaining Net
Positive Adjustments as of the end of such period bears to the Aggregate
Remaining Net Positive Adjustments as of that time, and (b) with respect to the
Partners holding Incentive Distribution Rights, the amount that bears the same
ratio to such Additional Book Basis Derivative Items as the Remaining Net
Positive Adjustments of the Partners holding the Incentive Distribution Rights
as of the end of such period bears to the Aggregate Remaining Net Positive
Adjustments as of that time.
"Special Approval" means approval by a majority of the members of the
Conflicts Committee.
"Subordinated Unit" means a Unit representing a fractional part of the
Partnership Interests of all Limited Partners and Assignees (other than of
holders of the Incentive Distribution Rights) and having the rights and
obligations specified with respect to Subordinated Units in this Agreement. The
term "Subordinated Unit" as used herein does not include a Deferred
Participation Unit prior to its conversion into a Subordinated Unit pursuant to
Section 5.11.
"Subordination Period" means the period commencing on the Effective
Date and ending when no Subordinated Units or Deferred Participation Units are
Outstanding. The Subordination Period may exist without the presence of a Unit
Subordination Period.
"Subsidiary" means, with respect to any Person, (a) a corporation of
which more than 50% of the voting power of shares of Capital Interests entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors or other governing body of such corporation is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person or a combination thereof, (b) a partnership (whether
general or limited) in which such Person or a Subsidiary of such Person is, at
the date of determination, a general or limited partner of such partnership, but
only if more than 50% of the Capital Interests of such partnership (considering
all of the partnership interests of the partnership as a single class) is owned,
directly or indirectly, at the date of determination, by such Person, by one or
more Subsidiaries of such Person, or a combination thereof, or (c) any other
Person (other than a corporation or a partnership) in which such Person, one or
more Subsidiaries of such Person, or a combination thereof, directly or
indirectly, at the date of determination, has (i) at least a majority ownership
interest or (ii) the power to elect or direct the election of a majority of the
directors or other governing body of such Person.
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"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 10.2 in place of and with
all the rights of a Limited Partner and who is shown as a Limited Partner on the
books and records of the Partnership.
"Surviving Business Entity" has the meaning assigned to such term in
Section 14.2(b).
"Third Deferred Target Distribution" means $0.67 per Unit per Quarter,
subject to adjustment in accordance with Sections 6.6 and 6.10.
"Trading Day" means a day on which the principal National Securities
Exchange on which such Limited Partner Interests of any class are listed or
admitted to trading is open for the transaction of business or, if Limited
Partner Interests of a class are not listed or admitted to trading on any
National Securities Exchange, a day on which banking institutions in New York
City generally are open.
"Tranche" has the meaning assigned to such term in Section 5.11(a).
"Transfer" has the meaning assigned to such term in Section 4.4(a).
"Transfer Agent" means such bank, trust company or other Person
(including the General Partner or one of its Affiliates) as shall be appointed
from time to time by the Partnership to act as registrar and transfer agent for
the Common Units; provided that if no Transfer Agent is specifically designated
for any other Partnership Securities, the General Partner shall act in such
capacity.
"Transfer Application" means an application and agreement for transfer
of Units in the form set forth on the back of a Certificate or in a form
substantially to the same effect in a separate instrument.
"Triton" has the meaning assigned to such term in the recitals hereto.
"Triton Interests" has the meaning assigned to such term in the
recitals hereto.
"Underwriter" means each Person named as an underwriter in Schedule I
to the Underwriting Agreement who purchases Common Units pursuant thereto.
"Underwriting Agreement" means the Underwriting Agreement dated January
27, 2000 among the Underwriters, the Partnership and certain other parties,
providing for the purchase of Common Units by such Underwriters.
"Unit" means a Partnership Security representing a fractional part of
the Partnership Interests of all Partners and Assignees and that is designated
as a "Unit" and shall include Common Units, General Partner Units, and
Subordinated Units; provided, however, that (a) each Common Unit at any time
Outstanding shall represent the same fractional part of the Partnership
Interests of all Partners and Assignees holding Common Units as each other
Common Unit, (b) each General Partner Unit at any time Outstanding shall
represent the same fractional part of the Partnership Interests of all Partners
and Assignees holding General Partner Units as each other General Partner Unit
and (c) each Subordinated Unit at any time Outstanding shall represent the same
fractional part of the Partnership Interests of all Partners and Assignees
holding Subordinated Units as each other Subordinated Unit; provided further
that a "Unit" shall not include an Incentive Distribution Right or a Deferred
Participation Unit.
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"Unitholders" means the holders of Common Units, General Partner Units
and Subordinated Units but shall not include holders of Outstanding Incentive
Distribution Rights or Deferred Participation Units.
"Unit Majority" means:
(a) during the Subordination Period, at least a majority of the
Outstanding Common Units voting as a class and at least a majority of the
Outstanding Subordinated Units voting as a class;
(b) after the end of the Subordination Period, at least a majority of
the Outstanding Common Units.
"Unit Subordination Period" means with respect to any particular
Subordinated Unit, the period commencing on the Effective Date and ending on the
first to occur of the following dates:
(a) the first day of any Quarter in respect of which:
(i) (A) distributions of Available Cash from Operating Surplus
on each of the Outstanding Common Units and Subordinated Units with
respect to each of the eight consecutive Quarters immediately preceding
such date equaled or exceeded the sum of the Minimum Quarterly
Distribution on all Outstanding Common Units and Subordinated Units
during each such Quarter and such Subordinated Unit was Outstanding
during each such Quarter; and
(B) the Adjusted Operating Surplus generated during
each of the eight consecutive Quarters immediately preceding
such date equaled or exceeded the sum of the Minimum Quarterly
Distribution on all of the Common Units and Subordinated Units
that were Outstanding during each such Quarter on a fully
diluted basis (i.e., taking into account for purposes of such
determination all Outstanding Common Units, all Outstanding
Subordinated Units, all Common Units issuable upon exercise of
employee options that have, as of the date of determination,
already vested or are scheduled to vest prior to the end of
the Quarter immediately following the Quarter with respect to
which such determination is made, and all Common Units that
have as of the date of determination, been earned by but not
yet issued to management of the Partnership in respect of
incentive compensation; provided, however, no Deferred
Participation Units nor the Subordinated Units into which they
may be converted shall be taken into account, other than those
Subordinated Units to be issued pursuant to the conversion of
the Deferred Participation Units into Subordinated Units as a
result of the distribution declared for such Quarter), plus
the related distributions on the General Partner Units and on
the general partner interest in the Operating Partnership,
during each such Quarter; and
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(ii) there are no Cumulative Common Unit Arrearages; or
(b) the first day of any Quarter in respect of which:
(i) (A) distributions of Available Cash that are deemed to be
from Operating Surplus on each of the Outstanding Common Units and
Subordinated Units with respect to each of the four consecutive
Quarters immediately preceding such date equaled or exceeded the sum of
$0.58 on all Outstanding Common Units and Subordinated Units during
each such Quarter and such Subordinated Unit was Outstanding during
each such Quarter; and
(B) the Adjusted Operating Surplus generated during
each of the four consecutive Quarters immediately preceding
such date equaled or exceeded the sum of $0.58 on all of the
Common Units and Subordinated Units that were Outstanding
during such Quarters on a fully diluted basis (i.e., taking
into account for purposes of such determination all
Outstanding Common Units, all Outstanding Subordinated Units,
all Common Units issuable upon exercise of employee options
that have, as of the date of determination, already vested or
are scheduled to vest prior to the end of the Quarter
immediately following the Quarter with respect to which such
determination is made, and all Common Units that have, as of
the date of determination, been earned by but not yet issued
to management of the Partnership in respect of incentive
compensation; provided, however, no Deferred Participation
Units nor the Subordinated Units into which they may be
converted shall be taken into account, other than those
Subordinated Units to be issued pursuant to the conversion of
the Deferred Participation Units into Subordinated Units as a
result of the distribution declared for such Quarter), plus
the related distributions on the General Partner Units and on
the general partner interest in the Operating Partnership,
during each such Quarter; and
(ii) there are no Cumulative Common Unit Arrearages;
provided, however, that for purposes of subclause (b)(i), the first
four Quarters immediately following the Effective Date shall not be
considered in the determination of whether the conditions for
conversion set forth in subclause (b)(i) have been met; and
provided further, that the Quarter in which the Effective Date occurs
shall (A) be counted as one of such first four Quarters and (B) be
considered as one of the eight immediately preceding Quarters in which
the Subordinated Units referred to in subclauses (a)(i)(A) and
(a)(i)(B) above are Outstanding for purposes of the eight Quarter test
set forth therein, only if the Effective Date occurs within the first
calendar month of such Quarter; or
(c) the date on which the General Partner is removed as general partner
of the Partnership upon the requisite vote by holders of Outstanding Units under
circumstances where Cause does not exist and Units held by the General Partner
and its Affiliates are not voted in favor of such removal.
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For purposes of determining whether the test in subclauses (a)(i)(B) or
(b)(i)(B) above has been satisfied, Adjusted Operating Surplus will be adjusted
upwards or downwards if the Conflicts Committee determines in good faith that
the amount of Estimated Maintenance Capital Expenditure used in the
determination of Adjusted Operating Surplus in subclauses (a)(i)(B) or (b)(i)(B)
above was materially incorrect, based on circumstances prevailing at the time of
original determination of Estimated Maintenance Capital Expenditures, for any
one or more of the preceding eight consecutive Quarters.
"Unpaid MQD" has the meaning assigned to such term in Section
6.1(c)(i)(B).
"Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a) the fair
market value of such property as of such date (as determined under Section
5.6(d)) over (b) the Carrying Value of such property as of such date (prior to
any adjustment to be made pursuant to Section 5.6(d) as of such date).
"Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a) the Carrying
Value of such property as of such date (prior to any adjustment to be made
pursuant to Section 5.6(d) as of such date) over (b) the fair market value of
such property as of such date (as determined under Section 5.6(d)).
"Unrecovered Capital" means at any time, with respect to a Unit, the
Initial Unit Price less the sum of all distributions constituting Capital
Surplus theretofore made in respect of an Initial Common Unit and any
distributions of cash (or the Net Agreed Value of any distributions in kind) in
connection with the dissolution and liquidation of the Partnership theretofore
made in respect of an Initial Common Unit, adjusted as the General Partner
determines to be appropriate to give effect to any distribution, subdivision or
combination of such Units.
"U.S. GAAP" means United States Generally Accepted Accounting
Principles consistently applied.
"Viking Resources" means Viking Resources Corporation, a Pennsylvania
corporation.
"Withdrawal Opinion of Counsel" has the meaning assigned to such term
in Section 11.1(b)(i).
"Working Capital Borrowings" means borrowings used solely for working
capital purposes or to pay distributions to Partners and made pursuant to a
credit facility or other arrangement requiring all such borrowings thereunder to
be reduced to a relatively small amount each year for an economically meaningful
period of time.
SECTION 1.2 Construction.
Unless the context requires otherwise: (a) any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa; (b) references to Articles and Sections refer to Articles and
Sections of this Agreement; and (c) the term "include" or "includes" means
includes, without limitation, and "including" means including, without
limitation.
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ARTICLE II
ORGANIZATION
SECTION 2.1 Formation.
The General Partner and the Organizational Limited Partner previously
formed the Partnership as a limited partnership pursuant to the provisions of
the Delaware Act. The General Partner and the Organizational Limited Partner
subsequently entered into the Amended Partnership Agreement. The General Partner
and the Limited Partners hereby amend and restate the Amended Partnership
Agreement in its entirety. This amendment and restatement shall become effective
on the Effective Date. Except as expressly provided to the contrary in this
Agreement, the rights, duties (including fiduciary duties), liabilities and
obligations of the Partners and the administration, dissolution and termination
of the Partnership shall be governed by the Delaware Act. All Partnership
Interests shall constitute personal property of the owner thereof for all
purposes and a Partner has no interest in specific Partnership property or
assets.
SECTION 2.2 Name.
The name of the Partnership is "Atlas Natural Resources, L.P." The
Partnership's business may be conducted under any other name or names deemed
necessary or appropriate by the General Partner in its sole discretion,
including the name of the General Partner. The words "Limited Partnership,"
"L.P.," "Ltd." or similar words or letters shall be included in the
Partnership's name where necessary for the purpose of complying with the laws of
any jurisdiction that so requires. The General Partner in its discretion may
change the name of the Partnership at any time and from time to time and shall
notify the Limited Partners of such change in the next regular communication to
the Limited Partners.
SECTION 2.3 Registered Office; Registered Agent; Principal Office; Other
Offices.
Unless and until changed by the General Partner, the registered office
of the Partnership in the State of Delaware shall be located at Corporation
Trust Center, 0000 Xxxxxx Xxxxxx Xxxxxxxxxx, Xxxxxxxx 00000, and the registered
agent for service of process on the Partnership in the State of Delaware at such
registered office shall be The Corporation Trust Company. The principal office
of the Partnership shall be located at 000 X. Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx
00000, or such other place as the General Partner may from time to time
designate by notice to the Limited Partners. The Partnership may maintain
offices at such other place or places within or outside the State of Delaware as
the General Partner deems necessary or appropriate. The address of the General
Partner shall be 000 X. Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx 00000, or such other
place as the General Partner may from time to time designate by notice to the
Limited Partners.
SECTION 2.4 Purpose and Business.
The purpose and nature of the business to be conducted by the
Partnership shall be to:
(a) hold a limited partner interest of 98.9899% in the Operating
Partnership and, in connection therewith, to exercise all the rights and powers
conferred upon the Partnership as a limited partner of the Operating Partnership
pursuant to the Operating Partnership Agreement or otherwise;
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(b) engage directly in, or enter into or form any corporation,
partnership, joint venture, limited liability company or other arrangement to
engage indirectly in, any business activity that any Operating Partnership is
permitted to engage in by any Operating Partnership Agreement and, in connection
therewith, to exercise all of the rights and powers conferred upon the
Partnership pursuant to the agreements relating to such business activity;
(c) engage directly in, or enter into or form any corporation,
partnership, joint venture, limited liability company or other arrangement to
engage indirectly in, any business activity that is approved by the General
Partner and which lawfully may be conducted by a limited partnership organized
pursuant to the Delaware Act and, in connection therewith, to exercise all of
the rights and powers conferred upon the Partnership pursuant to the agreements
relating to such business activity; provided, however, that the General Partner
reasonably determines, as of the date of the acquisition or commencement of such
activity, that such activity (i) generates "qualifying income" (as such term is
defined pursuant to Section 7704 of the Code) or (ii) enhances the operations of
an activity of any Operating Partnership or a Partnership activity that
generates qualifying income; and
(d) do anything necessary or appropriate to the foregoing, including
the making of capital contributions or loans to a Group Member.
The General Partner has no obligation or duty to the Partnership, the
Limited Partners, or the Assignees to propose or approve, and in its discretion
may decline to propose or approve, the conduct by the Partnership of any
business.
SECTION 2.5 Powers.
The Partnership shall be empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described in Section
2.4 and for the protection and benefit of the Partnership.
SECTION 2.6 Power of Attorney.
(a) Each Limited Partner and each Assignee hereby constitutes and
appoints, severally and not jointly, the General Partner and, if a Liquidator
shall have been selected pursuant to Section 12.3, the Liquidator, (and any
successor to either by merger, transfer, assignment, election or otherwise) and
each of their authorized officers and attorneys-in-fact, as the case may be,
with full power of substitution, as his true and lawful agent and
attorney-in-fact, with full power and authority in his name, place and xxxxx,
to:
(i) execute, swear to, acknowledge, deliver, file and record
in the appropriate public offices (A) all certificates, documents and
other instruments (including this Agreement and the Certificate of
Limited Partnership and all amendments or restatements hereof or
thereof) that the General Partner or the Liquidator deems necessary or
appropriate to form, qualify or continue the existence or qualification
of the Partnership as a limited partnership (or a partnership in which
the limited partners have limited liability) in the State of Delaware
and in all other jurisdictions in which the Partnership may conduct
business or own property; (B) all certificates, documents and other
instruments that the General Partner or the Liquidator deems necessary
or appropriate to reflect, in accordance with its terms, any amendment,
change, modification or restatement of this Agreement; (C) all
certificates, documents and other instruments (including conveyances
and a certificate of cancellation) that the General Partner or the
Liquidator deems necessary or appropriate to reflect the dissolution
and liquidation of the Partnership pursuant to the terms of this
Agreement; (D) all certificates, documents and other instruments
relating to the admission, withdrawal, removal or substitution of any
Partner pursuant to, or other events described in, Article IV, X, XI or
XII; (E) all certificates, documents and other instruments relating to
the Capital Contribution of any Partner; (F) all certificates,
documents and other instruments relating to the determination of the
rights, preferences and privileges of any class or series of
Partnership Securities issued pursuant to Section 5.7; and (G) all
certificates, documents and other instruments (including agreements and
a certificate of merger) relating to a merger or consolidation of the
Partnership pursuant to Article XIV; and
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(ii) execute, swear to, acknowledge, deliver, file and record
all ballots, consents, approvals, waivers, certificates, documents and
other instruments necessary or appropriate, in the discretion of the
General Partner or the Liquidator, to make, evidence, give, confirm or
ratify any vote, consent, approval, agreement or other action that is
made or given by the Partners hereunder or is consistent with the terms
of this Agreement or is necessary or appropriate, in the discretion of
the General Partner or the Liquidator, to effectuate the terms or
intent of this Agreement; provided, that when required by Section 13.3
or any other provision of this Agreement that establishes a percentage
of the Limited Partners or of the Limited Partners of any class or
series required to take any action, the General Partner or the
Liquidator may exercise the power of attorney made in this Section
2.6(a)(ii) only after the necessary vote, consent or approval of the
Limited Partners or of the Limited Partners of such class or series, as
applicable.
Nothing contained in this Section 2.6(a) shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article XIII
or as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive and, to
the maximum extent permitted by law, not be affected by the subsequent death,
incompetency, disability, incapacity, dissolution, bankruptcy or termination of
any Limited Partner or Assignee and the transfer of all or any portion of such
Limited Partner's or Assignee's Partnership Interest and shall extend to such
Limited Partner's or Assignee's heirs, successors, assigns and personal
representatives. Each such Limited Partner or Assignee hereby agrees to be bound
by any representation made by the General Partner or the Liquidator acting in
good faith pursuant to such power of attorney; and each such Limited Partner or
Assignee, to the maximum extent permitted by law, hereby waives any and all
defenses that may be available to contest, negate or disaffirm the action of the
General Partner or the Liquidator taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver to the
General Partner or the Liquidator, within 15 days after receipt of the request
therefor, such further designation, powers of attorney and other instruments as
the General Partner or the Liquidator deems necessary to effectuate this
Agreement and the purposes of the Partnership.
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SECTION 2.7 Term.
The term of the Partnership commenced upon the filing of the
Certificate of Limited Partnership in accordance with the Delaware Act and shall
continue in existence until the close of Partnership business on December 31,
2098 or until the earlier dissolution of the Partnership in accordance with the
provisions of Article XII. The existence of the Partnership as a separate legal
entity shall continue until the cancellation of the Certificate of Limited
Partnership as provided in the Delaware Act.
SECTION 2.8 Title to Partnership Assets.
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partner or Assignee, individually or collectively, shall
have any ownership interest in such Partnership assets or any portion thereof.
Title to any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner, one or more of its Affiliates or one or more
nominees, as the General Partner may determine. The General Partner hereby
declares and warrants that any Partnership assets for which record title is held
in the name of (a) the General Partner, (b) one or more of its Affiliates or (c)
one or more nominees shall be held by the General Partner or such Affiliate or
nominee for the use and benefit of the Partnership in accordance with the
provisions of this Agreement; provided, however, that the General Partner shall
use reasonable efforts to cause record title to such assets (other than those
assets in respect of which the General Partner determines that the expense and
difficulty of conveying makes transfer of record title to the Partnership
impracticable) to be vested in the Partnership as soon as reasonably
practicable; provided, further, that, prior to the withdrawal or removal of the
General Partner or as soon thereafter as practicable, the General Partner shall
use reasonable efforts to effect the transfer of record title of such assets to
the Partnership and, prior to any such transfer, will provide for the use of
such assets by the Partnership in a manner satisfactory to the General Partner.
All Partnership assets shall be recorded as the property of the Partnership in
its books and records, irrespective of the name in which record title to such
Partnership assets is held.
ARTICLE III
RIGHTS OF LIMITED PARTNERS
SECTION 3.1 Limitation of Liability.
The Limited Partners and the Assignees shall have no liability under
this Agreement except as expressly provided in this Agreement or the Delaware
Act.
SECTION 3.2 Management of Business.
No Limited Partner or Assignee, in its capacity as such, nor the
General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner or any of its Affiliates, in
its capacity as such, if such Person shall also be a Limited Partner or
Assignee, shall participate in the operation, management or control (within the
meaning of the Delaware Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. Any action taken by any Affiliate of the General
Partner or any officer, director, employee, member, general partner, agent or
trustee of the General Partner or any of its Affiliates, or any officer,
director, employee, member, general partner, agent or trustee of a Group Member,
in its capacity as such, shall not be deemed to be participation in the control
of the business of the Partnership by a limited partner of the Partnership
(within the meaning of Section 17-303(a) of the Delaware Act) and shall not
affect, impair or eliminate the limitations on the liability of the Limited
Partners or Assignees under this Agreement.
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SECTION 3.3 Outside Activities of Limited Partners.
Subject to the provisions of Section 7.5, which shall continue to be
applicable to the Persons referred to therein, regardless of whether such
Persons shall also be Limited Partners or Assignees, any Limited Partner or
Assignee shall be entitled to and may have business interests and engage in
business activities in addition to those relating to the Partnership, including
business interests and activities in direct competition with the Partnership
Group. Neither the Partnership nor any of the other Partners or Assignees shall
have any rights by virtue of this Agreement in any business ventures of any
Limited Partner or Assignee.
SECTION 3.4 Rights of Limited Partners.
(a) In addition to other rights provided by this Agreement or by
applicable law, and except as limited by Section 3.4(b), each Limited Partner
shall have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon reasonable written demand
and at such Limited Partner's own expense:
(i) to obtain true and full information regarding the status
of the business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of
the Partnership's federal, state and local income tax returns for each
year;
(iii) to have furnished to it a current list of the name and
last known business, residence or mailing address of each Partner;
(iv) to have furnished to it a copy of this Agreement and the
Certificate of Limited Partnership, together with a copy of the
executed copies of all powers of attorney pursuant to which this
Agreement, the Certificate of Limited Partnership and all amendments
thereto have been executed;
(v) to obtain true and full information regarding the amount
of cash and a description and statement of the Net Agreed Value of any
other Capital Contribution by each Partner and which each Partner has
agreed to contribute in the future, and the date on which each became a
Partner; and
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(vi) to obtain such other information regarding the affairs of
the Partnership as is just and reasonable.
(b) The General Partner may keep confidential from the Limited Partners
and Assignees, for such period of time as the General Partner deems reasonable:
(i) any information that the General Partner reasonably
believes to be in the nature of trade secrets; or
(ii) other information the disclosure of which the General
Partner in good faith believes (A) is not in the best interests of the
Partnership Group, (B) could damage the Partnership Group or (C) that
any Group Member is required by law or by agreement with any third
party to keep confidential (other than agreements with Affiliates of
the Partnership the primary purpose of which is to circumvent the
obligations set forth in this Section 3.4).
ARTICLE IV
CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS;
REDEMPTION OF PARTNERSHIP INTERESTS
SECTION 4.1 Certificates.
(a) Upon the Partnership's issuance of Common Units, Subordinated Units
or Deferred Participation Units to any Person, the Partnership shall issue one
or more Certificates in the name of such Person evidencing the number of such
Units being so issued; provided, however, that the certificates representing the
Deferred Participation Units shall initially be issued in five series of
Certificates with each series representing an equal aggregate amount of Deferred
Participation Units.
(b) Except as set forth below, all other Partnership Securities shall
be uncertificated:
(i) upon the General Partner's request, the Partnership shall
issue to the General Partner one or more Certificates in the name of
the General Partner evidencing its General Partner Units.
(ii) upon the request of any Person owning Incentive
Distribution Rights or any other Partnership Securities other than
Common Units, Subordinated Units or Deferred Participation Units, the
Partnership shall issue to such Person one or more certificates
evidencing such Incentive Distribution Rights or other Partnership
Securities other than Common Units, Subordinated Units or Deferred
Participation Units.
(c) Certificates shall be executed on behalf of the Partnership by the
General Partner. No Common Unit Certificate shall be valid for any purpose until
it has been countersigned by the Transfer Agent; provided, however, that if the
General Partner elects to issue Common Units in global or book-entry form, the
Common Unit Certificates shall be valid upon receipt of a certificate from the
Transfer Agent certifying that the Common Units have been duly registered in
accordance with the directions of the Partnership.
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(d) Subject to the requirements of Section 6.7(c), the Partners holding
Certificates evidencing Subordinated Units may exchange such Certificates for
Certificates evidencing Common Units on or after the date on which such
Subordinated Units are converted into Common Units pursuant to the terms of
Section 5.10.
(e) Subject to the provisions of Section 6.8(c), Partners holding
Certificates evidencing Deferred Participation Units may exchange such
Certificates for Certificates evidencing Subordinated Units on or after the date
on which such Deferred Participation Units are converted into Subordinated Units
pursuant to the terms of Section 5.11.
SECTION 4.2 Mutilated, Destroyed, Lost or Stolen Certificates.
(a) If any mutilated Certificate is surrendered to the Partnership, and
in the case of Common Units, to the Transfer Agent, the appropriate officers of
the General Partner on behalf of the Partnership shall execute, and the
Partnership or Transfer Agent, as applicable, shall countersign and deliver in
exchange therefor, a new Certificate evidencing the same number and type of
Partnership Securities as the Certificate so surrendered.
(b) The appropriate officers of the General Partner, on behalf of the
Partnership, shall execute and deliver, and, in the case of Common Units, the
Transfer Agent shall countersign, a new Certificate in place of any Certificate
previously issued if the Record Holder of the Certificate:
(i) makes proof by affidavit, in form and substance
satisfactory to the Partnership, that a previously issued Certificate
has been lost, destroyed or stolen;
(ii) requests the issuance of a new Certificate before the
Partnership has notice that the Certificate has been acquired by a
purchaser for value in good faith and without notice of an adverse
claim;
(iii) if requested by the Partnership, delivers to the
Partnership a bond, in form and substance satisfactory to the
Partnership, with surety or sureties and with fixed or open penalty as
the Partnership may reasonably direct, in its sole discretion, to
indemnify the Partnership, the Partners, the General Partner and the
Transfer Agent against any claim that may be made on account of the
alleged loss, destruction or theft of the Certificate; and
(iv) satisfies any other reasonable requirements imposed by
the Partnership.
If a Limited Partner or Assignee fails to notify the Partnership within
a reasonable time after it has notice of the loss, destruction or theft of a
Certificate, and a transfer of the Limited Partner Interests represented by the
Certificate is registered before the Partnership, the General Partner or the
Transfer Agent receives such notification, the Limited Partner or Assignee shall
be precluded from making any claim against the Partnership, the General Partner
or the Transfer Agent for such transfer or for a new Certificate.
(c) As a condition to the issuance of any new Certificate under this
Section 4.2, the Partnership may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Transfer
Agent) reasonably connected therewith.
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SECTION 4.3 Record Holders.
The Partnership shall be entitled to recognize the Record Holder as the
Partner or Assignee with respect to any Partnership Interest and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such Partnership Interest on the part of any other Person, regardless of whether
the Partnership shall have actual or other notice thereof, except as otherwise
provided by law or any applicable rule, regulation, guideline or requirement of
any National Securities Exchange on which such Partnership Interests are listed
for trading. Without limiting the foregoing, when a Person (such as a broker,
dealer, bank, trust company or clearing corporation or an agent of any of the
foregoing) is acting as nominee, agent or in some other representative capacity
for another Person in acquiring and/or holding Partnership Interests, as between
the Partnership on the one hand, and such other Persons on the other, such
representative Person (a) shall be the Partner or Assignee (as the case may be)
of record and beneficially, (b) must execute and deliver a Transfer Application
and (c) shall be bound by this Agreement and shall have the rights and
obligations of a Partner or Assignee (as the case may be) hereunder and as, and
to the extent, provided for herein.
SECTION 4.4 Transfer Generally.
(a) The term "transfer," when used in this Agreement with respect to a
Partnership Interest, shall be deemed to refer to a transaction by which (i) the
General Partner assigns its General Partner Interest to another Person who
becomes the General Partner, (ii) the holder of a Limited Partner Interest
assigns such Limited Partner Interest to another Person who is or becomes a
Limited Partner or an Assignee, or (iii) a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other disposition of a
Partnership Interest, by law or otherwise, occurs.
(b) No Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article IV.
Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article IV shall be null and void.
(c) Nothing contained in this Agreement shall be construed to prevent a
disposition by any member of the General Partner of any or all of the issued and
outstanding membership interests of the General Partner.
SECTION 4.5 Registration and Transfer of Limited Partner Interests.
(a) The Partnership shall keep or cause to be kept on behalf of the
Partnership a register in which, subject to such reasonable regulations as it
may prescribe and subject to the provisions of Section 4.5(b), the Partnership
will provide for the registration and transfer of Limited Partner Interests. The
Transfer Agent is hereby appointed registrar and transfer agent for the purpose
of registering Common Units and transfers of such Common Units as herein
provided. The General Partner is hereby appointed registrar and transfer agent
for the purpose of registering and transferring all other Limited Partner
Interests as herein provided. The Partnership shall not recognize transfers of
Certificates evidencing Limited Partner Interests unless such transfers are
effected in the manner described in this Section 4.5. Upon surrender of a
Certificate for registration of transfer of any Limited Partner Interests
evidenced by a Certificate, and subject to the provisions of this Section 4.5,
the appropriate officers of the General Partner, on behalf of the Partnership,
shall execute and deliver, and in the case of Common Units the Transfer Agent
shall countersign and deliver, in the name of the holder or the designated
transferee or transferees, as required pursuant to the holder's instructions,
one or more new Certificates evidencing the same aggregate number and type of
Limited Partner Interests as was evidenced by the Certificate so surrendered.
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(b) Except as otherwise provided in Section 4.9, the Partnership shall
not recognize any transfer of Limited Partner Interests until the Certificates
evidencing such Limited Partner Interests are surrendered for registration of
transfer and such Certificates are accompanied by a Transfer Application duly
executed by the transferee (or the transferee's attorney-in-fact duly authorized
in writing). No charge shall be imposed by the Partnership for such transfer;
provided, that as a condition to the issuance of any new Certificate under this
Section 4.5, the Partnership may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed with respect
thereto.
(c) Notwithstanding Section 4.5(b) above, Limited Partner Interests not
represented by a Certificate may, subject to the other provisions within this
Section 4.5, only be transferred pursuant to written notification to the General
Partner by the Record Holder of the transfer of such Limited Partner Interests
accompanied by a Transfer Application duly executed by the transferee (or the
transferee's attorney-in-fact duly authorized in writing). No charge shall be
imposed by the Partnership for such transfer; provided, however, that if the
transferee desires the Partnership to issue a Certificate representing the
Limited Partner Interest so transferred, the Partnership may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed with respect thereto. Such transfer shall be duly recorded in the
Partnership's register related to such Limited Partner Interest.
(d) Limited Partner Interests may be transferred only in the manner
described in this Section 4.5. The transfer of any Limited Partner Interests and
the admission of any new Limited Partner shall not constitute an amendment to
this Agreement.
(e) Until admitted as a Substituted Limited Partner pursuant to Section
10.2, the Record Holder of a Limited Partner Interest shall be an Assignee in
respect of such Limited Partner Interest. Limited Partners may include
custodians, nominees or any other individual or entity in its own or any
representative capacity.
(f) A transferee of a Limited Partner Interest who (i) has complied
with all of the applicable provisions of this Article IV and (ii) has completed
and delivered a Transfer Application shall be deemed to have (A) requested
admission as a Substituted Limited Partner, (B) agreed to comply with and be
bound by and to have executed this Agreement, (C) represented and warranted that
such transferee has the right, power and authority and, if an individual, the
capacity to enter into this Agreement, (D) granted the powers of attorney set
forth in this Agreement and (E) given the consents and approvals and made the
waivers contained, or authorized from time to time, in this Agreement.
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(g) The General Partner and its Affiliates shall have the right at any
time to transfer their Subordinated Units, Deferred Participation Units or
Common Units (whether issued upon conversion of the Subordinated Units, Deferred
Participation Units or otherwise) to one or more Persons; provided, however,
that the General Partner and its Affiliates must comply with the applicable
provisions in this Section 4.5.
SECTION 4.6 Transfer of the General Partner's General Partner Interest.
(a) Subject to Section 4.6(c) below, prior to the end of the
Subordination Period, the General Partner shall not transfer all or any part of
its General Partner Interest to a Person unless such transfer:
(i) has been approved by the prior written consent or vote of
the holders of at least a Unit Majority (excluding Common Units or
Subordinated Units held by the General Partner and its Affiliates); or
(ii) is of all, but not less than all, of its General Partner
Interest to (A) an Affiliate of the General Partner or (B) another
Person in connection with the merger or consolidation of the General
Partner with or into another Person or the transfer by the General
Partner of all or substantially all of its assets to another Person.
(b) Subject to Section 4.6(c) below, at or after the end of the
Subordination Period, the General Partner may transfer all or any of its General
Partner Interest without Unitholder approval.
(c) Notwithstanding anything herein to the contrary, no transfer by the
General Partner of all or any part of its General Partner Interest to another
Person shall be permitted unless:
(i) the transferee agrees to assume the rights and duties of
the General Partner under this Agreement and any Operating Partnership
Agreement and to be bound by the provisions of this Agreement and any
Operating Partnership Agreement;
(ii) the Partnership receives an Opinion of Counsel that such
transfer would not result in the loss of limited liability of any
Limited Partner or of any limited partner of any Operating Partnership
or cause the Partnership or any Operating Partnership to be treated as
an association taxable as a corporation or otherwise to be taxed as an
entity for federal income tax purposes (to the extent not already so
treated or taxed); and
(iii) such transferee also agrees to purchase all (or the
appropriate portion thereof, if applicable) of the partnership interest
of the General Partner as the general partner of each other Group
Member. In the case of a transfer pursuant to and in compliance with
this Section 4.6, the transferee or successor (as the case may be)
shall, subject to compliance with the terms of Section 10.3, be
admitted to the Partnership as a General Partner immediately prior to
the transfer of the Partnership Interest, and the business of the
Partnership shall continue without dissolution.
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SECTION 4.7 Transfer of Incentive Distribution Rights.
(a) Prior to the end of the Subordination Period, a holder of Incentive
Distribution Rights may transfer any or all of the Incentive Distribution Rights
held by such holder without any consent of the Unitholders:
(i) to an Affiliate or its direct or indirect beneficial
owners;
(ii) to another Person in connection with (A) the merger or
consolidation of such holder of Incentive Distribution Rights with or
into such other Person or (B) the transfer by such holder of all or
substantially all of its assets to such other Person; or
(iii) pursuant to the terms of a Lien as set forth in Section
4.7(e) below.
(b) Any other transfer of the Incentive Distribution Rights prior to
the end of the Subordination Period shall require the prior approval of at least
a Unit Majority (excluding Common Units or Subordinated Units held by the holder
of the Incentive Distribution Rights to be transferred and its Affiliates). At
or after the end of the Subordination Period, the General Partner or any other
holder of Incentive Distribution Rights may transfer any or all of its Incentive
Distribution Rights without Unitholder approval.
(c) Notwithstanding anything herein to the contrary, no transfer of
Incentive Distribution Rights to another Person shall be permitted unless the
transferee agrees to be bound by the provisions of this Agreement.
(d) The General Partner shall have the authority (but shall not be
required) to adopt such reasonable restrictions on the transfer of Incentive
Distribution Rights and requirements for registering the transfer of Incentive
Distribution Rights as the General Partner, in its sole discretion, shall
determine are necessary or appropriate.
(e) Notwithstanding Sections 4.7(a), (b) and (d) above and to the
extent the General Partner or its Affiliates is the holder and transferor of any
Incentive Distribution Rights, nothing in this Section 4.7 shall prevent the
General Partner or its Affiliates from granting a Lien in such Incentive
Distribution Rights to a Person, including, but not limited to, a Group Member,
a Partner, an Affiliate or other financing source (a "Secured Party"). Nothing
in this Section 4.7 shall prevent the subsequent transfer of the Incentive
Distribution Rights to the Secured Party pursuant to the terms of or upon the
foreclosure on the Lien; provided, however, that if such transfer is to a Person
other than those Persons set forth in subsection (a)(i) above, that prior to the
granting of a Lien, the General Partner or its Affiliates shall obtain the
Special Approval of the Conflicts Committee for such grant and; provided
further, that this Section 4.7(e) may not solely be used to circumvent the
requirements or actions of Sections 4.7(b) and 4.7(d) regarding, when
applicable, the prior approval of holders at least a Unit Majority and the
restrictions to be adopted by the General Partner.
SECTION 4.8 Restrictions on Transfers.
(a) Except as provided in Section 4.8(d) below, but notwithstanding the
other provisions of this Article IV, no transfer of any Partnership Interests
shall be made if such transfer would:
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(i) violate the then applicable federal or state securities
laws or rules and regulations of the Commission, any state securities
commission or any other governmental authority with jurisdiction over
such transfer;
(ii) terminate the existence or qualification of the
Partnership or the Operating Partnership under the laws of the
jurisdiction of its formation;
(iii) cause the Partnership or the Operating Partnership to be
treated as an association taxable as a corporation or otherwise to be
taxed as an entity for federal income tax purposes (to the extent not
already so treated or taxed); or
(iv) cause an unregistered class of Partnership Securities to
be required to be registered under the Securities Act.
(b) The General Partner may impose restrictions on the transfer of
Partnership Interests if a subsequent Opinion of Counsel determines that such
restrictions are necessary to avoid a significant risk of the Partnership or the
Operating Partnership becoming taxable as a corporation or otherwise to be taxed
as an entity for federal income tax purposes. The restrictions may be imposed by
making such amendments to this Agreement as the General Partner may determine to
be necessary or appropriate to impose such restrictions; provided, however, that
any amendment that the General Partner believes, in the exercise of its
reasonable discretion, could result in the delisting or suspension of trading of
any class of Limited Partner Interests on the principal National Securities
Exchange on which such class of Limited Partner Interests is then traded must be
approved, prior to such amendment being effected, by the holders of at least a
majority of the Outstanding Limited Partner Interests of such class.
(c) The transfer of a Subordinated Unit that has converted into a
Common Unit shall be subject to the restrictions imposed by Section 6.7(c).
(d) Nothing contained in this Article IV, or elsewhere in this
Agreement, shall preclude the settlement of any transactions involving
Partnership Interests entered into through the facilities of any National
Securities Exchange on which such Partnership Interests are listed for trading.
SECTION 4.9 Citizenship Certificates; Non-citizen Assignees.
(a) If any Group Member is or becomes subject to any federal, state or
local law or regulation that, in the reasonable determination of the General
Partner, creates a substantial risk of cancellation or forfeiture of any
property in which the Group Member has an interest based on the nationality,
citizenship or other related status of a Limited Partner or Assignee, the
General Partner may request any Limited Partner or Assignee to furnish to the
General Partner, within 30 days after receipt of such request, an executed
Citizenship Certification or such other information concerning his nationality,
citizenship or other related status (or, if the Limited Partner or Assignee is a
nominee holding for the account of another Person, the nationality, citizenship
or other related status of such Person) as the General Partner may request. If a
Limited Partner or Assignee fails to furnish to the General Partner within the
aforementioned 30-day period such Citizenship Certification or other requested
information or if upon receipt of such Citizenship Certification or other
requested information the General Partner determines, with the advice of
counsel, that a Limited Partner or Assignee is not an Eligible Citizen, the
Partnership Interests owned by such Limited Partner or Assignee shall be subject
to redemption in accordance with the provisions of Section 4.10. In addition,
the General Partner may require that the status of any such Partner or Assignee
be changed to that of a Non-citizen Assignee and, thereupon, the General Partner
shall be substituted for such Non-citizen Assignee as the Limited Partner in
respect of such Non-Citizen Assignee's Limited Partner Interests.
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(b) The General Partner shall, in exercising voting rights in respect
of Limited Partner Interests held by it on behalf of Non-citizen Assignees,
distribute the votes in the same ratios as the votes of Partners (including
without limitation the General Partner) in respect of Limited Partner Interests
other than those of Non-citizen Assignees are cast, either for, against or
abstaining as to the matter.
(c) Upon dissolution of the Partnership, a Non-citizen Assignee shall
have no right to receive a distribution in kind pursuant to Section 12.4 but
shall be entitled to the cash equivalent thereof, and the Partnership shall
provide cash in exchange for an assignment of the Non-citizen Assignee's share
of the distribution in kind. Such payment and assignment shall be treated for
Partnership purposes as a purchase by the Partnership from the Non-citizen
Assignee of his Limited Partner Interest (representing his right to receive his
share of such distribution in kind).
(d) At any time after it can and does certify that it has become an
Eligible Citizen, a Non-citizen Assignee may, upon application to the General
Partner, request admission as a Substituted Limited Partner with respect to any
Limited Partner Interests of such Non-citizen Assignee not redeemed pursuant to
Section 4.10, and upon its admission pursuant to Section 10.2, the General
Partner shall cease to be deemed to be the Limited Partner in respect of the
Non-citizen Assignee's Limited Partner Interests.
SECTION 4.10 Redemption of Partnership Interests of Non-citizen Assignees.
(a) If at any time a Limited Partner or Assignee fails to furnish a
Citizenship Certification or other information requested within the 30-day
period specified in Section 4.9(a), or if upon receipt of such Citizenship
Certification or other information the General Partner determines, with the
advice of counsel, that a Limited Partner or Assignee is not an Eligible
Citizen, the Partnership may, unless the Limited Partner or Assignee establishes
to the satisfaction of the General Partner that such Limited Partner or Assignee
is an Eligible Citizen or has transferred his Partnership Interests to a Person
who is an Eligible Citizen and who furnishes a Citizenship Certification to the
General Partner prior to the date fixed for redemption as provided below, redeem
the Partnership Interest of such Limited Partner or Assignee as follows:
(i) The General Partner shall, not later than the 30th day
before the date fixed for redemption, give notice of redemption to the
Limited Partner or Assignee, at his last address designated on the
records of the Partnership or the Transfer Agent, by registered or
certified mail, postage prepaid. The notice shall be deemed to have
been given when so mailed. The notice shall specify the Redeemable
Interests, the date fixed for redemption, the place of payment, that
payment of the redemption price will be made upon surrender of the
Certificate evidencing the Redeemable Interests and that on and after
the date fixed for redemption no further allocations or distributions
to which the Limited Partner or Assignee would otherwise be entitled in
respect of the Redeemable Interests will accrue or be made.
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(ii) The aggregate redemption price for Redeemable Interests
shall be an amount equal to the Current Market Price (the date of
determination of which shall be the date fixed for redemption) of
Limited Partner Interests of the class to be so redeemed multiplied by
the number of Limited Partner Interests of each such class included
among the Redeemable Interests. The redemption price shall be paid, in
the discretion of the General Partner, in cash or by delivery of a
promissory note of the Partnership in the principal amount of the
redemption price, bearing interest at the rate of 10% annually and
payable in three equal annual installments of principal together with
accrued interest, commencing one year after the redemption date.
(iii) Upon surrender by or on behalf of the Limited Partner or
Assignee, at the place specified in the notice of redemption, of the
Certificate evidencing the Redeemable Interests, duly endorsed in blank
or accompanied by an assignment duly executed in blank, the Limited
Partner or Assignee or his duly authorized representative shall be
entitled to receive the payment therefor.
(iv) After the redemption date, Redeemable Interests shall no
longer constitute issued and Outstanding Limited Partner Interests.
(b) The provisions of this Section 4.10 shall also be applicable to
Limited Partner Interests held by a Limited Partner or Assignee as nominee of a
Person determined to be other than an Eligible Citizen.
(c) Nothing in this Section 4.10 shall prevent the recipient of a
notice of redemption from transferring his Limited Partner Interest before the
redemption date if such transfer is otherwise permitted under this Agreement.
Upon receipt of notice of such a transfer, the General Partner shall withdraw
the notice of redemption, provided the transferee of such Limited Partner
Interest certifies to the satisfaction of the General Partner in a Citizenship
Certification delivered in connection with the Transfer Application that he is
an Eligible Citizen. If the transferee fails to make such certification, such
redemption shall be effected from the transferee on the original redemption
date.
ARTICLE V
CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
SECTION 5.1 Organizational Contributions.
In connection with the formation of the Partnership under the Delaware
Act, the General Partner made an initial Capital Contribution to the Partnership
in the amount of $10 for a certain interest in the Partnership and was admitted
as the General Partner and as a Limited Partner of the Partnership. The
Organizational Limited Partner made an initial Capital Contribution to the
Partnership in the amount of $990 for an interest in the Partnership and was
admitted as a Limited Partner of the Partnership. As of the Initial Closing
Date, the interest of the Organizational Limited Partner was redeemed as
provided in the Contribution and Conveyance Agreement. The initial Capital
Contributions of the General Partner and the Organizational Limited Partner were
thereupon refunded and the Organizational Limited Partner ceased to be a Limited
Partner of the Partnership. One percent of any interest or other profit that may
have resulted from the investment or other use of such initial Capital
Contributions was allocated and distributed to the Organizational Limited
Partner, and the balance thereof was allocated and distributed to the General
Partner.
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SECTION 5.2 Contributions by the General Partner, Its Affiliates and the
Issuance of General Partner Units.
(a) On the Initial Closing Date and pursuant to the Contribution and
Conveyance Agreement, the General Partner contributed to the Partnership, as a
Capital Contribution, all but 1.0101% of its general partnership interest in the
Operating Partnership in exchange for (A) the continuation of its 1% General
Partner Interest, subject to all of the rights, privileges and duties of the
General Partner under this Agreement, (B) the reimbursement of certain expenses
related to the formation and business of the Partnership and the Operating
Partnership, (C) the Initial Subordinated Units and (D) the Incentive
Distribution Rights.
(b) On the Effective Date, the Partnership shall issue 144,062 General
Partner Units to represent the General Partner Interest as of that date after
taking into account the transactions contemplated by the Contribution Agreement,
which number is equal to 1.0% of the quotient of the number of Common Units and
Subordinated Units then Outstanding (after giving effect to the issuances
described in Section 5.4) divided by 99.0% rounded down to the nearest whole
number of General Partner Units.
(c) Immediately upon the conversion of a Deferred Participation Unit
into a Subordinated Unit pursuant to Section 5.11, the Partnership shall issue
to the General Partner (for no consideration) that number of General Partner
Units which will cause the Percentage Interest of its General Partner Interest
immediately after such conversion to be equal to the Percentage Interest of its
General Partner Interest immediately prior to such conversion.
(d) (i) The General Partner may, at any time, make a Capital
Contribution to the Partnership such that the General Partner shall have a
Capital Account equal to at least 1.0% of the sum of the Capital Accounts of all
Partners. Other than when made pursuant to the prior sentence, a Capital
Contribution by the General Partner to the Partnership may, but is not required
to, be in exchange for Limited Partner Interests.
(ii) Subject to Section 5.2(c), upon the issuance of any
additional Units by the Partnership to any Person, the General Partner,
in its discretion, may simultaneously purchase (or may purchase at any
time thereafter as specified below) a number of General Partner Units,
only to the extent necessary, such that after taking into account the
additional Units issued to such Person and the General Partner Units to
be issued to the General Partner pursuant to this Section 5.2(d)(ii),
the Percentage Interest of its General Partner Interest shall be no
more than 1.0%. The consideration for the General Partner Units to be
issued to the General Partner shall be (A) if the Units issued are
Common Units, the higher of the price at which the Common Units were
issued or, only if the purchase of the General Partner Units is not
made simultaneously with the issuance of the Common Units, the Closing
Price of the Common Units on the day prior to the proposed issuance of
such General Partner Units or (B) if the Units issued are not Common
Units, the price at which the Partnership initially sells such Units.
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SECTION 5.3 Contributions by Initial Limited Partners and Reimbursement of the
General Partner.
(a) On the Initial Closing Date and pursuant to the Underwriting
Agreement, each Underwriter contributed to the Partnership cash in an amount
equal to the Issue Price per Initial Common Unit, multiplied by the number of
Common Units specified in the Underwriting Agreement to be purchased by such
Underwriter at the Initial Closing Date. In exchange for such Capital
Contributions by the Underwriters, the Partnership issued Common Units to each
Underwriter on whose behalf such Capital Contribution was made in an amount
equal to the quotient obtained by dividing (i) the cash contribution to the
Partnership by or on behalf of such Underwriter by (ii) the Issue Price per
Initial Common Unit.
(b) No Limited Partner Interests were issued at the Initial Closing
Date other than (i) the Common Units issued pursuant to subsection (a) hereof in
an aggregate number equal to 1,500,000, (ii) the 1,641,026 Initial Subordinated
Units issued to the General Partner or its Affiliates pursuant to Section 5.2
hereof, and (iii) the Incentive Distribution Rights.
SECTION 5.4 Contributions by the Contributors.
On the Effective Date and pursuant to the Contribution Agreement, the
Contributors shall contribute the Triton Interests to the Partnership. In
exchange for such Capital Contribution by the Contributors, the Partnership
shall issue 7,101,818 Common Units, 4,058,182 Subordinated Units and 18,000,000
Deferred Participation Units to the Contributors.
SECTION 5.5 Interest and Withdrawal.
No interest shall be paid by the Partnership on Capital Contributions.
No Partner or Assignee shall be entitled to the withdrawal or return of its
Capital Contribution, except to the extent, if any, that distributions made
pursuant to this Agreement or upon termination of the Partnership may be
considered as such by law and then only to the extent provided for in this
Agreement. Except to the extent expressly provided in this Agreement, no Partner
or Assignee shall have priority over any other Partner or Assignee either as to
the return of Capital Contributions or as to profits, losses or distributions.
Any such return shall be a compromise to which all Partners and Assignees agree
within the meaning of 17-502(b) of the Delaware Act.
SECTION 5.6 Capital Accounts.
(a) The Partnership shall maintain for each Partner (or a beneficial
owner of Partnership Interests held by a nominee in any case in which the
nominee has furnished the identity of such owner to the Partnership in
accordance with Section 6031(c) of the Code or any other method acceptable to
the General Partner in its sole discretion) owning a Partnership Interest a
separate Capital Account with respect to such Partnership Interest in accordance
with the rules of Treasury Regulation Section 1.704-1(b)(2)(iv). Such Capital
Account shall be increased by (i) the amount of all Capital Contributions made
to the Partnership with respect to such Partnership Interest pursuant to this
Agreement and (ii) all items of Partnership income and gain (including, without
limitation, income and gain exempt from tax) computed in accordance with Section
5.6(b) and allocated with respect to such Partnership Interest pursuant to
Section 6.1, and decreased by (A) the amount of cash or Net Agreed Value of all
actual and deemed distributions of cash or property made with respect to such
Partnership Interest pursuant to this Agreement and (B) all items of Partnership
deduction and loss computed in accordance with Section 5.6(b) and allocated with
respect to such Partnership Interest pursuant to Section 6.1.
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(b) For purposes of computing the amount of any item of income, gain,
loss or deduction which is to be allocated pursuant to Article VI and is to be
reflected in the Partners' Capital Accounts, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes (including,
without limitation, any method of depreciation, cost recovery or amortization
used for that purpose), provided, that:
(i) Solely for purposes of this Section 5.6, the Partnership
shall be treated as owning directly its proportionate share (as
determined by the General Partner based upon the provisions of any
Operating Partnership Agreement) of all property owned by any Operating
Partnership or any other Subsidiary that is classified as a partnership
for federal income tax purposes.
(ii) All fees and other expenses incurred by the Partnership
to promote the sale of (or to sell) a Partnership Interest that can
neither be deducted nor amortized under Section 709 of the Code, if
any, shall, for purposes of Capital Account maintenance, be treated as
an item of deduction at the time such fees and other expenses are
incurred and shall be allocated among the Partners pursuant to Section
6.1.
(iii) Except as otherwise provided in Treasury Regulation
Section 1.704-1(b)(2)(iv)(m), the computation of all items of income,
gain, loss and deduction shall be made without regard to any election
under Section 754 of the Code which may be made by the Partnership and,
as to those items described in Section 705(a)(1)(B) or 705(a)(2)(B) of
the Code, without regard to the fact that such items are not includable
in gross income or are neither currently deductible nor capitalized for
federal income tax purposes. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b)
or 743(b) of the Code is required, pursuant to Treasury Regulation
Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining
Capital Accounts, the amount of such adjustment in the Capital Accounts
shall be treated as an item of gain or loss.
(iv) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the
adjusted basis of such property as of such date of disposition were
equal in amount to the Partnership's Carrying Value with respect to
such property as of such date.
(v) In accordance with the requirements of Section 704(b) of
the Code, any deductions for depreciation, cost recovery or
amortization attributable to any Contributed Property shall be
determined as if the adjusted basis of such property on the date it was
acquired by the Partnership were equal to the Agreed Value of such
property. Upon an adjustment pursuant to Section 5.6(d) to the Carrying
Value of any Partnership property subject to depreciation, cost
recovery or amortization, any further deductions for such depreciation,
cost recovery or amortization attributable to such property shall be
determined (A) as if the adjusted basis of such property were equal to
the Carrying Value of such property immediately following such
adjustment and (B) using a rate of depreciation, cost recovery or
amortization derived from the same method and useful life (or, if
applicable, the remaining useful life) as is applied for federal income
tax purposes; provided, however, that, if the asset has a zero adjusted
basis for federal income tax purposes, depreciation, cost recovery or
amortization deductions shall be determined using any reasonable method
that the General Partner may adopt.
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(vi) If the Partnership's adjusted basis in a depreciable or
cost recovery property is reduced for federal income tax purposes
pursuant to Section 48(q)(1) or 48(q)(3) of the Code, the amount of
such reduction shall, solely for purposes hereof, be deemed to be an
additional depreciation or cost recovery deduction in the year such
property is placed in service and shall be allocated among the Partners
pursuant to Section 6.1. Any restoration of such basis pursuant to
Section 48(q)(2) of the Code shall, to the extent possible, be
allocated in the same manner to the Partners to whom such deemed
deduction was allocated.
(c) (i) Subject to subsection (ii) below, a transferee of a Partnership
Interest shall succeed to a pro rata portion of the Capital Account of the
transferor relating to the Partnership Interest so transferred.
(ii) Immediately prior to the transfer of (A) a Subordinated
Unit or (B) a Subordinated Unit that has converted into a Common Unit
pursuant to Section 5.10 by a holder thereof (other than a transfer to
an Affiliate unless the General Partner elects to have this
subparagraph 5.5(c)(ii) apply), the Capital Account maintained for such
Person with respect to its Subordinated Units or converted Subordinated
Units will
(1) first, be allocated to the Subordinated Units or
converted Subordinated Units to be transferred in an amount
equal to the product of (aa) the number of such Subordinated
Units or converted Subordinated Units to be transferred and
(bb) the Per Unit Capital Amount for a Common Unit; and
(2) second, to the extent the transferor continues to
hold any Units, any remaining balance in such Capital Account
will be retained by the transferor.
Following any such allocation, the transferor's Capital Account, if
any, maintained with respect to the retained Subordinated Units or
converted Subordinated Units, if any, will have a balance equal to the
amount allocated under clause (c)(ii)(2) hereinabove, and the
transferee's Capital Account established with respect to the
transferred Subordinated Units or converted Subordinated Units will
have a balance equal to the amount allocated under clause (c)(ii)(1)
hereinabove.
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(d) (i) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), on an issuance of additional Partnership Interests for
cash or Contributed Property or the conversion of the General Partner's Combined
Interest to Common Units pursuant to Section 11.3(c), the Capital Account of all
Partners (other than those Partners whose only Partnership Interests consist of
Deferred Participation Units) and the Carrying Value of each Partnership
property immediately prior to such issuance shall be adjusted upward or downward
to reflect any Unrealized Gain or Unrealized Loss attributable to such
Partnership property, as if such Unrealized Gain or Unrealized Loss had been
recognized on an actual sale of each such property immediately prior to such
issuance and had been allocated to the Partners (other than those Partners whose
only Partnership Interests consist of Deferred Participation Units) at such time
pursuant to Section 6.1 in the same manner as any item of gain or loss actually
recognized during such period would have been allocated. In determining such
Unrealized Gain or Unrealized Loss, the aggregate cash amount and fair market
value of all Partnership assets (including, without limitation, cash or cash
equivalents) immediately prior to the issuance of additional Partnership
Interests shall be determined by the General Partner using such reasonable
method of valuation as it may adopt; provided, however, that the General
Partner, in arriving at such valuation, must take fully into account the fair
market value of the Partnership Interests of all Partners (other than those
Partners whose only Partnership Interests consist of Deferred Participation
Units) at such time. The General Partner shall allocate such aggregate value
among the assets of the Partnership (in such manner as it determines in its
discretion to be reasonable) to arrive at a fair market value for individual
properties.
(ii) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), immediately prior to any actual or deemed
distribution to a Partner of any Partnership property (other than a
distribution of cash that is not in redemption or retirement of a
Partnership Interest), the Capital Accounts of all Partners (other than
those Partners whose only Partnership Interests consist of Deferred
Participation Units) and the Carrying Value of all Partnership property
shall be adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as if such
Unrealized Gain or Unrealized Loss had been recognized in a sale of
such property immediately prior to such distribution for an amount
equal to its fair market value, and had been allocated to the Partners
(other than those Partners whose only Partnership Interests consist of
Deferred Participation Units), at such time, pursuant to this Section
6.1 in the same manner as any item of gain or loss actually recognized
during such period would have been allocated. In determining such
Unrealized Gain or Unrealized Loss the aggregate cash amount and fair
market value of all Partnership assets (including, without limitation,
cash or cash equivalents) immediately prior to a distribution shall (A)
in the case of an actual distribution which is not made pursuant to
Section 12.4 or in the case of a deemed distribution, be determined and
allocated in the same manner as that provided in Section 5.6(d)(i) or
(B) in the case of a liquidating distribution pursuant to Section 12.4,
be determined and allocated by the Liquidator using such reasonable
method of valuation as it may adopt.
(e) (i) Notwithstanding any other provision of this Agreement to the
contrary, the Partners agree that their respective Capital Account balances
(solely as such Capital Account balances relate to Outstanding Common Units (a
"Common Capital Account") or Subordinated Units (a "Subordinated Capital
Account") held by such Partners) immediately after the effective time of the
conversion of an Outstanding Deferred Participation Unit into a Subordinated
Unit pursuant to Section 5.11 (a "Conversion") shall be adjusted (a "Conversion
Adjustment") as provided in this Section 5.6(e).
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(ii) Upon a Conversion, each Subordinated Capital Account and
each Common Capital Account shall be adjusted (provided, however, that
the aggregate sum of all Subordinated Capital Account balances and all
Common Capital Account balances shall be the same immediately after a
Conversion Adjustment as immediately prior to such Conversion
Adjustment) such that the Per Unit Capital Amount is the same for all
Outstanding Subordinated Units (including the Subordinated Units issued
pursuant to such Conversion) immediately after the Conversion
Adjustment. A Conversion Adjustment shall have the effect of reducing
the Per Unit Capital Amount for each Unit (other than General Partner
Units) Outstanding immediately prior to the Conversion (each, an
"Existing Unit") in a manner that shall be borne (A) proportionally
among each class of Existing Units such that the Per Unit Capital Ratio
is the same immediately after such Conversion Adjustment as immediately
prior to such Conversion Adjustment and (B) proportionally within each
class of Existing Units such that the Per Unit Capital Amounts
immediately after such Conversion Adjustment is the same for all Units
within such class of Existing Units.
SECTION 5.7 Issuances of Additional Partnership Securities.
(a) Subject to Section 5.8, the Partnership may issue additional
Partnership Securities and options, rights, warrants and appreciation rights
relating to the Partnership Securities for any Partnership purpose at any time
and from time to time to such Persons for such consideration and on such terms
and conditions as shall be established by the General Partner in its sole
discretion, all without the approval of any Limited Partners.
(b) Each additional Partnership Security authorized to be issued by the
Partnership pursuant to Section 5.7(a) may be issued in one or more classes, or
one or more series of any such classes, with such designations, preferences,
rights, powers and duties (which may be senior to existing classes and series of
Partnership Securities), as shall be fixed by the General Partner in the
exercise of its sole discretion, including:
(i) the right to share Partnership profits and losses or items
thereof;
(ii) the right to share in Partnership distributions;
(iii) the rights upon dissolution and liquidation of the
Partnership;
(iv) whether, and the terms and conditions upon which, the
Partnership may redeem the Partnership Security;
(v) whether such Partnership Security is issued with the
privilege of conversion or exchange and, if so, the terms and
conditions of such conversion or exchange;
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(vi) the terms and conditions upon which each Partnership
Security will be issued, evidenced by certificates and assigned or
transferred; and
(vii) the right, if any, of each such Partnership Security to
vote on Partnership matters, including matters relating to the relative
rights, preferences and privileges of such Partnership Security.
(c) The General Partner is hereby authorized and directed to take all
actions that it deems necessary or appropriate in connection with:
(i) each issuance of Partnership Securities and options,
rights, warrants and appreciation rights relating to Partnership
Securities pursuant to this Section 5.7;
(ii) the conversion of the Combined Interest into Units
pursuant to the terms of this Agreement;
(iii) the admission of Additional Limited Partners; and
(iv) all additional issuances of Partnership Securities.
(d) The General Partner is further authorized and directed to specify
the relative rights, powers and duties of the holders of the Units or other
Partnership Securities being so issued. The General Partner shall do all things
necessary to comply with the Delaware Act and is authorized and directed to do
all things it deems to be necessary or advisable in connection with any future
issuance of Partnership Securities or in connection with the conversion of the
Incentive Distribution Rights into Units pursuant to the terms of this
Agreement, including compliance with any statute, rule, regulation or guideline
of any federal, state or other governmental agency or any National Securities
Exchange on which the Units or other Partnership Securities are listed for
trading.
SECTION 5.8 Limitations on Issuance of Additional Partnership Securities.
The issuance of Partnership Securities pursuant to Section 5.7 shall be
subject to the following restrictions and limitations:
(a) During the Subordination Period, the Partnership shall not issue
(and shall not issue any options, rights, warrants or appreciation rights
relating to) an aggregate of more than 4,500,000 additional Parity Units without
the prior approval of the holders of a Unit Majority. In applying this
limitation, there shall be excluded Common Units and other Parity Units issued:
(i) in accordance with Sections 5.8(b) and 5.8(c);
(ii) upon conversion of Subordinated Units pursuant to Section
5.10;
(iii) upon conversion of the Combined Interest pursuant to
Section 11.3(c);
(iv) pursuant to the employee benefit plans of the General
Partner, the Partnership or any other Group Member; and
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(v) in the event of a combination or subdivision of Common
Units or other pro rata distribution to the Common Unit holders.
(b) The Partnership may also issue an unlimited number of Parity Units,
prior to the end of the Subordination Period and without the prior approval of
the Unitholders, if such issuance occurs (i) in connection with an Acquisition
or a Capital Improvement or (ii) within 365 days of, and the net proceeds from
such issuance are used to repay debt incurred in connection with, an Acquisition
or a Capital Improvement, in each case where such Acquisition or Capital
Improvement involves assets that, if acquired by the Partnership as of the date
that is one year prior to the first day of the Quarter in which such Acquisition
is to be consummated or such Capital Improvement is to be completed, would have
resulted, on a pro forma basis, in no decrease in:
(A) the amount of Adjusted Operating Surplus
generated by the Partnership on a per-Unit basis (for all
Outstanding Units) with respect to each of the four most
recently completed Quarters (on a pro forma basis as described
below) as compared to
(B) the actual amount of Adjusted Operating Surplus
generated by the Partnership on a per-Unit basis (for all
Outstanding Units) (excluding Adjusted Operating Surplus
attributable to the Acquisition or Capital Improvement) with
respect to each of such four most recently completed Quarters.
The amount in clause (A) shall be determined on a pro forma basis and include
any necessary modifications as if (1) all of the Parity Units to be issued in
connection with or within 365 days of such Acquisition or Capital Improvement
had been issued and outstanding, (2) all indebtedness for borrowed money to be
incurred or assumed in connection with such Acquisition or Capital Improvement
(other than any such indebtedness that is to be repaid with the proceeds of such
issuance of Parity Units) had been incurred or assumed, in each case as of the
commencement of such four-Quarter period, (3) the personnel expenses that would
have been incurred by the Partnership in the operation of the acquired assets
are the personnel expenses for employees to be retained by the Partnership in
the operation of the acquired assets, (4) the non-personnel costs and expenses
are computed on the same basis as those incurred by the Partnership in the
operation of the Partnership's business at similarly situated Partnership
facilities and (5) the expected normalized operations and acquisition synergies
had been achieved.
(c) During the Subordination Period, the Partnership shall not issue
(and shall not issue any options, rights, warrants or appreciation rights
relating to) additional Partnership Securities having rights to distributions or
in liquidation ranking prior or senior to the Common Units, without the prior
approval of the holders of a Unit Majority.
(d) No fractional Units (or fractional Deferred Participation Units)
shall be issued by the Partnership. If a distribution, subdivision, combination
or some such other such event would result in the issuance of fractional Units
(or fractional Deferred Participation Units), each fractional Unit (or
fractional Deferred Participation Unit) shall be rounded to the nearest whole
Unit (or Deferred Participation Unit), and a 0.5 Unit (or 0.5 Deferred
Participation Unit) shall be rounded to the next higher Unit (or Deferred
Participation Unit). This Section 5.8(d) shall not apply to General Partner
Units.
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SECTION 5.9 Conversion of Initial Subordinated Units.
On the Effective Date, all Outstanding Initial Subordinated Units shall
convert into 1,481,026 Common Units. Upon such conversion, such Outstanding
Initial Subordinated Units shall no longer be Outstanding Initial Subordinated
Units but rather shall become Outstanding Common Units for all purposes under
this Agreement.
SECTION 5.10 Conversion of Subordinated Units.
(a) With respect to any particular Outstanding Subordinated Unit, such
Outstanding Subordinated Unit shall convert into a Common Unit on a one-for-one
basis on the termination of the Unit Subordination Period applicable to such
Outstanding Subordinated Unit. Upon such conversion, such Subordinated Unit
shall no longer be an Outstanding Subordinated Unit but rather it shall be an
Outstanding Common Unit for all purposes under this Agreement.
(b) Notwithstanding any other provision of this Agreement, all the
Outstanding Subordinated Units shall automatically convert into Common Units on
a one-for-one basis pursuant to the terms of Section 11.4.
(c) A Subordinated Unit that has converted into a Common Unit, other
than by reason of Section 11.4, shall remain subject to the provisions of
Section 5.6(c)(ii), 6.1(d)(x) and 6.7(c).
SECTION 5.11 Conversion of Deferred Participation Units.
(a) The Outstanding Deferred Participation Units shall convert on a
one-for-one basis into Subordinated Units in four separate and equal tranches
pursuant to the terms set forth below (each a "Tranche").
(b) The conversion of a Deferred Participation Unit into a Subordinated
Unit shall be subject to the following general conditions:
(i) the first day such a conversion may occur is the last day
of the Quarter after the first anniversary date of the Effective Date
provided that the Effective Date occurs within the first calendar month
of such Quarter. If the Effective Date does not occur within the first
calendar month of such Quarter, the first day such a conversion may
occur is the last day of the Quarter immediately following the Quarter
in which the first anniversary date of the Effective Date occurs;
(ii) no more than one Tranche may vest in any consecutive four
Quarter period; and
(iii) Tranches shall vest in numerical order whereby the first
Tranche shall vest first and the fifth Tranche shall vest last.
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(c) Subject to the conditions set forth in subsection (b) hereinabove,
the first Tranche shall vest and the underlying Deferred Participation Units
shall automatically convert into Subordinated Units on the Record Date for a
distribution of Available Cash (and shall be deemed Outstanding on such Record
Date for purposes of receiving such distribution) if:
(i) the General Partner declares a distribution of Available
Cash that is deemed to be from Operating Surplus and is sufficient to
pay each of the Outstanding Common Units, Outstanding Subordinated
Units and those Subordinated Units to be issued upon the conversion of
the entire first Tranche, an amount at least equal to the First
Deferred Target Distribution; and
(ii) the Adjusted Operating Surplus generated during the
Quarter for which such distribution is declared equaled or exceeded the
sum of the First Deferred Target Distribution on all of the Common
Units and Subordinated Units that were Outstanding during such Quarter
on a fully diluted basis (i.e., taking into account for purposes of
such determination all Outstanding Common Units, all Outstanding
Subordinated Units, all Common Units and Subordinated Units issuable
upon exercise of employee options that have, as of the date of
determination, already vested or are scheduled to vest prior to the end
of the Quarter immediately following the Quarter in respect of which
such determination is made, and all Common Units and Subordinated Units
that have as of the date of determination, been earned by but not yet
issued to management of the Partnership with respect to incentive
compensation; provided, however, no Deferred Participation Units nor
the Subordinated Units into which they may be converted shall be taken
into account, other than those Subordinated Units to be issued pursuant
to the conversion of the Deferred Participation Units into Subordinated
Units as a result of the distribution declared for such Quarter), plus
the related distribution on the General Partner Units and on the
general partner interest in the Operating Partnership during such
Quarter.
(d) The second through the fifth Tranches shall vest and the applicable
Deferred Participation Units shall convert into Subordinated Units pursuant to
the provisions set forth in subsection (c) hereinabove; provided, however, that
after the vesting of the first Tranche and the subsequent conversion of the
applicable Deferred Participation Units, and likewise after each vesting and
corresponding conversion related to the second through the fourth Tranches, the
term "First Deferred Target Distribution" in Section 5.11(c) shall be replaced
with, as applicable, the terms (i) "Second Deferred Target Distribution," (ii)
"Third Deferred Target Distribution," and (iii) "Fourth Deferred Target
Distribution" and the reference to "first Tranche" in Section 5.11(c) shall be
replaced to reflect the applicable Tranche.
(e) Upon the conversion of a Deferred Participation Unit, such Deferred
Participation Unit shall no longer be an Outstanding Deferred Participation Unit
but rather shall be an Outstanding Subordinated Unit for all purposes of this
Agreement effective on the date of such conversion.
(f) Any Deferred Participation Unit that has not converted into a
Subordinated Unit upon the eighth anniversary of the Effective Date shall expire
and become null and void.
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(g) Notwithstanding any other provision of this Agreement, all the then
Outstanding Deferred Participation Units will automatically convert into Common
Units on a one-for-one basis as set forth in, and pursuant to the terms of,
Section 11.4.
(h) For purposes of determining whether the test in Section 5.11(c)(ii)
has been satisfied, Adjusted Operating Surplus will be adjusted upwards or
downwards if the Conflicts Committee determines in good faith that the amount of
Estimated Maintenance Capital Expenditure used in the determination of Adjusted
Operating Surplus in Section 5.11(c)(ii) was materially incorrect, based on
circumstances prevailing at the time of original determination of Estimated
Maintenance Capital Expenditures, for any one or more of the preceding eight
consecutive Quarters.
SECTION 5.12 Limited Preemptive Right.
Except as provided in this Section 5.12 and in Section 5.2, no Person
shall have any preemptive, preferential or other similar right with respect to
the issuance of any Partnership Security, whether unissued, held in the treasury
or hereafter created. The General Partner shall have the right, which it may
from time to time assign in whole or in part to any of its Affiliates, to
purchase Partnership Securities from the Partnership whenever, and on the same
terms that, the Partnership issues Partnership Securities to Persons other than
the General Partner and its Affiliates, to the extent necessary to maintain the
Percentage Interests of the General Partner and its Affiliates equal to that
which existed immediately prior to the issuance of such Partnership Securities.
SECTION 5.13 Splits and Combinations.
(a) Subject to Sections 5.13(d), 6.6 and 6.10 (dealing with adjustments
of distribution levels), the Partnership may make a Pro Rata distribution of
Partnership Securities to all Record Holders or may effect a subdivision or
combination of Partnership Securities so long as, after any such event, each
Partner shall have the same Percentage Interest in the Partnership as before
such event (and in the case of Deferred Participation Units, the number of such
Deferred Participation Units shall be proportionately adjusted upward or
downward, as applicable), and any amounts calculated on a per Unit basis
(including any Common Unit Arrearage or Cumulative Common Unit Arrearage) or
stated as a number of Units (including Deferred Participation Units and the
number of additional Parity Units that may be issued pursuant to Section 5.8
without a Unitholder vote) are proportionately adjusted retroactive to the
beginning of the Partnership.
(b) Whenever such a distribution, subdivision or combination of
Partnership Securities is declared, the General Partner shall select a Record
Date as of which the distribution, subdivision or combination shall be effective
and shall send notice thereof at least 20 days prior to such Record Date to each
Record Holder as of a date not less than 10 days prior to the date of such
notice. The General Partner also may cause a firm of independent public
accountants selected by it to calculate the number of Partnership Securities to
be held by each Record Holder after giving effect to such distribution,
subdivision or combination. The General Partner shall be entitled to rely on any
certificate provided by such firm as conclusive evidence of the accuracy of such
calculation.
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(c) Promptly following any such distribution, subdivision or
combination, the Partnership may issue Certificates to the Record Holders of
Partnership Securities as of the applicable Record Date representing the new
number of Partnership Securities held by such Record Holders, or the General
Partner may adopt such other procedures as it may deem appropriate to reflect
such changes. If any such combination results in a smaller total number of
Partnership Securities Outstanding, the Partnership shall require, as a
condition to the delivery to a Record Holder of such new Certificate, the
surrender of any Certificate held by such Record Holder immediately prior to
such Record Date.
(d) The Partnership shall not issue fractional Units (or fractional
Deferred Participation Units) upon any distribution, subdivision or combination
of Units (or Deferred Participation Units). If a distribution, subdivision or
combination of Units (or Deferred Participation Units) would result in the
issuance of fractional Units (or fractional Deferred Participation Units) but
for the provisions of Section 5.8(e) and this Section 5.13(d), each fractional
Unit (or fractional Deferred Participation Unit) shall be rounded to the nearest
whole Unit (or Deferred Participation Unit), and a 0.5 Unit (or 0.5 Deferred
Participation Unit) shall be rounded to the next higher Unit (or Deferred
Participation Unit). This Section 5.13(d) shall not apply to General Partner
Units.
SECTION 5.14 Fully Paid and Non-Assessable Nature of Limited Partner Interests.
All Limited Partner Interests issued pursuant to, and in accordance
with the requirements of, this Article V shall be fully paid and non-assessable
Limited Partner Interests in the Partnership, except as such non-assessability
may be affected by Section 17-607 of the Delaware Act.
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
SECTION 6.1 Allocations for Capital Account Purposes.
For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Section 5.6(b)) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.
(a) Net Income. After giving effect to the special allocations set
forth in Section 6.1(d), Net Income for each taxable year and all items of
income, gain, loss and deduction taken into account in computing Net Income for
such taxable year shall be allocated as follows:
(i) First, 100% to the General Partner in an amount equal to
the aggregate Net Losses allocated to the General Partner pursuant to
Section 6.1(b)(iii) for all previous taxable years until the aggregate
Net Income allocated to the General Partner pursuant to this Section
6.1(a)(i) for the current taxable year and all previous taxable years
is equal to the aggregate Net Losses allocated to the General Partner
pursuant to Section 6.1(b)(iii) for all previous taxable years;
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(ii) Second, to the Unitholders, Pro Rata, until the aggregate
Net Income allocated to such Partners pursuant to this Section
6.1(a)(ii) for the current taxable year and all previous taxable years
is equal to the aggregate Net Losses allocated to such Partners
pursuant to Section 6.1(b)(ii) for all previous taxable years; and
(iii) Third, the balance, if any, to the Unitholders, Pro
Rata.
(b) Net Losses. After giving effect to the special allocations set
forth in Section 6.1(d), Net Losses for each taxable period and all items of
income, gain, loss and deduction taken into account in computing Net Losses for
such taxable period shall be allocated as follows:
(i) First, to the Unitholders, Pro Rata, until the aggregate
Net Losses allocated pursuant to this Section 6.1(b)(i) for the current
taxable year and all previous taxable years is equal to the aggregate
Net Income allocated to such Partners pursuant to Section 6.1(a)(iii)
for all previous taxable years;
(ii) Second, to the Unitholders, Pro Rata; provided, that Net
Losses shall not be allocated pursuant to this Section 6.1(b)(ii) to
the extent that such allocation would cause any Unitholder to have a
deficit balance in its Adjusted Capital Account at the end of such
taxable year (or increase any existing deficit balance in its Adjusted
Capital Account); and
(iii) Third, the balance, if any, 100% to the General Partner.
(c) Net Termination Gains and Losses. After giving effect to the
special allocations set forth in Section 6.1(d), all items of income, gain, loss
and deduction taken into account in computing Net Termination Gain or Net
Termination Loss for such taxable period shall be allocated in the same manner
as such Net Termination Gain or Net Termination Loss is allocated hereunder. All
allocations under this Section 6.1(c) shall be made after Capital Account
balances have been adjusted by all other allocations provided under this Section
6.1 and Section 5.6(e) and after all distributions of Available Cash provided
under Sections 6.4 and 6.5 have been made; provided, however, that solely for
purposes of this Section 6.1(c), Capital Accounts shall not be adjusted for
distributions made pursuant to Section 12.4.
(i) If a Net Termination Gain is recognized (or deemed
recognized pursuant to Section 5.6(d)), such Net Termination Gain shall
be allocated among the Partners in the following manner (and the
Capital Accounts of the Partners shall be increased by the amount so
allocated in each of the following subclauses, in the order listed,
before an allocation is made pursuant to the next succeeding
subclause):
(A) First, to each Partner having a deficit balance
in its Capital Account, in the proportion that such deficit
balance bears to the total deficit balances in the Capital
Accounts of all Partners, until each such Partner has been
allocated Net Termination Gain equal to any such deficit
balance in its Capital Account;
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(B) Second, to the Unitholders holding Common Units,
Pro Rata, in a percentage equal to 100% less the Percentage
Interest of the General Partner Interest, and to the General
Partner in a percentage equal to the Percentage Interest of
its General Partner Interest, until the Capital Account in
respect of each Common Unit then Outstanding is equal to the
sum of (1) its Unrecovered Capital plus (2) the Minimum
Quarterly Distribution for the Quarter during which the
Liquidation Date (or the date on which the Carrying Value of
Partnership property is adjusted pursuant to Section 5.6(d))
occurs, reduced by any distribution pursuant to Sections
6.4(a)(i)(A) or 6.4(b)(i) with respect to such Common Unit for
such Quarter (the amount determined pursuant to this clause
(2) is hereinafter defined as the "Unpaid MQD") plus (3) any
then existing Cumulative Common Unit Arrearage;
(C) Third, if such Net Termination Gain is recognized
(or is deemed to be recognized) prior to the expiration of the
Subordination Period, to the Unitholders holding Subordinated
Units, Pro Rata, in a percentage equal to 100% less the
Percentage Interest of the General Partner Interest, and to
the General Partner in a percentage equal to the Percentage
Interest of its General Partner Interest, until the Capital
Account in respect of each Subordinated Unit then Outstanding
equals the sum of (1) its Unrecovered Capital, determined for
the taxable year (or portion thereof) to which this allocation
of gain relates, plus (2) the Minimum Quarterly Distribution
for the Quarter during which the Liquidation Date (or the date
on which the Carrying Value of Partnership property is
adjusted pursuant to Section 5.6(d)) occurs, reduced by any
distribution pursuant to Section 6.4(a)(i)(C) with respect to
such Subordinated Unit for such Quarter.
(D) Fourth, 86% to all Unitholders, Pro Rata, and 14%
to the holders of the Incentive Distribution Rights, Pro Rata,
until the Capital Account in respect of each Common Unit then
Outstanding is equal to the sum of (1) its Unrecovered
Capital, plus (2) the Unpaid MQD, plus (3) any then existing
Cumulative Common Unit Arrearage, plus (4) the excess of (aa)
the First Target Distribution less the Minimum Quarterly
Distribution for each Quarter of the Partnership's existence
over (bb) the cumulative per Unit amount of any distributions
of Operating Surplus that was distributed pursuant to Sections
6.4(a)(i)(D) and 6.4(b)(iii) (the sum of (1) plus (2) plus (3)
plus (4) is hereinafter defined as the "First Liquidation
Target Amount");
(E) Fifth, 76% to all Unitholders, Pro Rata, and 24%
to the holders of the Incentive Distribution Rights, Pro Rata,
until the Capital Account in respect of each Common Unit then
Outstanding is equal to the sum of (1) the First Liquidation
Target Amount, plus (2) the excess of (aa) the Second Target
Distribution less the First Target Distribution for each
Quarter of the Partnership's existence over (bb) the
cumulative per Unit amount of any distributions of Operating
Surplus that was distributed pursuant to Section 6.4(a)(i)(E)
and 6.4(b)(iv); and
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(F) Finally, any remaining amount 51% to all
Unitholders, Pro Rata, and 49% to the holders of the Incentive
Distribution Rights, Pro Rata.
(ii) If a Net Termination Loss is recognized (or deemed
recognized pursuant to Section 5.5(d)), such Net Termination Loss shall
be allocated among the Partners in the following manner:
(A) First, to the extent that Net Termination Gain
has been allocated pursuant to Sections 6.1(c)(i)(B)-(F) and
not previously offset by allocations of Net Termination Loss
pursuant to this Section 6.1(c)(ii)(A), to the Unitholders and
holders of Incentive Distribution Rights in the reverse order
and the same ratios as such prior allocations of Net
Termination Gain;
(B) Second, if such Net Termination Loss is
recognized (or is deemed to be recognized) prior to the
conversion of the last Outstanding Subordinated Unit, to the
Unitholders holding Subordinated Units, Pro Rata, in a
percentage equal to 100% less the Percentage Interest of the
General Partner Interest, and to the General Partner in a
percentage equal to the Percentage Interest of its General
Partner Interest, until the Capital Account in respect of each
Subordinated Unit then Outstanding has been reduced to zero;
(C) Third, to the Unitholders holding Common Units,
Pro Rata, in a percentage equal to 100% less the Percentage
Interest of the General Partner Interest, and to the General
Partner in a percentage equal to the Percentage Interest of
its General Partner Interest, until the Capital Account in
respect of each Common Unit then Outstanding has been reduced
to zero; and
(D) Fourth, the balance, if any, 100% to the General
Partner.
(d) Special Allocations. Notwithstanding any other provision of this
Section 6.1, the following special allocations shall be made for such taxable
period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding any
other provision of this Section 6.1, if there is a net decrease in
Partnership Minimum Gain during any Partnership taxable period, each
Partner shall be allocated items of Partnership income and gain for
such period (and, if necessary, subsequent periods) in the manner and
amounts provided in Treasury Regulation Sections 1.704-2(f)(6),
1.704-2(g)(2) and 1.704-2(j)(2)(i), or any successor provision. For
purposes of this Section 6.1(d), each Partner's Adjusted Capital
Account balance shall be determined, and the allocation of income or
gain required hereunder shall be effected, prior to the application of
any other allocations pursuant to this Section 6.1(d) with respect to
such taxable period (other than an allocation pursuant to Sections
6.1(d)(vi) and 6.1(d)(vii)). This Section 6.1(d)(i) is intended to
comply with the Partnership Minimum Gain chargeback requirement in
Treasury Regulation Section 1.704-2(f) and shall be interpreted
consistently therewith.
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(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain.
Notwithstanding the other provisions of this Section 6.1 (other than
Section 6.1(d)(i)), except as provided in Treasury Regulation Section
1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain during any Partnership taxable period, any Partner with a
share of Partner Nonrecourse Debt Minimum Gain at the beginning of such
taxable period shall be allocated items of Partnership income and gain
for such period (and, if necessary, subsequent periods) in the manner
and amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and
1.704-2(j)(2)(ii), or any successor provisions. For purposes of this
Section 6.1(d), each Partner's Adjusted Capital Account balance shall
be determined, and the allocation of income or gain required hereunder
shall be effected, prior to the application of any other allocations
pursuant to this Section 6.1(d), other than Section 6.1(d)(i) and other
than an allocation pursuant to Sections 6.1(d)(vi) and 6.1(d)(vii),
with respect to such taxable period. This Section 6.1(d)(ii) is
intended to comply with the chargeback of items of income and gain
requirement in Treasury Regulation Section 1.704-2(i)(4) and shall be
interpreted consistently therewith.
(iii) Priority Allocations.
(A) If the amount of cash or the Net Agreed Value of
any property distributed (except cash or property distributed
pursuant to Section 12.4) to any Unitholder with respect to
its Units for a taxable year is greater (on a per Unit basis)
than the amount of cash or the Net Agreed Value of property
distributed to the other Unitholders with respect to their
Units (on a per Unit basis), then (1) each Unitholder
receiving such greater cash or property distribution shall be
allocated gross income in an amount equal to the product of
(aa) the amount by which the distribution (on a per Unit
basis) to such Unitholder exceeds the distribution (on a per
Unit basis) to the Unitholders receiving the smallest
distribution and (bb) the number of Units owned by the
Unitholder receiving the greater distribution; and (2) the
General Partner shall be allocated gross income in an
aggregate amount equal to the sum of the amounts allocated in
clause (1) above multiplied by the Percentage Interest of its
General Partner Interest, divided by 100% less the Percentage
Interest of its General Partner Interest.
(B) After the application of Section 6.1(d)(iii)(A),
all or any portion of the remaining items of Partnership gross
income or gain for the taxable period, if any, shall be
allocated 100% to the holders of Incentive Distribution
Rights, Pro Rata, until the aggregate amount of such items
allocated to the holders of Incentive Distribution Rights
pursuant to this Section 6.1(d)(iii)(B) for the current
taxable year and all previous taxable years is equal to the
cumulative amount of all Incentive Distributions made to the
holders of Incentive Distribution Rights from the Initial
Closing Date to a date 45 days after the end of the current
taxable year.
(iv) Qualified Income Offset. In the event any Partner
unexpectedly receives any adjustments, allocations or distributions
described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of
Partnership income and gain shall be specially allocated to such
Partner in an amount and manner sufficient to eliminate, to the extent
required by the Treasury Regulations promulgated under Section 704(b)
of the Code, the deficit balance, if any, in its Adjusted Capital
Account created by such adjustments, allocations or distributions as
quickly as possible unless such deficit balance is otherwise eliminated
pursuant to Section 6.1(d)(i) or (ii).
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(v) Gross Income Allocations. In the event any Partner has a
deficit balance in its Capital Account at the end of any Partnership
taxable period in excess of the sum of (A) the amount such Partner is
required to restore pursuant to the provisions of this Agreement and
(B) the amount such Partner is deemed obligated to restore pursuant to
Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5), such Partner
shall be specially allocated items of Partnership gross income and gain
in the amount of such excess as quickly as possible; provided, that an
allocation pursuant to this Section 6.1(d)(v) shall be made only if and
to the extent that such Partner would have a deficit balance in its
Capital Account as adjusted after all other allocations provided for in
this Section 6.1 have been tentatively made as if this Section
6.1(d)(v) were not in this Agreement.
(vi) Nonrecourse Deductions. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in accordance with
their respective Percentage Interests. If the General Partner
determines in its good faith discretion that the Partnership's
Nonrecourse Deductions must be allocated in a different ratio to
satisfy the safe harbor requirements of the Treasury Regulations
promulgated under Section 704(b) of the Code, the General Partner is
authorized, upon notice to the other Partners, to revise the prescribed
ratio to the numerically closest ratio that does satisfy such
requirements.
(vii) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to the
Partner that bears the Economic Risk of Loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions
are attributable in accordance with Treasury Regulation Section
1.704-2(i). If more than one Partner bears the Economic Risk of Loss
with respect to a Partner Nonrecourse Debt, such Partner Nonrecourse
Deductions attributable thereto shall be allocated between or among
such Partners in accordance with the ratios in which they share such
Economic Risk of Loss.
(viii) Nonrecourse Liabilities. For purposes of Treasury
Regulation Section 1.752-3(a)(3), the Partners agree that Nonrecourse
Liabilities of the Partnership in excess of the sum of (A) the amount
of Partnership Minimum Gain and (B) the total amount of Nonrecourse
Built-in Gain shall be allocated among the Partners in accordance with
their respective Percentage Interests.
(ix) Code Section 754 Adjustments. To the extent an adjustment
to the adjusted tax basis of any Partnership asset pursuant to Section
734(b) or 743(c) of the Code is required, pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment to the
Capital Accounts shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases
such basis), and such item of gain or loss shall be specially allocated
to the Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section
of the Treasury Regulations.
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(x) Economic Uniformity.
(A) At the election of the General Partner, with
respect to:
(1) any taxable period ending upon, or after, the
termination of a Unit Subordination Period for a particular
Subordinated Unit; or
(2) each Initial Subordinated Unit immediately prior
to the conversion of the Initial Subordinated Units pursuant
to Section 5.9;
all or a portion of the remaining items of Partnership gross
income or gain for such taxable period, after taking into
account allocations pursuant to Section 6.1(d)(iii), shall be
allocated 100% to the holder of such Subordinated Unit or such
Initial Subordinated Unit, as applicable, as of the
termination of the Unit Subordination Period or immediately
prior to the conversion of the Initial Subordination Units, as
applicable, until such holder has been allocated an amount of
gross income or gain which increases the Capital Account
maintained with respect to such Subordinated Unit or such
Initial Subordinated Unit, as applicable, to an amount equal
to the Per Unit Capital Amount for a Common Unit.
(B) The purpose of this allocation is to establish
uniformity between the Capital Accounts underlying
Subordinated Units or Initial Subordinated Units and the
Capital Accounts underlying Common Units held by Persons other
than those holders of Subordinated Units or Initial
Subordinated Units immediately prior to the conversion of such
Subordinated Units or Initial Subordinated Units into Common
Units. This allocation method for establishing such economic
uniformity will only be available to the General Partner to
the extent (i) the method for allocating the Capital Account
maintained with respect to the Subordinated Units between the
transferred and retained Subordinated Units pursuant to
Section 5.6(c)(ii) does not otherwise provide such economic
uniformity to such converted Subordinated Units or (ii) the
Capital Accounts underlying the Initial Subordinated Units are
not sufficient to provide such economic uniformity to such
converted Initial Subordinated Units.
(xi) Curative Allocation.
(A) Notwithstanding any other provision of this
Section 6.1, other than the Required Allocations, the Required
Allocations shall be taken into account in making the Agreed
Allocations so that, to the extent possible, the net amount of
items of income, gain, loss and deduction allocated to each
Partner pursuant to the Required Allocations and the Agreed
Allocations, together, shall be equal to the net amount of
such items that would have been allocated to each such Partner
under the Agreed Allocations had the Required Allocations and
the related Curative Allocation not otherwise been provided in
this Section 6.1. Notwithstanding the preceding sentence,
Required Allocations relating to (1) Nonrecourse Deductions
shall not be taken into account except to the extent that
there has been a decrease in Partnership Minimum Gain and (2)
Partner Nonrecourse Deductions shall not be taken into account
except to the extent that there has been a decrease in Partner
Nonrecourse Debt Minimum Gain. Allocations pursuant to this
Section 6.1(d)(xi)(A) shall only be made with respect to
Required Allocations to the extent the General Partner
reasonably determines that such allocations will otherwise be
inconsistent with the economic agreement among the Partners.
Further, allocations pursuant to this Section 6.1(d)(xi)(A)
shall be deferred with respect to allocations pursuant to
clauses (1) and (2) hereof to the extent the General Partner
reasonably determines that such allocations are likely to be
offset by subsequent Required Allocations.
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(B) The General Partner shall have reasonable
discretion, with respect to each taxable period, to (1) apply
the provisions of Section 6.1(d)(xi)(A) in whatever order is
most likely to minimize the economic distortions that might
otherwise result from the Required Allocations, and (2) divide
all allocations pursuant to Section 6.1(d)(xi)(A) among the
Partners in a manner that is likely to minimize such economic
distortions.
(xii) Corrective Allocations. In the event of any allocation
of Additional Book Basis Derivative Items or any Book-Down Event or any
recognition of a Net Termination Loss, the following rules shall apply:
(A) In the case of any allocation of Additional Book
Basis Derivative Items (other than an allocation of Unrealized
Gain or Unrealized Loss under Section 5.6(d) hereof), the
General Partner shall allocate additional items of gross
income and gain away from the holders of Incentive
Distribution Rights to the Unitholders and the General
Partner, or additional items of deduction and loss away from
the Unitholders and the General Partner to the holders of
Incentive Distribution Rights, to the extent that the
Additional Book Basis Derivative Items allocated to the
Unitholders or the General Partner exceed their Share of
Additional Book Basis Derivative Items. For this purpose, the
Unitholders and the General Partner shall be treated as being
allocated Additional Book Basis Derivative Items to the extent
that such Additional Book Basis Derivative Items have reduced
the amount of income that would otherwise have been allocated
to the Unitholders or the General Partner under the
Partnership Agreement (e.g., Additional Book Basis Derivative
Items taken into account in computing cost of goods sold would
reduce the amount of book income otherwise available for
allocation among the Partners). Any allocation made pursuant
to this Section 6.1(d)(xii)(A) shall be made after all of the
other Agreed Allocations have been made as if this Section
6.1(d)(xii) were not in this Agreement and, to the extent
necessary, shall require the reallocation of items that have
been allocated pursuant to such other Agreed Allocations.
(B) In the case of any negative adjustments to the
Capital Accounts of the Partners resulting from a Book-Down
Event or from the recognition of a Net Termination Loss, such
negative adjustment (1) shall first be allocated, to the
extent of the Aggregate Remaining Net Positive Adjustments, in
such a manner, as reasonably determined by the General
Partner, that to the extent possible the aggregate Capital
Accounts of the Partners will equal the amount which would
have been the Capital Account balance of the Partners if no
prior Book-Up Events had occurred, and (2) any negative
adjustment in excess of the Aggregate Remaining Net Positive
Adjustments shall be allocated pursuant to Section 6.1(c)
hereof.
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(C) In making the allocations required under this
Section 6.1(d)(xii), the General Partner, in its sole
discretion, may apply whatever conventions or other
methodology it deems reasonable to satisfy the purpose of this
Section 6.1(d)(xii).
SECTION 6.2 Allocations for Tax Purposes.
(a) Except as otherwise provided herein, for federal income tax
purposes, each item of income, gain, loss and deduction shall be allocated among
the Partners in the same manner as its correlative item of "book" income, gain,
loss or deduction is allocated pursuant to Section 6.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated for
federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in the
manner provided under Section 704(c) of the Code that takes into
account the variation between the Agreed Value of such property and its
adjusted basis at the time of contribution; and (B) any item of
Residual Gain or Residual Loss attributable to a Contributed Property
shall be allocated among the Partners in the same manner as its
correlative item of "book" gain or loss is allocated pursuant to
Section 6.1.
(ii) (A) In the case of an Adjusted Property, such items shall
(1) first, be allocated among the Partners in a manner consistent with
the principles of Section 704(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to such property and
the allocations thereof pursuant to Section 5.6(d)(i) or 5.6(d)(ii),
and (2) second, in the event such property was originally a Contributed
Property, be allocated among the Partners in a manner consistent with
Section 6.2(b)(i)(A); and (B) any item of Residual Gain or Residual
Loss attributable to an Adjusted Property shall be allocated among the
Partners in the same manner as its correlative item of "book" gain or
loss is allocated pursuant to Section 6.1.
(iii) The General Partner shall apply the principles of
Treasury Regulation Section 1.704-3(d) to eliminate Book-Tax
Disparities.
(c) For the proper administration of the Partnership and for the
preservation of uniformity of the Limited Partner Interests (or any class or
classes thereof), the General Partner shall have sole discretion to (i) adopt
such conventions as it deems appropriate in determining the amount of
depreciation, amortization and cost recovery deductions; (ii) make special
allocations for federal income tax purposes of income (including, without
limitation, gross income) or deductions; and (iii) amend the provisions of this
Agreement as appropriate (x) to reflect the proposal or promulgation of Treasury
Regulations under Section 704(b) or Section 704(c) of the Code or (y) otherwise
to preserve or achieve uniformity of the Limited Partner Interests (or any class
or classes thereof). The General Partner may adopt such conventions, make such
allocations and make such amendments to this Agreement as provided in this
Section 6.2(c) only if such conventions, allocations or amendments would not
have a material adverse effect on the Partners, the holders of any class or
classes of Limited Partner Interests issued and Outstanding or the Partnership,
and if such allocations are consistent with the principles of Section 704 of the
Code.
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(d) The General Partner in its discretion may determine to depreciate
or amortize the portion of an adjustment under Section 743(b) of the Code
attributable to unrealized appreciation in any Adjusted Property (to the extent
of the unamortized Book-Tax Disparity) using a predetermined rate derived from
the depreciation or amortization method and useful life applied to the
Partnership's common basis of such property, despite any inconsistency of such
approach with Treasury Regulation Section 1.167(c)-l(a)(6), Proposed Treasury
Regulation 1.197-2(g)(3), or any successor regulations thereto. If the General
Partner determines that such reporting position cannot reasonably be taken, the
General Partner may adopt depreciation and amortization conventions under which
all purchasers acquiring Limited Partner Interests in the same month would
receive depreciation and amortization deductions, based upon the same applicable
rate as if they had purchased a direct interest in the Partnership's property.
If the General Partner chooses not to utilize such aggregate method, the General
Partner may use any other reasonable depreciation and amortization conventions
to preserve the uniformity of the intrinsic tax characteristics of any Limited
Partner Interests that would not have a material adverse effect on the Limited
Partners or the Record Holders of any class or classes of Limited Partner
Interests.
(e) Any gain allocated to the Partners upon the sale or other taxable
disposition of any Partnership asset shall, to the extent possible, after taking
into account other required allocations of gain pursuant to this Section 6.2, be
characterized as Recapture Income in the same proportions and to the same extent
as such Partners (or their predecessors in interest) have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.
(f) All items of income, gain, loss, deduction and credit recognized by
the Partnership for federal income tax purposes and allocated to the Partners in
accordance with the provisions hereof shall be determined without regard to any
election under Section 754 of the Code which may be made by the Partnership;
provided, however, that such allocations, once made, shall be adjusted as
necessary or appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
(g) Each item of Partnership income, gain, loss and deduction
attributable to a transferred Partnership Interest, shall for federal income tax
purposes, be determined on an annual basis and prorated on a monthly basis and
shall be allocated to the Partners as of the opening of the New York Stock
Exchange on the first Business Day of each month; provided, however, that (i)
such items for the period beginning on the Initial Closing Date and ending on
the last day of the month in which the expiration of the Over-allotment Option
occurs shall be allocated to the Partners as of the opening of the New York
Stock Exchange on the first Business Day of the next succeeding month; and
provided, further, that gain or loss on a sale or other disposition of any
assets of the Partnership other than in the ordinary course of business shall be
allocated to the Partners as of the opening of the New York Stock Exchange on
the first Business Day of the month in which such gain or loss is recognized for
federal income tax purposes. The General Partner may revise, alter or otherwise
modify such methods of allocation as it determines necessary, to the extent
permitted or required by Section 706 of the Code and the regulations or rulings
promulgated thereunder.
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(h) Allocations that would otherwise be made to a Limited Partner under
the provisions of this Article VI shall instead be made to the beneficial owner
of Limited Partner Interests held by a nominee in any case in which the nominee
has furnished the identity of such owner to the Partnership in accordance with
Section 6031(c) of the Code or any other method acceptable to the General
Partner in its sole discretion.
SECTION 6.3 Requirement and Characterization of Distributions; Distributions to
Record Holders.
(a) Within 45 days following the end of each Quarter commencing with
the Quarter ending on March 31, 2000, an amount equal to 100% of Available Cash
with respect to such Quarter shall, subject to Section 17-607 of the Delaware
Act, be distributed in accordance with this Article VI by the Partnership to the
Partners as of the Record Date selected by the General Partner in its reasonable
discretion. Other than as set forth in Section 6.3(f), all amounts of Available
Cash distributed by the Partnership on any date from any source shall be deemed
to be Operating Surplus until the sum of all amounts of Available Cash
theretofore distributed by the Partnership to the Partners pursuant to Section
6.4 equals the Operating Surplus from the Initial Closing Date through the close
of the immediately preceding Quarter. Any remaining amounts of Available Cash
distributed by the Partnership on such date shall, except as otherwise provided
in Section 6.5, be deemed to be "Capital Surplus." All distributions required to
be made under this Agreement shall be made subject to Section 17-607 of the
Delaware Act.
(b) Notwithstanding Section 6.3(a), in the event of the dissolution and
liquidation of the Partnership, all receipts received during or after the
Quarter in which the Liquidation Date occurs, other than from borrowings
described in (a)(ii) of the definition of Available Cash, shall be applied and
distributed solely in accordance with, and subject to the terms and conditions
of, Section 12.4.
(c) Each distribution in respect of a Partnership Interest shall be
paid by the Partnership, directly or through the Transfer Agent or through any
other Person or agent, only to the Record Holder of such Partnership Interest as
of the Record Date set for such distribution. Such payment shall constitute full
payment and satisfaction of the Partnership's liability in respect of such
payment, regardless of any claim of any Person who may have an interest in such
payment by reason of an assignment or otherwise.
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(d) Notwithstanding any other provisions of this Agreement and with
respect to the first distribution of Available Cash for which a Record Date for
such distribution occurs after the date of issuance of the Subordinated Units
initially issued to the Contributors pursuant to the Contribution Agreement,
such Subordinated Units shall receive only a pro rata share of the distribution
of Available Cash then declared and to be made to such Subordinated Units
pursuant to Sections 6.4(a)(i)(C)-(F). Such pro rata share shall be determined
by multiplying (i) such distribution by (ii) a percentage equal to the number of
days such Subordinated Units were Outstanding prior to that Record Date divided
by the number of days in the Quarter to which such distribution applies plus the
number of days from the end of that Quarter up to and including the Record Date.
(e) (i) With respect to the first distribution of Available Cash for
which a Record Date for such distribution occurs after the date of issuance of
the Common Units initially issued to the Contributors pursuant to the
Contribution Agreement, such Common Units shall receive the full distribution of
Available Cash then declared and to be made to such Common Units pursuant to
Sections 6.4(a)(i)(A)-(F), if the amount of Available Cash as of the Effective
Date (taking into account any Available Cash of Triton as of the Effective Date
(as calculated pursuant to this Agreement)) is sufficient to pay such Common
Units a pro rata portion of such distribution applicable to the period from the
first day of such Quarter to the day immediately prior to the Effective Date; or
(ii) If such Available Cash is insufficient to pay such Common
Units a pro rata portion of such distribution applicable to the period
from the first day of such Quarter to the day immediately prior to the
Effective Date, then with respect to the first distribution of
Available Cash for which a Record Date for such distribution occurs
after the date of issuance of the Common Units initially issued
pursuant to the Contribution Agreement, such Common Units shall receive
a pro rata distribution of Available Cash then declared and to be made
to such Common Units pursuant to Sections 6.4(a)(i)(A)-(F). Such pro
rata share shall be determined by multiplying (i) such distribution by
(ii) a percentage equal to the number of days such Common Units were
Outstanding prior to that Record Date divided by the number of days in
the Quarter to which such distribution applies plus the number of days
from the end of that Quarter up to and including the Record Date.
(f) On the Effective Date, the Partnership shall make a one-time
special distribution of $3.70 (the "Special Distribution") to each Common Unit
that is Outstanding immediately prior to the Effective Date. Notwithstanding
Section 6.3(a), such Special Distribution shall be deemed to be from Capital
Surplus and the provisions of Sections 6.5 and 6.6(b) shall not apply to such
Special Distribution. It is intended that no taxable income of the Partnership
shall be allocated to any Partner based on a Partner's receipt of the Special
Distribution.
SECTION 6.4 Distributions of Available Cash from Operating Surplus.
(a) During a Unit Subordination Period.
(i) With respect to any Quarter in which a Unit Subordination
Period exists, Available Cash that is deemed to be Operating Surplus
pursuant to the provisions of Section 6.3 or 6.5 shall, subject to
Section 17-607 of the Delaware Act, be distributed as follows, except
as otherwise required by Section 5.7(b) in respect of additional
Partnership Securities issued pursuant thereto or except as otherwise
required by Sections 6.3(d) or (e):
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(A) First, to the Unitholders holding Common Units,
Pro Rata, in a percentage equal to 100% less the Percentage
Interest of the General Partner Interest, and to the General
Partner in a percentage equal to the Percentage Interest of
its General Partner Interest, until there has been distributed
in respect of each Common Unit then Outstanding an amount
equal to the Minimum Quarterly Distribution for such Quarter;
(B) Second, to the Unitholders holding Common Units,
Pro Rata, in a percentage equal to 100% less the Percentage
Interest of the General Partner Interest, and to the General
Partner in a percentage equal to the Percentage Interest of
its General Partner Interest, until there has been distributed
in respect of each Common Unit then Outstanding an amount
equal to such Common Unit's Cumulative Common Unit Arrearage
existing with respect to such Quarter;
(C) Third, to the Unitholders holding Subordinated
Units, Pro Rata, in a percentage equal to 100% less the
Percentage Interest of the General Partner Interest, and to
the General Partner in a percentage equal to the Percentage
Interest of its General Partner Interest, until there has been
distributed in respect of each Subordinated Unit then
Outstanding an amount equal to the Minimum Quarterly
Distribution for such Quarter;
(D) Fourth, 86% to all Unitholders, Pro Rata, and 14%
to the holders of the Incentive Distribution Rights, Pro Rata,
until there has been distributed in respect of each Unit then
Outstanding an amount equal to the excess of the First Target
Distribution over the Minimum Quarterly Distribution for such
Quarter;
(E) Fifth, 76% to all Unitholders, Pro Rata, and 24%
to the holders of the Incentive Distribution Rights, Pro Rata,
until there has been distributed in respect of each Unit then
Outstanding an amount equal to the excess of the Second Target
Distribution over the First Target Distribution for such
quarter; and
(F) Thereafter, 51% to all Unitholders, Pro Rata, and
49% to the holders of the Incentive Distribution Rights, Pro
Rata; provided, however, if the Minimum Quarterly
Distribution, the First Target Distribution and the Second
Target Distribution have been reduced to zero pursuant to
Section 6.6(b), and subject to the satisfaction of Section
6.4(a)(i)(B), the distribution of Available Cash that is
deemed to be Operating Surplus with respect to any Quarter
will be made solely in accordance with this Section
6.4(a)(i)(F).
(ii) If as a result of the distribution of Available Cash for
such Quarter, the holder of a Deferred Participation Unit becomes a
Unitholder due to the conversion of such Deferred Participation Unit
into a Subordinated Unit pursuant to Section 5.11, the holder of such
converted Deferred Participation Unit shall be included as a Unitholder
for such distributions in subsections (a)(i)(C)-(F) above and
notwithstanding anything to the contrary, such Subordinated Unit shall
be considered Outstanding for such Quarter.
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(b) No Unit Subordination Period. With respect to any Quarter (1) in
which a Unit Subordination Period does not exist or (2) after the Subordination
Period, Available Cash that is deemed to be Operating Surplus pursuant to the
provisions of Section 6.3 or 6.5, subject to Section 17-607 of the Delaware Act,
shall be distributed as follows, except as otherwise required by Section 5.7(b)
in respect of additional Partnership Securities issued pursuant thereto:
(i) First, to the Unitholders holding Common Units, Pro Rata,
in a percentage equal to 100% less the Percentage Interest of the
General Partner Interest, and to the General Partner in a percentage
equal to the Percentage Interest of its General Partner Interest, until
there has been distributed in respect of each Common Unit then
Outstanding an amount equal to the Minimum Quarterly Distribution for
such Quarter;
(ii) Second, to the Unitholders holding Common Units, Pro
Rata, in a percentage equal to 100% less the Percentage Interest of the
General Partner Interest, and to the General Partner in a percentage
equal to the Percentage Interest of its General Partner Interest, until
there has been distributed in respect of each Common Unit then
Outstanding an amount equal to the Cumulative Common Unit Arrearage
existing with respect to such Quarter;
(iii) Third, 86% to all Unitholders, Pro Rata, and 14% to the
holders of the Incentive Distribution Rights, Pro Rata, until there has
been distributed in respect of each Unit then Outstanding an amount
equal to the excess of the First Target Distribution over the Minimum
Quarterly Distribution for such Quarter;
(iv) Fourth, 76% to all Unitholders, Pro Rata, and 24% to the
holders of the Incentive Distribution Rights, Pro Rata, until there has
been distributed in respect of each Unit then Outstanding an amount
equal to the excess of the Second Target Distribution over the First
Target Distribution for such quarter; and
(v) Thereafter, 51% to all Unitholders, Pro Rata, and 49% to
the holders of the Incentive Distribution Rights, Pro Rata; provided,
however, if the Minimum Quarterly Distribution, the First Target
Distribution and the Second Target Distribution have been reduced to
zero pursuant to Section 6.6(b), the distribution of Available Cash
that is deemed to be Operating Surplus with respect to any Quarter will
be made solely in accordance with this Section 6.4(b)(v).
SECTION 6.5 Distributions of Available Cash from Capital Surplus.
Available Cash that is deemed to be Capital Surplus pursuant to the
provisions of Section 6.3(a) shall, subject to Section 17-607 of the Delaware
Act, be distributed, unless the provisions of Section 6.3 require otherwise, as
follows:
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(a) First, to all Unitholders, Pro Rata, until a hypothetical holder of
a Common Unit acquired on the Initial Closing Date has received with respect to
such Common Unit, during the period since the Initial Closing Date through such
date, distributions of Available Cash that are deemed to be Capital Surplus in
an aggregate amount equal to the Initial Unit Price;
(b) Second, to the Unitholders holding Common Units, Pro Rata, in a
percentage equal to 100% less the Percentage Interest of the General Partner
Interest, and to the General Partner in a percentage equal to the Percentage
Interest of its General Partner Interest, until there has been distributed with
respect to each Common Unit then Outstanding an amount equal to the Cumulative
Common Unit Arrearage;
(c) Third, any remaining Available Cash shall be distributed as if it
were Operating Surplus and shall be distributed in accordance with Section 6.4.
SECTION 6.6 Adjustment of Minimum Quarterly Distribution, Target Distribution
Levels and Deferred Target Distribution Levels.
(a) The Minimum Quarterly Distribution, First Target Distribution,
Second Target Distribution, First Deferred Target Distribution, Second Deferred
Target Distribution, Third Deferred Target Distribution, Fourth Deferred Target
Distribution, Fifth Deferred Target Distribution, Common Unit Arrearages and
Cumulative Common Unit Arrearages shall be proportionately adjusted in the event
of any distribution, combination or subdivision (whether effected by a
distribution payable in Units or otherwise) of Units or other Partnership
Securities in accordance with Section 5.13.
(b) Except as set forth in Section 6.3(f), in the event of a
distribution of Available Cash that is deemed to be from Capital Surplus, the
then applicable Minimum Quarterly Distribution, First Target Distribution,
Second Target Distribution, First Deferred Target Distribution, Second Deferred
Target Distribution, Third Deferred Target Distribution, Fourth Deferred Target
Distribution or Fifth Deferred Target Distribution shall be adjusted
proportionately downward to equal the product obtained by multiplying the
otherwise applicable Minimum Quarterly Distribution, First Target Distribution,
Second Target Distribution, First Deferred Target Distribution, Second Deferred
Target Distribution, Third Deferred Target Distribution, Fourth Deferred Target
Distribution or Fifth Deferred Target Distribution, as the case may be, by a
fraction of which the numerator is the Unrecovered Capital of the Common Units
immediately after giving effect to such distribution and of which the
denominator is the Unrecovered Capital of the Common Units immediately prior to
giving effect to such distribution.
(c) The Minimum Quarterly Distribution, First Target Distribution,
Second Target Distribution, First Deferred Target Distribution, Second Deferred
Target Distribution, Third Deferred Target Distribution, Fourth Deferred Target
Distribution and Fifth Deferred Target Distribution shall also be subject to
adjustment pursuant to Section 6.10.
SECTION 6.7 Special Provisions Relating to the Holders of Subordinated Units.
(a) Except with respect to (i) the right to vote on or approve matters
requiring the vote or approval of a percentage of the holders of Outstanding
Common Units and (ii) the right to participate in allocations of income, gain,
loss and deduction and distributions made with respect to Common Units, the
holder of a Subordinated Unit shall have all of the rights and obligations of a
Unitholder holding Common Units hereunder.
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(b) Provided, however, that immediately upon the conversion of a
Subordinated Unit into a Common Unit pursuant to Section 5.10, the Unitholder
holding a Subordinated Unit shall possess all of the rights and obligations of a
Unitholder holding a Common Unit hereunder, including the right to vote as a
Common Unitholder and the right to participate in allocations of income, gain,
loss and deduction and distributions made with respect to a Common Unit and,
with respect to such converted Subordinated Unit, all references in this
Agreement to a Common Unit shall be interpreted to include such converted
Subordinated Unit.; provided, however, that such converted Subordinated Unit
shall remain subject to the provisions of Sections 5.6(c)(ii), 6.1(d)(x) and
6.7(c).
(c) The Unitholder holding a Subordinated Unit which has converted into
a Common Unit pursuant to Section 5.10 shall not be issued a Common Unit
Certificate pursuant to Section 4.1, and shall not be permitted to transfer its
converted Subordinated Units to a Person which is not an Affiliate of the holder
until such time as the General Partner determines, based on advice of counsel,
that a converted Subordinated Unit should have, as a substantive matter, like
intrinsic economic and federal income tax characteristics, in all material
respects, to the intrinsic economic and federal income tax characteristics of an
Initial Common Unit. In connection with the condition imposed by this Section
6.7(c), the General Partner may take whatever reasonable steps are required to
provide economic uniformity to the converted Subordinated Units in preparation
for a transfer of such converted Subordinated Units, including the application
of Sections 5.6(c)(ii) and 6.1(d)(x); provided, however, that no such steps may
be taken that would have a material adverse effect on the Unitholders holding
Common Units represented by Common Unit Certificates.
SECTION 6.8 Special Provisions Relating to the Holders of Deferred Participation
Units.
Except as otherwise provided in this Section 6.8 and notwithstanding
anything to the contrary set forth in this Agreement, the holder of a Deferred
Participation Unit shall have the following rights and obligations:
(a) prior to its conversion into a Subordinated Unit pursuant to
Section 5.11, the holder of a Deferred Participation Unit shall not:
(i) be entitled to any distributions;
(ii) be allocated items of income, gain, loss or deduction;
(iii) be entitled to vote on any matters requiring the
approval or vote of the holders of Outstanding Units other than with
respect to an amendment to this Agreement that affects the Deferred
Participation Units in a manner described in Section 13.3(c); and
(b) shall possess the rights and obligations provided in this Agreement
with respect to both (i) a Partner holding a Deferred Participation Unit and
(ii) a Limited Partner pursuant to Articles III and VII (and, except as set
forth in the preceding subsection (iii), no other rights otherwise available to
a holder of a Partnership Interest); and
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(c) immediately upon the conversion of a Deferred Participation Unit
into a Subordinated Unit pursuant to Section 5.11, the holder of the converted
Deferred Participation Unit shall possess all of the rights and obligations of a
Unitholder holding a Subordinated Unit hereunder (including the establishment of
a Capital Account pursuant to Section 5.6(e)) and, with respect to such
converted Deferred Participation Unit, all references in this Agreement to a
Subordinated Unit shall be interpreted to include such converted Deferred
Participation Unit; provided, however, that until the holder of such Deferred
Participation Unit delivers the Certificate representing such Deferred
Participation Unit to the Partnership (together with any documentation required
by the General Partner in its discretion), such converted Deferred Participation
Unit shall represent only the right to receive the Subordinated Unit into which
it was converted and any applicable distributions made thereon and the
Partnership shall not be obligated to pay such holder those distributions until
such delivery.
SECTION 6.9 Special Provisions Relating to the Holders of Incentive Distribution
Rights.
Notwithstanding anything to the contrary set forth in this Agreement,
the holders of the Incentive Distribution Rights:
(a) shall (i) possess the rights and obligations provided in this
Agreement with respect to a Limited Partner pursuant to Articles III and VII and
(ii) have a Capital Account as a Partner pursuant to Section 5.6 and all other
provisions related thereto; and
(b) shall not (i) be entitled to vote on any matters requiring the
approval or vote of the holders of Outstanding Units, (ii) be entitled to any
distributions other than as provided in Sections 6.4(a)(i)(D)-(F),
6.4(b)(iii)-(v) and 12.4 or (iii) be allocated items of income, gain, loss or
deduction other than as specified in this Article VI. SECTION 6.10 Entity-Level
Taxation.
If legislation is enacted or the interpretation of existing language is
modified by the relevant governmental authority which causes the Partnership or
any Operating Partnership to be treated as an association taxable as a
corporation or otherwise subjects the Partnership or the Operating Partnership
to entity-level taxation for federal income tax purposes, the then applicable
Minimum Quarterly Distribution, First Target Distribution, Second Target
Distribution, First Deferred Target Distribution, Second Deferred Target
Distribution, Third Deferred Target Distribution, Fourth Deferred Target
Distribution and Fifth Deferred Target Distribution shall be adjusted to equal
the product obtained by multiplying (a) the amount thereof by (b) one minus the
sum of (i) the highest marginal federal corporate (or other entity, as
applicable) income tax rate of the Partnership or such Operating Partnership for
the taxable year of the Partnership or such Operating Partnership in which such
Quarter occurs (expressed as a percentage) plus (ii) the effective overall state
and local income tax rate (expressed as a percentage) applicable to the
Partnership or such Operating Partnership for the calendar year next preceding
the calendar year in which such Quarter occurs (after taking into account the
benefit of any deduction allowable for federal income tax purposes with respect
to the payment of state and local income taxes), but only to the extent of the
increase in such rates resulting from such legislation or interpretation. Such
effective overall state and local income tax rate shall be determined for the
taxable year next preceding the first taxable year during which the Partnership
or such Operating Partnership is taxable for federal income tax purposes as an
association taxable as a corporation or is otherwise subject to entity-level
taxation by determining such rate as if the Partnership or such Operating
Partnership had been subject to such state and local taxes during such preceding
taxable year.
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ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
SECTION 7.1 Management.
(a) The General Partner shall conduct, direct and manage all activities
of the Partnership. Except as otherwise expressly provided in this Agreement,
all management powers over the business and affairs of the Partnership shall be
exclusively vested in the General Partner, and no Limited Partner or Assignee
shall have any management power over the business and affairs of the
Partnership. In addition to the powers now or hereafter granted a general
partner of a limited partnership under applicable law or which are granted to
the General Partner under any other provision of this Agreement, the General
Partner, subject to Section 7.3, shall have full power and authority to do all
things and on such terms as it, in its sole discretion, may deem necessary or
appropriate to conduct the business of the Partnership, to exercise all powers
set forth in Section 2.5 and to effectuate the purposes set forth in Section
2.4, including the following:
(i) the making of any expenditures, the lending or borrowing
of money, the assumption or guarantee of, or other contracting for,
indebtedness and other liabilities, the issuance of evidences of
indebtedness, including indebtedness that is convertible into
Partnership Securities, and the incurring of any other obligations;
(ii) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other
agencies having jurisdiction over the business or assets of the
Partnership;
(iii) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the assets of
the Partnership or the merger or other combination of the Partnership
with or into another Person (the matters described in this clause (iii)
being subject, however, to any prior approval that may be required by
Section 7.3);
(iv) the use of the assets of the Partnership (including cash
on hand) for any purpose consistent with the terms of this Agreement,
including (A) the financing of the conduct of the operations of the
Partnership Group, (B) subject to Section 7.6(a), the lending of funds
to other Persons (including any Operating Partnership), (C) the
repayment of obligations of the Partnership Group and (D) the making of
capital contributions to any member of the Partnership Group;
(v) the negotiation, execution and performance of any
contracts, conveyances or other instruments (including instruments that
limit the liability of the Partnership under contractual arrangements
to all or particular assets of the Partnership, with the other party to
the contract to have no recourse against the General Partner or its
assets other than its interest in the Partnership, even if same results
in the terms of the transaction being less favorable to the Partnership
than would otherwise be the case);
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(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees (including
employees having titles such as "president," "vice president,"
"secretary" and "treasurer") and agents, outside attorneys,
accountants, consultants and contractors and the determination of their
compensation and other terms of employment or hiring;
(viii) the maintenance of such insurance for the benefit of
the Partnership Group and the Partners as it deems necessary or
appropriate;
(ix) the formation of, or acquisition of an interest in, and
the contribution of property and the making of loans to, any further
limited or general partnerships, joint ventures, corporations, limited
liability companies or other relationships (including the acquisition
of interests in, and the contributions of property to, any Operating
Partnership from time to time) subject to the restrictions set forth in
Section 2.4;
(x) the control of any matters affecting the rights and
obligations of the Partnership, including the bringing and defending of
actions at law or in equity and otherwise engaging in the conduct of
litigation and the incurring of legal expense and the settlement of
claims and litigation;
(xi) the indemnification of any Person against liabilities and
contingencies to the extent permitted by law;
(xii) the entering into of listing agreements with any
National Securities Exchange and the delisting of some or all of the
Limited Partner Interests from, or requesting that trading be suspended
on, any such exchange (subject to any prior approval that may be
required under Section 4.8);
(xiii) unless restricted or prohibited by Section 5.8, the
purchase, sale or other acquisition or disposition of Partnership
Securities, or the issuance of additional options, rights, warrants and
appreciation rights relating to Partnership Securities; and
(xiv) the undertaking of any action in connection with the
Partnership's participation in any Operating Partnership as a partner.
(b) Notwithstanding any other provision of this Agreement, any
Operating Partnership Agreement, the Delaware Act or any applicable law, rule or
regulation, each of the Partners and the Assignees and each other Person who may
acquire an interest in Partnership Securities hereby:
(i) approves, ratifies and confirms the execution, delivery
and performance by the parties thereto of any Operating Partnership
Agreement, the Underwriting Agreement, the Master Natural Gas Gathering
Agreement, the Contribution and Conveyance Agreement, the Contribution
Agreement and the other agreements described in or filed as exhibits to
the Registration Statement that are related to the transactions
contemplated by the Registration Statement;
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(ii) agrees that the General Partner (on its own or through
any officer of the Partnership) is authorized to execute, deliver and
perform the agreements referred to in clause (i) above and the other
agreements, acts, transactions and matters described in or contemplated
by the Registration Statement on behalf of the Partnership without any
further act, approval or vote of the Partners or the Assignees or the
other Persons who may acquire an interest in Partnership Securities;
and
(iii) agrees that the execution, delivery or performance by
the General Partner, any Group Member or any Affiliate of any of them,
of this Agreement or any agreement authorized or permitted under this
Agreement (including the exercise by the General Partner or any
Affiliate of the General Partner of the rights accorded pursuant to
Article XV), shall not constitute a breach by the General Partner of
any duty that the General Partner may owe the Partnership or the
Limited Partners or any other Persons under this Agreement (or any
other agreements) or of any duty stated or implied by law or equity.
SECTION 7.2 Certificate of Limited Partnership.
The General Partner has caused the Certificate of Limited Partnership
to be filed with the Secretary of State of the State of Delaware as required by
the Delaware Act and shall use all reasonable efforts to cause to be filed such
other certificates or documents as may be determined by the General Partner in
its sole discretion to be reasonable and necessary or appropriate for the
formation, continuation, qualification and operation of a limited partnership
(or a partnership in which the limited partners have limited liability) in the
State of Delaware or any other state in which the Partnership may elect to do
business or own property. To the extent that such action is determined by the
General Partner in its sole discretion to be reasonable and necessary or
appropriate, the General Partner shall file amendments to and restatements of
the Certificate of Limited Partnership and do all things to maintain the
Partnership as a limited partnership (or a partnership or other entity in which
the limited partners have limited liability) under the laws of the State of
Delaware or of any other state in which the Partnership may elect to do business
or own property. Subject to the terms of Section 3.4(a), the General Partner
shall not be required, before or after filing, to deliver or mail a copy of the
Certificate of Limited Partnership, any qualification document or any amendment
thereto to any Limited Partner.
SECTION 7.3 Restrictions on General Partner's Authority.
(a) The General Partner may not, without written approval of the
specific act by holders of all of the Outstanding Limited Partner Interests or
by other written instrument executed and delivered by holders of all of the
Outstanding Limited Partner Interests subsequent to the date of this Agreement,
take any action in contravention of this Agreement, including, except as
otherwise provided in this Agreement, (i) committing any act that would make it
impossible to carry on the ordinary business of the Partnership; (ii) possessing
Partnership property, or assigning any rights in specific Partnership property,
for other than a Partnership purpose; (iii) admitting a Person as a Partner;
(iv) amending this Agreement in any manner; or (v) transferring its interest as
general partner of the Partnership.
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(b) Except as provided in Articles XII and XIV, the General Partner may
not sell, exchange or otherwise dispose of all or substantially all of the
Partnership's assets in a single transaction or a series of related transactions
(including by way of merger, consolidation or other combination) or approve on
behalf of the Partnership the sale, exchange or other disposition of all or
substantially all of the assets of the Operating Partnership, taken as a whole,
without the approval of holders of a Unit Majority; provided, however, that this
provision shall not preclude or limit the General Partner's ability to mortgage,
pledge, hypothecate or grant a security interest in all or substantially all of
the assets of the Partnership or any Operating Partnership and shall not apply
to any forced sale of any or all of the assets of the Partnership or any
Operating Partnership pursuant to the foreclosure of, or other realization upon,
any such encumbrance. Without the approval of holders of a Unit Majority, the
General Partner shall not, on behalf of the Partnership, (i) consent to any
amendment to any Operating Partnership Agreement or, except as expressly
permitted by Section 7.9(d), take any action permitted to be taken by a partner
of any Operating Partnership, in either case, that would have a material adverse
effect on the Partnership as a partner of any Operating Partnership or (ii)
except as permitted under Sections 4.6, 11.1 and 11.2, elect or cause the
Partnership to elect a successor general partner of the Partnership or a
successor general partner of any Operating Partnership.
SECTION 7.4 Reimbursement of the General Partner.
(a) Except as provided in this Section 7.4 and elsewhere in this
Agreement or in any Operating Partnership Agreement, the General Partner shall
not be compensated for its services as general partner of any Group Member.
(b) The General Partner shall be reimbursed on a monthly basis, or such
other reasonable basis as the General Partner may determine in its sole
discretion, for (i) all direct and indirect expenses it incurs or payments it
makes on behalf of the Partnership (including salary, bonus, incentive
compensation and other amounts paid to any Person including Affiliates of the
General Partner to perform services for the Partnership or for the General
Partner in the discharge of its duties to the Partnership), and (ii) all other
necessary or appropriate expenses allocable to the Partnership or otherwise
reasonably incurred by the General Partner in connection with operating the
Partnership's business (including expenses allocated to the General Partner by
its Affiliates). The General Partner shall determine the expenses that are
allocable to the Partnership in any reasonable manner determined by the General
Partner in its sole discretion. Reimbursements pursuant to this Section 7.4
shall be in addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 7.7.
SECTION 7.5 Outside Activities.
(a) After the Initial Closing Date, the General Partner, for so long as
it is the General Partner of the Partnership, (i) agrees that its sole business
will be to act as the general partner of the Partnership, any Operating
Partnership, and any other partnership of which the Partnership or any Operating
Partnership is, directly or indirectly, a partner and to undertake activities
that are ancillary or related thereto (including being a limited partner in the
Partnership), and (ii) shall not engage in any business or activity or incur any
debts or liabilities except in connection with or incidental to (A) its
performance as general partner of one or more Group Members or as described in
or contemplated by the Registration Statement or (B) the acquiring, owning or
disposing of debt or equity securities in any Group Member.
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(b) Except as specifically restricted by Section 7.5(a), each
Indemnitee (other than the General Partner) shall have the right to engage in
businesses of every type and description and other activities for profit and to
engage in and possess an interest in other business ventures of any and every
type or description, whether in businesses engaged in or anticipated to be
engaged in by any Group Member, independently or with others, including business
interests and activities in direct competition with the business and activities
of any Group Member, and none of the same shall constitute a breach of this
Agreement or any duty express or implied by law to any Group Member or any
Partner or Assignee. Neither any Group Member, any Limited Partner nor any other
Person shall have any rights by virtue of this Agreement, any Operating
Partnership Agreement or the partnership relationship established hereby or
thereby in any business ventures of any Indemnitee.
(c) Subject to the terms of Section 7.5(a) and Section 7.5(b), but
otherwise notwithstanding anything to the contrary in this Agreement, (i) the
engaging in competitive activities by any Indemnitees (other than the General
Partner) in accordance with the provisions of this Section 7.5 is hereby
approved by the Partnership and all Partners, (ii) it shall be deemed not to be
a breach of the General Partner's fiduciary duty or any other obligation of any
type whatsoever of the General Partner for the Indemnitees (other than the
General Partner) to engage in such business interests and activities in
preference to or to the exclusion of the Partnership and (iii) the General
Partner and the Indemnitees shall have no obligation to present business
opportunities to any Group Member.
(d) The General Partner and any of its Affiliates may acquire Units or
other Partnership Securities in addition to those acquired on the Initial
Closing Date and the Effective Date and, except as otherwise provided in this
Agreement, shall be entitled to exercise all rights of the General Partner or
Limited Partner, as applicable, relating to such Units or Partnership
Securities.
(e) The term "Affiliates" when used in Section 7.5(d) with respect to
the General Partner shall not include any Group Member or any Subsidiary of any
Group Member.
(f) Anything in this Agreement to the contrary notwithstanding, to the
extent that provisions of Sections 7.7, 7.8, 7.9, 7.10 or other Sections of this
Agreement purport or are interpreted to have the effect of restricting the
fiduciary duties that might otherwise, as a result of Delaware or other
applicable law, be owed by the General Partner to the Partnership and its
Limited Partners, or to constitute a waiver or consent by the Limited Partners
to any such restriction, such provisions shall be inapplicable and have no
effect in determining whether the General Partner has complied with its
fiduciary duties in connection with determinations made by it under this Section
7.5.
SECTION 7.6 Loans from the General Partner; Loans or Contributions from the
Partnership; Contracts with Affiliates; Certain Restrictions on the General
Partner.
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(a) The General Partner or its Affiliates may lend to any Group Member,
and any Group Member may borrow from the General Partner or any of its
Affiliates, funds needed or desired by the Group Member for such periods of time
and in such amounts as the General Partner may determine; provided, however,
that in any such case the lending party may not charge the borrowing party
interest at a rate greater than the rate that would be charged the borrowing
party or impose terms less favorable to the borrowing party than would be
charged or imposed on the borrowing party by unrelated lenders on comparable
loans made on an arm's-length basis (without reference to the lending party's
financial abilities or guarantees). The borrowing party shall reimburse the
lending party for any costs (other than any additional interest costs) incurred
by the lending party in connection with the borrowing of such funds. For
purposes of this Section 7.6(a) and Section 7.6(b), the term "Group Member"
shall include any Affiliate of a Group Member that is controlled by the Group
Member. No Group Member may lend funds to the General Partner or any of its
Affiliates (other than another Group Member).
(b) The Partnership may lend or contribute to any Group Member, and any
Group Member may borrow from the Partnership, funds on terms and conditions
established in the sole discretion of the General Partner; provided, however,
that the Partnership may not charge the Group Member interest at a rate less
than the rate that would be charged to the Group Member (without reference to
the General Partner's financial abilities or guarantees) by unrelated lenders on
comparable loans. The foregoing authority shall be exercised by the General
Partner in its sole discretion and shall not create any right or benefit in
favor of any Group Member or any other Person.
(c) The General Partner may itself, or may enter into an agreement with
any of its Affiliates to, render services to a Group Member or to the General
Partner in the discharge of its duties as general partner of the Partnership.
Any services rendered to a Group Member by the General Partner or any of its
Affiliates shall be on terms that are fair and reasonable to the Partnership;
provided, however, that the requirements of this Section 7.6(c) shall be deemed
satisfied as to (i) any transaction approved by Special Approval, (ii) any
transaction, the terms of which are no less favorable to the Partnership Group
than those generally being provided to or available from unrelated third parties
or (iii) any transaction that, taking into account the totality of the
relationships between the parties involved (including other transactions that
may be particularly favorable or advantageous to the Partnership Group), is
equitable to the Partnership Group. The provisions of Section 7.4 shall apply to
the rendering of services described in this Section 7.6(c).
(d) The Partnership Group may transfer assets to joint ventures, other
partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.
(e) Neither the General Partner nor any of its Affiliates shall sell,
transfer or convey any property to, or purchase any property from, the
Partnership, directly or indirectly, except pursuant to transactions that are
fair and reasonable to the Partnership; provided, however, that the requirements
of this Section 7.6(e) shall be deemed to be satisfied as to (i) the
transactions effected pursuant to Sections 5.2, 5.3 and 5.4, the Contribution
and Conveyance Agreement, the Contribution Agreement and any other transactions
described in or contemplated by the Registration Statement, (ii) any transaction
approved by Special Approval, (iii) any transaction, the terms of which are no
less favorable to the Partnership than those generally being provided to or
available from unrelated third parties, or (iv) any transaction that, taking
into account the totality of the relationships between the parties involved
(including other transactions that may be particularly favorable or advantageous
to the Partnership), is equitable to the Partnership. With respect to any
contribution of assets to the Partnership in exchange for Partnership
Securities, the Conflicts Committee, in determining whether the appropriate
number of Partnership Securities are being issued, may take into account, among
other things, the fair market value of the assets, the liquidated and contingent
liabilities assumed, the tax basis in the assets, the extent to which tax-only
allocations to the transferor will protect the existing partners of the
Partnership against a low tax basis, and such other factors as the Conflicts
Committee deems relevant under the circumstances.
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(f) The General Partner and its Affiliates will have no obligation to
permit any Group Member to use any facilities or assets of the General Partner
and its Affiliates, except as may be provided in contracts entered into from
time to time specifically dealing with such use, nor shall there be any
obligation on the part of the General Partner or its Affiliates to enter into
such contracts.
(g) Without limitation of Sections 7.6(a) through 7.6(f), and
notwithstanding anything to the contrary in this Agreement, the existence of the
conflicts of interest described in the Registration Statement are hereby
approved by all Partners.
SECTION 7.7 Indemnification.
(a) To the fullest extent permitted by law but subject to the
limitations expressly provided in this Agreement, all Indemnitees shall be
indemnified and held harmless by the Partnership from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest, settlements and
other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, in which
any Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, by reason of its status as an Indemnitee in connection with the
Partnership's business affairs; provided, that in each case the Indemnitee acted
in good faith and in a manner that such Indemnitee reasonably believed to be in,
or not opposed to, the best interests of the Partnership and, with respect to
any criminal proceeding, had no reasonable cause to believe its conduct was
unlawful; provided, further, no indemnification pursuant to this Section 7.7
shall be available to the General Partner with respect to its obligations
incurred pursuant to the Underwriting Agreement, the Contribution and Conveyance
Agreement or the Contribution Agreement (other than obligations incurred by the
General Partner on behalf of the Partnership or any Operating Partnership). The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere, or its equivalent, shall not
create a presumption that the Indemnitee acted in a manner contrary to that
specified above. Any indemnification pursuant to this Section 7.7 shall be made
only out of the assets of the Partnership, it being agreed that the General
Partner shall not be personally liable for such indemnification and shall have
no obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate such indemnification.
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(b) To the fullest extent permitted by law, expenses (including legal
fees and expenses) incurred by an Indemnitee who is indemnified pursuant to
Section 7.7(a) in defending any claim, demand, action, suit or proceeding shall,
from time to time, be advanced by the Partnership prior to the final disposition
of such claim, demand, action, suit or proceeding upon receipt by the
Partnership of any undertaking by or on behalf of the Indemnitee to repay such
amount if it shall be determined that the Indemnitee is not entitled to be
indemnified as authorized in this Section 7.7.
(c) The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, pursuant to any vote of the holders of Outstanding Limited Partner
Interests, as a matter of law or otherwise, both as to actions in the
Indemnitee's capacity as an Indemnitee and as to actions in any other capacity
(including any capacity under the Underwriting Agreement), and shall continue as
to an Indemnitee who has ceased to serve in such capacity and shall inure to the
benefit of the heirs, successors, assigns and administrators of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the General
Partner or its Affiliates for the cost of) insurance, on behalf of the General
Partner, its Affiliates and such other Persons as the General Partner shall
determine, against any liability that may be asserted against or expense that
may be incurred by such Person in connection with the Partnership's activities
or such Person's activities on behalf of the Partnership, regardless of whether
the Partnership would have the power to indemnify such Person against such
liability under the provisions of this Agreement.
(e) For purposes of this Section 7.7, the Partnership shall be deemed
to have requested an Indemnitee to serve as fiduciary of an employee benefit
plan whenever the performance by it of its duties to the Partnership also
imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute "fines" within the meaning of Section 7.7(a); and action taken
or omitted by it with respect to any employee benefit plan in the performance of
its duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is in, or not opposed to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
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(i) No amendment, modification or repeal of this Section 7.7 or any
provision hereof shall in any manner terminate, reduce or impair the right of
any past, present or future Indemnitee to be indemnified by the Partnership, nor
the obligations of the Partnership to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 7.7 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
SECTION 7.8 Liability of Indemnitees.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, no Indemnitee shall be liable for monetary damages to the
Partnership, the Limited Partners, the Assignees or any other Persons who have
acquired interests in the Partnership Securities, for losses sustained or
liabilities incurred as a result of any act or omission if such Indemnitee acted
in good faith.
(b) Subject to its obligations and duties as General Partner set forth
in Section 7.1(a), the General Partner may exercise any of the powers granted to
it by this Agreement and perform any of the duties imposed upon it hereunder
either directly or by or through its agents, and the General Partner shall not
be responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.
(c) To the extent that, at law or in equity, an Indemnitee has duties
(including fiduciary duties) and liabilities relating thereto to the Partnership
or to the Partners, the General Partner and any other Indemnitee acting in
connection with the Partnership's business or affairs shall not be liable to the
Partnership or to any Partner for its good faith reliance on the provisions of
this Agreement. The provisions of this Agreement, to the extent that they
restrict or otherwise modify the duties and liabilities of an Indemnitee
otherwise existing at law or in equity, are agreed by the Partners to replace
such other duties and liabilities of such Indemnitee.
(d) Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability to the Partnership, the Limited Partners, the
General Partner, and the Partnership's and General Partner's directors, officers
and employees under this Section 7.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.
SECTION 7.9 Resolution of Conflicts of Interest.
(a) Unless otherwise expressly provided in this Agreement or any
Operating Partnership Agreement, whenever a potential conflict of interest
exists or arises between the General Partner or any of its Affiliates, on the
one hand, and the Partnership, any Operating Partnership, any Partner or any
Assignee, on the other, any resolution or course of action by the General
Partner or its Affiliates in respect of such conflict of interest shall be
permitted and deemed approved by all Partners, and shall not constitute a breach
of this Agreement, of any Operating Partnership Agreement, of any agreement
contemplated herein or therein, or of any duty stated or implied by law or
equity, if the resolution or course of action is, or by operation of this
Agreement is deemed to be, fair and reasonable to the Partnership. The General
Partner shall be authorized but not required in connection with its resolution
of such conflict of interest to seek Special Approval of such resolution. Any
conflict of interest and any resolution of such conflict of interest shall be
conclusively deemed fair and reasonable to the Partnership if such conflict of
interest or resolution is (i) approved by Special Approval (as long as the
material facts known to the General Partner or any of its Affiliates regarding
any proposed transaction were disclosed to the Conflicts Committee at the time
it gave its approval), (ii) on terms no less favorable to the Partnership than
those generally being provided to or available from unrelated third parties or
(iii) fair to the Partnership, taking into account the totality of the
relationships between the parties involved (including other transactions that
may be particularly favorable or advantageous to the Partnership). The General
Partner may also adopt a resolution or course of action that has not received
Special Approval. The General Partner (including the Conflicts Committee in
connection with Special Approval) shall be authorized in connection with its
determination of what is "fair and reasonable" to the Partnership and in
connection with its resolution of any conflict of interest to consider (A) the
relative interests of any party to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interest; (B) any
customary or accepted industry practices and any customary or historical
dealings with a particular Person; (c) any applicable generally accepted
accounting practices or principles; and (D) such additional factors as the
General Partner (including the Conflicts Committee) determines in its sole
discretion to be relevant, reasonable or appropriate under the circumstances.
Nothing contained in this Agreement, however, is intended to nor shall it be
construed to require the General Partner (including the Conflicts Committee) to
consider the interests of any Person other than the Partnership. In the absence
of bad faith by the General Partner, the resolution, action or terms so made,
taken or provided by the General Partner with respect to such matter shall not
constitute a breach of this Agreement or any other agreement contemplated herein
or a breach of any standard of care or duty imposed herein or therein or, to the
extent permitted by law, under the Delaware Act or any other law, rule or
regulation.
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(b) Whenever this Agreement or any other agreement contemplated hereby
provides that the General Partner or any of its Affiliates is permitted or
required to make a decision (i) in its "sole discretion" or "discretion," that
it deems "necessary or appropriate" or "necessary or advisable" or under a grant
of similar authority or latitude, except as otherwise provided herein, the
General Partner or such Affiliate shall be entitled to consider only such
interests and factors as it desires and shall have no duty or obligation to give
any consideration to any interest of, or factors affecting, the Partnership, any
Operating Partnership, any Limited Partner or any Assignee, (ii) it may make
such decision in its sole discretion (regardless of whether there is a reference
to "sole discretion" or "discretion") unless another express standard is
provided for, or (iii) in "good faith" or under another express standard, the
General Partner or such Affiliate shall act under such express standard and
shall not be subject to any other or different standards imposed by this
Agreement, any Operating Partnership Agreement, any other agreement contemplated
hereby or under the Delaware Act or any other law, rule or regulation. In
addition, any actions taken by the General Partner or such Affiliate consistent
with the standards of "reasonable discretion" set forth in the definitions of
Available Cash or Operating Surplus shall not constitute a breach of any duty of
the General Partner to the Partnership or the Limited Partners. The General
Partner shall have no duty, express or implied, to sell or otherwise dispose of
any asset of the Partnership Group other than in the ordinary course of
business. No borrowing by any Group Member or the approval thereof by the
General Partner shall be deemed to constitute a breach of any duty of the
General Partner to the Partnership or the Limited Partners by reason of the fact
that the purpose or effect of such borrowing is directly or indirectly to (A)
enable distributions to the General Partner or its Affiliates (including in
their capacities as Limited Partners) to exceed 1% of the total amount
distributed to all partners or (B) hasten the expiration of the Subordination
Period, the conversion of any Deferred Participation Units into Subordinated
Units, or the conversion of any Subordinated Units into Common Units.
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(c) Whenever a particular transaction, arrangement or resolution of a
conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transactions.
(d) The Unitholders hereby authorize the General Partner, on behalf of
the Partnership as a partner of a Group Member, to approve of actions by the
general partner of such Group Member similar to those actions permitted to be
taken by the General Partner pursuant to this Section 7.9.
SECTION 7.10 Other Matters Concerning the General Partner.
(a) The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion (including an Opinion of Counsel) of such Persons as to matters
that the General Partner reasonably believes to be within such Person's
professional or expert competence shall be conclusively presumed to have been
done or omitted in good faith and in accordance with such opinion.
(c) The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers, a duly appointed attorney or attorneys-in-fact or the duly authorized
officers of the Partnership.
(d) Any standard of care and duty imposed by this Agreement or under
the Delaware Act or any applicable law, rule or regulation shall be modified,
waived or limited, to the extent permitted by law, as required to permit the
General Partner to act under this Agreement or any other agreement contemplated
by this Agreement and to make any decision pursuant to the authority prescribed
in this Agreement, so long as such action is reasonably believed by the General
Partner to be in, or not inconsistent with, the best interests of the
Partnership.
SECTION 7.11 Purchase or Sale of Partnership Securities.
The General Partner may cause the Partnership to purchase or otherwise
acquire Partnership Securities; provided, that except as permitted pursuant to
Section 4.10, the General Partner may not cause any Group Member to purchase
Subordinated Units or Deferred Participation Units during the Subordination
Period. As long as Partnership Securities are held by any Group Member, such
Partnership Securities shall not be considered Outstanding for any purpose,
except as otherwise provided herein. The General Partner or any Affiliate of the
General Partner may also purchase or otherwise acquire and sell or otherwise
dispose of Partnership Securities for its own account, subject to the provisions
of Articles IV and X.
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SECTION 7.12 Registration Rights of the General Partner and Its Affiliates.
(a) If (i) the General Partner or any Affiliate of the General Partner
(including for purposes of this Section 7.12, any Person that is an Affiliate of
the General Partner at the date hereof notwithstanding that it may later cease
to be an Affiliate of the General Partner) holds Partnership Securities that it
desires to sell and (ii) Rule 144 of the Securities Act (or any successor rule
or regulation to Rule 144) or another exemption from registration is not
available to enable such holder of Partnership Securities (the "Holder") to
dispose of the number of Partnership Securities it desires to sell at the time
it desires to do so without registration under the Securities Act, then upon the
request of the General Partner or any of its Affiliates, the Partnership shall
file with the Commission as promptly as practicable after receiving such
request, and use all reasonable efforts to cause to become effective and remain
effective for a period of not less than six months following its effective date
or such shorter period as shall terminate when all Partnership Securities
covered by such registration statement have been sold, a registration statement
under the Securities Act registering the offering and sale of the number of
Partnership Securities specified by the Holder; provided, however, that the
Partnership shall not be required to effect more than three registrations
pursuant to this Section 7.12(a); and provided further, however, that if the
Conflicts Committee determines in its good faith judgment that a postponement of
the requested registration for up to six months would be in the best interests
of the Partnership and its Partners due to a pending transaction, investigation
or other event, the filing of such registration statement or the effectiveness
thereof may be deferred for up to six months, but not thereafter. In connection
with any registration pursuant to the immediately preceding sentence, the
Partnership shall promptly prepare and file (x) such documents as may be
necessary to register or qualify the securities subject to such registration
under the securities laws of such states as the Holder shall reasonably request;
provided, however, that no such qualification shall be required in any
jurisdiction where, as a result thereof, the Partnership would become subject to
general service of process or to taxation or qualification to do business as a
foreign corporation or partnership doing business in such jurisdiction solely as
a result of such registration, and (y) such documents as may be necessary to
apply for listing or to list the Partnership Securities subject to such
registration on such National Securities Exchange as the Holder shall reasonably
request, and do any and all other acts and things that may reasonably be
necessary or advisable to enable the Holder to consummate a public sale of such
Partnership Securities in such states. Except as set forth in Section 7.12(c),
all costs and expenses of any such registration and offering (other than the
underwriting discounts and commissions) shall be paid by the Partnership,
without reimbursement by the Holder.
(b) If the Partnership shall at any time propose to file a registration
statement under the Securities Act for an offering of equity securities of the
Partnership for cash (other than an offering relating solely to an employee
benefit plan), the Partnership shall use all reasonable efforts to include such
number or amount of securities held by the Holder in such registration statement
as the Holder shall request. If the proposed offering pursuant to this Section
7.12(b) shall be an underwritten offering, then, in the event that the managing
underwriter or managing underwriters of such offering advise the Partnership and
the Holder in writing that in their opinion the inclusion of all or some of the
Holder's Partnership Securities would adversely and materially affect the
success of the offering, the Partnership shall include in such offering only
that number or amount, if any, of securities held by the Holder which, in the
opinion of the managing underwriter or managing underwriters, will not so
adversely and materially affect the offering. Except as set forth in Section
7.12(c), all costs and expenses of any such registration and offering (other
than the underwriting discounts and commissions) shall be paid by the
Partnership, without reimbursement by the Holder.
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(c) If underwriters are engaged in connection with any registration
referred to in this Section 7.12, the Partnership shall provide indemnification,
representations, covenants, opinions and other assurance to the underwriters in
form and substance reasonably satisfactory to such underwriters. Further, in
addition to and not in limitation of the Partnership's obligation under Section
7.7, the Partnership shall, to the fullest extent permitted by law, indemnify,
defend and hold harmless the Holder, its officers, directors and each Person who
controls the Holder (within the meaning of the Securities Act) and any agent
thereof (collectively, "Indemnified Persons") against any losses, claims,
demands, actions, causes of action, assessments, damages, liabilities (joint or
several), costs and expenses (including interest, penalties and reasonable
attorneys' fees and disbursements), resulting to, imposed upon, or incurred by
the Indemnified Persons, directly or indirectly, under the Securities Act or
otherwise (hereinafter referred to in this Section 7.12(c) as a "claim" and in
the plural as "claims") based upon, arising out of or resulting from any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which any Partnership Securities were registered
under the Securities Act or any state securities or Blue Sky laws, in any
preliminary prospectus (if used prior to the effective date of such registration
statement), or in any summary or final prospectus or in any amendment or
supplement thereto (if used during the period the Partnership is required to
keep the registration statement current), or arising out of, based upon or
resulting from the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements made therein
not misleading; provided, however, that the Partnership shall not be liable to
any Indemnified Person to the extent that any such claim arises out of, is based
upon or results from an untrue statement or alleged untrue statement or omission
or alleged omission made in such registration statement, such preliminary,
summary or final prospectus or such amendment or supplement, in reliance upon
and in conformity with written information furnished to the Partnership by or on
behalf of such Indemnified Person specifically for use in the preparation
thereof.
(d) The provisions of Section 7.12(a) and 7.12(b) shall continue to be
applicable with respect to the General Partner (and any of the General Partner's
Affiliates) after it ceases to be a Partner of the Partnership, during a period
of two years subsequent to the effective date of such cessation and for so long
thereafter as is required for the Holder to sell all of the Partnership
Securities with respect to which it has requested during such two-year period
inclusion in a registration statement otherwise filed or that a registration
statement be filed; provided, however, that the Partnership shall not be
required to file successive registration statements covering the same
Partnership Securities for which registration was demanded during such two-year
period. The provisions of Section 7.12(c) shall continue in effect thereafter.
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(e) Any request to register Partnership Securities pursuant to this Section 7.12
shall (i) specify the Partnership Securities intended to be offered and sold by
the Person making the request, (ii) express such Person's present intent to
offer such shares for distribution, (iii) describe the nature or method of the
proposed offer and sale of Partnership Securities, and (iv) contain the
undertaking of such Person to provide all such information and materials and
take all action as may be required in order to permit the Partnership to comply
with all applicable requirements in connection with the registration of such
Partnership Securities.
SECTION 7.13 Reliance by Third Parties.
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner and any officer of the General Partner authorized by the General Partner
to act on behalf of and in the name of the Partnership has full power and
authority to encumber, sell or otherwise use in any manner any and all assets of
the Partnership and to enter into any authorized contracts on behalf of the
Partnership, and such Person shall be entitled to deal with the General Partner
or any such officer as if it were the Partnership's sole party in interest, both
legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies that may be available against such Person to contest,
negate or disaffirm any action of the General Partner or any such officer in
connection with any such dealing. In no event shall any Person dealing with the
General Partner or any such officer or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to inquire
into the necessity or expedience of any act or action of the General Partner or
any such officer or its representatives. Each and every certificate, document or
other instrument executed on behalf of the Partnership by the General Partner or
its representatives shall be conclusive evidence in favor of any and every
Person relying thereon or claiming thereunder that (a) at the time of the
execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (b) the Person executing and delivering
such certificate, document or instrument was duly authorized and empowered to do
so for and on behalf of the Partnership and (c) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
SECTION 8.1 Records and Accounting.
The General Partner shall keep or cause to be kept at the principal
office of the Partnership appropriate books and records with respect to the
Partnership's business, including all books and records necessary to provide to
the Limited Partners any information required to be provided pursuant to Section
3.4(a). Any books and records maintained by or on behalf of the Partnership in
the regular course of its business, including the record of the Record Holders
and Assignees of Units or other Partnership Securities, books of account and
records of Partnership proceedings, may be kept on, or be in the form of,
computer disks, hard drives, punch cards, magnetic tape, photographs,
micrographics or any other information storage device; provided, that the books
and records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for both tax and financial reporting purposes, on an accrual basis.
The books of the Partnership shall be maintained for financial reporting
purposes in accordance with U.S. GAAP.
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SECTION 8.2 Fiscal Year.
The fiscal year of the Partnership shall be a fiscal year ending
December 31.
SECTION 8.3 Reports.
(a) As soon as practicable, but in no event later than 120 days after
the close of each fiscal year of the Partnership, the General Partner shall
cause to be mailed or furnished to each Record Holder of a Unit as of a date
selected by the General Partner in its discretion, an annual report containing
financial statements of the Partnership for such fiscal year of the Partnership,
presented in accordance with U.S. GAAP, including a balance sheet and statements
of operations, Partnership equity and cash flows, such statements to be audited
by a firm of independent public accountants selected by the General Partner.
(b) As soon as practicable, but in no event later than 90 days after
the close of each Quarter except the last Quarter of each fiscal year, the
General Partner shall cause to be mailed or furnished to each Record Holder of a
Unit, as of a date selected by the General Partner in its discretion, a report
containing unaudited financial statements of the Partnership and such other
information as may be required by applicable law, regulation or rule of any
National Securities Exchange on which the Units are listed for trading, or as
the General Partner determines to be necessary or appropriate.
ARTICLE IX
TAX MATTERS
SECTION 9.1 Tax Returns and Information.
The General Partner shall arrange for the preparation and timely filing
of all returns of the Partnership that are required for federal, state and local
income tax purposes on the basis of the accrual method and a taxable year ending
on December 31. The General Partner shall use all reasonable efforts to furnish,
within 90 days of the close of the calendar year in which the Partnership's
taxable year ends, the tax information reasonably required by Record Holders for
federal and state income tax reporting purposes with respect to a taxable year.
The classification, realization and recognition of income, gain, losses and
deductions and other items shall be on the accrual method of accounting for
federal income tax purposes.
SECTION 9.2 Tax Elections.
(a) The Partnership shall make the election under Section 754 of the
Code in accordance with applicable regulations thereunder, subject to the
reservation of the right to seek to revoke any such election upon the General
Partner's determination that such revocation is in the best interests of the
Limited Partners. Notwithstanding any other provision herein contained, for the
purposes of computing the adjustments under Section 743(b) of the Code, the
General Partner shall be authorized (but not required) to adopt a convention
whereby the price paid by a transferee of a Limited Partner Interest will be
deemed to be the lowest quoted closing price of the Limited Partner Interests on
any National Securities Exchange on which such Limited Partner Interests are
traded during the calendar month in which such transfer is deemed to occur
pursuant to Section 6.2(g) without regard to the actual price paid by such
transferee.
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(b) The Partnership shall elect to deduct expenses incurred in
organizing the Partnership ratably over a sixty-month period as provided in
Section 709 of the Code.
(c) Except as otherwise provided herein, the General Partner shall
determine whether the Partnership should make any other elections permitted by
the Code.
SECTION 9.3 Tax Controversies.
Subject to the provisions hereof, the General Partner is designated as
the Tax Matters Partner (as defined in the Code) and is authorized and required
to represent the Partnership (at the Partnership's expense) in connection with
all examinations of the Partnership's affairs by tax authorities, including
resulting administrative and judicial proceedings, and to expend Partnership
funds for professional services and costs associated therewith. Each Partner and
Assignee agrees to cooperate with the General Partner and to do or refrain from
doing any or all things reasonably required by the General Partner to conduct
such proceedings.
SECTION 9.4 Withholding.
Notwithstanding any other provision of this Agreement, the General
Partner is authorized to take any action that it determines in its discretion to
be necessary or appropriate to cause the Partnership and any Operating
Partnership to comply with any withholding requirements established under the
Code or any other federal, state or local law including, without limitation,
pursuant to Sections 1441, 1442, 1445 and 1446 of the Code. To the extent that
the Partnership is required or elects to withhold and pay over to any taxing
authority any amount resulting from the allocation or distribution of income to
any Partner or Assignee (including, without limitation, by reason of Section
1446 of the Code), the amount withheld may at the discretion of the General
Partner be treated by the Partnership as a distribution of cash in the amount of
such withholding from such Partner.
SECTION 9.5 Entity-Level Arrearage Collections.
(a) If the Partnership is required by applicable law to pay any
federal, state or local income tax on behalf of, or withhold such amount with
respect to, any Partner or Assignee or any former Partner or Assignee with
respect to a Unit held by such Person, the General Partner shall cause the
Partnership to pay such tax on behalf of such Partner or Assignee or former
Partner or Assignee from the funds of the Partnership and any amount so paid on
behalf of, or withheld with respect to, any such Partner or Assignee shall
constitute a distribution out of Available Cash to such Partner or Assignee
pursuant to the definition of Available Cash; provided, however, in the
discretion of the General Partner, such taxes (if pertaining to all such
Partners) may be considered to be cash disbursements of the Partnership which
reduce Available Cash, but the payment or withholding thereof shall not be
deemed to be a distribution of Available Cash to such Partners.
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(b) To the extent any such Partner or Assignee (but not a former
Partner or Assignee) is not then entitled to such distribution under this
Agreement, the General Partner shall be authorized, without the approval of any
Partner or Assignee, to amend this Agreement insofar as is necessary to maintain
the uniformity of intrinsic tax characteristics as to all Common Units and to
make subsequent adjustments to distributions in a manner which, in the
reasonable judgment of the General Partner, will make as little alteration as
practicable in the priority and amount of distributions otherwise applicable
under this Agreement, and will not otherwise alter the distributions to which
Partners and Assignees are entitled under this Agreement.
(c) If the Partnership is permitted (but not required) by applicable
law to pay any such tax on behalf of, or withhold such amount with respect to,
any Partner or Assignee or former Partner or Assignee with respect to Units held
by such Person, the General Partner shall be authorized (but not required) to
cause the Partnership to pay such tax from the funds of the Partnership and to
take any action consistent with this Section 9.5. The General Partner shall be
authorized (but not required) to take all necessary or appropriate actions to
collect all or any portion of a deficiency in the payment of any such tax that
relates to prior periods and that is attributable to Persons who were Limited
Partners or Assignees with respect to Units held by such Person when such
deficiencies arose, from such Persons.
SECTION 9.6 Opinions of Counsel.
Notwithstanding any other provision of this Agreement, if the
Partnership or the Operating Partnership is treated as an association taxable as
a corporation at any time or is otherwise taxable for federal income tax
purposes as an entity at any time and, pursuant to the provisions of this
Agreement, an Opinion of Counsel would otherwise be required to the effect that
an action will not cause the Partnership or the Operating Partnership to become
so treated as an association taxable as a corporation or otherwise taxable as an
entity for federal income tax purposes, such requirement for an Opinion of
Counsel shall be deemed automatically waived.
ARTICLE X
ADMISSION OF PARTNERS
SECTION 10.1 Admission of Initial Limited Partners.
Upon the issuance by the Partnership of Common Units, Initial
Subordinated Units and Incentive Distribution Rights to the General Partner as
described in Section 5.2, the General Partner was deemed to have been admitted
to the Partnership as a Limited Partner in respect of the Common Units, Initial
Subordinated Units and Incentive Distribution Rights issued to it. Upon the
issuance by the Partnership of Common Units to the Underwriters as described in
Section 5.3 in connection with the Initial Offering and the execution by each
Underwriter of a Transfer Application, the General Partner admitted the
Underwriters to the Partnership as Initial Limited Partners in respect of the
Common Units purchased by them.
SECTION 10.2 Admission of Substituted Limited Partner.
(a) By transfer of a Limited Partner Interest in accordance with
Article IV, the transferor shall be deemed to have given the transferee the
right to seek admission as a Substituted Limited Partner subject to the
conditions of, and in the manner permitted under, this Agreement. A transferor
of a Certificate representing a Limited Partner Interest shall, however, only
have the authority to convey to a purchaser or other transferee who does not
execute and deliver a Transfer Application (i) the right to negotiate such
Certificate to a purchaser or other transferee and (ii) the right to transfer
the right to request admission as a Substituted Limited Partner to such
purchaser or other transferee in respect of the transferred Limited Partner
Interests. Each transferee of a Limited Partner Interest (including any nominee
holder or an agent acquiring such Limited Partner Interest for the account of
another Person) who executes and delivers a Transfer Application shall, by
virtue of such execution and delivery, be an Assignee and be deemed to have
applied to become a Substituted Limited Partner with respect to the Limited
Partner Interests so transferred to such Person.
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(b) Such Assignee shall become a Substituted Limited Partner (i) at
such time as the General Partner consents thereto, which consent may be given or
withheld in the General Partner's discretion, and (ii) when any such admission
is shown on the books and records of the Partnership. If such consent is
withheld, such transferee shall be an Assignee. An Assignee shall have an
interest in the Partnership equivalent to that of a Limited Partner with respect
to allocations and distributions, including liquidating distributions, of the
Partnership. With respect to voting rights attributable to Limited Partner
Interests that are held by Assignees, the General Partner shall be deemed to be
the Limited Partner with respect thereto and shall, in exercising the voting
rights in respect of such Limited Partner Interests on any matter, vote such
Limited Partner Interests at the written direction of the Assignee who is the
Record Holder of such Limited Partner Interests. If no such written direction is
received, such Limited Partner Interests will not be voted. An Assignee shall
have no other rights of a Limited Partner.
SECTION 10.3 Admission of Successor General Partner.
A successor General Partner approved pursuant to Section 11.1 or 11.2
or the transferee of or successor to all of the General Partner Interest
pursuant to Section 4.6 who is proposed to be admitted as a successor General
Partner shall be admitted to the Partnership as the General Partner, effective
immediately prior to the withdrawal or removal of the predecessor or
transferring General Partner pursuant to Section 11.1 or 11.2 or the transfer of
the General Partner Interest pursuant to Section 4.6, provided, however, that no
such successor shall be admitted to the Partnership until compliance with the
terms of Section 4.6 has occurred and such successor has executed and delivered
such other documents or instruments as may be required to effect such admission.
Any such successor shall, subject to the terms hereof, carry on the business of
the members of the Partnership Group without dissolution.
SECTION 10.4 Admission of Additional Limited Partners.
(a) A Person (other than the General Partner, an Initial Limited
Partner or a Substituted Limited Partner) who makes a Capital Contribution to
the Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the General
Partner (i) evidence of acceptance in form satisfactory to the General Partner
of all of the terms and conditions of this Agreement, including the power of
attorney granted in Section 2.6, and (ii) such other documents or instruments as
may be required in the discretion of the General Partner to effect such Person's
admission as an Additional Limited Partner.
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(b) Notwithstanding anything to the contrary in this Section 10.4, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's discretion. The admission of any Person as an Additional Limited
Partner shall become effective on the date upon which the name of such Person is
recorded as such in the books and records of the Partnership, following the
consent of the General Partner to such admission.
(c) Upon the issuance by the Partnership of the Common Units,
Subordinated Units and Deferred Participation Units to the Contributors as
described in Section 5.4 in connection with the Contribution Agreement and in
accordance with the terms of this Agreement, the General Partner shall admit the
Contributors to the Partnership as Additional Limited Partners with respect to
the Common Units, Subordinated Units and Deferred Participation Units issued to
them.
SECTION 10.5 Amendment of Agreement and Certificate of Limited Partnership.
To effect the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Delaware Act to
amend the records of the Partnership to reflect such admission and, if
necessary, to prepare as soon as practicable an amendment to this Agreement and,
if required by law, the General Partner shall prepare and file an amendment to
the Certificate of Limited Partnership, and the General Partner may for this
purpose, among others, exercise the power of attorney granted pursuant to
Section 2.6.
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
SECTION 11.1 Withdrawal of the General Partner.
(a) The General Partner shall be deemed to have withdrawn from the
Partnership upon the occurrence of any one of the following events (each such
event herein referred to as an "Event of Withdrawal");
(i) The General Partner voluntarily withdraws from the
Partnership by giving written notice to the other Partners (and it
shall be deemed that the General Partner has withdrawn pursuant to this
Section 11.1(a)(i) if the General Partner voluntarily withdraws as
general partner of the Operating Partnership);
(ii) The General Partner transfers all of its General Partner
Interests pursuant to Section 4.6;
(iii) The General Partner is removed pursuant to Section 11.2;
(iv) The General Partner (A) makes a general assignment for
the benefit of creditors; (B) files a voluntary bankruptcy petition for
relief under Chapter 7 of the United States Bankruptcy Code; (C) files
a petition or answer seeking for itself a liquidation, dissolution or
similar relief (but not a reorganization or readjustment) under any
law; (D) files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against the
General Partner in a proceeding of the type described in clauses
(A)-(C) of this Section 11.1(a)(iv); or (E) seeks, consents to or
acquiesces in the appointment of a trustee (but not a
debtor-in-possession), receiver or liquidator of the General Partner or
of all or any substantial part of its properties;
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(v) A final and non-appealable order of relief under Chapter 7
of the United States Bankruptcy Code is entered by a court with
appropriate jurisdiction pursuant to a voluntary or involuntary
petition by or against the General Partner that the General Partner is
bankrupt or insolvent; or
(vi) (A) in the event the General Partner is a corporation, a
certificate of dissolution or its equivalent is filed for the General
Partner, or 90 days expire after the date of notice to the General
Partner of revocation of its charter without a reinstatement of its
charter, under the laws of its state of incorporation; (B) in the event
the General Partner is a partnership or a limited liability company,
the dissolution and commencement of winding up of the General Partner;
(C) in the event the General Partner is acting in such capacity by
virtue of being a trustee of a trust, the termination of the trust; (D)
in the event the General Partner is a natural person, his death or
adjudication of incompetency; and (E) otherwise in the event of the
termination of the General Partner.
If an Event of Withdrawal specified in Section 11.1(a)(iv), (v) or
(vi)(A), (B), (C) or (E) occurs, the withdrawing General Partner shall give
notice to the Limited Partners within 30 days after such occurrence. The
Partners hereby agree that only the Events of Withdrawal described in this
Section 11.1 shall result in the withdrawal of the General Partner from the
Partnership.
(b) Withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal shall not constitute a breach of this
Agreement under the following circumstances:
(i) at any time during the period beginning on the Initial
Closing Date and ending at 12:00 midnight, Eastern Time, on the last
day of the Subordination Period, the General Partner voluntarily
withdraws by giving at least 90 days' advance notice of its intention
to withdraw to the Limited Partners; provided that prior to the
effective date of such withdrawal, the withdrawal is approved by a Unit
Majority (excluding Common Units and Subordinated Units held by the
General Partner and its Affiliates) and the General Partner delivers to
the Partnership an Opinion of Counsel ("Withdrawal Opinion of Counsel")
that such withdrawal (following the selection of the successor General
Partner) would not result in the loss of the limited liability of any
Limited Partner or of the limited partner of the Operating Partnership
or cause the Partnership or the Operating Partnership to be treated as
an association taxable as a corporation or otherwise to be taxed as an
entity for federal income tax purposes (to the extent not previously
treated as such);
(ii) at any time after 12:00 midnight, Eastern Time, on the
last day of the Subordination Period, the General Partner voluntarily
withdraws by giving at least 90 days' advance notice to the
Unitholders, such withdrawal to take effect on the date specified in
such notice;
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(iii) at any time that the General Partner ceases to be the
General Partner pursuant to Section 11.1(a)(ii) or is removed pursuant
to Section 11.2; or
(iv) notwithstanding clause (i) of this sentence, at any time
that the General Partner voluntarily withdraws by giving at least 90
days' advance notice of its intention to withdraw to the Limited
Partners, such withdrawal to take effect on the date specified in the
notice, if at the time such notice is given one Person and its
Affiliates (other than the General Partner and its Affiliates or their
direct or indirect beneficial owners) own beneficially or of record or
control at least 50% of the Outstanding Units.
(c) The withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal shall also constitute the withdrawal of the
General Partner as general partner of the other Group Members. If the General
Partner gives a notice of withdrawal pursuant to Section 11.1(a)(i), the holders
of at least a Unit Majority (excluding Common Units and Subordinated Units held
by the General Partner and its Affiliates), may, prior to the effective date of
such withdrawal, elect a successor General Partner. The Person so elected as
successor General Partner shall automatically become the successor general
partner of the other Group Members of which the General Partner is a general
partner. If, prior to the effective date of the General Partner's withdrawal, a
successor is not selected by the Unitholders as provided herein or the
Partnership does not receive a Withdrawal Opinion of Counsel, the Partnership
shall be dissolved in accordance with Section 12.1. Any successor General
Partner elected in accordance with the terms of this Section 11.1 shall be
subject to the provisions of Section 10.3.
SECTION 11.2 Removal of the General Partner.
The General Partner may be removed if such removal is approved by the
Unitholders holding at least 66 2/3% of the Outstanding Common Units and 66 2/3%
of the Outstanding Subordinated Units (excluding Common Units and Subordinated
Units held by the General Partner and its Affiliates). Any such action by such
holders for removal of the General Partner must also provide for the election of
a successor General Partner by at least a Unit Majority (excluding Common Units
and Subordinated Units held by the General Partner and its Affiliates). Such
removal shall be effective immediately following the admission of a successor
General Partner pursuant to Section 10.3. The removal of the General Partner
shall also automatically constitute the removal of the General Partner as
general partner of the other Group Members of which the General Partner is a
general partner. If a Person is elected as a successor General Partner in
accordance with the terms of this Section 11.2, such Person shall, upon
admission pursuant to Section 10.3, automatically become a successor general
partner of the other Group Members of which the General Partner is a general
partner. The right of the holders of Outstanding Common Units and Outstanding
Subordinated Units to remove the General Partner shall not exist or be exercised
unless the Partnership has received an opinion opining as to the matters covered
by a Withdrawal Opinion of Counsel. Any successor General Partner elected in
accordance with the terms of this Section 11.2 shall be subject to the
provisions of Section 10.3.
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SECTION 11.3 Interest of Departing Partner and Successor General Partner.
(a) In the event of (i) withdrawal of the General Partner under
circumstances where such withdrawal does not violate this Agreement or (ii)
removal of the General Partner under the circumstances set forth in Section
11.4, if a successor General Partner is elected in accordance with the terms of
Section 11.1 or 11.2, the Departing Partner shall have the option exercisable
prior to the effective date of the departure of such Departing Partner to
require its successor to purchase its General Partner Interest (or equivalent
interest), its general partnership interest in the other Group Members and all
of its Incentive Distribution Rights (collectively, the "Combined Interest") in
exchange for an amount in cash equal to the fair market value of such Combined
Interest, such amount to be determined and payable as of the effective date of
its departure. If the General Partner is removed by the Unitholders under
circumstances where Cause exists or if the General Partner withdraws under
circumstances where such withdrawal violates this Agreement or the Operating
Partnership Agreement, and if a successor General Partner is elected in
accordance with the terms of Section 11.1 or 11.2, such successor shall have the
option, exercisable prior to the effective date of the departure of such
Departing Partner, to purchase the Combined Interest for such fair market value
of such Combined Interest. In either event, the Departing Partner shall be
entitled to receive all reimbursements due such Departing Partner pursuant to
Section 7.4, including any employee-related liabilities (including severance
liabilities), incurred in connection with the termination of any employees
employed by the General Partner for the benefit of the Partnership or the other
Group Members.
(b) For purposes of Section 11.3(a), the fair market value of the
Combined Interest shall be determined by agreement between the Departing Partner
and its successor or, failing agreement within 30 days after the effective date
of such Departing Partner's departure, by an independent investment banking firm
or other independent expert selected by the Departing Partner and its successor,
which, in turn, may rely on other experts, and the determination of which shall
be conclusive as to such matter. If such parties cannot agree upon one
independent investment banking firm or other independent expert within 45 days
after the effective date of such departure, then the Departing Partner shall
designate an independent investment banking firm or other independent expert,
the Departing Partner's successor shall designate an independent investment
banking firm or other independent expert, and such firms or experts shall
mutually select a third independent investment banking firm or independent
expert, which third independent investment banking firm or other independent
expert shall determine the fair market value of the Combined Interest. In making
its determination, such third independent investment banking firm or other
independent expert may consider the then current trading price of Units on any
National Securities Exchange on which Units are then listed, the value of the
Partnership's assets, the rights and obligations of the Departing Partner and
other factors it may deem relevant. The Partnership shall pay the costs of all
such independent investment banking firms or other independent experts.
(c) If the Combined Interest is not purchased in the manner set forth
in Section 11.3(a), the Departing Partner (or its transferee) shall become a
Limited Partner and its Combined Interest shall be converted into Common Units
pursuant to a valuation made by an investment banking firm or other independent
expert selected pursuant to Section 11.3(a), without reduction in such
Partnership Interest (but subject to proportionate dilution by reason of the
admission of its successor). Any successor General Partner shall indemnify the
Departing Partner (or its transferee) as to all debts and liabilities of the
Partnership arising on or after the date on which the Departing Partner (or its
transferee) becomes a Limited Partner. For purposes of this Agreement,
conversion of the Combined Interest to Common Units will be characterized as if
the General Partner (or its transferee) contributed its Combined Interest to the
Partnership in exchange for the newly issued Common Units.
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(d) If a successor General Partner is elected in accordance with the
terms of Section 11.1 or 11.2 and the option described in Section 11.3(a) is not
exercised by the party entitled to do so, the successor General Partner shall,
at the effective date of its admission to the Partnership, contribute to the
capital of the Partnership cash in an amount such that its Capital Account,
after giving effect to such contribution and any adjustments made to the Capital
Accounts of all Partners pursuant to Section 5.6(d)(i), shall be equal to that
percentage of the Capital Accounts of all Partners that is equal to its
Percentage Interest as the General Partner. In such event, such successor
General Partner shall be entitled to such Percentage Interest of all Partnership
allocations and distributions and any other allocations and distributions to
which the Departing Partner was entitled in its capacity as the General Partner.
SECTION 11.4 Termination of Subordination Period, Conversion of Subordinated
Units and Deferred Participation Units and Extinguishment of Cumulative Common
Unit Arrearages.
Notwithstanding any provision of this Agreement, if the General Partner
is removed as general partner of the Partnership under circumstances where Cause
does not exist and the General Partner does not consent to such removal, (i) the
Subordination Period will end and all Outstanding Subordinated Units will
immediately and automatically convert into Common Units on a one-for-one basis,
(ii) all Outstanding Deferred Participation Units will immediately and
automatically convert into Common Units on a one-for-one basis, (iii) all
Cumulative Common Unit Arrearages on the Common Units will be extinguished, (iv)
all additional Capital Contributions by the General Partner to fund any Minimum
Quarterly Distribution shortfalls shall be repaid and (v) the Combined Interest
held by the General Partner shall be converted to Common Units at the option of
the General Partner. Notwithstanding any other provision within this Agreement,
the Common Units to be issued upon the conversion of the Outstanding
Subordinated Units and Outstanding Deferred Participation Units pursuant to this
Section 11.4 shall have, as a substantive matter, like intrinsic economic and
federal tax characteristics of a Common Unit.
SECTION 11.5 Withdrawal of Limited Partners.
No Limited Partner shall have any right to withdraw from the
Partnership; provided, however, that when a transferee of a Limited Partner's
Limited Partner Interest becomes a Record Holder of the Limited Partner Interest
so transferred, such transferring Limited Partner shall cease to be a Limited
Partner with respect to the Limited Partner Interest so transferred.
ARTICLE XII
DISSOLUTION AND LIQUIDATION
SECTION 12.1 Dissolution.
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the removal or withdrawal of the General Partner, if a successor General Partner
is elected pursuant to Section 11.1 or 11.2, the Partnership shall not be
dissolved and such successor General Partner shall continue the business of the
Partnership. The Partnership shall dissolve, and (subject to Section 12.2) its
affairs shall be wound up, upon:
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(a) the expiration of its term as provided in Section 2.7;
(b) an Event of Withdrawal of the General Partner as provided in
Section 11.1(a) (other than Section 11.1(a)(ii)), unless a successor is elected
and an Opinion of Counsel is received as provided in Section 11.1(b) or 11.2 and
such successor is admitted to the Partnership pursuant to Section 10.3;
(c) an election to dissolve the Partnership by the General Partner that
is approved by the holders of a Unit Majority;
(d) the entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Delaware Act; or
(e) the sale of all or substantially all of the assets and properties
of the Partnership Group.
SECTION 12.2 Continuation of the Business of the Partnership After Dissolution.
Upon (a) dissolution of the Partnership following an Event of
Withdrawal caused by the withdrawal or removal of the General Partner as
provided in Section 11.1(a)(i) or (iii) and the failure of the Partners to
select a successor to such Departing Partner pursuant to Section 11.1 or 11.2,
then within 90 days thereafter, or (b) dissolution of the Partnership upon an
event constituting an Event of Withdrawal as defined in Section 11.1(a)(iv), (v)
or (vi), then, to the maximum extent permitted by law, within 180 days
thereafter, the holders of a Unit Majority may elect to reconstitute the
Partnership and continue its business on the same terms and conditions set forth
in this Agreement by forming a new limited partnership on terms identical to
those set forth in this Agreement and having as the successor general partner a
Person approved by the holders of a Unit Majority. Unless such an election is
made within the applicable time period as set forth above, the Partnership shall
conduct only activities necessary to wind up its affairs. If such an election is
so made, then:
(i) the reconstituted Partnership shall continue until the end
of the term set forth in Section 2.7 unless earlier dissolved in
accordance with this Article XII;
(ii) if the successor General Partner is not the former
General Partner, then the interest of the former General Partner shall
be treated in the manner provided in Section 11.3; and
(iii) all necessary steps shall be taken to cancel this
Agreement and the Certificate of Limited Partnership and to enter into
and, as necessary, to file a new partnership agreement and certificate
of limited partnership, and the successor general partner may for this
purpose exercise the powers of attorney granted the General Partner
pursuant to Section 2.6; provided, that the right of the holders of a
Unit Majority to approve a successor General Partner and to
reconstitute and to continue the business of the Partnership shall not
exist and may not be exercised unless the Partnership has received an
Opinion of Counsel that (x) the exercise of the right would not result
in the loss of limited liability of any Limited Partner and (y) neither
the Partnership, the reconstituted limited partnership nor the
Operating Partnership would be treated as an association taxable as a
corporation or otherwise be taxable as an entity for federal income tax
purposes upon the exercise of such right to continue.
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SECTION 12.3 Liquidator.
Upon dissolution of the Partnership, unless the Partnership is
continued under an election to reconstitute and continue the Partnership
pursuant to Section 12.2, the General Partner, or in the event the General
Partner has been dissolved or removed, become bankrupt as set forth in Section
11.1 or withdrawn from the Partnership, a liquidator or liquidating committee
approved by the holders of at least a majority of the Outstanding Common Units
and Outstanding Subordinated Units voting as a single class, shall select one or
more Persons to act as Liquidator. The Liquidator (if other than the General
Partner) shall be entitled to receive such compensation for its services as may
be approved by holders of at least a majority of the Outstanding Common Units
and Subordinated Units voting as a single class. The Liquidator (if other than
the General Partner) shall agree not to resign at any time without 15 days'
prior notice and may be removed at any time, with or without cause, by notice of
removal approved by holders of at least a majority of the Outstanding Common
Units and Subordinated Units voting as a single class. Upon dissolution, removal
or resignation of the Liquidator, a successor and substitute Liquidator (who
shall have and succeed to all rights, powers and duties of the original
Liquidator) shall within 30 days thereafter be approved by holders of at least a
majority of the Outstanding Common Units and Subordinated Units voting as a
single class. The right to approve a successor or substitute Liquidator in the
manner provided herein shall be deemed to refer also to any such successor or
substitute Liquidator approved in the manner herein provided. Except as
expressly provided in this Article XII, the Liquidator approved in the manner
provided herein shall have and may exercise, without further authorization or
consent of any of the parties hereto, all of the powers conferred upon the
General Partner under the terms of this Agreement (but subject to all of the
applicable limitations, contractual and otherwise, upon the exercise of such
powers, other than the limitation on sale set forth in Section 7.3(b)) to the
extent necessary or desirable in the good faith judgment of the Liquidator to
carry out the duties and functions of the Liquidator hereunder for and during
such period of time as shall be reasonably required in the good faith judgment
of the Liquidator to complete the winding up and liquidation of the Partnership
as provided for herein.
SECTION 12.4 Liquidation.
The Liquidator shall proceed to dispose of the assets of the
Partnership, discharge its liabilities, and otherwise wind up its affairs in
such manner and over such period as the Liquidator determines to be in the best
interest of the Partners, subject to Section 17-804 of the Delaware Act and the
following:
(a) Disposition of Assets. The assets may be disposed of by public or
private sale or by distribution in kind to one or more Partners on such terms as
the Liquidator and such Partner or Partners may agree. If any property is
distributed in kind, the Partner receiving the property shall be deemed for
purposes of Section 12.4(c) to have received cash equal to its fair market
value; and contemporaneously therewith, appropriate cash distributions must be
made to the other Partners. The Liquidator may, in its absolute discretion,
defer liquidation or distribution of the Partnership's assets for a reasonable
time if it determines that an immediate sale or distribution of all or some of
the Partnership's assets would be impractical or would cause undue loss to the
Partners. The Liquidator may, in its absolute discretion, distribute the
Partnership's assets, in whole or in part, in kind if it determines that a sale
would be impractical or would cause undue loss to the Partners.
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(b) Discharge of Liabilities. Liabilities of the Partnership include
amounts owed to Partners otherwise than in respect of their distribution rights
under Article VI. With respect to any liability that is contingent, conditional
or unmatured or is otherwise not yet due and payable, the Liquidator shall
either settle such claim for such amount as it thinks appropriate or establish a
reserve of cash or other assets to provide for its payment. When paid, any
unused portion of the reserve shall be distributed as additional liquidation
proceeds.
(c) Liquidation Distributions. All property and all cash in excess of
that required to discharge liabilities as provided in Section 12.4(b) shall be
distributed to the Partners in accordance with, and to the extent of, the
positive balances in their respective Capital Accounts, as determined after
taking into account all Capital Account adjustments (other than those made by
reason of distributions pursuant to this Section 12.4(c)) for the taxable year
of the Partnership during which the liquidation of the Partnership occurs (with
such date of occurrence being determined pursuant to Treasury Regulation Section
1.704-1(b) (2)(ii)(g)), and such distribution shall be made by the end of such
taxable year (or, if later, within 90 days after said date of such occurrence).
SECTION 12.5 Cancellation of Certificate of Limited Partnership.
Upon the completion of the distribution of Partnership cash and
property as provided in Section 12.4 in connection with the liquidation of the
Partnership, the Partnership shall be terminated and the Certificate of Limited
Partnership and all qualifications of the Partnership as a foreign limited
partnership in jurisdictions other than the State of Delaware shall be canceled
and such other actions as may be necessary to terminate the Partnership shall be
taken.
SECTION 12.6 Return of Contributions.
The General Partner shall not be personally liable for, and shall have
no obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate, the return of the Capital Contributions of the Limited
Partners or Unitholders, or any portion thereof, it being expressly understood
that any such return shall be made solely from Partnership assets.
SECTION 12.7 Waiver of Partition.
To the maximum extent permitted by law, each Partner hereby waives any
right to partition of the Partnership property.
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SECTION 12.8 Capital Account Restoration.
No Limited Partner shall have any obligation to restore any negative
balance in its Capital Account upon liquidation of the Partnership. The General
Partner shall be obligated to restore any negative balance in its Capital
Account upon liquidation of its interest in the Partnership by the end of the
taxable year of the Partnership during which such liquidation occurs, or, if
later, within 90 days after the date of such liquidation.
SECTION 12.9 Reasonable Time for Winding Up.
A reasonable time shall be allowed for the orderly winding up of
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 12.4 in order to minimize any losses otherwise attendant
upon such winding up, and the provisions of this Agreement shall remain in
effect between the Partners during the period of liquidation.
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
SECTION 13.1 Amendment to Be Adopted Solely by the General Partner.
Each Partner agrees that the General Partner, without the approval of
any Partner or Assignee, may amend any provision of this Agreement and execute,
swear to, acknowledge, deliver, file and record whatever documents may be
required in connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the
principal place of business of the Partnership, the registered agent of the
Partnership or the registered office of the Partnership;
(b) admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement;
(c) a change that, in the sole discretion of the General Partner, is
necessary or advisable to qualify or continue the qualification of the
Partnership as a limited partnership or a partnership in which the Limited
Partners have limited liability under the laws of any state or to ensure that
the Partnership and the Operating Partnership will not be treated as an
association taxable as a corporation or otherwise taxed as an entity for federal
income tax purposes;
(d) a change that, in the discretion of the General Partner, (i) does
not adversely affect the Limited Partners in any material respect, (ii) is
necessary or advisable to (A) satisfy any requirements, conditions or guidelines
contained in any opinion, directive, order, ruling or regulation of any federal
or state agency or judicial authority or contained in any federal or state
statute (including the Delaware Act) or (B) facilitate the trading of the
Limited Partner Interests (including the division of any class or classes of
Outstanding Limited Partner Interests into different classes to facilitate
uniformity of tax consequences within such classes of Limited Partner Interests)
or comply with any rule, regulation, guideline or requirement of any National
Securities Exchange on which the Limited Partner Interests are or will be listed
for trading, compliance with any of which the General Partner determines in its
discretion to be in the best interests of the Partnership and the Limited
Partners, (iii) is necessary or advisable in connection with action taken by the
General Partner to implement tax-related provisions of this Agreement or (iv) is
required to effect the intent expressed in the Registration Statement or the
intent of the provisions of this Agreement or is otherwise contemplated by this
Agreement;
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(e) a change in the fiscal year or taxable year of the Partnership and
any changes that, in the discretion of the General Partner, are necessary or
advisable as a result of a change in the fiscal year or taxable year of the
Partnership including, if the General Partner shall so determine, a change in
the definition of "Quarter" and the dates on which distributions are to be made
by the Partnership;
(f) an amendment that is necessary, in the Opinion of Counsel, to
prevent the Partnership, or the General Partner or its directors, officers,
trustees or agents from in any manner being subjected to the provisions of the
Investment Company Act of 1940, as amended, the Investment Advisers Act of 1940,
as amended, or "plan asset" regulations adopted under the Employee Retirement
Income Security Act of 1974, as amended, regardless of whether such are
substantially similar to plan asset regulations currently applied or proposed by
the United States Department of Labor;
(g) subject to the terms of Section 5.8, an amendment that, in the
discretion of the General Partner, is necessary or advisable in connection with
the authorization of issuance of any class or series of Partnership Securities
pursuant to Section 5.7;
(h) any amendment expressly permitted in this Agreement to be made by
the General Partner acting alone;
(i) an amendment effected, necessitated or contemplated by a Merger
Agreement approved in accordance with Section 14.3;
(j) an amendment that, in the discretion of the General Partner, is
necessary or advisable to reflect, account for and deal with appropriately the
formation by the Partnership of, or investment by the Partnership in, any
corporation, partnership, joint venture, limited liability company or other
entity, in connection with the conduct by the Partnership of activities
permitted by the terms of Section 2.4;
(k) a merger or conveyance pursuant to Section 14.3(d); or
(l) any other amendments substantially similar to the foregoing.
SECTION 13.2 Amendment Procedures.
Except as provided in Sections 13.1 and 13.3, all amendments to this
Agreement shall be made in accordance with the following requirements.
Amendments to this Agreement may be proposed only by or with the consent of the
General Partner which consent may be given or withheld in its sole discretion. A
proposed amendment shall be effective upon its approval by the holders of a Unit
Majority, unless a greater or different percentage is required under this
Agreement or by Delaware law. Each proposed amendment that requires the approval
of the holders of a specified percentage of Outstanding Units shall be set forth
in a writing that contains the text of the proposed amendment. If such an
amendment is proposed, the General Partner shall seek the written approval of
the requisite percentage of Outstanding Units or call a meeting of the
Unitholders to consider and vote on such proposed amendment. The General Partner
shall notify all Record Holders upon final adoption of any such proposed
amendments.
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SECTION 13.3 Amendment Requirements.
(a) Notwithstanding the provisions of Sections 13.1 and 13.2, no
provision of this Agreement that establishes a percentage of Outstanding Units
(including Units deemed owned by the General Partner) required to take any
action shall be amended, altered, changed, repealed or rescinded in any respect
that would have the effect of reducing such voting percentage unless such
amendment is approved by the written consent or the affirmative vote of holders
of Outstanding Units whose aggregate Outstanding Units constitute not less than
the voting requirement sought to be reduced.
(b) Notwithstanding the provisions of Sections 13.1 and 13.2, no
amendment to this Agreement may (i) enlarge the obligations of any Limited
Partner without its consent, unless such shall be deemed to have occurred as a
result of an amendment approved pursuant to Section 13.3(c), (ii) enlarge the
obligations of, restrict in any way any action by or rights of, or reduce in any
way the amounts distributable, reimbursable or otherwise payable to, the General
Partner or any of its Affiliates without its consent, which consent may be given
or withheld in its sole discretion, (iii) change Section 12.1(a) or 12.1(c), or
(iv) change the term of the Partnership or, except as set forth in Section
12.1(c), give any Person the right to dissolve the Partnership.
(c) Except as provided in Section 14.3, and except as otherwise
provided, and without limitation of the General Partner's authority to adopt
amendments to this Agreement as contemplated in Section 13.1, any amendment that
would have a material adverse effect on the rights or preferences of any class
of Partnership Interests in relation to other classes of Partnership Interests
must be approved by the holders of not less than a majority of the Outstanding
Partnership Interests of the class affected.
(d) Notwithstanding any other provision of this Agreement, except for
amendments pursuant to Section 13.1 and except as otherwise provided by Section
14.3(b), no amendments shall become effective without the approval of the
holders of at least 90% of the Outstanding Common Units and Subordinated Units
voting as a single class unless the Partnership obtains an Opinion of Counsel to
the effect that such amendment will not affect the limited liability of any
Limited Partner under applicable law.
(e) Except as provided in Section 13.1, this Section 13.3 shall only be
amended with the approval of the holders of at least 90% of the Outstanding
Units.
SECTION 13.4 Special Meetings.
All acts of Limited Partners to be taken pursuant to this Agreement
shall be taken in the manner provided in this Article XIII. Special meetings of
the Limited Partners may be called by the General Partner or by Limited Partners
owning 20% or more of the Outstanding Limited Partner Interests of the class or
classes for which a meeting is proposed. Limited Partners shall call a special
meeting by delivering to the General Partner one or more requests in writing
stating that the signing Limited Partners wish to call a special meeting and
indicating the general or specific purposes for which the special meeting is to
be called. Within 60 days after receipt of such a call from Limited Partners or
within such greater time as may be reasonably necessary for the Partnership to
comply with any statutes, rules, regulations, listing agreements or similar
requirements governing the holding of a meeting or the solicitation of proxies
for use at such a meeting, the General Partner shall send a notice of the
meeting to the Limited Partners either directly or indirectly through the
Transfer Agent. A meeting shall be held at a time and place determined by the
General Partner on a date not less than 10 days nor more than 60 days after the
mailing of notice of the meeting. Limited Partners shall not vote on matters
that would cause the Limited Partners to be deemed to be taking part in the
management and control of the business and affairs of the Partnership so as to
jeopardize the Limited Partners' limited liability under the Delaware Act or the
law of any other state in which the Partnership is qualified to do business.
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SECTION 13.5 Notice of a Meeting.
Notice of a meeting called pursuant to Section 13.4 shall be given to
the Record Holders of the class or classes of Limited Partner Interests for
which a meeting is proposed in writing by mail or other means of written
communication in accordance with Section 16.1. The notice shall be deemed to
have been given at the time when deposited in the mail or sent by other means of
written communication.
SECTION 13.6 Record Date.
For purposes of determining the Limited Partners entitled to notice of
or to vote at a meeting of the Limited Partners or to give approvals without a
meeting as provided in Section 13.11 the General Partner may set a Record Date,
which shall not be less than 10 nor more than 60 days before (a) the date of the
meeting (unless such requirement conflicts with any rule, regulation, guideline
or requirement of any National Securities Exchange on which the Limited Partner
Interests are listed for trading, in which case the rule, regulation, guideline
or requirement of such exchange shall govern) or (b) in the event that approvals
are sought without a meeting, the date by which Limited Partners are requested
in writing by the General Partner to give such approvals.
SECTION 13.7 Adjournment.
When a meeting is adjourned to another time or place, notice need not
be given of the adjourned meeting and a new Record Date need not be fixed, if
the time and place thereof are announced at the meeting at which the adjournment
is taken, unless such adjournment shall be for more than 45 days. At the
adjourned meeting, the Partnership may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than 45
days or if a new Record Date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given in accordance with this Article XIII.
SECTION 13.8 Waiver of Notice; Approval of Meeting; Approval of Minutes.
The transactions of any meeting of Limited Partners, however called and
noticed, and whenever held, shall be as valid as if it had occurred at a meeting
duly held after regular call and notice, if a quorum is present either in person
or by proxy, and if, either before or after the meeting, Limited Partners
representing such quorum who were present in person or by proxy and entitled to
vote, sign a written waiver of notice or an approval of the holding of the
meeting or an approval of the minutes thereof. All waivers and approvals shall
be filed with the Partnership records or made a part of the minutes of the
meeting. Attendance of a Limited Partner at a meeting shall constitute a waiver
of notice of the meeting, except when the Limited Partner does not approve, at
the beginning of the meeting, of the transaction of any business because the
meeting is not lawfully called or convened; and except that attendance at a
meeting is not a waiver of any right to disapprove the consideration of matters
required to be included in the notice of the meeting, but not so included, if
the disapproval is expressly made at the meeting.
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SECTION 13.9 Quorum.
The holders of a majority of the Outstanding Limited Partner Interests
of the class or classes for which a meeting has been called (including Limited
Partner Interests deemed owned by the General Partner) represented in person or
by proxy shall constitute a quorum at a meeting of Limited Partners of such
class or classes unless any such action by the Limited Partners requires
approval by holders of a greater percentage of such Limited Partner Interests,
in which case the quorum shall be such greater percentage. At any meeting of the
Limited Partners duly called and held in accordance with this Agreement at which
a quorum is present, the act of Limited Partners holding Outstanding Limited
Partner Interests that in the aggregate represent a majority of the Outstanding
Limited Partner Interests entitled to vote and be present in person or by proxy
at such meeting shall be deemed to constitute the act of all Limited Partners,
unless a greater or different percentage is required with respect to such action
under the provisions of this Agreement, in which case the act of the Limited
Partners holding Outstanding Limited Partner Interests that in the aggregate
represent at least such greater or different percentage shall be required. The
Limited Partners present at a duly called or held meeting at which a quorum is
present may continue to transact business until adjournment, notwithstanding the
withdrawal of enough Limited Partners to leave less than a quorum, if any action
taken (other than adjournment) is approved by the required percentage of
Outstanding Limited Partner Interests specified in this Agreement (including
Limited Partner Interests deemed owned by the General Partner). In the absence
of a quorum any meeting of Limited Partners may be adjourned from time to time
by the affirmative vote of holders of at least a majority of the Outstanding
Limited Partner Interests entitled to vote at such meeting (including Limited
Partner Interests deemed owned by the General Partner) represented either in
person or by proxy, but no other business may be transacted, except as provided
in Section 13.7.
SECTION 13.10 Conduct of a Meeting.
The General Partner shall have full power and authority concerning the
manner of conducting any meeting of the Limited Partners or solicitation of
approvals in writing, including the determination of Persons entitled to vote,
the existence of a quorum, the satisfaction of the requirements of Section 13.4,
the conduct of voting, the validity and effect of any proxies and the
determination of any controversies, votes or challenges arising in connection
with or during the meeting or voting. The General Partner shall designate a
Person to serve as chairman of any meeting and shall further designate a Person
to take the minutes of any meeting. All minutes shall be kept with the records
of the Partnership maintained by the General Partner. The General Partner may
make such other regulations consistent with applicable law and this Agreement as
it may deem advisable concerning the conduct of any meeting of the Limited
Partners or solicitation of approvals in writing, including regulations in
regard to the appointment of proxies, the appointment and duties of inspectors
of votes and approvals, the submission and examination of proxies and other
evidence of the right to vote, and the revocation of approvals in writing.
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SECTION 13.11 Action Without a Meeting.
If authorized by the General Partner, any action that may be taken at a
meeting of the Limited Partners may be taken without a meeting if an approval in
writing setting forth the action so taken is signed by Limited Partners owning
not less than the minimum percentage of the Outstanding Limited Partner
Interests (including Limited Partner Interests deemed owned by the General
Partner) that would be necessary to authorize or take such action at a meeting
at which all the Limited Partners entitled to vote thereon were present and
voted (unless such provision conflicts with any rule, regulation, guideline or
requirement of any National Securities Exchange on which the Limited Partner
Interests are listed for trading, in which case the rule, regulation, guideline
or requirement of such exchange shall govern). Prompt notice of the taking of
action without a meeting shall be given to the Limited Partners who have not
approved in writing. The General Partner may specify that any written ballot
submitted to Limited Partners for the purpose of taking any action without a
meeting shall be returned to the Partnership within the time period, which shall
be not less than 20 days, specified by the General Partner. If a ballot returned
to the Partnership does not vote all of the Limited Partner Interests held by
the Limited Partners the Partnership shall be deemed to have failed to receive a
ballot for the Limited Partner Interests that were not voted. If approval of the
taking of any action by the Limited Partners is solicited by any Person other
than by or on behalf of the General Partner, the written approvals shall have no
force and effect unless and until (a) they are deposited with the Partnership in
care of the General Partner, (b) approvals sufficient to take the action
proposed are dated as of a date not more than 90 days prior to the date
sufficient approvals are deposited with the Partnership and (c) an Opinion of
Counsel is delivered to the General Partner to the effect that the exercise of
such right and the action proposed to be taken with respect to any particular
matter (i) will not cause the Limited Partners to be deemed to be taking part in
the management and control of the business and affairs of the Partnership so as
to jeopardize the Limited Partners' limited liability, (ii) will not jeopardize
the status of the Partnership as a partnership under applicable tax laws and
regulations and (iii) is otherwise permissible under the state statutes then
governing the rights, duties and liabilities of the Partnership and the
Partners.
SECTION 13.12 Voting and Other Rights.
(a) Only those Record Holders of the Limited Partner Interests on the
Record Date set pursuant to Section 13.6 (and also subject to the limitations
contained in the definition of "Outstanding") shall be entitled to notice of,
and to vote at, a meeting of Limited Partners or to act with respect to matters
as to which the holders of the Outstanding Limited Partner Interests have the
right to vote or to act. All references in this Agreement to votes of, or other
acts that may be taken by, the Outstanding Limited Partner Interests shall be
deemed to be references to the votes or acts of the Record Holders of such
Outstanding Limited Partner Interests.
(b) With respect to Limited Partner Interests that are held for a
Person's account by another Person (such as a broker, dealer, bank, trust
company or clearing corporation, or an agent of any of the foregoing), in whose
name such Limited Partner Interests are registered, such other Person shall, in
exercising the voting rights in respect of such Limited Partner Interests on any
matter, and unless the arrangement between such Persons provides otherwise, vote
such Limited Partner Interests in favor of, and at the direction of, the Person
who is the beneficial owner, and the Partnership shall be entitled to assume it
is so acting without further inquiry. The provisions of this Section 13.12(b)
(as well as all other provisions of this Agreement) are subject to the
provisions of Section 4.3.
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(c) With respect to any vote or act that may be taken by the Record
Holders of any Outstanding Units or Deferred Participation Units as specified in
this Agreement, each Outstanding Unit and Deferred Participation Unit that is
permitted to vote shall be entitled to one vote per that Outstanding Unit or
Deferred Participation Unit, as applicable.
ARTICLE XIV
MERGER
SECTION 14.1 Authority.
The Partnership may merge or consolidate with one or more corporations,
limited liability companies, business trusts or associations, real estate
investment trusts, common law trusts or unincorporated businesses, including a
general partnership or limited partnership, formed under the laws of the State
of Delaware or any other state of the United States of America, pursuant to a
written agreement of merger or consolidation ("Merger Agreement") in accordance
with this Article XIV.
SECTION 14.2 Procedure for Merger or Consolidation.
Merger or consolidation of the Partnership pursuant to this Article XIV
requires the prior approval of the General Partner. If the General Partner shall
determine, in the exercise of its discretion, to consent to the merger or
consolidation, the General Partner shall approve the Merger Agreement, which
shall set forth:
(a) The names and jurisdictions of formation or organization of each of
the business entities proposing to merge or consolidate;
(b) The name and jurisdiction of formation or organization of the
business entity that is to survive the proposed merger or consolidation (the
"Surviving Business Entity");
(c) The terms and conditions of the proposed merger or consolidation;
(d) The manner and basis of exchanging or converting the equity
securities of each constituent business entity for, or into, cash, property or
general or limited partner interests, rights, securities or obligations of the
Surviving Business Entity; and (i) if any general or limited partner interests,
securities or rights of any constituent business entity are not to be exchanged
or converted solely for, or into, cash, property or general or limited partner
interests, rights, securities or obligations of the Surviving Business Entity,
the cash, property or general or limited partner interests, rights, securities
or obligations of any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity) which the holders of such general or
limited partner interests, securities or rights are to receive in exchange for,
or upon conversion of their general or limited partner interests, securities or
rights, and (ii) in the case of securities represented by certificates, upon the
surrender of such certificates, which cash, property or general or limited
partner interests, rights, securities or obligations of the Surviving Business
Entity or any general or limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity), or evidences thereof, are to be
delivered;
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(e) A statement of any changes in the constituent documents or the
adoption of new constituent documents (the articles or certificate of
incorporation, articles of trust, declaration of trust, certificate or agreement
of limited partnership or other similar charter or governing document) of the
Surviving Business Entity to be effected by such merger or consolidation;
(f) The effective time of the merger, which may be the date of the
filing of the certificate of merger pursuant to Section 14.4 or a later date
specified in or determinable in accordance with the Merger Agreement (provided,
that if the effective time of the merger is to be later than the date of the
filing of the certificate of merger, the effective time shall be fixed no later
than the time of the filing of the certificate of merger and stated therein);
and
(g) Such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or appropriate by the General Partner.
SECTION 14.3 Approval by Limited Partners of Merger or Consolidation.
(a) Except as provided in Section 14.3(d), the General Partner, upon
its approval of the Merger Agreement, shall direct that the Merger Agreement be
submitted to a vote of Unitholders, whether at a special meeting or by written
consent, in either case in accordance with the requirements of Article XIII. A
copy or a summary of the Merger Agreement shall be included in or enclosed with
the notice of a special meeting or the written consent.
(b) Except as provided in Section 14.3(d), the Merger Agreement shall
be approved upon receiving the affirmative vote or consent of the holders of a
Unit Majority unless the Merger Agreement contains any provision that, if
contained in an amendment to this Agreement, the provisions of this Agreement or
the Delaware Act would require for its approval the vote or consent of a greater
percentage of the Unitholders or of any class of Limited Partners, in which case
such greater percentage vote or consent shall be required for approval of the
Merger Agreement.
(c) Except as provided in Section 14.3(d), after such approval by vote
or consent of the Unitholders or of any class of Limited Partners, as
applicable, and at any time prior to the filing of the certificate of merger
pursuant to Section 14.4, the merger or consolidation may be abandoned pursuant
to provisions therefor, if any, set forth in the Merger Agreement.
(d) Notwithstanding anything else contained in this Article XIV or in
this Agreement, the General Partner is permitted, in its discretion, without
Limited Partner approval, to merge the Partnership or any Group Member into, or
convey all of the Partnership's assets to, another limited liability entity
which shall be newly formed and shall have no assets, liabilities or operations
at the time of such Merger other than those it receives from the Partnership or
other Group Member if (i) the General Partner has received an Opinion of Counsel
that the merger or conveyance, as the case may be, would not result in the loss
of the limited liability of any Limited Partner or any partner in the Operating
Partnership or cause the Partnership or Operating Partnership to be treated as
an association taxable as a corporation or otherwise to be taxed as an entity
for federal income tax purposes (to the extent not previously treated as such),
(ii) the sole purpose of such merger or conveyance is to effect a mere change in
the legal form of the Partnership into another limited liability entity and
(iii) the governing instruments of the new entity provide the Limited Partners
and the General Partner with the same rights and obligations as are herein
contained.
-101-
SECTION 14.4 Certificate of Merger.
Upon the required approval by the General Partner and the Unitholders
of a Merger Agreement, a certificate of merger shall be executed and filed with
the Secretary of State of the State of Delaware in conformity with the
requirements of the Delaware Act.
SECTION 14.5 Effect of Merger.
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the
business entities that has merged or consolidated, and all property,
real, personal and mixed, and all debts due to any of those business
entities and all other things and causes of action belonging to each of
those business entities, shall be vested in the Surviving Business
Entity and after the merger or consolidation shall be the property of
the Surviving Business Entity to the extent they were of each
constituent business entity;
(ii) the title to any real property vested by deed or
otherwise in any of those constituent business entities shall not
revert and is not in any way impaired because of the merger or
consolidation;
(iii) all rights of creditors and all liens on or security
interests in property of any of those constituent business entities
shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent
business entities shall attach to the Surviving Business Entity and may
be enforced against it to the same extent as if the debts, liabilities
and duties had been incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this Article shall
not be deemed to result in a transfer or assignment of assets or liabilities
from one entity to another.
ARTICLE XV
RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
SECTION 15.1 Right to Acquire Limited Partner Interests.
(a) Notwithstanding any other provision of this Agreement, if at any
time not more than 20% of the total Limited Partner Interests of any class then
Outstanding is held by Persons other than the General Partner and its
Affiliates, the General Partner shall then have the right, which right it may
assign and transfer, in whole or in part, to the Partnership or any Affiliate of
the General Partner or their direct or indirect beneficial owners , exercisable
in its sole discretion, to purchase all, but not less than all, of such Limited
Partner Interests of such class then Outstanding held by Persons other than the
General Partner and its Affiliates, at the greater of (x) the Current Market
Price as of the date three days prior to the date that the notice described in
Section 15.1(b) is mailed and (y) the highest cash price paid by the General
Partner or any of its Affiliates for any such Limited Partner Interest of such
class purchased during the 90-day period preceding the date that the notice
described in Section 15.1(b) is mailed.
-102-
(b) If the General Partner, any Affiliate of the General Partner or the
Partnership elects to exercise the right to purchase Limited Partner Interests
granted pursuant to Section 15.1(a), the General Partner shall deliver to the
Transfer Agent notice of such election to purchase (the "Notice of Election to
Purchase") and shall cause the Transfer Agent to mail a copy of such Notice of
Election to Purchase to the Record Holders of Limited Partner Interests of such
class (as of a Record Date selected by the General Partner) at least 10, but not
more than 60, days prior to the Purchase Date. Such Notice of Election to
Purchase shall also be published for a period of at least three consecutive days
in at least two daily newspapers of general circulation printed in the English
language and published in the Borough of Manhattan, New York. The Notice of
Election to Purchase shall specify the Purchase Date and the price (determined
in accordance with Section 15.1(a)) at which Limited Partner Interests will be
purchased and state that the General Partner, its Affiliate or the Partnership,
as the case may be, elects to purchase such Limited Partner Interests, upon
surrender of Certificates representing such Limited Partner Interests in
exchange for payment, at such office or offices of the Transfer Agent as the
Transfer Agent may specify, or as may be required by any National Securities
Exchange on which such Limited Partner Interests are listed or admitted to
trading. Any such Notice of Election to Purchase mailed to a Record Holder of
Limited Partner Interests at his address as reflected in the records of the
Transfer Agent shall be conclusively presumed to have been given regardless of
whether the owner receives such notice. On or prior to the Purchase Date, the
General Partner, its Affiliate or the Partnership, as the case may be, shall
deposit with the Transfer Agent cash in an amount sufficient to pay the
aggregate purchase price of all of such Limited Partner Interests to be
purchased in accordance with this Section 15.1. If the Notice of Election to
Purchase shall have been duly given as aforesaid at least 10 days prior to the
Purchase Date, and if on or prior to the Purchase Date the deposit described in
the preceding sentence has been made for the benefit of the holders of Limited
Partner Interests subject to purchase as provided herein, then from and after
the Purchase Date, notwithstanding that any Certificate shall not have been
surrendered for purchase, all rights of the holders of such Limited Partner
Interests (including any rights pursuant to Articles IV, V, VI, and XII) shall
thereupon cease, except the right to receive the purchase price (determined in
accordance with Section 15.1(a)) for their Limited Partner Interests, without
interest, upon surrender to the Transfer Agent of the Certificates representing
such Limited Partner Interests, and such Limited Partner Interests shall
thereupon be deemed to be transferred to the General Partner, its Affiliate or
the Partnership, as the case may be, on the record books of the Transfer Agent
and the Partnership, and the General Partner or any Affiliate of the General
Partner, or the Partnership, as the case may be, shall be deemed to be the owner
of all such Limited Partner Interests from and after the Purchase Date and shall
have all rights as the owner of such Limited Partner Interests (including all
rights as owner of such Limited Partner Interests pursuant to Articles IV, V, VI
and XII).
-103-
(c) At any time from and after the Purchase Date, a holder of an
Outstanding Limited Partner Interest subject to purchase as provided in this
Section 15.1 may surrender his Certificate evidencing such Limited Partner
Interest to the Transfer Agent in exchange for payment of the amount described
in Section 15.1(a), therefor, without interest thereon.
ARTICLE XVI
GENERAL PROVISIONS
SECTION 16.1 Addresses and Notices.
Any notice, demand, request, report or proxy materials required or
permitted to be given or made to a Partner or Assignee under this Agreement
shall be in writing and shall be deemed given or made when delivered in person
or when sent by first class United States mail or by other means of written
communication to the Partner or Assignee at the address described below. Any
notice, payment or report to be given or made to a Partner or Assignee hereunder
shall be deemed conclusively to have been given or made, and the obligation to
give such notice or report or to make such payment shall be deemed conclusively
to have been fully satisfied, upon sending of such notice, payment or report to
the Record Holder of such Partnership Securities at his address as shown on the
records of the Transfer Agent or as otherwise shown on the records of the
Partnership, regardless of any claim of any Person who may have an interest in
such Partnership Securities by reason of any assignment or otherwise. An
affidavit or certificate of making of any notice, payment or report in
accordance with the provisions of this Section 16.1 executed by the General
Partner, the Transfer Agent or the mailing organization shall be prima facie
evidence of the giving or making of such notice, payment or report. If any
notice, payment or report addressed to a Record Holder at the address of such
Record Holder appearing on the books and records of the Transfer Agent or the
Partnership is returned by the United States Postal Service marked to indicate
that the United States Postal Service is unable to deliver it, such notice,
payment or report and any subsequent notices, payments and reports shall be
deemed to have been duly given or made without further mailing (until such time
as such Record Holder or another Person notifies the Transfer Agent or the
Partnership of a change in his address) if they are available for the Partner or
Assignee at the principal office of the Partnership for a period of one year
from the date of the giving or making of such notice, payment or report to the
other Partners and Assignees. Any notice to the Partnership shall be deemed
given if received by the General Partner at the principal office of the
Partnership designated pursuant to Section 2.3. The General Partner may rely and
shall be protected in relying on any notice or other document from a Partner,
Assignee or other Person if believed by it to be genuine.
SECTION 16.2 Further Action.
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
SECTION 16.3 Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
-104-
SECTION 16.4 Integration.
This Agreement constitutes the entire agreement among the parties
hereto pertaining to the subject matter hereof and supersedes all prior
agreements and understandings pertaining thereto.
SECTION 16.5 Creditors.
None of the provisions of this Agreement shall be for the benefit of,
or shall be enforceable by, any creditor of the Partnership.
SECTION 16.6 Waiver.
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach of any other covenant, duty, agreement or condition.
SECTION 16.7 Counterparts.
This Agreement may be executed in counterparts, all of which together
shall constitute an agreement binding on all the parties hereto, notwithstanding
that all such parties are not signatories to the original or the same
counterpart. Each party shall become bound by this Agreement immediately upon
affixing its signature hereto or, in the case of a Person acquiring a Unit, upon
accepting the certificate evidencing such Unit or executing and delivering a
Transfer Application as herein described, independently of the signature of any
other party.
SECTION 16.8 Applicable Law.
This Agreement shall be construed in accordance with and governed by
the laws of the State of Delaware, without regard to the principles of conflicts
of law.
SECTION 16.9 Invalidity of Provisions.
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
SECTION 16.10 Consent of Partners.
Each Partner hereby expressly consents and agrees that, whenever in
this Agreement it is specified that an action may be taken upon the affirmative
vote or consent of less than all of the Partners, such action may be so taken
upon the concurrence of less than all of the Partners and each Partner shall be
bound by the results of such action.
-105-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
ATLAS NATURAL RESOURCES GP, LLC
By:
----------------------------------
Xxxxxxx X. Xxxxxxx
President, Chief Operating Officer
and Secretary
LIMITED PARTNERS:
All Limited Partners now and hereafter
admitted as Limited Partners of the
Partnership, pursuant to powers of
attorney now and hereafter executed in
favor of, and granted and delivered to
the General Partner.
By: ATLAS NATURAL RESOURCES GP, LLC
By:
----------------------------------
Xxxxxxx X. Xxxxxxx
President, Chief Operating Officer
and Secretary
-106-
EXHIBIT A
to the Second Amended and Restated Agreement
of Limited Partnership of
Atlas Natural Resources, L.P.
Certificate Evidencing Common Units
Representing Limited Partner Interests in
Atlas Natural Resources, L.P.
No. __________ __________ Common Units
In accordance with Section 4.1 of the Second Amended and Restated
Agreement of Limited Partnership of Atlas Natural Resources, L.P., as amended,
supplemented or restated from time to time (the "Partnership Agreement"), Atlas
Natural Resources, L.P., a Delaware limited partnership (the "Partnership"),
hereby certifies that ___________________ (the "Holder") is the registered owner
of ________ Common Units representing limited partner interests in the
Partnership (the "Common Units") transferable on the books of the Partnership,
in person or by duly authorized attorney, upon surrender of this Certificate
properly endorsed and accompanied by a properly executed application for
transfer of the Common Units represented by this Certificate. The rights,
preferences and limitations of the Common Units are set forth in, and this
Certificate and the Common Units represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Partnership Agreement.
Copies of the Partnership Agreement are on file at, and will be furnished
without charge on delivery of written request to the Partnership at, the
principal office of the Partnership located at 000 X. Xxxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxx 00000. Capitalized terms used herein but not defined shall have the
meanings given them in the Partnership Agreement.
The Holder, by accepting this Certificate, is deemed to have (i)
requested admission as, and agreed to become, a Limited Partner, (ii) agreed to
comply with and be bound by and to have executed the Partnership Agreement,
(iii) represented and warranted that the Holder has all right, power and
authority and, if an individual, the capacity necessary to enter into the
Partnership Agreement, (iv) granted the powers of attorney provided for in the
Partnership Agreement and (v) made the waivers and given the consents and
approvals contained, or authorized from time to time, in the Partnership
Agreement.
A-1
This Certificate shall not be valid for any purpose unless it has been
countersigned and registered by the Transfer Agent and Registrar.
Dated: _______________ Atlas Natural Resources, L.P.
Countersigned and Registered by: By: Atlas Natural Resources GP, LLC,
its General Partner
By:
------------------------------- ----------------------------------
as Transfer Agent and Registrar Name
--------------------------------
By: Title:
---------------------------- ------------------------------
Authorized Signature
A-2
[Reverse of Certificate]
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as follows according to applicable laws
or regulations:
TEN COM - as tenants in common UNIF GIFT/TRANSFERS MIN ACT
TEN ENT - as tenants by the ______________ Custodian ________
entireties (Cust) (Minor)
JT TEN - as joint tenants with under Uniform Gifts/Transfers to Minors Act
right of survivorship __________________________
and not as tenants (State)
Additional abbreviations, though not in the above list, may
also be used.
A-3
ASSIGNMENT OF COMMON UNITS
in
ATLAS NATURAL RESOURCES, L.P.
IMPORTANT NOTICE REGARDING INVESTOR
RESPONSIBILITIES DUE TO TAX SHELTER STATUS OF ATLAS
NATURAL RESOURCES, L.P.
You have acquired an interest in Atlas Natural Resources, L.P., 000 X.
Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx 00000, whose taxpayer identification number
is 00-0000000. The Internal Revenue Service has issued Atlas Natural Resources,
L.P. the following tax shelter registration number: 99344000008.
YOU MUST REPORT THIS REGISTRATION NUMBER TO THE INTERNAL REVENUE
SERVICE IF YOU CLAIM ANY DEDUCTION, LOSS, CREDIT OR OTHER TAX BENEFIT OR REPORT
ANY INCOME BY REASON OF YOUR INVESTMENT IN ATLAS NATURAL RESOURCES, L.P.
You must report the registration number as well as the name and
taxpayer identification number of Atlas Natural Resources, L.P. on Form 8271.
FORM 8271 MUST BE ATTACHED TO THE RETURN ON WHICH YOU CLAIM THE DEDUCTION, LOSS,
CREDIT OR OTHER TAX BENEFIT OR REPORT ANY INCOME BY REASON OF YOUR INVESTMENT IN
ATLAS NATURAL RESOURCES, L.P.
If you transfer your interest in Atlas Natural Resources, L.P. to
another person, you are required by the Internal Revenue Service to keep a list
containing (a) that person's name, address and taxpayer identification number,
(b) the date on which you transferred the interest and (c) the name, address and
tax shelter registration number of Atlas Natural Resources, L.P. If you do not
want to keep such a list, you must (1) send the information specified above to
the Partnership, which will keep the list for this tax shelter, and (2) give a
copy of this notice to the person to whom you transfer your interest. Your
failure to comply with any of the above-described responsibilities could result
in the imposition of a penalty under Section 6707(b) or 6708(a) of the Internal
Revenue Code of 1986, as amended, unless such failure is shown to be due to
reasonable cause.
ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS
INVESTMENT OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED OR APPROVED
BY THE INTERNAL REVENUE SERVICE.
A-4
FOR VALUE RECEIVED, _______________________________ hereby assigns,
conveys, sells and transfers unto
----------------------------- ----------------------------------------
(Please print or typewrite (Please insert Social Security
name and address of Assignee) or other identifying number of Assignee)
________________ Common Units representing limited partner interests evidenced
by this Certificate, subject to the Partnership Agreement, and does hereby
irrevocably constitute and appoint ________________ as its attorney-in-fact with
full power of substitution to transfer the same on the books of Atlas Natural
Resources, L.P.
Date: __________________ NOTE: The signature to any endorsement
hereon must correspond with the name as
written upon the face of this
Certificate in every particular, without
alteration, enlargement or change.
SIGNATURE(S) MUST BE GUARANTEED BY A MEMBER _______________________________
FIRM OF THE NATIONAL ASSOCIATION OF (Signature)
SECURITIES DEALERS, INC. OR
BY A COMMERCIAL BANK OR TRUST COMPANY _______________________________
(Signature)
SIGNATURE(S) GUARANTEED
No transfer of the Common Units evidenced hereby will be registered on
the books of the Partnership, unless the Certificate evidencing the Common Units
to be transferred is surrendered for registration or transfer and an Application
for Transfer of Common Units has been executed by a transferee either (a) on the
form set forth below or (b) on a separate application that the Partnership will
furnish on request without charge. A transferor of the Common Units shall have
no duty to the transferee with respect to execution of the transfer application
in order for such transferee to obtain registration of the transfer of the
Common Units.
A-5
APPLICATION FOR TRANSFER OF COMMON UNITS
The undersigned ("Assignee") hereby applies for transfer to the name of
the Assignee of the Common Units evidenced hereby.
The Assignee (a) requests admission as a Substituted Limited Partner
and agrees to comply with and be bound by, and hereby executes, the Second
Amended and Restated Agreement of Limited Partnership of Atlas Natural
Resources, L.P. (the "Partnership"), as amended, supplemented or restated to the
date hereof (the "Partnership Agreement"), (b) represents and warrants that the
Assignee has all right, power and authority and, if an individual, the capacity
necessary to enter into the Partnership Agreement, (c) appoints the General
Partner of the Partnership and, if a Liquidator shall be appointed, the
Liquidator of the Partnership as the Assignee's attorney-in-fact to execute,
swear to, acknowledge and file any document, including, without limitation, the
Partnership Agreement and any amendment thereto and the Certificate of Limited
Partnership of the Partnership and any amendment thereto, necessary or
appropriate for the Assignee's admission as a Substituted Limited Partner and as
a party to the Partnership Agreement, (d) gives the powers of attorney provided
for in the Partnership Agreement, and (e) makes the waivers and gives the
consents and approvals contained, or authorized from time to time, in the
Partnership Agreement. Capitalized terms not defined herein have the meanings
assigned to such terms in the Partnership Agreement.
Date: ______________
---------------------------------------------- ----------------------------
Social Security or other identifying number of Signature of Assignee
Assignee
---------------------------------------------- ----------------------------
Purchase Price including commissions, if any Name and Address of Assignee
Type of Entity (check one):
[X] Individual [X] Partnership [X] Corporation
[X] Trust [X] Other (specify) ___________________________
Nationality (check one):
[X] U.S. Citizen, Resident or Domestic Entity
[X] Foreign Corporation [X] Non-resident Alien
A-6
If the U.S. Citizen, Resident or Domestic Entity box is checked, the
following certification must be completed.
Under Section 1445(e) of the Internal Revenue Code of 1986, as amended
(the "Code"), the Partnership must withhold tax with respect to certain
transfers of property if a holder of an interest in the Partnership is a foreign
person. To inform the Partnership that no withholding is required with respect
to the undersigned interestholder's interest in it, the undersigned hereby
certifies the following (or, if applicable, certifies the following on behalf of
the interestholder).
Complete Either A or B:
A. Individual Interestholder
1. I am not a non-resident alien for purposes of U.S. income taxation.
2. My U.S. taxpayer identification number (Social Security Number) is
_________.
3. My home address is _________________________________.
B. Partnership, Corporation or Other Interestholder
1. ___________________ (name of Interestholder) is not a foreign
corporation, foreign partnership, foreign trust or foreign estate (as those
terms are defined in the Code and Treasury Regulations).
2. The interestholder's U.S. employer identification number is
________________ .
3. The interestholder's office address and place of incorporation (if
applicable) is __________.
The interestholder agrees to notify the Partnership within sixty (60)
days of the date the interestholder becomes a foreign person.
The interestholder understands that this certificate may be disclosed
to the Internal Revenue Service by the Partnership and that any false statement
contained herein could be punishable by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete and, if applicable, I further declare that I have authority to sign
this document on behalf of:
----------------------
Name of Interestholder
----------------------
Signature and Date
----------------------
Title (if applicable)
A-7
Note: If the Assignee is a broker, dealer, bank, trust company,
clearing corporation, other nominee holder or an agent of any of the foregoing,
and is holding for the account of any other person, this application should be
completed by an officer thereof or, in the case of a broker or dealer, by a
registered representative who is a member of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc.,
or, in the case of any other nominee holder, a person performing a similar
function. If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee owner or an agent of any of the foregoing, the above
certification as to any person for whom the Assignee will hold the Common Units
shall be made to the best of the Assignee's knowledge.
A-8
EXHIBIT B
to the Second Amended and Restated Agreement
of Limited Partnership of
Atlas Natural Resources, L.P.
Certificate Evidencing Subordinated Units
Representing Limited Partner Interests in
Atlas Natural Resources, L.P.
No. __________ __________ Subordinated Units
In accordance with Section 4.1 of the Second Amended and Restated
Agreement of Limited Partnership of Atlas Natural Resources, L.P., as amended,
supplemented or restated from time to time (the "Partnership Agreement"), Atlas
Natural Resources, L.P., a Delaware limited partnership (the "Partnership"),
hereby certifies that ___________________ (the "Holder") is the registered owner
of ________ Subordinated Units representing limited partner interests in the
Partnership (the "Subordinated Units") transferable on the books of the
Partnership, in person or by duly authorized attorney, upon surrender of this
Certificate properly endorsed and accompanied by a properly executed application
for transfer of the Subordinated Units represented by this Certificate. The
rights, preferences and limitations of the Subordinated Units are set forth in,
and this Certificate and the Subordinated Units represented hereby are issued
and shall in all respects be subject to the terms and provisions of, the
Partnership Agreement. Copies of the Partnership Agreement are on file at, and
will be furnished without charge on delivery of written request to the
Partnership at, the principal office of the Partnership located at 000 X.
Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx 00000. Capitalized terms used herein but not
defined shall have the meanings given them in the Partnership Agreement.
The Holder, by accepting this Certificate, is deemed to have (i)
requested admission as, and agreed to become, a Limited Partner, (ii) agreed to
comply with and be bound by and to have executed the Partnership Agreement,
(iii) represented and warranted that the Holder has all right, power and
authority and, if an individual, the capacity necessary to enter into the
Partnership Agreement, (iv) granted the powers of attorney provided for in the
Partnership Agreement and (v) made the waivers and given the consents and
approvals contained, or authorized from time to time, in the Partnership
Agreement.
B-1
Dated: ___________________
Atlas Natural Resources, L.P.
By: Atlas Natural Resources GP, LLC,
its General Partner
By: _______________________________
Name: _______________________________
President
By: _______________________________
Name: _______________________________
Secretary
B-2
[Reverse of Certificate]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY
BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
BEFORE THIS SECURITY IS OFFERED, SOLD OR OTHERWISE TRANSFERRED, THE PARTNERSHIP,
MAY REQUIRE THE HOLDER OF THIS SECURITY TO DELIVER A WRITTEN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION THAT IT REASONABLY REQUIRES TO CONFIRM
THAT SUCH PROPOSED OFFER, SALE OR TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as follows according to applicable laws
or regulations:
TEN COM - as tenants in common UNIF GIFT/TRANSFERS MIN ACT
TEN ENT - as tenants by the ________________ Custodian ______________
entireties (Cust) (Minor)
JT TEN - as joint tenants with under Uniform Gifts/Transfers to Minors Act
right of survivorship ___________________________
and not as tenants (State)
Additional abbreviations, though not in the above list, may
also be used.
B-3
ASSIGNMENT OF SUBORDINATED UNITS
in
ATLAS NATURAL RESOURCES, L.P.
IMPORTANT NOTICE REGARDING INVESTOR
RESPONSIBILITIES DUE TO TAX SHELTER STATUS OF ATLAS
NATURAL RESOURCES, L.P.
You have acquired an interest in Atlas Natural Resources, L.P., 000 X.
Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx 00000, whose taxpayer identification number
is 00-0000000. The Internal Revenue Service has issued Atlas Natural Resources,
L.P. the following tax shelter registration number: 99344000008.
YOU MUST REPORT THIS REGISTRATION NUMBER TO THE INTERNAL REVENUE
SERVICE IF YOU CLAIM ANY DEDUCTION, LOSS, CREDIT OR OTHER TAX BENEFIT OR REPORT
ANY INCOME BY REASON OF YOUR INVESTMENT IN ATLAS NATURAL RESOURCES, L.P.
You must report the registration number as well as the name and
taxpayer identification number of Atlas Natural Resources, L.P. on Form 8271.
FORM 8271 MUST BE ATTACHED TO THE RETURN ON WHICH YOU CLAIM THE DEDUCTION, LOSS,
CREDIT OR OTHER TAX BENEFIT OR REPORT ANY INCOME BY REASON OF YOUR INVESTMENT IN
ATLAS NATURAL RESOURCES, L.P.
If you transfer your interest in Atlas Natural Resources, L.P. to
another person, you are required by the Internal Revenue Service to keep a list
containing (a) that person's name, address and taxpayer identification number,
(b) the date on which you transferred the interest and (c) the name, address and
tax shelter registration number of Atlas Natural Resources, L.P. If you do not
want to keep such a list, you must (1) send the information specified above to
the Partnership, which will keep the list for this tax shelter, and (2) give a
copy of this notice to the person to whom you transfer your interest. Your
failure to comply with any of the above-described responsibilities could result
in the imposition of a penalty under Section 6707(b) or 6708(a) of the Internal
Revenue Code of 1986, as amended, unless such failure is shown to be due to
reasonable cause.
ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS
INVESTMENT OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED OR APPROVED
BY THE INTERNAL REVENUE SERVICE.
B-4
FOR VALUE RECEIVED, _______________________________ hereby assigns,
conveys, sells and transfers unto
------------------------------- ----------------------------------------
(Please print or typewrite name (Please insert Social Security
and address of Assignee) or other identifying number of Assignee)
________________ Subordinated Units representing limited partner interests
evidenced by this Certificate, subject to the Partnership Agreement, and does
hereby irrevocably constitute and appoint ________________ as its
attorney-in-fact with full power of substitution to transfer the same on the
books of Atlas Natural Resources, L.P.
Date: __________________ NOTE: The signature to any endorsement
hereon must correspond with the name as
written upon the face of this
Certificate in every particular, without
alteration, enlargement or change.
SIGNATURE(S) MUST BE GUARANTEED BY A MEMBER ___________________________________
FIRM OF THE NATIONAL ASSOCIATION OF (Signature)
SECURITIES DEALERS, INC. OR (Signature)
BY A COMMERCIAL BANK OR TRUST COMPANY ___________________________________
(Signature)
SIGNATURE(S) GUARANTEED
No transfer of the Subordinated Units evidenced hereby will be
registered on the books of the Partnership, unless the Certificate evidencing
the Subordinated Units to be transferred is surrendered for registration or
transfer and an Application for Transfer of Subordinated Units has been executed
by a transferee either (a) on the form set forth below or (b) on a separate
application that the Partnership will furnish on request without charge. A
transferor of the Subordinated Units shall have no duty to the transferee with
respect to execution of the transfer application in order for such transferee to
obtain registration of the transfer of the Subordinated Units.
B-5
APPLICATION FOR TRANSFER OF SUBORDINATED UNITS
The undersigned ("Assignee") hereby applies for transfer to the name of
the Assignee of the Subordinated Units evidenced hereby.
The Assignee (a) requests admission as a Substituted Limited Partner
and agrees to comply with and be bound by, and hereby executes, the Second
Amended and Restated Agreement of Limited Partnership of Atlas Natural
Resources, L.P. (the "Partnership"), as amended, supplemented or restated to the
date hereof (the "Partnership Agreement"), (b) represents and warrants that the
Assignee has all right, power and authority and, if an individual, the capacity
necessary to enter into the Partnership Agreement, (c) appoints the General
Partner of the Partnership and, if a Liquidator shall be appointed, the
Liquidator of the Partnership as the Assignee's attorney-in-fact to execute,
swear to, acknowledge and file any document, including, without limitation, the
Partnership Agreement and any amendment thereto and the Certificate of Limited
Partnership of the Partnership and any amendment thereto, necessary or
appropriate for the Assignee's admission as a Substituted Limited Partner and as
a party to the Partnership Agreement, (d) gives the powers of attorney provided
for in the Partnership Agreement, and (e) makes the waivers and gives the
consents and approvals contained, or authorized from time to time, in the
Partnership Agreement. Capitalized terms not defined herein have the meanings
assigned to such terms in the Partnership Agreement.
The Assignee acknowledges that (a) the Subordinated Units evidenced
hereby have not been registered under the Securities Act of 1933, as amended
(the "Securities Act"), or the securities laws of any state but have rather been
issued in reliance on an exemption therefrom and, therefore, cannot be sold
unless they are subsequently registered under the Securities Act and any
applicable state securities laws or exemptions from registration thereunder are
available, (b) only the Partnership can take action to register such
Subordinated Units and that the Partnership is under no obligation and has no
present plans to do so, (c) no authority, agency, commission, official,
department, commission, board, bureau, agency or instrumentality of the United
States, or any state, county, city or other political subdivision thereof, has
made any finding or determination as to the fairness of an investment in such
Subordinated Units, nor any recommendation or endorsement with respect thereto
and (d) before any subsequent offers, sale or other transfer of such
Subordinated Units, the Partnership, may require the Assignee to deliver a
written opinion of counsel, certifications and/or other information that it
reasonably requires to confirm that such proposed offer, sale or transfer is
being made pursuant to an exemption from the registration requirements of the
Securities Act.
Date:________________
---------------------------------------------- ----------------------------
Social Security or other identifying number of Signature of Assignee
Assignee
---------------------------------------------- ----------------------------
Purchase Price including commissions, if any Name and Address of Assignee
B-6
Type of Entity (check one):
[X] Individual [X] Partnership [X] Corporation
[X] Trust [X] Other (specify) ___________________________
Nationality (check one):
[X] U.S. Citizen, Resident or Domestic Entity
[X] Foreign Corporation [X] Non-resident Alien
If the U.S. Citizen, Resident or Domestic Entity box is checked, the
following certification must be completed.
Under Section 1445(e) of the Internal Revenue Code of 1986, as amended
(the "Code"), the Partnership must withhold tax with respect to certain
transfers of property if a holder of an interest in the Partnership is a foreign
person. To inform the Partnership that no withholding is required with respect
to the undersigned interestholder's interest in it, the undersigned hereby
certifies the following (or, if applicable, certifies the following on behalf of
the interestholder).
Complete Either A or B:
A. Individual Interestholder
4. I am not a non-resident alien for purposes of U.S. income taxation.
5. My U.S. taxpayer identification number (Social Security Number) is
_________.
6. My home address is _________________________________.
B. Partnership, Corporation or Other Interestholder
7. ___________________ (name of Interestholder) is not a foreign
corporation, foreign partnership, foreign trust or foreign estate (as those
terms are defined in the Code and Treasury Regulations).
8. The interestholder's U.S. employer identification number is
_________________
9. The interestholder's office address and place of incorporation (if
applicable) is __________.
The interestholder agrees to notify the Partnership within sixty (60)
days of the date the interestholder becomes a foreign person.
B-7
The interestholder understands that this certificate may be disclosed
to the Internal Revenue Service by the Partnership and that any false statement
contained herein could be punishable by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete and, if applicable, I further declare that I have authority to sign
this document on behalf of:
----------------------
Name of Interestholder
----------------------
Signature and Date
----------------------
Title (if applicable)
Note: If the Assignee is a broker, dealer, bank, trust company,
clearing corporation, other nominee holder or an agent of any of the foregoing,
and is holding for the account of any other person, this application should be
completed by an officer thereof or, in the case of a broker or dealer, by a
registered representative who is a member of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc.,
or, in the case of any other nominee holder, a person performing a similar
function. If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee owner or an agent of any of the foregoing, the above
certification as to any person for whom the Assignee will hold the Subordinated
Units shall be made to the best of the Assignee's knowledge.
B-8
EXHIBIT C
to the Second Amended and Restated Agreement
of Limited Partnership of
Atlas Natural Resources, L.P.
Certificate Evidencing Deferred Participation Units
Representing Limited Partner Interests in
Atlas Natural Resources, L.P.
No. __________ __________ Deferred Participation Units
In accordance with Section 4.1 of the Second Amended and Restated
Agreement of Limited Partnership of Atlas Natural Resources, L.P., as amended,
supplemented or restated from time to time (the "Partnership Agreement"), Atlas
Natural Resources, L.P., a Delaware limited partnership (the "Partnership"),
hereby certifies that ___________________ (the "Holder") is the registered owner
of ________ Deferred Participation Units representing limited partner interests
in the Partnership (the "Deferred Participation Units") transferable on the
books of the Partnership, in person or by duly authorized attorney, upon
surrender of this Certificate properly endorsed and accompanied by a properly
executed application for transfer of the Deferred Participation Units
represented by this Certificate. The rights, preferences and limitations of the
Deferred Participation Units are set forth in, and this Certificate and the
Deferred Participation Units represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Partnership Agreement.
Copies of the Partnership Agreement are on file at, and will be furnished
without charge on delivery of written request to the Partnership at, the
principal office of the Partnership located at 000 X. Xxxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxx 00000. Capitalized terms used herein but not defined shall have the
meanings given them in the Partnership Agreement.
The Holder, by accepting this Certificate, is deemed to have (i)
requested admission as, and agreed to become, a Limited Partner, (ii) agreed to
comply with and be bound by and to have executed the Partnership Agreement,
(iii) represented and warranted that the Holder has all right, power and
authority and, if an individual, the capacity necessary to enter into the
Partnership Agreement, (iv) granted the powers of attorney provided for in the
Partnership Agreement and (v) made the waivers and given the consents and
approvals contained, or authorized from time to time, in the Partnership
Agreement.
C-1
Dated:_______________
Atlas Natural Resources, L.P.
By: Atlas Natural Resources, GP, LLC,
its General Partner
By: _____________________________
Name: _____________________________
President
By: _____________________________
Name: _____________________________
Secretary
C-2
[Reverse of Certificate]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY
BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
BEFORE THIS SECURITY IS OFFERED, SOLD OR OTHERWISE TRANSFERRED, THE PARTNERSHIP,
MAY REQUIRE THE HOLDER OF THIS SECURITY TO DELIVER A WRITTEN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION THAT IT REASONABLY REQUIRES TO CONFIRM
THAT SUCH PROPOSED OFFER, SALE OR TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as follows according to applicable laws
or regulations:
TEN COM - as tenants in common UNIF GIFT/TRANSFERS MIN ACT
TEN ENT - as tenants by the ________________ Custodian _____________
entireties (Cust) (Minor)
JT TEN - as joint tenants with under Uniform Gifts/Transfers to Minors Act
right of survivorship ___________________________
and not as tenants (State)
Additional abbreviations, though not in the above list, may
also be used.
C-3
ASSIGNMENT OF DEFERRED PARTICIPATION UNITS
in
ATLAS NATURAL RESOURCES, L.P.
IMPORTANT NOTICE REGARDING INVESTOR
RESPONSIBILITIES DUE TO TAX SHELTER STATUS OF ATLAS
NATURAL RESOURCES, L.P.
You have acquired an interest in Atlas Natural Resources, L.P., 000 X.
Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx 00000, whose taxpayer identification number
is 00-0000000. The Internal Revenue Service has issued Atlas Natural Resources,
L.P. the following tax shelter registration number: 99344000008.
YOU MUST REPORT THIS REGISTRATION NUMBER TO THE INTERNAL REVENUE
SERVICE IF YOU CLAIM ANY DEDUCTION, LOSS, CREDIT OR OTHER TAX BENEFIT OR REPORT
ANY INCOME BY REASON OF YOUR INVESTMENT IN ATLAS NATURAL RESOURCES, L.P.
You must report the registration number as well as the name and
taxpayer identification number of Atlas Natural Resources, L.P. on Form 8271.
FORM 8271 MUST BE ATTACHED TO THE RETURN ON WHICH YOU CLAIM THE DEDUCTION, LOSS,
CREDIT OR OTHER TAX BENEFIT OR REPORT ANY INCOME BY REASON OF YOUR INVESTMENT IN
ATLAS NATURAL RESOURCES, L.P.
If you transfer your interest in Atlas Natural Resources, L.P. to
another person, you are required by the Internal Revenue Service to keep a list
containing (a) that person's name, address and taxpayer identification number,
(b) the date on which you transferred the interest and (c) the name, address and
tax shelter registration number of Atlas Natural Resources, L.P. If you do not
want to keep such a list, you must (1) send the information specified above to
the Partnership, which will keep the list for this tax shelter, and (2) give a
copy of this notice to the person to whom you transfer your interest. Your
failure to comply with any of the above-described responsibilities could result
in the imposition of a penalty under Section 6707(b) or 6708(a) of the Internal
Revenue Code of 1986, as amended, unless such failure is shown to be due to
reasonable cause.
ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS
INVESTMENT OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED OR APPROVED
BY THE INTERNAL REVENUE SERVICE.
C-4
FOR VALUE RECEIVED, _______________________________ hereby assigns,
conveys, sells and transfers unto
------------------------------- ---------------------------------------
(Please print or typewrite name (Please insert Social Security or other
and address of Assignee) identifying number of Assignee)
________________ Deferred Participation Units representing limited partner
interests evidenced by this Certificate, subject to the Partnership Agreement,
and does hereby irrevocably constitute and appoint ________________ as its
attorney-in-fact with full power of substitution to transfer the same on the
books of Atlas Natural Resources, L.P.
Date: __________________ NOTE: The signature to any endorsement
hereon must correspond with the name as
written upon the face of this
Certificate in every particular, without
alteration, enlargement or change.
SIGNATURE(S) MUST BE GUARANTEED BY A MEMBER ________________________________
FIRM OF THE NATIONAL ASSOCIATION OF (Signature)
SECURITIES DEALERS, INC. OR
BY A COMMERCIAL BANK OR TRUST COMPANY ________________________________
(Signature)
SIGNATURE(S) GUARANTEED
No transfer of the Deferred Participation Units evidenced hereby will
be registered on the books of the Partnership, unless the Certificate evidencing
the Deferred Participation Units to be transferred is surrendered for
registration or transfer and an Application for Transfer of Deferred
Participation Units has been executed by a transferee either (a) on the form set
forth below or (b) on a separate application that the Partnership will furnish
on request without charge. A transferor of the Deferred Participation Units
shall have no duty to the transferee with respect to execution of the transfer
application in order for such transferee to obtain registration of the transfer
of the Deferred Participation Units.
C-5
APPLICATION FOR TRANSFER OF DEFERRED PARTICIPATION UNITS
The undersigned ("Assignee") hereby applies for transfer to the name of
the Assignee of the Deferred Participation Units evidenced hereby.
The Assignee (a) requests admission as a Substituted Limited Partner
and agrees to comply with and be bound by, and hereby executes, the Second
Amended and Restated Agreement of Limited Partnership of Atlas Natural
Resources, L.P. (the "Partnership"), as amended, supplemented or restated to the
date hereof (the "Partnership Agreement"), (b) represents and warrants that the
Assignee has all right, power and authority and, if an individual, the capacity
necessary to enter into the Partnership Agreement, (c) appoints the General
Partner of the Partnership and, if a Liquidator shall be appointed, the
Liquidator of the Partnership as the Assignee's attorney-in-fact to execute,
swear to, acknowledge and file any document, including, without limitation, the
Partnership Agreement and any amendment thereto and the Certificate of Limited
Partnership of the Partnership and any amendment thereto, necessary or
appropriate for the Assignee's admission as a Substituted Limited Partner and as
a party to the Partnership Agreement, (d) gives the powers of attorney provided
for in the Partnership Agreement, and (e) makes the waivers and gives the
consents and approvals contained, or authorized from time to time, in the
Partnership Agreement. Capitalized terms not defined herein have the meanings
assigned to such terms in the Partnership Agreement.
The Assignee acknowledges that (a) the Deferred Participation Units
evidenced hereby have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), or the securities laws of any state but have
rather been issued in reliance on an exemption therefrom and, therefore, cannot
be sold unless they are subsequently registered under the Securities Act and any
applicable state securities laws or exemptions from registration thereunder are
available, (b) only the Partnership can take action to register such Deferred
Participation Units and that the Partnership is under no obligation and has no
present plans to do so, (c) no authority, agency, commission, official,
department, commission, board, bureau, agency or instrumentality of the United
States, or any state, county, city or other political subdivision thereof, has
made any finding or determination as to the fairness of an investment in such
Deferred Participation Units, nor any recommendation or endorsement with respect
thereto and (d) before any subsequent offers, sale or other transfer of such
Deferred Participation Units, the Partnership, may require the Assignee to
deliver a written opinion of counsel, certifications and/or other information
that it reasonably requires to confirm that such proposed offer, sale or
transfer is being made pursuant to an exemption from the registration
requirements of the Securities Act.
Date:_____________
-------------------------------------------- ----------------------------
Social Security or other identifying number of Signature of Assignee
Assignee
-------------------------------------------- ----------------------------
Purchase Price including commissions, if any Name and Address of Assignee
C-6
Type of Entity (check one):
[X] Individual [X] Partnership [X] Corporation
[X] Trust [X] Other (specify) ___________________________
Nationality (check one):
[X] U.S. Citizen, Resident or Domestic Entity
[X] Foreign Corporation [X] Non-resident Alien
If the U.S. Citizen, Resident or Domestic Entity box is checked, the
following certification must be completed.
Under Section 1445(e) of the Internal Revenue Code of 1986, as amended
(the "Code"), the Partnership must withhold tax with respect to certain
transfers of property if a holder of an interest in the Partnership is a foreign
person. To inform the Partnership that no withholding is required with respect
to the undersigned interestholder's interest in it, the undersigned hereby
certifies the following (or, if applicable, certifies the following on behalf of
the interestholder).
Complete Either A or B:
A. Individual Interestholder
10. I am not a non-resident alien for purposes of U.S. income taxation.
11. My U.S. taxpayer identification number (Social Security Number) is
_________.
12. My home address is _________________________________.
B. Partnership, Corporation or Other Interestholder
13. ___________________ (name of Interestholder) is not a foreign
corporation, foreign partnership, foreign trust or foreign estate (as those
terms are defined in the Code and Treasury Regulations).
14. The interestholder's U.S. employer identification number is
_________________
15. The interestholder's office address and place of incorporation (if
applicable) is __________.
The interestholder agrees to notify the Partnership within sixty (60)
days of the date the interestholder becomes a foreign person.
The interestholder understands that this certificate may be disclosed
to the Internal Revenue Service by the Partnership and that any false statement
contained herein could be punishable by fine, imprisonment or both.
C-7
Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete and, if applicable, I further declare that I have authority to sign
this document on behalf of:
------------------------------------
Name of Interestholder
-------------------------------------
Signature and Date
-------------------------------------
Title (if applicable)
Note: If the Assignee is a broker, dealer, bank, trust company,
clearing corporation, other nominee holder or an agent of any of the foregoing,
and is holding for the account of any other person, this application should be
completed by an officer thereof or, in the case of a broker or dealer, by a
registered representative who is a member of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc.,
or, in the case of any other nominee holder, a person performing a similar
function. If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee owner or an agent of any of the foregoing, the above
certification as to any person for whom the Assignee will hold the Deferred
Participation Units shall be made to the best of the Assignee's knowledge.
C-8
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS............................................................................ 2
SECTION 1.1 Definitions................................................................. 2
SECTION 1.2 Construction................................................................ 25
ARTICLE II ORGANIZATION........................................................................... 26
SECTION 2.1 Formation................................................................... 26
SECTION 2.2 Name........................................................................ 26
SECTION 2.3 Registered Office; Registered Agent; Principal Office; Other Offices........ 26
SECTION 2.4 Purpose and Business........................................................ 26
SECTION 2.5 Powers...................................................................... 27
SECTION 2.6 Power of Attorney........................................................... 27
SECTION 2.7 Term........................................................................ 29
SECTION 2.8 Title to Partnership Assets................................................. 29
ARTICLE III RIGHTS OF LIMITED PARTNERS............................................................. 29
SECTION 3.1 Limitation of Liability..................................................... 29
SECTION 3.2 Management of Business...................................................... 29
SECTION 3.3 Outside Activities of Limited Partners...................................... 30
SECTION 3.4 Rights of Limited Partners.................................................. 30
ARTICLE IV CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS; REDEMPTION OF
PARTNERSHIP INTERESTS.................................................................. 31
SECTION 4.1 Certificates................................................................ 31
SECTION 4.2 Mutilated, Destroyed, Lost or Stolen Certificates........................... 32
SECTION 4.3 Record Holders.............................................................. 33
SECTION 4.4 Transfer Generally.......................................................... 33
SECTION 4.5 Registration and Transfer of Limited Partner Interests...................... 33
SECTION 4.6 Transfer of the General Partner's General Partner Interest.................. 35
SECTION 4.7 Transfer of Incentive Distribution Rights................................... 35
SECTION 4.8 Restrictions on Transfers................................................... 36
SECTION 4.9 Citizenship Certificates; Non-citizen Assignees............................. 37
SECTION 4.10 Redemption of Partnership Interests of Non-citizen Assignees................ 38
-i-
TABLE OF CONTENTS
(continued)
Page
ARTICLE V CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS................................. 39
SECTION 5.1 Organizational Contributions..................................................... 39
SECTION 5.2 Contributions by the General Partner, Its Affiliates and the Issuance of
General Partner Units............................................................ 40
SECTION 5.3 Contributions by Initial Limited Partners and Reimbursement of the
General Partner.................................................................. 41
SECTION 5.4 Contributions by the Contributors................................................ 41
SECTION 5.5 Interest and Withdrawal.......................................................... 41
SECTION 5.6 Capital Accounts................................................................. 41
SECTION 5.7 Issuances of Additional Partnership Securities................................... 45
SECTION 5.8 Limitations on Issuance of Additional Partnership Securities..................... 46
SECTION 5.9 Conversion of Initial Subordinated Units......................................... 48
SECTION 5.10 Conversion of Subordinated Units................................................. 48
SECTION 5.11 Conversion of Deferred Participation Units....................................... 48
SECTION 5.12 Limited Preemptive Right......................................................... 50
SECTION 5.13 Splits and Combinations.......................................................... 50
SECTION 5.14 Fully Paid and Non-Assessable Nature of Limited Partner Interests................ 51
ARTICLE VI ALLOCATIONS AND DISTRIBUTIONS............................................................. 51
SECTION 6.1 Allocations for Capital Account Purposes......................................... 51
SECTION 6.2 Allocations for Tax Purposes..................................................... 59
SECTION 6.3 Requirement and Characterization of Distributions; Distributions to
Record Holders................................................................... 61
SECTION 6.4 Distributions of Available Cash from Operating Surplus........................... 62
SECTION 6.5 Distributions of Available Cash from Capital Surplus............................. 64
SECTION 6.6 Adjustment of Minimum Quarterly Distribution, Target Distribution Levels
and Deferred Target Distribution Levels.......................................... 65
SECTION 6.7 Special Provisions Relating to the Holders of Subordinated Units................. 65
SECTION 6.8 Special Provisions Relating to the Holders of Deferred Participation Units....... 66
-ii-
TABLE OF CONTENTS
(continued)
Page
SECTION 6.9 Special Provisions Relating to the Holders of Incentive Distribution
Rights........................................................................... 67
SECTION 6.10 Entity-Level Taxation............................................................ 67
ARTICLE VII MANAGEMENT AND OPERATION OF BUSINESS...................................................... 68
SECTION 7.1 Management....................................................................... 68
SECTION 7.2 Certificate of Limited Partnership............................................... 70
SECTION 7.3 Restrictions on General Partner's Authority...................................... 70
SECTION 7.4 Reimbursement of the General Partner............................................. 71
SECTION 7.5 Outside Activities............................................................... 71
SECTION 7.6 Loans from the General Partner; Loans or Contributions from the
Partnership; Contracts with Affiliates; Certain Restrictions on the
General Partner.................................................................. 72
SECTION 7.7 Indemnification.................................................................. 74
SECTION 7.8 Liability of Indemnitees......................................................... 76
SECTION 7.9 Resolution of Conflicts of Interest.............................................. 76
SECTION 7.10 Other Matters Concerning the General Partner..................................... 78
SECTION 7.11 Purchase or Sale of Partnership Securities....................................... 78
SECTION 7.12 Registration Rights of the General Partner and Its Affiliates.................... 79
SECTION 7.13 Reliance by Third Parties........................................................ 81
ARTICLE VIII BOOKS, RECORDS, ACCOUNTING AND REPORTS.................................................... 81
SECTION 8.1 Records and Accounting........................................................... 81
SECTION 8.2 Fiscal Year...................................................................... 82
SECTION 8.3 Reports.......................................................................... 82
ARTICLE IX TAX MATTERS................................................................................. 82
SECTION 9.1 Tax Returns and Information...................................................... 82
SECTION 9.2 Tax Elections.................................................................... 82
SECTION 9.3 Tax Controversies................................................................ 83
SECTION 9.4 Withholding...................................................................... 83
SECTION 9.5 Entity-Level Arrearage Collections............................................... 83
SECTION 9.6 Opinions of Counsel.............................................................. 84
-iii-
TABLE OF CONTENTS
(continued)
Page
ARTICLE X ADMISSION OF PARTNERS....................................................................... 84
SECTION 10.1 Admission of Initial Limited Partners............................................ 84
SECTION 10.2 Admission of Substituted Limited Partner......................................... 84
SECTION 10.3 Admission of Successor General Partner........................................... 85
SECTION 10.4 Admission of Additional Limited Partners......................................... 85
SECTION 10.5 Amendment of Agreement and Certificate of Limited Partnership.................... 86
ARTICLE XI WITHDRAWAL OR REMOVAL OF PARTNERS........................................................... 86
SECTION 11.1 Withdrawal of the General Partner................................................ 86
SECTION 11.2 Removal of the General Partner................................................... 88
SECTION 11.3 Interest of Departing Partner and Successor General Partner...................... 88
SECTION 11.4 Termination of Subordination Period, Conversion of Subordinated Units and
Deferred Participation Units and Extinguishment of Cumulative Common Unit
Arrearages....................................................................... 90
SECTION 11.5 Withdrawal of Limited Partners................................................... 90
ARTICLE XII DISSOLUTION AND LIQUIDATION....................................................... 90
SECTION 12.1 Dissolution...................................................................... 90
SECTION 12.2 Continuation of the Business of the Partnership After Dissolution................ 91
SECTION 12.3 Liquidator....................................................................... 92
SECTION 12.4 Liquidation...................................................................... 92
SECTION 12.5 Cancellation of Certificate of Limited Partnership............................... 93
SECTION 12.6 Return of Contributions.......................................................... 93
SECTION 12.7 Waiver of Partition.............................................................. 93
SECTION 12.8 Capital Account Restoration...................................................... 93
SECTION 12.9 Reasonable Time for Winding Up................................................... 94
ARTICLE XIII AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE.................................. 94
SECTION 13.1 Amendment to Be Adopted Solely by the General Partner............................ 94
SECTION 13.2 Amendment Procedures............................................................. 95
SECTION 13.3 Amendment Requirements........................................................... 96
SECTION 13.4 Special Meetings................................................................. 96
SECTION 13.5 Notice of a Meeting.............................................................. 97
-iv-
TABLE OF CONTENTS
(continued)
Page
SECTION 13.6 Record Date................................................................... 97
SECTION 13.7 Adjournment................................................................... 97
SECTION 13.8 Waiver of Notice; Approval of Meeting; Approval of Minutes.................... 97
SECTION 13.9 Quorum........................................................................ 98
SECTION 13.10 Conduct of a Meeting.......................................................... 98
SECTION 13.11 Action Without a Meeting...................................................... 99
SECTION 13.12 Voting and Other Rights....................................................... 99
ARTICLE XIV MERGER................................................................................... 100
SECTION 14.1 Authority..................................................................... 100
SECTION 14.2 Procedure for Merger or Consolidation......................................... 100
SECTION 14.3 Approval by Limited Partners of Merger or Consolidation....................... 101
SECTION 14.4 Certificate of Merger......................................................... 102
SECTION 14.5 Effect of Merger.............................................................. 102
ARTICLE XV RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS............................................... 102
SECTION 15.1 Right to Acquire Limited Partner Interests.................................... 102
ARTICLE XVI GENERAL PROVISIONS....................................................................... 104
SECTION 16.1 Addresses and Notices......................................................... 104
SECTION 16.2 Further Action................................................................ 104
SECTION 16.3 Binding Effect................................................................ 104
SECTION 16.4 Integration................................................................... 104
SECTION 16.5 Creditors..................................................................... 105
SECTION 16.6 Waiver........................................................................ 105
SECTION 16.7 Counterparts.................................................................. 105
SECTION 16.8 Applicable Law................................................................ 105
SECTION 16.9 Invalidity of Provisions...................................................... 105
SECTION 16.10 Consent of Partners........................................................... 105
-v-
EXHIBIT B to Contribution Agreement
REGISTRATION RIGHTS AGREEMENT, dated as of
_________, 2002, (the "Agreement") among ATLAS PIPELINE
PARTNERS, L.P., a Delaware limited partnership (the
"Partnership"), New Vulcan Coal Holdings, L.L.C., a Delaware
limited liability company, and Resource America, Inc., a
Delaware corporation.
The Unitholders (as hereinafter defined) own or have the right
to purchase or otherwise acquire Common Units (as hereinafter defined) of the
Partnership. The Partnership and the Unitholders deem it to be in their
respective best interests to set forth their rights in connection with public
offerings and sales of the Common Units.
NOW, THEREFORE, in consideration of the premises and mutual
covenants and obligations hereinafter set forth, the Partnership and the
Unitholders hereby agree as follows:
Section 1. Definitions.
-----------
As used in this Agreement, the following terms shall have the
following meanings:
"Affiliate" means, with respect to any Person, any (i)
director, officer, limited or general partner, member or stockholder holding 5%
or more of the outstanding capital stock or other equity interests of such
Person, (ii) spouse, parent, sibling or descendant of such Person (or a spouse,
parent, sibling or descendant of a Person specified in clause (i) above) and
(iii) other Person that, directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such Person. The term "control" includes, without limitation, the possession,
directly or indirectly, of the power to direct the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Board" means the Board of Managers of the general partner of
the Partnership.
"Commission" means the Securities and Exchange Commission or
any other agency at the time administering the Securities Act.
"Common Units" shall have the meaning set forth in the
Partnership Agreement.
"Contribution Agreement" means that certain Contribution
Agreement dated January [__], 2002 by and among Vulcan Intermediary, L.L.C.,
New Vulcan Coal Holdings, L.L.C., Atlas Pipeline Partners GP, L.L.C., the
Partnership and Resource America, Inc., as the same may be amended from time
to time.
"Deferred Participation Units" shall have the meaning set
forth in the Partnership Agreement.
"Exchange Act" means the Securities Exchange Act of 1934 or
any successor statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Material Transaction" means any material transaction in which
the Partnership or any of its subsidiaries proposes to engage or is engaged,
including a purchase or sale of assets or units, financing, merger, tender offer
or any other transaction that would require disclosure pursuant to the Exchange
Act or the rules of any securities exchange or interdealer quotation system on
which any securities of the Partnership are listed or authorized for quotation,
and with respect to which the Board reasonably has determined in good faith that
compliance with this Agreement may reasonably be expected to either materially
interfere with the Partnership's or such subsidiary's ability to consummate such
transaction in a timely fashion or require the Partnership to disclose material,
non-public information prior to such time as the Partnership would otherwise be
required to disclose such material, non-public information.
"Other Units" means at any time those Common Units which do
not constitute Primary Units or Registrable Units hereunder.
"Partnership Agreement" means the Second Amended and Restated
Limited Partnership Agreement of the Partnership, dated as of the date hereof,
as the same may be amended from time to time.
"Person" shall be construed broadly and means and includes a
natural person, a partnership, a corporation, an association, a joint stock
company, a limited liability company, a trust, a joint venture, an
unincorporated organization and any other entity and any federal, state,
municipal, foreign or other government, governmental department, commission,
board, bureau, agency or instrumentality, or any private or public court or
tribunal.
"Primary Units" means, at any time, Common Units to be issued
by the Partnership, the issuance of which by the Partnership is permitted or has
been authorized in accordance with the Partnership Agreement.
"Prospectus" means the prospectus included in a Registration
Statement, including any amendment or prospectus subject to completion, and any
such prospectus as amended or supplemented by any prospectus supplement with
respect to the terms of the offering of any portion of the Registrable Units
and, in each case, by all other amendments and supplements to such prospectus,
including post-effective amendments, and in each case including all material
incorporated by reference therein.
"Public Offering" means the registration and sale pursuant to
a public offering (which may be underwritten or otherwise) by the Partnership of
up to $180 million of Common Units in accordance with, and as contemplated by,
Section 6.23 of the Contribution Agreement.
"Registrable Units" means the Common Units held by the
Unitholders which constitute Restricted Units.
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"Registration Statement" means any registration statement of
the Partnership which covers an offering of any of the Registrable Units, and
all amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Resource Registrable Units" means the Registrable Units held
by the Resource Unitholders.
"Requesting Unitholders" shall have the meaning set forth in
Section 2(a).
"Required Vulcan Unitholders" means holders of at least 10% of
Vulcan Registrable Units then outstanding.
"Resource Unitholders" means Resource America, Inc. and any of
its Affiliates owning Common Units, and any successor, assignee or transferee of
any of the foregoing that agrees in writing to be bound by the terms hereof.
"Restricted Units" means (i) with respect to Vulcan
Unitholders, Common Units, whether held as of the date hereof or acquired
hereafter, including, without limitation, Common Units received upon conversion
of any Subordinated Units (including Subordinated Units received upon conversion
of the Deferred Participation Units), by any Vulcan Unitholder and (ii) with
respect to the Resource Unitholders, the Common Units held as of the date hereof
by the Resource Unitholders or acquired upon conversion of Subordinated Units
held by the Resource Unitholders pursuant to the Contribution Agreement. A
Restricted Unit shall cease to be a Restricted Unit when (i) such Restricted
Unit has been registered under the Securities Act, the Registration Statement in
connection therewith has been declared effective and it has been disposed of
pursuant to such effective Registration Statement, or (ii) with regard to any
individual Unitholder, all of such Unitholder's Restricted Units that are
eligible to be sold or distributed pursuant to Rule 144 (including, without
limitation, Rule 144(k)) in a single transaction by such Unitholder.
"Rule 144" means Rule 144 promulgated under the Securities Act
or any successor rule thereto or any complementary rule thereto (such as Rule
144A).
"Securities Act" means the Securities Act of 1933 or any
successor statute, and the rules and regulations of the Commission thereunder,
all as the same shall be in effect from time to time.
"Subordinated Units" shall have the meaning set forth in the
Partnership Agreement.
"Unitholders" means the Vulcan Unitholders and the Resource
Unitholders.
"Vulcan Registrable Units" means the Registrable Units held by
the Vulcan Unitholders.
-3-
"Vulcan Unitholders" means (i) New Vulcan Coal Holdings,
L.L.C., (ii) the Affiliates of New Vulcan Coal Holdings, L.L.C., (iii) any of
the direct or indirect beneficial owners of the Persons specified in clauses (i)
and (ii) above, and (iv) without limitation, any successor, assignee or
transferee of any of the foregoing that agrees in writing to be bound by the
terms hereof.
Section 2. Required Registration.
---------------------
(a) At any time after the date hereof, if either (x) the
Required Vulcan Unitholders shall request (the "Vulcan Requesting
Unitholders") in writing that the Partnership effect the registration
of Vulcan Registrable Units under the Securities Act or (y) Resource
Unitholders shall request in writing that the Partnership effect the
registration of at least 500,000 Resource Registrable Units owned by
such Resource Unitholders (the "Resource Requesting Unitholders" and,
collectively with the Vulcan Requesting Unitholders, the "Requesting
Unitholders"), then, in the case of a request under clause (x) or (y),
the Partnership shall, within five business days, give written notice
to the Unitholders other than the Requesting Unitholders of its
requirement to so register such offering and, upon the written request
of any other Unitholders to include in such registration Registrable
Units (which request shall specify the number of Registrable Units
proposed to be included in such registration), which request has been
delivered to the Partnership within ten business days after delivery of
any such notice by the Partnership, then the Partnership shall promptly
use its reasonable best efforts to effect the registration under the
Securities Act of such Vulcan Registrable Units or Resource Registrable
Units, as the case may be, and, if applicable, such other Registrable
Units.
(b) Notwithstanding anything contained in this Section 2 to
the contrary, the Partnership shall not be obligated to effect any
registration under the Securities Act except in accordance with the
following provisions:
(i) The number of requests permitted by (x) the
Vulcan Unitholders pursuant to Section 2(a) shall be limited
to six (and to no more than one during any 12 month period),
it being understood that the Public Offering shall not
constitute a requested registration under Section 2(a), and
(y) the Resource Unitholders pursuant to Section 2(a) shall be
limited to three (and to no more than one during any 12 month
period).
(ii) The Partnership may delay the filing or
effectiveness of any Registration Statement for a period of up
to 90 days after the date of a request for registration
pursuant to Section 2(a) or Section 4 if at the time of such
request: (x) the Partnership is engaged, or has filed a
Registration Statement under the Securities Act to engage, in
a public offering of Common Units (other than an offering on
Form S-8 under the Securities Act or otherwise in connection
with a stock option plan, stock purchase plan, savings plan or
other, similar plan), or (y) the Board reasonably determines
that such registration and offering would interfere with any
Material Transaction involving the Partnership; provided,
however, that the Partnership shall only be entitled to invoke
its rights under this Section 2(b)(ii) one time during any 12
month period.
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(iii) With respect to any registration pursuant to
this Section 2 or Section 4, the Partnership may include in
such registration any Primary Units or Other Units; provided,
however, that if the managing underwriter advises the
Partnership that the inclusion of all Registrable Units,
Primary Units and/or Other Units proposed to be included in
such registration would interfere with the successful
marketing (including pricing) of the Registrable Units
proposed to be included in such registration, then the number
of Registrable Units, Primary Units and/or Other Units
proposed to be included in such registration shall be included
in the following order:
(A) first, the Vulcan Registrable Units, if
the request is from the Vulcan Requesting
Unitholders, or the Resource Registrable Units, if
the request is from the Resource Requesting
Unitholders;
(B) second, the Resource Registrable Units
(if the Vulcan Registrable Units have the priority of
clause (A)), or the Vulcan Registrable Units (if the
Resource Registrable Units have the priority of
clause (A));
(C) third, the Primary Units; and
(D) fourth, the Other Units.
(iv) If the Requesting Unitholders pursuant to
Section 2(a) or Section 4 so elect, the offering of such
Registrable Units pursuant to such registration shall be in
the form of an underwritten offering. The Requesting
Unitholders shall select one or more nationally recognized
firms of investment bankers to act as the lead managing
underwriter or underwriters in connection with such offering.
(v) At any time before the Registration Statement
covering such Registrable Units becomes effective, the holders
of a majority of such units held by the Requesting Unitholders
may request the Partnership to withdraw or not to file the
Registration Statement. Such requested registration shall
constitute a request under Section 2(a) for purposes of
Section 2(b)(i), and the Requesting Unitholders shall be
deemed to have used one of their registration rights under
Section 2(a) for purposes of Section 2(b)(i), unless (a) such
request of withdrawal was caused by, or made in response to a
material adverse change in the business, properties,
condition, or operations of the Partnership occurring after
the request of the Requesting Unitholders pursuant to Section
2(a) was made or (b) the Partnership shall have been
reimbursed (pro rata by the Partnership (in respect of its
Primary Units, if any, to be included in the registration) and
the Unitholders participating in such registration (in respect
of the Registrable Units to be included in the registration)
or in such other proportion as such parties may agree) for all
out-of-pocket expenses incurred by the Partnership in
connection with such withdrawn registration.
-5-
(vi) Except as provided in Section 2(b)(v), a
registration shall not count as a requested registration
pursuant to Section 2(a) for purposes of Section 2(b)(i) until
it has become effective. If, after it has become effective,
(a) such Registration Statement has not been kept continuously
effective for a period of at least 90 days (or such shorter
period which will terminate when all the Registrable Units
covered by such Registration Statement have been sold pursuant
thereto), (b) such registration requested pursuant to Section
2(a) becomes subject to any stop order, injunction or other
order or requirement of the Commission or other governmental
agency or court for any reason preventing the sale of such
Registrable Units, or (c) the conditions to closing specified
in the underwriting agreement entered into in connection with
such registration are not satisfied or waived, other than by
reason of some act or omission by the Requesting Unitholders,
such registration shall not count as a requested registration
pursuant to Section 2(a) for purposes of Section 2(b)(i).
Section 3. Piggyback Registration.
----------------------
(a) If the Partnership at any time proposes for any reason to
register Primary Units or Other Units under the Securities Act (other
than the Public Offering, offerings on Form S-4 or Form S-8 promulgated
under the Securities Act (or any successor forms thereto), offerings in
connection with any stock option plan, stock purchase plan, savings or
similar plan or offerings pursuant to registration rights in existence
as of the date hereof (to the extent piggyback registration rights are
permitted by such registration rights) and other than pursuant to
Section 2), it shall give written notice to the Unitholders of its
intention to so register such Primary Units or Other Units at least 30
days before the initial filing of the Registration Statement related
thereto and, upon the request of any Unitholders to include in such
registration Registrable Units (which request shall specify the number
of Registrable Units proposed to be included in such registration),
delivered to the Partnership within 15 business days after delivery of
any such notice by the Partnership, the Partnership shall use its
reasonable best efforts to cause all such Registrable Units to be
included in such registration on the same terms and conditions as the
units otherwise being sold in such registration; provided, however,
that if the managing underwriter advises the Partnership that the
inclusion of all Registrable Units requested to be included in such
registration would interfere with the successful marketing (including
pricing) of the Primary Units or Other Units proposed to be registered
by the Partnership, then the number of Primary Units, Registrable Units
and Other Units proposed to be included in such registration shall be,
at the request of the managing underwriter, excluded from the offering
or reduced ("cutback") pro rata among the holders of Registrable Shares
and Other Shares, based upon the number of units requested by holders
thereof to be registered in such offering; provided, further, that if,
at any time after giving written notice of its intention to register
any Primary Units or Other Units and prior to the effective date of the
Registration Statement filed in connection with such registration, the
Partnership shall determine for any reason either not to register or to
delay registration of such units, the Partnership may, at its election,
give written notice of such determination to each holder of Registrable
Units and, thereupon (i) in the case of a determination not to
register, shall be relieved of its obligation to register any
Registrable Units in connection with such registration (but not from
its obligation to pay the expenses of such registration), without
prejudice, however, to the rights of any holder or holders of
Registrable Units entitled to do so to request that such registration
be effected as a Registration Statement pursuant to Section 2 or
Section 4 of this Agreement, and (ii) in the case of a determination to
delay registering, shall be permitted to delay registering any
Registrable Units, for the same period as the delay in registering such
Primary Units and/or Other Units. No registration effected pursuant to
this Section 3 shall relieve the Partnership of its obligation to
effect any registration upon request under Section 2 or Section 4, nor
shall any registration hereunder be deemed to have been effected
pursuant to Section 2 or Section 4. The Partnership will pay all
expenses of registration in connection with each registration pursuant
to this Section 3.
-6-
(b) The number of requests permitted by the Unitholders
pursuant to this Section 3 shall be unlimited.
Section 4. Registrations on Form S-3.
------------------------- -
Anything contained in Section 2 to the contrary
notwithstanding, at such time as the Partnership shall have qualified for the
use of Form S-3 promulgated under the Securities Act or any successor form
thereto, the Requesting Unitholders shall have the right to request an unlimited
number of registrations of Registrable Units on Form S-3 (which may, at such
holders' request, be shelf registrations pursuant to Rule 415 promulgated under
the Securities Act) or its successor form, which request or requests shall (i)
specify the number of Registrable Units intended to be sold or disposed of and
the holders thereof, and (ii) state whether the intended method of disposition
of such Registrable Units is an underwritten offering or a shelf registration;
provided, however, that not more than one (1) request shall be made in any 12
month period. A requested registration on Form S-3 (or its successor form) in
compliance with this Section 4 shall not count as a registration statement
initiated pursuant to Section 2(a) but shall otherwise be subject to the
provisions of to Sections 2(b)(ii), 2(b)(iii), 2(b)(iv), and 2(b)(v).
Section 5. Preparation and Filing.
----------------------
If and whenever the Partnership is under an obligation
pursuant to the provisions of this Agreement to effect the registration of any
Registrable Units, the Partnership shall, as expeditiously as practicable:
(a) use its reasonable best efforts to cause a Registration
Statement that registers such Registrable Units to become and remain
effective until the earlier of 90 days from the effective date of such
Registration Statement or until all of such Registrable Units have been
disposed of, or, if the Registration Statement is a shelf registration
under Section 4, the earlier of the termination of the period permitted
under Rule 415 or until all of such Registrable Units have been
disposed of;
(b) furnish, at least ten business days before filing, a copy
of the Registration Statement that registers such Registrable Units and
a Prospectus relating thereto to one counsel selected by the holders of
Registrable Units requesting such registration (the "Unitholders'
Counsel"), together with copies of all such documents proposed to be
filed with the Securities and Exchange Commission therewith (it being
understood that such ten business-day period need not apply to
successive drafts of the same document proposed to be filed so long as
such successive drafts are supplied to the Unitholders' Counsel in
advance of the proposed filing by a period of time that is customary
and reasonable under the circumstances);
-7-
(c) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the Prospectus used in
connection therewith as may be necessary to keep such Registration
Statement effective as set forth in Section 5(a) until all of such
Registrable Units have been disposed of and to comply with the
provisions of the Securities Act with respect to the sale or other
disposition of such Registrable Units. If any such Registration
Statement refers to any holder of Registrable Units by name or
otherwise as the holder of any units of the Partnership, then such
holder shall have the right to require (i) the insertion therein of
language, in form and substance satisfactory to such holder, to the
effect that the holding by such holder of such units is not to be
construed as a recommendation by such holder of the investment quality
of the Partnership's units covered thereby and that such holding does
not imply that such holder will assist in meeting any future financial
requirements of the Partnership, or (ii) in the event that such
reference to such holder by name or otherwise is not required by the
Securities Act or any similar federal statute then in force, the
deletion of the reference to such holder;
(d) notify in writing the Unitholders' Counsel (i) of the
receipt by the Partnership of any notification with respect to any
comments by the Commission with respect to such Registration Statement
or Prospectus or any amendment or supplement thereto or any request by
the Commission for the amending or supplementing thereof or for
additional information with respect thereto, (ii) of the receipt by the
Partnership of any notification with respect to the issuance by the
Commission of any stop order suspending the effectiveness of such
Registration Statement or Prospectus or any amendment or supplement
thereto or the initiation or threatening of any proceeding for that
purpose and (iii) of the receipt by the Partnership of any notification
with respect to the suspension of the qualification of such Registrable
Units for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purposes;
(e) use its reasonable best efforts to register or qualify
such Registrable Units under such other securities or blue sky laws of
such jurisdictions as the holders of Registrable Units reasonably
request and do any and all other acts and things which may be
reasonably necessary or advisable to enable the Unitholders to
consummate the disposition in such jurisdictions of the Registrable
Units owned by the Unitholders; provided, however, that the Partnership
will not be required to qualify generally to do business, subject
itself to general taxation or consent to general service of process in
any jurisdiction where it would not otherwise be required to do so but
for this subsection (e);
(f) furnish to the Unitholders such number of copies of a
summary Prospectus, if any, or other Prospectus, including a
preliminary Prospectus, in conformity with the requirements of the
Securities Act, and such other documents as such Unitholders may
reasonably request in order to facilitate the public sale or other
disposition of such Registrable Units;
-8-
(g) without limiting subsection (e) above, use its reasonable
best efforts to cause such Registrable Units to be registered with or
approved by such other governmental agencies or authorities as may be
necessary by virtue of the business and operations of the Partnership
to enable the Unitholders holding such Registrable Units to consummate
the disposition of such Registrable Units;
(h) notify the Unitholders holding such Registrable Units on a
timely basis at any time when a Prospectus relating to such Registrable
Units or any document related thereto includes an untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances then existing and, at the request of the
Unitholders, prepare and furnish to such Unitholders a reasonable
number of copies of a supplement to or an amendment of such Prospectus
as may be necessary so that, as thereafter delivered to the offerees of
such shares, such Prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;
(i) make available upon reasonable notice and during normal
business hours, for inspection by the Unitholders holding such
Registrable Units, any underwriter participating in any disposition
pursuant to such Registration Statement and any attorney, accountant or
other agent or representative retained by such Unitholders or
underwriter (collectively, the "Inspectors"), all pertinent financial
and other records, pertinent documents and properties of the
Partnership (collectively, the "Records"), as shall be reasonably
necessary to enable them to exercise their due diligence
responsibility, and cause the Partnership's officers, directors and
employees to supply all information (together with the Records, the
"Information") reasonably requested by any such Inspector in connection
with such Registration Statement. Any of the Information which the
Partnership determines in good faith to be confidential, and of which
determination the Inspectors are so notified, shall not be disclosed by
the Inspectors unless (i) the disclosure of such Information is
necessary to avoid or correct a material misstatement or omission in
the Registration Statement, (ii) the release of such Information is
ordered pursuant to a subpoena or other order from a court or
governmental agency or authority of competent jurisdiction, (iii) such
Information has been made generally available to the public through no
breach of the nondisclosure obligations of the Inspectors or their
Affiliates or (iv) such disclosure is required to be made under
applicable law;
(j) use its reasonable best efforts to obtain from its
independent certified public accountants "cold comfort" letters in
customary form and at customary times and covering matters of the type
customarily covered by cold comfort letters;
(k) use its reasonable best efforts to obtain from its counsel
an opinion or opinions in customary form, if required;
(l) provide a transfer agent and registrar (which may be the
same entity and which may be the Partnership) for such Registrable
Units;
-9-
(m) promptly issue to any underwriter to which the Unitholders
holding such Registrable Units may sell shares in such offering
certificates evidencing such Registrable Units;
(n) list such Registrable Units on any national securities
exchange on which any Common Units are listed or, if the Common Units
are not listed on a national securities exchange, use its reasonable
best efforts to qualify such Registrable Units for inclusion on the
automated quotation system of the National Association of Securities
Dealers, Inc. (the "NASD"), or such other national securities exchange
or quotation system as the holders of a majority of such Registrable
Units shall reasonably request;
(o) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission and make
available to its Unitholders, as soon as reasonably practicable,
earnings statements covering a period of 12 months beginning within
three months after the effective date of the subject Registration
Statement (which earnings statements shall satisfy the provisions of
Section 11(a) of the Securities Act);
(p) otherwise use its reasonable best efforts to take all
other steps necessary to effect the registration of such Registrable
Units contemplated hereby; and
(q) cause senior representatives of the Partnership to
participate in any "road show" or "road shows" reasonably requested by
any underwriter of an underwritten or "best efforts" offering of
Registrable Units.
Each holder of the Registrable Units, upon receipt of any
notice from the Partnership of any event of the kind described in Section 5(h),
shall forthwith discontinue disposition of the Registrable Units pursuant to the
Registration Statement covering such Registrable Units until such holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 5(h), and, if so directed by the Partnership, such holder shall deliver
to the Partnership all copies, other than permanent file copies then in such
holder's possession, of the Prospectus covering such Registrable Units at the
time of receipt of such notice.
Section 6. Suspension.
----------
Anything contained in this Agreement to the contrary
notwithstanding, the Partnership may (not more than once with respect to each
registration), by notice in writing to each holder of Registrable Units to which
a Prospectus relates, require such holder to suspend, for up to 60 days (the
"Suspension Period"), the use of any Prospectus included in a Registration
Statement filed under Sections 2, 3 or 4 if a Material Transaction exists that
would require an amendment to such Registration Statement or supplement to such
Prospectus (including any such amendment or supplement made through
incorporation by reference to a report filed under Section 13 of the Exchange
Act). The period during which such Prospectus must remain effective shall be
extended by a period equal to the Suspension Period. The Partnership may (but
shall not be obligated to) withdraw the effectiveness of any Registration
Statement subject to this provision.
-10-
Section 7. Expenses.
--------
All expenses incurred by the Partnership and the Unitholders
in complying with their obligations pursuant to this Agreement and in connection
with the registration and disposition of Registrable Units, including, without
limitation, all registration and filing fees (including all expenses incident to
filing with the NASD), fees and expenses of complying with securities and blue
sky laws, printing expenses, fees and expenses of the Partnership's counsel and
accountants shall be paid by the Partnership; provided, however, that all
underwriting discounts, selling commissions applicable to the Registrable Units
and Other Units and fees and expenses of the Unitholders' Counsel and any other
counsel of the Unitholders shall be borne by the holders selling such
Registrable Units and Other Units, in proportion to the number of Registrable
Units and Other Units sold by each such holder.
Section 8. Indemnification.
---------------
(a) In connection with any registration of any Registrable
Units under the Securities Act pursuant to this Agreement, the
Partnership shall indemnify and hold harmless the holders of
Registrable Units, each of such holder's officers, directors, managers,
employees, members, partners, shareholders and advisors and their
respective Affiliates, each underwriter, broker or any other person
acting on behalf of the holders of Registrable Units and each other
Person, if any, who controls any of the foregoing Persons within the
meaning of the Securities Act against any losses, claims, damages,
liabilities, or actions joint or several (or actions in respect
thereof), to which any of the foregoing persons may become subject
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or allegedly untrue statement of a
material fact contained in the Registration Statement under which such
Registrable Units were registered under the Securities Act, any
preliminary Prospectus or final Prospectus contained therein or
otherwise filed with the Commission, any amendment or supplement
thereto or any document incident to registration or qualification of
any Registrable Units, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading or, with respect to any Prospectus, necessary to make the
statements therein in light of the circumstances under which they were
made not misleading, or any violation by the Partnership of the
Securities Act or state securities or blue sky laws applicable to the
Partnership or relating to action or inaction required of the
Partnership in connection with such registration or qualification under
such state securities or blue sky laws; and shall reimburse such
Persons for any legal or other expenses reasonably incurred by any of
them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the
Partnership shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of or is based
upon an untrue statement or allegedly untrue statement of material fact
or omission or alleged omission made in said Registration Statement,
preliminary Prospectus, final Prospectus, amendment, supplement or
document incident to registration or qualification of any Registrable
Units in reliance upon and in conformity with written information
furnished to the Partnership by the holders of Registrable Units
specifically for use in the preparation thereof; provided further,
however, that the foregoing indemnity agreement is subject to the
condition that, insofar as it relates to any untrue statement,
allegedly untrue statement, omission or alleged omission made in any
preliminary Prospectus but eliminated or remedied in the final
Prospectus, such indemnity agreement shall not inure to the benefit of
any of such Persons if a copy of such final Prospectus had been made
available to such Persons and such final Prospectus was not delivered
to the purchaser of the Registrable Units with or prior to the written
confirmation of the sale of such Registrable Units.
-11-
(b) In connection with any registration of Registrable Units
under the Securities Act pursuant to this Agreement, each holder of
Registrable Units shall severally (based on the percentage of all
Registrable Units, Primary Units and Other Units included in such
registration that were owned by such holder) and not jointly and
severally indemnify and hold harmless (in the same manner and to the
same extent as set forth in Section 8(a)) the Partnership, the
Partnership's general partner, each director or manager of the
Partnership and its general partner, each officer of the Partnership or
the Partnership's general partner who shall sign such Registration
Statement, each underwriter, broker or other person acting on behalf of
the holders of Registrable Units and each person who controls any of
the foregoing persons within the meaning of the Securities Act with
respect to any statement or omission from such Registration Statement,
any preliminary Prospectus or final Prospectus contained therein or
otherwise filed with the Commission, any amendment or supplement
thereto or any document incident to registration or qualification of
any Registrable Units, if such statement or omission was made in
reliance upon and in conformity with written information furnished to
the Partnership or such underwriter by such holder of Registrable Units
specifically for use in connection with the preparation of such
Registration Statement, preliminary Prospectus, final Prospectus,
amendment, supplement or document; provided, however, that the maximum
amount of liability in respect of such indemnification shall be
limited, in the case of each holder of Registrable Units, to an amount
equal to the net proceeds actually received by such holder from the
sale of Registrable Units effected pursuant to such registration.
(c) Promptly after receipt by an indemnified party of notice
of the commencement of any action involving a claim referred to in this
Section 8, such indemnified party will, if a claim in respect thereof
is made against an indemnifying party, give written notice to the
latter of the commencement of such action. The failure of any
indemnified party as set forth in the previous sentence to notify an
indemnifying party of any such action shall not (unless such failure
shall have a prejudicial effect on the indemnifying party's ability to
defend) relieve the indemnifying party from any liability in respect of
such action that it may have to such indemnified party hereunder. In
case any such action is brought against an indemnified party, the
indemnifying party will be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be
responsible for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof; provided,
however, that if any indemnified party shall have reasonably concluded
that there may be one or more legal or equitable defenses available to
such indemnified party which are additional to or conflict with those
available to the indemnifying party, the indemnifying party shall not
have the right to assume the defense of such action on behalf of such
indemnified party (but shall have the right to participate therein with
counsel of its choice) and such indemnifying party shall reimburse such
indemnified party and any Person controlling such indemnified party for
that portion of the reasonable fees and expenses of any counsel
retained by the indemnified party which is reasonably related to the
matters covered by the indemnity agreement provided hereunder. If the
indemnifying party is not entitled to, or elects not to, assume the
defense of a claim, it will not be obligated to pay the fees and
expenses of more than one counsel with respect to such claim for all
indemnified parties.
-12-
(d) If the indemnification provided for hereunder is held by a
court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, claim, damage, liability or action
referred to herein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the
amounts paid or payable by such indemnified party as a result of such
loss, claim, damage, liability or action in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on
the one hand and of the indemnified party on the other in connection
with the statements or omissions which resulted in such loss, claim,
damage, liability or action as well as any other relevant equitable
considerations, provided, however, that the maximum amount of liability
in respect of such contribution shall be limited, in the case of each
holder of Registrable Units, to an amount equal to the net proceeds
actually received by such holder from the sale of Registrable Units
effected pursuant to such registration. The relative fault of the
indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The parties agree that
it would not be just and equitable if contribution pursuant hereto were
determined by pro rata allocation or by any other method or allocation
which does not take account of the equitable considerations referred to
herein. No person guilty or liable of fraudulent misrepresentation
shall be entitled to contribution from any person.
(e) In the defense of any claim or litigation pursuant to this
Section 8, the indemnifying party shall not, without the prior written
consent of the indemnified party, consent to entry of any judgment or
enter into any settlement which imposes restrictions or non-monetary
obligations on the indemnified party, nor shall the indemnifying party,
without the prior written consent of the indemnified party, consent to
entry of any judgment or enter into any settlement unless such
judgement or settlement includes an unconditional release of each
indemnified party from any liabilities arising out of such claim,
action or proceeding.
(f) The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by
or on behalf of the indemnified party or any officer, director or
controlling person of such indemnified party and will survive the
transfer of Registrable Units.
-13-
Section 9. Underwriting Agreement.
----------------------
(a) Notwithstanding the provisions of Sections 5, 6 and 7, to
the extent that the Unitholders selling Registrable Units in a proposed
registration shall enter into an underwriting or similar agreement,
which agreement contains provisions covering one or more issues
addressed in such Sections of this Agreement, the provisions contained
in such Sections of this Agreement addressing such issue or issues
shall be of no force or effect with respect to such registration, but
this provision shall not apply to the Partnership if the Partnership is
not a party to the underwriting or similar agreement.
(b) If any registration pursuant to Section 2 or Section 4 is
requested to be an underwritten offering, the Partnership shall
negotiate in good faith to enter into a reasonable and customary
underwriting agreement with the underwriters thereof. The Partnership
shall be entitled to receive indemnities from lead institutions,
underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in the distribution, to the same
extent as provided above with respect to information so furnished in
writing by such Persons specifically for inclusion in any Prospectus or
Registration Statement and to the extent customary given their role in
such distribution. No holder of Registrable Units shall be required to
make any representations or warranties to, or agreements with, the
Partnership, other than representations, warranties or agreements
regarding the identity of such holder or such holder's Registrable
Units, such holder's intended method of distribution or any other
representations, warranties or agreements required by applicable law or
any other representations and warranties relating specifically to the
information provided by such holder.
(c) No Unitholder may participate in any registration
hereunder that is underwritten unless such Unitholder agrees to (i)
sell such Unitholder's Registrable Units proposed to be included
therein on the basis provided in any underwriting arrangements
acceptable to the Partnership and the Unitholders and (ii) as
expeditiously as possible, notify the Partnership of the occurrence of
any event concerning such Unitholder as a result of which the
Prospectus relating to such registration contains an untrue statement
of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Section 10. Information by Holder.
---------------------
The Unitholders shall furnish to the Partnership such written
information regarding the Unitholders and the distribution proposed by any
Unitholders as the Partnership may reasonably request in writing and as shall be
reasonably required in connection with any registration referred to in this
Agreement.
Section 11. Exchange Act Compliance.
-----------------------
The Partnership currently complies in all respects with the
reporting requirements under the Exchange Act and, from and after the date
hereof, the Partnership shall continue at all times to comply with all of the
reporting requirements of the Exchange Act applicable to it and shall comply
with all other public information reporting requirements of the Commission which
are conditions to the availability of Rule 144. The Partnership shall cooperate
with the Unitholders in supplying such information as may be necessary for the
Unitholders to complete and file any information reporting forms presently or
hereafter required by the Commission as a condition to the availability of Rule
144.
-14-
Section 12. No Conflict of Rights; Future Rights.
------------------------------------
The Partnership shall not, after the date hereof, grant any
registration rights which conflict with or adversely affect the rights granted
to the Unitholders hereby. If at any time following the date hereof, the
Partnership shall grant to any present or future holder of units of the
Partnership rights to in any manner cause or participate in any Registration
Statement of the Partnership that, in the judgment of the Unitholders, are
superior to, pari passu with or otherwise conflict with the rights granted to
the Unitholders hereby, such grant shall be null, void and ultra xxxxx.
Section 13. Termination.
-----------
This Agreement shall terminate and be of no further force or
effect when there are no longer any Common Units outstanding that constitute
Restricted Units.
Section 14. Benefits of Agreement.
---------------------
Except as provided herein, this Agreement shall bind and inure
to the benefit of the Partnership, the Unitholders and subject to Section 15,
the respective successors and assigns of the Partnership and the Unitholders.
Section 15. Assignment.
----------
Each Unitholder may assign its rights hereunder to any
purchaser or transferee of Registrable Units; provided, however, that such
purchaser or transferee shall, as a condition to the effectiveness of such
assignment, be required to execute a counterpart to this Agreement agreeing to
be treated as a Unitholder whereupon such purchaser or transferee shall have the
benefits of, and shall be subject to the restrictions contained in, this
Agreement, but only to the extent of its ownership of the assigned Registrable
Units, as if such purchaser or transferee was originally included in the
definition of a Unitholder herein and had originally been a party hereto.
Section 16. Mergers, Etc.
------------
The Partnership shall not, directly or indirectly, enter into
any merger, consolidation or reorganization in which the Partnership shall not
be the surviving entity unless the surviving entity shall, prior to such merger,
consolidation or reorganization, agree in writing to assume the obligations of
the Partnership under this Agreement, and for that purpose references hereunder
to "Registrable Units" shall be deemed to include the common equity interests or
other securities, if any, which the Unitholders would be entitled to receive in
exchange for Common Units under any such merger, consolidation or
reorganization, provided that, to the extent the Unitholders receive securities
that are by their terms convertible into common equity interests of the issuer
thereof, then any such common equity interests as are issued or issuable upon
conversion of said convertible securities shall be included within the
definition of "Registrable Units."
-15-
Section 17. Entire Agreement.
----------------
This Agreement, and the other writings referred to herein or
delivered pursuant hereto, contain the entire agreement among the parties hereto
with respect to the subject matter hereof and supersede all prior and
contemporaneous arrangements or understandings with respect thereto.
Section 18. Notices.
-------
Any notice, request, instruction, or correspondence or other
document to be given hereunder by either party to the other (herein collectively
called "Notice") shall be in writing and delivered in person or by courier
service requiring acknowledgement of receipt of delivery or mailed by certified
mail, postage prepaid and return receipt requested, or by telecopier, as
follows:
(i) if to the Partnership to:
Atlas Natural Resources, L.P.
c/o Atlas Natural Resources GP, LLC
[Address]
Telephone: _____________
Attention: _____________
with a copy to:
X'Xxxxxxxx, LLP
00 Xxxxxxxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxxx
(ii) if to the Unitholders, to their respective
addresses set forth on Annex I hereto.
All such notices, requests, consents and other communications
shall be deemed to have been delivered (a) in the case of personal delivery or
delivery by telecopy, on the date of such delivery, (b) in the case of dispatch
by nationally-recognized overnight courier, on the next business day following
such dispatch and (c) in the case of mailing, on the third business day after
the posting thereof.
-16-
Section 19. Modifications; Amendments; Waivers.
----------------------------------
The terms and provisions of this Agreement may not be modified
or amended except pursuant to a writing signed by the Partnership and
Unitholders holding at least a majority of all Registrable Units then
outstanding. Any waiver of any provision of this Agreement requested by any
party hereto must be granted in advance, in writing by the party granting such
waiver; provided, however, that the holders of a majority of all then
outstanding Registrable Units may grant a waiver on behalf of all Unitholders.
Notwithstanding the foregoing, no amendment, modification or waiver that
adversely affects the Resource Unitholders shall be effective as to the Resource
Unitholders without the consent of the holders of a majority of the Registrable
Units held by the Resource Unitholders.
Section 20. Counterparts; Facsimile Signatures.
----------------------------------
This Agreement may be executed in any number of original or
facsimile counterparts, and each such counterpart hereof shall be deemed to be
an original instrument, but all such counterparts together shall constitute one
and the same instrument.
Section 21. Headings.
--------
The headings of the various Sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be a
part of or to affect the meaning or interpretation of this Agreement. The Annex
referred to herein is attached hereto and incorporated by reference, and unless
the context expressly requires otherwise, such schedules are incorporated in the
definition of "Agreement".
Section 22. Governing Law.
-------------
All questions concerning the construction, interpretation and
validity of this Agreement shall be governed by and construed and enforced in
accordance with the internal law of the State of Delaware, without giving effect
to any choice or conflict of law provision or rule (whether in the State of
Delaware or any other jurisdiction) that would cause the application of the law
of any jurisdiction other than the State of Delaware. In furtherance of the
foregoing, the internal law of the State of Delaware will control the
interpretation and construction of this Agreement, even if under such
jurisdiction's choice of law or conflict of law analysis, the internal law of
some other jurisdiction would ordinarily or necessarily apply.
Section 23. Remedies.
--------
(a) Each Unitholder shall have all rights and remedies
reserved for such Unitholder pursuant to this Agreement and all rights
and remedies which such Unitholder has been granted at any time under
any other agreement or contract and all of the rights which such holder
has under any law or equity. Any Person having any rights under any
provision of this Agreement will be entitled to enforce such rights
specifically, to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by
law or equity.
-17-
(b) It is acknowledged that it will be impossible to measure
in money the damages that would be suffered if the parties fail to
comply with any of the obligations herein imposed on them and that in
the event of any such failure, an aggrieved Person will be irreparably
damaged and will not have an adequate remedy at law. Any such Person
shall, therefore, be entitled to injunctive relief, including specific
performance, to enforce such obligations, and if any action should be
brought in equity to enforce any of the provisions of this Agreement,
none of the parties hereto shall raise the defense that there is an
adequate remedy at law.
Section 24. Severability.
------------
It is the desire and intent of the parties that the provisions
of this Agreement be enforced to the fullest extent permissible under the law
and public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not be invalid,
prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
* * * *
-18-
IN WITNESS WHEREOF, the parties hereto have executed this
Registration Rights Agreement on the date first written above.
ATLAS PIPELINE PARTNERS, L.P.
By: Atlas Pipeline Partners G.P., LLC
its general partner
By:_______________________________
Name:
Title:
RESOURCE AMERICA, INC.
By:_______________________________
Name:
Title:
NEW VULCAN COAL HOLDINGS, LLC:
By:_______________________________
Name:
Title:
ANNEX I
UNITHOLDER HOLDINGS
NEW VULCAN COAL HOLDINGS, LLC
Kisco Management Corporation
000 Xxxxx Xxxxxx
Xx. Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
DuPont Capital Management
Xxx Xxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
Telecopy: (000) 000-0000
Harbourton Enterprises
00 Xxxxxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Telecopy: (000) 000-0000
Vulcan Capital Management
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx
Xxxxx Xxxxx
Telecopy: (000) 000-0000
with a copy to (which shall not constitute notice):
X'Xxxxxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxx
Telecopy: (000) 000-0000
RESOURCE AMERICA, INC
Resource America, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxx
Telecopy: (000) 000-0000
with a copy to (which shall not constitute notice):
Ledgewood Law Firm
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxxx X. Abt
================================================================================
REGISTRATION RIGHTS AGREEMENT
by and among,
ATLAS PIPELINE PARTNERS, L.P.,
New Vulcan Coal Holdings, L.L.C.,
and
Resource America, Inc.
______________, 2002
================================================================================
Exhibit C to Contribution Agreement
AMENDED AND RESTATED
MASTER NATURAL GAS GATHERING AGREEMENT
ATLAS NATURAL RESOURCES OPERATING PARTNERSHIP, L.P.,
ATLAS NATURAL RESOURCES, L.P.,
ATLAS AMERICA, INC.,
RESOURCE ENERGY, INC.,
VIKING RESOURCES CORPORATION
and
RESOURCE AMERICA, INC.
_____________, 2002
AMENDED AND RESTATED
MASTER NATURAL GAS GATHERING AGREEMENT
THIS AMENDED AND RESTATED MASTER NATURAL GAS GATHERING AGREEMENT (this
"Agreement") is made and entered into as of __________________, 2002, by and
among ATLAS NATURAL RESOURCES, L.P., a Delaware limited partnership ("ANR"),
ATLAS NATURAL RESOURCES OPERATING PARTNERSHIP, L.P., a Delaware limited
partnership (the "OLP"), ATLAS AMERICA, INC., a Delaware corporation ("Atlas
America"), RESOURCE ENERGY, INC., a Delaware corporation ("Resource Energy"),
VIKING RESOURCES CORPORATION, a Pennsylvania corporation ("Viking Resources,"
and collectively with Atlas America and Resource Energy, the "Resource
Entities") and RESOURCE AMERICA, INC., a Delaware corporation ("Resource
America").
R E C I T A L S:
A. The MLP (as defined below) owns and operates a private use natural
gas gathering system and related easements, fixtures and facilities consisting
of approximately 1,300 miles of pipelines located in New York, Ohio and
Pennsylvania, as more particularly described in Exhibit A (as it may be added
to, reduced or extended, the "Gathering System").
B. The Resource Entities have, or may in the future form, Affiliates
(as such term is hereinafter defined) for purposes of carrying on the Resource
Entities' energy industry business.
C. As of the date hereof, the Resource Entities and Affiliates own
interests in certain xxxxx connected to the Gathering System, as set forth in
Exhibit B (the "Resource Entities' Existing Well Interests").
D. The Resource Entities and Affiliates may drill additional xxxxx, own
or acquire interests in other xxxxx or operate (with the authority to determine
natural gas gathering arrangements) other xxxxx (excluding Future Investment
Program Well Interests, as such term is hereinafter defined), and connect them
to the Gathering System or a Third Party Gathering System (as such term is
hereinafter defined) after the date of this Agreement in accordance with the
terms of this Agreement (the "Resource Entities' Future Well Interests").
E. As of the date hereof, the Resource Entities and Affiliates have
agreements or other arrangements with respect to the gathering of natural gas
from interests in xxxxx owned by third parties and connected to the Gathering
System, including well interests owned by Investment Programs (as such term is
hereinafter defined), which are more particularly described in Exhibit C
("Existing Third Party Well Interests").
F. The Resource Entities and Affiliates have sponsored or may in the
future sponsor Investment Programs which (i) as of or after December 1, 1999,
had drilled, (ii) thereafter did drill and (iii) may in the future drill, xxxxx
or own or acquire interests in other xxxxx and connect them to the Gathering
System or connect them to Third Party Gathering Systems, all as more
particularly provided for herein (including xxxxx for which drilling has
commenced on or after December 1, 1999, "Future Investment Program Well
Interests").
G. The MLP and the Resource Entities entered into that certain Master
Natural Gas Gathering Agreement dated as of February 2, 2000 (the "Existing
Gathering Agreement").
H. The MLP and certain other parties have entered into that certain
Contribution Agreement dated January 18, 2002 (the "Contribution Agreement"),
and one of the conditions precedent to the closing of the transactions
contemplated by the Contribution Agreement is the amendment and restatement of
the Existing Gathering Agreement.
I. The MLP and the Resource Entities entered into that certain Omnibus
Agreement dated as of February 2, 2000, providing for, among other things, the
drilling by the Resource Entities of additional xxxxx and the connection thereof
to the Gathering System (the "Omnibus Agreement"), and those parties desire to
terminate the Omnibus Agreement and to modify and incorporate into this
Agreement some of the rights and obligations under the Omnibus Agreement.
J. The MLP and the Resource Entities entered into that certain
Distribution Support Agreement dated as of February 2, 2000 (the "Distribution
Support Agreement") and those parties desire to terminate the Distribution
Support Agreement.
K. The MLP desires to engage Atlas America with respect to the
management, maintenance and operation of the Gathering System, and Atlas America
desires to perform such duties as set forth herein.
L. The MLP and the Resource Entities desire, on the terms and subject
to the conditions hereinafter set forth, to amend and restate the Existing
Gathering Agreement (a) to continue the gathering and redelivery of the natural
gas produced from the Resource Entities' Xxxxx, (b) to provide for the drilling
of additional xxxxx and the expansion of the Gathering System by the Resource
Entities and (c) to provide for Atlas America's management, maintenance and
operation of the Gathering System.
M. The Resource Entities acknowledge that the Gathering Fee (as such
term is hereinafter defined) is to be used by ANR to pay a portion of ANR's
distributions to its unitholders.
NOW, THEREFORE, in consideration of the premises and the covenants,
conditions and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, amend and restate the
Existing Gathering Agreement in its entirety as follows:
ARTICLE 1. DEFINITIONS
Unless otherwise defined herein, the following terms shall have the
following meanings:
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with the Person in question. As used
herein, the term "control" means (a) direct or indirect beneficial ownership of
50% or more of the voting securities or voting interest of a Person or, in the
case of a limited partnership, of 50% or more of the general partnership
interest, either directly or through an entity which the Person controls or (b)
the possession of the power to direct the management of a Person, whether
through contract or otherwise. For purposes of this Agreement, no Investment
Program shall be deemed to be an Affiliate of the Resource Entities.
2
"Agreement" means this Amended and Restated Master Natural Gas
Gathering Agreement, as it may be amended, modified or supplemented from time to
time.
"Area of Mutual Interest" means that geographic territory comprised of
New York, Ohio, Pennsylvania and West Virginia.
"Capital Budget" has the meaning set forth in Section 11.2.
"Connectable Well" means a Resource Entities' Well that is drilled
within 2,500 feet of the Gathering System, such distance to be measured from the
outside edge of the wellhead of the Resource Entities' Well to the nearest point
of intersection with the Gathering System.
"Contribution Agreement" has the meaning set forth in recital H.
"CPI" shall mean the Consumer Price Index for All Urban Consumers--U.S.
City Average for All Items Unadjusted, as published by the United States
Department of Labor, Bureau of Labor Statistics, or such successor index as the
United States Department of Labor, or a successor agency or department, shall
develop as a replacement for such index.
"Day" means a period of time beginning at 7:00 a.m., Eastern Time, on
each calendar day and ending at 7:00 a.m., Eastern Time, on the next calendar
day.
"Delivery Points" means the points on the Gathering System for the
redelivery of natural gas from the Gathering System to other pipelines or to
customers, as set forth in Exhibit D.
"Distribution Support Agreement" has the meaning set forth in recital
J.
"Existing Gathering Agreement" has the meaning set forth in recital G.
"Existing Third Party Well Interests" has the meaning set forth in
recital E.
"FERC" means the Federal Energy Regulatory Commission and any successor
Governmental Authority.
"Files" means (i) all files, books, records, and accounts in the
Resource Entities' possession or to which the Resource Entities have access that
in any way relate to the Gathering System and the transportation of natural gas
through it, including all such files, records, books and accounts maintained in
computer-sensible form, whether on magnetic tape, disks or other storage media,
together with the computer software and programs required to enter, delete,
read, manipulate, revise, append, transfer, communicate, or print data therein,
and including all Gathering System title, easement and contract files, legal
files, accounting records, xxxxxxxx, invoices, statements, receipts, daily gauge
and run tickets, meter readings, natural gas sales information and pricing
terms, correspondence and interpretations; and (ii) all data and information
contained in any of the records, books, accounts, files or materials described
above.
3
"Flow Line" means any flow line from a wellhead, or such other type of
line as may connect a well to a gathering system in accordance with standard
industry practice.
"Force Majeure Event" means any act of God, strike, lockout or other
industrial disturbance, act of a public enemy, sabotage, war (whether or not an
actual declaration is made thereof), blockade, insurrection, riot, epidemic,
landslide, lightning, earthquake, flood, storm, fire, washout, arrest and
restraint of rules and peoples, civil disturbance, explosion, breakage or
accident to machinery or line or pipe, hydrate obstruction of line or pipe, lack
of pipeline capacity, repair, maintenance, improvement, replacement, or
alteration to plant or line of pipe or related facility, failure or delay in
transportation, temporary failure of gas supply or markets, freezing of the well
or delivery facility, well blowout, cratering, partial or entire failure of the
gas well, the act of any court, agency or Governmental Authority, or any other
cause, whether of the kind enumerated or otherwise, which is not within the
reasonable control of the party claiming suspension.
"Future Investment Program Well Interests" has the meaning set forth in
recital F.
"Gathering System" has the meaning set forth in recital A.
"Gathering Fee" has the meaning set forth in Section 8.1.
"Governmental Authority" means any federal, state, local, municipal or
other government; any governmental, regulatory or administrative agency,
commission, body or other authority exercising or entitled to exercise any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power; and any court or governmental tribunal.
"Gross Sales Price" shall mean the price, per Mcf, due and payable to
the Resource Entities for the Resource Entities' Gas sold by them to
unaffiliated third parties, without deduction for brokerage fees, commissions or
offsets; provided, however, that the Gross Sales Price for any Resource
Entities' Gas sold to Affiliates shall be the average Gross Sales Price at that
Delivery Point for that period (not taking into account those sales to
Affiliates); if there are no sales of Resource Entities' Gas to non-Affiliates
at that Delivery Point for the relevant period, the Gross Sales Price for such
gas shall be the average Gross Sales Price for non-Affiliates at all Delivery
Points for the relevant period.
"Identified Third Party Gathering System" has the meaning set forth in
Section 4.3(a).
"Indemnity Claim" has the meaning set forth in Section 11.3.
"Investment Program" means a Person for whom the Resource Entities or
an Affiliate of the Resource Entities acts as a general partner, managing
partner or manager and the securities of which have been offered and sold to
investors.
4
"Mcf" means one thousand (1,000) cubic feet of gas measured at a base
temperature of sixty degrees Fahrenheit (60(degree) F) and at a pressure base of
fourteen and seventy-three one-hundredths (14.73) psia.
"MLP" means ANR, the OLP and their Affiliates.
"Notice" has the meaning set forth in Section 16.10.
"Omnibus Agreement" has the meaning set forth in recital I.
"Operating Fee" means the fee to be paid to Atlas America by the MLP in
consideration of Atlas America's performance of its obligations set forth
herein, except as otherwise indicated, which fee shall include costs related to
the categories of sales, general and administrative expenses set forth on
Exhibit E attached hereto and which fee shall equal (a) $0.12 per Mcf of natural
gas on which the Gathering Fee is paid under this Agreement other than related
to any portion of the Gathering System acquired by the MLP pursuant to Section
4.3, and (b) any Operating Fee per Mcf of natural gas on which the Gathering Fee
is paid related to any part of the Gathering System acquired by the MLP pursuant
to Section 4.3(c), in each case as adjusted on January 1 of each year in a
percentage equal to the change in the CPI since the prior January 1.
"Other Delivery Point" means a delivery point other than on the
Gathering System for the delivery of natural gas produced by a Resource
Entities' Well.
"Person" means an individual, corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, association,
Governmental Authority or other entity.
"Potential Acquisition" has the meaning set forth in Section 4.3(a).
"psia" means pounds per square inch absolute.
"Receipt Points" means the points on the Gathering System to receive
natural gas into the Gathering System, as of the date hereof and as may be
established from time to time by a Resource Entity.
"Report" has the meaning set forth in Section 9.2.
"Resource Entities' Existing Well Interests" has the meaning set forth
in recital C.
"Resource Entities' Field Fuel" means (a) the Resource Entities'
allocated share of actual Gathering System fuel requirements, shrinkage, and
lost and unaccounted for gas, and (b) house, royalty and farm gas delivered
through the Gathering System for third party use pursuant to agreements or other
arrangements entered into by a Resource Entity as of the date of this Agreement
and as may be agreed to by the MLP pursuant to Section 5.6. Such allocations
shall be based upon the proportional volume of natural gas that the Resource
Entities' Gas bears to the aggregate volume of natural gas gathered through the
Gathering System during the relevant period.
5
"Resource Entities' Future Well Interests" has the meaning set forth in
recital D.
"Resource Entities' Gas" means all natural gas produced by the Resource
Entities' Xxxxx, except Resource Entities' Xxxxx connected to an Other Delivery
Point or a Third Party Gathering System for which the MLP has not assumed the
cost of a Flow Line pursuant to Section 4.2(d) and any Resource Entities' Xxxxx
included in a Potential Acquisition closed by the Resource Entities in
accordance with this Agreement and to which the MLP was not a party.
"Resource Entities' Xxxxx" means, collectively, the Resource Entities'
Existing Well Interests, the Resource Entities' Future Well Interests, Existing
Third Party Well Interests and Future Investment Program Well Interests, as
drilled or as may be drilled in the Area of Mutual Interest and with respect to
which a Resource Entity or Affiliate has authority to enter into natural gas
gathering agreements.
"Third Party Gathering Fee" has the meaning set forth in Section
8.1(a).
"Third Party Gathering System" means a natural gas gathering system
owned by a Person other than the MLP.
ARTICLE 2. OPERATION OF GATHERING SYSTEM
2.1. Management of Gathering System. Except for specific approvals of
the MLP as set forth in this Agreement, Atlas America shall conduct and have
full control and responsibility over the Gathering System, including its
management, maintenance, operation, extension, preservation and replacement.
Atlas America shall have sole and exclusive responsibility for settling all
allocations of the Gross Sales Price with all Persons having an interest in the
Resource Entities' Gas and for collecting gathering fees with respect thereto.
Atlas America represents and warrants that it is experienced in operating,
maintaining, repairing, replacing and expanding gas gathering systems like the
Gathering System, and has the resources available to it to perform all of its
obligations under this Agreement, including the number and type of personnel
necessary to competently and prudently operate the Gathering System. Atlas
America shall be entitled to negotiate, execute and perform contracts,
agreements or arrangements necessary or appropriate for it to perform its duties
as operator of the Gathering System hereunder; provided, however, that Atlas
America may not bind the MLP or take action with respect to the MLP's assets
(such as a sale, transfer or hypothecation) without the MLP's express written
consent.
2.2. Standard of Conduct. Atlas America shall act in accordance with
the provisions of this Agreement in good faith, with due diligence as a
reasonable and prudent operator of gas gathering pipeline systems.
ARTICLE 3. FILES.
3.1. Inspection and Audit. The MLP shall have the right, from time to
time, (a) to inspect any portion of the Gathering System and the Resource
Entities' facilities at the Receipt Points (and Atlas America shall cooperate
with such inspections), and (b) to audit, inspect, copy and verify (and Atlas
America shall provide upon request of the MLP) all Files, including those that
form the basis or source documents for a Report. In addition, the MLP may
request that Atlas America provide, and Atlas America shall provide, access to
Atlas America's personnel familiar with the Gathering System and the Files to
answer questions, including the provision of personnel to assist with field
visits to the Gathering System. Any inspection, audit, copying, verification or
provision of Atlas America personnel shall be (i) upon at least twenty-four (24)
hours prior Notice to Atlas America, (ii) conducted on business days during
normal business hours, and (iii) coordinated with Atlas America.
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3.2. Retention. Atlas America shall keep and maintain the Files during
the term of this Agreement and for a period of three (3) years thereafter;
provided, however, that (a) all test data, charts, and similar data pertaining
to the measurement and testing of the Resource Entities' Gas, (b) all Files
relating to natural gas volumes or prices, and (c) all records relating to any
Report or statement delivered pursuant to Article 9, need be retained for only
five (5) years from the date of such measurement, testing, sale, throughput or
statement, unless a longer period is prescribed by applicable regulations of a
Governmental Authority.
3.3. Maintenance. Atlas America shall preserve, protect, and maintain
the Files in accordance with standard industry practices. Atlas America shall
promptly and routinely enter and/or deposit in the Files all items that
constitute Files as they are received by or become available to the Resource
Entities.
ARTICLE 4. XXXXX AND FLOW LINES
4.1. Drilling and Connection of New Xxxxx. The Resource Entities and
Resource America, on behalf of themselves, their Affiliates or Investment
Programs, shall, no later than March 15, 2005, drill and connect to the
Gathering System at least 500 new Connectable Xxxxx. Such xxxxx shall be capable
of producing natural gas in commercial quantities for delivery into the
Gathering System, consistent with past practices, and will constitute Resource
Entities' Future Well Interests or Future Investment Program Well Interests, as
applicable. At least 175 of such xxxxx shall be drilled and connected (pursuant
to Section 4.2(a)) no later than March 15, 2003. All Connectable Xxxxx drilled
and connected (pursuant to Section 4.2(a)) after January 2, 2002, shall count
towards this commitment.
4.2. Construction of Flow Lines.
(a) The Resource Entities jointly and severally agree that,
upon the drilling and completion of a Connectable Well, the Resource Entities
shall, at their sole cost and expense, promptly connect that Connectable Well to
the Gathering System by the construction of a Flow Line to a Receipt Point.
(b) To the extent provided for in a Capital Budget or
otherwise proposed to the MLP by Atlas America (which proposal shall not be
unreasonably denied, delayed or withheld by the MLP) and with respect to a
Resource Entities' Well other than a Resource Entities' Well subject to Section
4.2(a), (c) or (d), if a Resource Entity constructs a Flow Line from any such
Resource Entities' Well to within 1,000 feet of the Gathering System (such
distance to be measured from the end of the related Flow Line from the Resource
Entities' Well to the nearest point of intersection with the Gathering System),
the MLP shall assume the actual cost of extending the Gathering System to meet
such Flow Line, but in no event shall the aggregate of the cost for all such
extensions exceed the projected cost therefor in a Capital Budget, plus 10%,
except that such costs for connections made pursuant to proposals not included
in the Capital Budget, but approved by the MLP, shall not be in excess of the
proposed cost therefor plus 10%. Atlas America shall complete construction of
the Gathering System extension within sixty (60) days after the date designated
by the Resource Entities as the date such Resource Entities' Well will be
completed as a producing natural gas well. The extension constructed on behalf
of the MLP shall be the property of the MLP and part of the Gathering System,
and the gas delivered through that extension shall be subject to the Gathering
Fee and the Operating Fee. The MLP shall reimburse Atlas America for the costs
of constructing such extension in accordance with Section 9.1.
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(c) To the extent provided for in a Capital Budget and with
respect to a Resource Entities' Well other than a Resource Entities' Well
subject to Section 4.2(a), (b) or (d), the MLP shall assume the actual cost of
extending the Gathering System to within 2,500 feet of that Resource Entities'
Well (such distance to be measured from the end of the related Flow Line from
the Resource Entities' Well to the nearest point of intersection with the
Gathering System), but in no event shall such cost be more than 10% in excess of
the projected cost thereof in a Capital Budget. Atlas America shall complete
construction of the Gathering System extension within sixty (60) days after the
date designated by the Resource Entities as the date such Resource Entities'
Well will be completed as a producing natural gas well. The extension
constructed on behalf of the MLP shall be the property of the MLP and part of
the Gathering System, and the gas delivered through that extension shall be
subject to the Gathering Fee and the Operating Fee. The MLP shall reimburse
Atlas America for the costs of constructing such extension in accordance with
Section 9.1.
(d) To the extent provided for in a Capital Budget and with
respect to a Resource Entities' Well other than a Resource Entities' Well
subject to Section 4.2(a), (b) or (c), the MLP shall assume the cost of the
construction of the Flow Line to an Other Delivery Point or Third Party
Gathering System, but in no event shall such cost be more than 10% in excess of
the projected cost thereof in a Capital Budget. Atlas America shall complete
construction of the Gathering System extension within sixty (60) days after the
date designated by the Resource Entities as the date such Resource Entities'
Well will be completed as a producing natural gas well. The Flow Line
constructed on behalf of the MLP shall be the property of the MLP and part of
the Gathering System, and the gas delivered through that extension shall be
subject to the Gathering Fee. The MLP shall reimburse Atlas America for the
costs of constructing such Flow Line in accordance with Section 9.1.
4.3. Potential Acquisitions.
(a) Upon the identification by any of the Resource Entities or
the MLP of any properties or leases within the Area of Mutual Interest for
possible acquisition by the Resource Entities, the MLP or any Affiliate (each, a
"Potential Acquisition") that include a Third Party Gathering System and related
easements, fixtures and facilities (the "Identified Third Party Gathering
System"), the identifying party shall give Notice to the other party of the
identification of such proposed acquisition. To aid the Resource Entities in
identifying such possible acquisitions, Exhibit F attached hereto sets forth
general criteria by which the MLP expects to value any potential acquisition,
which exhibit may be amended from time to time by Notice from the MLP to the
Resource Entities, and which the Resource Entities acknowledge do not constitute
strict criteria. The Notice shall identify the seller and the proposed sales
price of the Potential Acquisition, and shall include all written information
about the Potential Acquisition provided to the identifying party by or on
behalf of the seller, and any information or analyses compiled by the
identifying party or that the identifying party has in its possession from other
sources.
8
(b) The MLP and the Resource Entities shall then proceed
jointly to formulate a bid for the Potential Acquisition, with the MLP's bid to
be for the Identified Third Party Gathering System and the Resource Entities'
bid to be for the remaining properties, xxxxx and/or leases. The parties agree
to use all reasonable business efforts to effect their bids within the time
frame specified by the applicable seller. At any time during the bid process but
before the execution of any definitive documents with respect to the purchase of
the Potential Acquisition, either the MLP or the Resource Entities may give
Notice to the other of their desire not to continue with the bid. In such case,
the other party may continue with the bid for its own account and with no
obligation to the other under this Agreement with respect to the properties then
identified to be included in the Potential Acquisition.
(c) In connection with the MLP's bid, the MLP shall give
Notice to Atlas America of the Operating Fee the MLP proposes to be applicable
to the Identified Third Party Gathering System. Atlas America shall then elect
by Notice to the MLP whether Atlas America agrees to operate the Identified
Third Party Gathering System under this Agreement with the application of that
Operating Fee or not. If Atlas America agrees thereto and the Potential
Acquisition is completed, the Identified Gathering System shall become a part of
the Gathering System subject to the applicable Operating Fee, and the gas
delivered through the Identified Third Party Gathering System will be subject to
the Gathering Fee. If Atlas America does not so elect to operate the Identified
Third Party Gathering System, the MLP shall give Notice to the Resource Entities
of the MLP's election (i) to continue with the bid process and the potential
completion of the Potential Acquisition using another Person to operate the
Identified Third Party Gathering System, or (ii) to not continue the bid process
and to not participate in the Potential Acquisition. In the case of clause (i),
upon completion of the Potential Acquisition, the Identified Third Party
Gathering System shall become a part of the Gathering System and the gas
delivered through the Identified Third Party Gathering System will be subject to
the Gathering Fee, but no Operating Fee shall be due to Atlas America with
respect thereto; provided, however, that the Operating Fee agreed to, or paid
by, the MLP to the other Person for operating the Identified Third Party
Gathering System shall be no more than that proposed by the MLP to Atlas
America. In the case of clause (ii), the Resource Entities may continue with the
bid for their own account and with no obligation to the MLP under this Agreement
with respect to the properties then identified to be included in the Potential
Acquisition.
(d) If the joint bid for the Potential Acquisition is
rejected, either party may bid for the Potential Acquisition for its own account
and such Potential Acquisition, if completed, shall not be subject to the terms
of this Agreement.
9
(e) The Resource Entities and the MLP shall not, and shall
cause their Affiliates not to, acquire any Third Party Gathering System within
the Area of Mutual Interest without compliance with the terms of this Agreement.
4.4. Title.
(a) The MLP shall own and have title to (i) the Gathering
System as of the date hereof, (ii) any Flow Line or extension of the Gathering
System, together with the related easements, and facilities, constructed on
behalf of the MLP pursuant to Sections 4.2(b), (c) and (d); and (iii) any
Identified Third Party Gathering System, together with the related easements,
fixtures and facilities, included in any Potential Acquisition which has been
consummated in which the MLP is a party.
(b) Except to the extent ownership or title resides in an
Investment Program, the Resource Entities shall own and have title to any Flow
Line, together with the related easements, constructed from (i) any Connectable
Well to a Receipt Point pursuant to Section 4.2(a), (ii) a Resource Entities'
Well to the point at which ownership and title start for the MLP pursuant to
Section 4.2(b), (iii) any Flow Line that otherwise would have been subject to
Section 4.2(d) for which the costs were not included in a Capital Budget in
accordance with Section 11.2, and (iv) any Identified Third Party Gathering
System, together with the related easements and facilities, included in any
Potential Acquisition which has been consummated in which the MLP is not a
party.
(c) The Resource Entities shall use their best efforts to
cause title to any of the items specified in clause (a) above to be vested in
the MLP, as directed by the MLP. The Resource Entities shall make all
appropriate or necessary filings with any Governmental Authority related
thereto. Prior to such assignment, the Resource Entities shall hold in trust all
such items for the use and benefit of the MLP.
4.5. New Investment Programs. The Resource Entities shall cause a
manager of one of the Investment Programs currently existing to be designated as
the manager for Investment Programs organized after the date hereof, and agree
that the natural gas xxxxx which are operated by a Resource Entity or an
Affiliate and owned by Investment Programs organized after the date hereof shall
be deemed to be Future Investment Program Well Interests for purposes of this
Agreement.
ARTICLE 5. GATHERING SERVICES
5.1. Receipt of Gas. Subject to the terms, limitations and conditions
of this Agreement, the Resource Entities dedicate, and shall cause their
Affiliates and all Investment Programs to dedicate, all of the Resource
Entities' Gas to this Agreement; provided, however, that the Resource Entities
may reserve a reasonable amount of the Resource Entities' Gas, prior to delivery
(a) at the Receipt Points into the Gathering System for fuel to operate the
Resource Entities' Xxxxx, (b) at the Receipt Points into the Gathering System
for fuel to operate the Resource Entities' facilities and related equipment
installed to deliver the Resource Entities' Gas to the MLP and (c) at the
Delivery Points for house, royalty or farm gas agreed to be delivered prior to
the date hereof or otherwise approved by the MLP subsequent to the date hereof
pursuant to Section 5.6.
10
5.2. Redelivery of Gas. Atlas America shall cause the Gathering System
to gather, compress and redeliver, on a fully interruptible basis, to the
Delivery Points, a quantity of gas equal, on an Mcf basis, to the quantity of
the Resource Entities' Gas received at the Receipt Points, less the Resource
Entities' Field Fuel.
5.3. Resource Entities' Field Fuel. Atlas America shall calculate on a
monthly basis the Resource Entities' Field Fuel by allocating such quantities of
actual Gathering System fuel requirements, shrinkage, and lost and unaccounted
for gas between all shippers using the Gathering System or a portion thereof.
Atlas America may cause the Gathering System to retain and use the Resource
Entities' Field Fuel as fuel for compression and other operations on the
Gathering System.
5.4. Commingling Resource Entities' Gas. Atlas America shall have the
right to commingle the Resource Entities' Gas with other natural gas in the
Gathering System. Atlas America shall cause the Gathering System to extract, or
permit to be extracted, at Atlas America's sole cost and expense, condensate
from the Resource Entities' Gas to the extent necessary to meet the quality
requirements of the receiving pipeline at the Delivery Points or for proper
functioning of the Gathering System.
5.5. Resource Entities' Gas. Except for the Resource Entities' Field
Fuel and products removed in treating the Resource Entities' Gas prior to
delivery to a Receipt Point, title to the Resource Entities' Gas shall remain
with the Resource Entities or, (a) with respect to the Resource Entities' Gas
from Existing Third Party Well Interests, the owners of such xxxxx, and (b) with
respect to the Resource Entities' Gas from Investment Programs, the Investment
Programs owning such xxxxx.
5.6. House, Royalty or Farm Gas. After the date hereof, the Resource
Entities shall not enter into any agreement with any Person to provide house,
royalty or farm gas after a Receipt Point without the prior written consent of
the MLP.
ARTICLE 6. DELIVERY PRESSURE AND GAS QUALITY
6.1. Receipt Points; Delivery Points. The Resource Entities shall
deliver the Resource Entities' Gas or any other natural gas to be delivered
through the Gathering System at a pressure sufficient to effect delivery into
the Gathering System at the Receipt Points. Atlas America shall use its
reasonable best efforts to redeliver the Resource Entities' Gas or any other
natural gas delivered through the Gathering System at a pressure sufficient to
effect redelivery from the Gathering System at the Delivery Points.
6.2. Compression. Atlas America shall cause the Gathering System to
maintain all compression facilities of the Gathering System and shall cause to
be installed such additional compression facilities in accordance with a Capital
Budget, as may be commercially reasonable and necessary or appropriate for the
operation of the Gathering System under good industry practices.
11
6.3. Wellhead Equipment. With respect to the Resource Entities' Xxxxx,
the Resource Entities shall install, operate and maintain all wellhead and
pressure regulating equipment necessary to prevent the delivery pressure of the
Resource Entities' Gas at the Receipt Points from exceeding the maximum pressure
for the commercial operation of the Gathering System.
6.4. Gas Quality. Atlas America shall ensure that all of the Resource
Entities' Gas or any other natural gas delivered into the Gathering System is
commercially free from liquids of any kind, air, dust, gum, gum-forming
constituents, harmful or noxious vapors, or other solid or liquid matter that
may interfere with the merchantability of the Resource Entities' Gas or any
other natural gas transported through the Gathering System or that may cause
injury to or interfere with proper operation of the lines, regulators, meters or
other equipment of the Gathering System, other than dehydration, which shall
occur no later than at a Delivery Point. Atlas America shall ensure that the
Resource Entities' Gas and any other natural gas transported through the
Gathering System shall conform to applicable quality specifications of the
receiving pipeline at each applicable Delivery Point.
ARTICLE 7. MEASUREMENT AND TESTING
7.1. Measurement Equipment. Measurement of the Resource Entities' Gas
shall take place at the Receipt Points. The Resource Entities shall install, or
cause to be installed, at or near the Receipt Points, orifice meters or other
measuring equipment necessary to measure accurately the volumes of the Resource
Entities' Gas being delivered into the Gathering System, to the extent such
meters or other measuring equipment have not been installed as of the date of
this Agreement. Such measuring equipment shall be comparable to the measuring
equipment of other parties delivering gas into the Gathering System.
7.2. Delivery Points. The measurement of, and tests for, quality of the
Resource Entities' Gas redelivered at the Delivery Points shall be governed by
and determined in accordance with the requirements of the receiving pipeline at
each Delivery Point. Atlas America shall install, or cause to be installed, at
or near the Delivery Points, orifice meters or other measuring equipment
necessary to measure accurately the volumes of the Resource Entities' Gas to be
redelivered at the Delivery Points, in cases where such meters or other
measuring equipment have not been installed as of the date of this Agreement.
Such measuring equipment shall be comparable to the measuring equipment of other
parties redelivering gas at the Delivery Points.
7.3. Chart Integration. Atlas America shall be responsible for reading
the meters at the Receipt Points and the Delivery Points. Atlas America shall
furnish, install, remove and integrate all recording charts used in such meters
in accordance with industry standard practices.
7.4. Unit of Volume. The unit of volume for purposes of measurement
shall be one (1) cubic foot of gas at a temperature base of sixty degrees
Fahrenheit (60(degree) F) and at a pressure base of fourteen and seventy-three
one-hundredths (14.73) psia. In the event that natural gas delivered or
redelivered under this Agreement is measured by heating content (in British
thermal units or decatherms) rather than volume, appropriate adjustments to this
Agreement will be made, including periodic tests by the Resource Entities to
determine and confirm the heating content of such gas.
12
7.5. Testing Procedures. Atlas America shall determine the meter
calibrations schedule for each meter on the Gathering System. Such calibrations
shall occur at least once every twelve (12) months but not more frequently than
once every six (6) months. No testing, calibration or adjustment of a meter or
related equipment shall be performed without the MLP's first being given five
(5) days' prior Notice thereof and having the opportunity to be present.
7.6. Meter Inaccuracy. If, at any time, any meter is found to be out of
service or registering inaccurately in any percentage, it shall be adjusted at
once by Atlas America to read accurately within the limits prescribed by the
meter's manufacturer. If such equipment is out of service or inaccurate by an
amount exceeding three percent (3%) of a reading corresponding to the average
flow rate for the period since the last test, the previous readings shall be
corrected for the period that the meter is known to be inaccurate, or, if not
known, a period of one-half (1/2) the elapsed time since the last test;
provided, however, the Operating Fee and Gathering Fee previously paid will be
adjusted retroactively between the parties based on any corrected volumes but
the volumes allocated among shippers on the Gathering System shall be adjusted
only prospectively. The volume of the Resource Entities' Gas delivered during
such period shall be estimated by Atlas America either (a) by using the data
recorded by any check measuring equipment if installed and accurately
registered, (b) by correcting the error if the percentage of error is
ascertainable by calibration, test, or mechanical calculation or, if neither
such method is feasible, (c) by estimating the quantity delivered based upon
deliveries under similar conditions during a period when the equipment
registered accurately. No volume correction shall be made for metering
inaccuracies of three percent (3%) or less.
7.7. Meter Testing. If the MLP requests that a meter be tested, then
Atlas America shall have the meter tested in the presence of, and to the
satisfaction of, the MLP. If the meter tested proves to be accurate within plus
or minus three percent (3%) at its normal operating range, then the cost of
testing and recalibrating the meter shall be borne by the MLP. In all other
cases, such costs will be borne by Atlas America. Atlas America shall conduct
all required tests within ten (10) days of a request by the MLP. Atlas America
shall notify the MLP at least five (5) working days prior to the test of the
date, time and location of such test.
ARTICLE 8. GATHERING FEE
8.1. Calculation. As consideration for the gathering of the Resource
Entities' Gas through the Gathering System, and except as otherwise provided in
this Article 8, the Resource Entities, jointly and severally, shall pay to the
MLP a gathering fee (the "Gathering Fee") equal to the higher of $0.35 or 16% of
the Gross Sales Price, calculated on an Mcf basis, for natural gas:
(a) delivered by any of the Resource Entities' Xxxxx to
Receipt Points, a Third Party Gathering System or an Other Delivery Point
(except to the extent the MLP (i) did not agree to the inclusion of the cost of
a Flow Line to a Third Party Gathering System or Other Delivery Point in a
Capital Budget or (ii) was not a party to a Potential Acquisition pursuant to
Section 4.3, and except that the Gathering Fees with respect to Resource
Entities' Xxxxx connected to a Third Party Gathering System or Other Delivery
Point for which Gathering Fees are payable hereunder shall be reduced by any
gathering fee paid by Atlas America to an operator of that Third Party Gathering
System, but in no case shall the reduction be more than the third party
gathering fee proposed to be paid by Atlas America to the operator of such Third
Party Gathering System in the applicable Capital Budget (the "Third Party
Gathering Fee")); and
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(b) owned by third parties and delivered though the Gathering
System pursuant to third party agreements with any of the Resource Entities or
their Affiliates in existence on February 2, 2000.
In the case of both (a) and (b), the amount of natural gas as to which the
Gathering Fee shall be payable shall be reduced by the amount of the Resource
Entities' Field Fuel; provided, however, that no reduction shall be made for gas
lost due directly or indirectly to actions or inactions of Atlas America other
than gas lost in the operation and maintenance of the Gathering System in the
ordinary course of business in accordance with this Agreement; and provided,
further, that no reduction shall be made for any house, royalty or farm gas for
which the recipient pays a Gross Sales Price. The Gathering Fee for xxxxx owned
by third parties (other than Investment Programs) and connected to the Gathering
System after February 2, 2000 and before the date of this Agreement shall be as
set forth in agreements between the owners or operators thereof and the MLP; the
Gathering Fee for xxxxx owned by third parties (other than Investment Programs)
and connected to the Gathering System after the date of this Agreement shall be
as agreed upon by Atlas America, on behalf of the MLP, with the owners or
operators of such xxxxx, subject to the prior written approval of the MLP.
8.2. Ceiling. The parties agree and understand that at no time during
the term of this Agreement shall the Gathering Fee be more than $0.80/Mcf, as
adjusted on January 1 of each year in a percentage equal to the change in the
CPI since the prior January 1.
ARTICLE 9. BILLING AND PAYMENT
9.1. Monthly Statements. Atlas America shall prepare and submit to the
MLP each month a statement showing for the prior month:
(a) with respect to each well connected to the Gathering
System, the volumes of natural gas received at each Receipt Point and the
volumes of natural gas delivered to each Delivery Point;
(b) the Resource Entities' Field Fuel;
(c) a detailed calculation of the aggregate Gathering Fee,
including an itemization of the Gross Sales Price(s);
(d) a calculation of the aggregate Operating Fee;
14
(e) a detailed accounting of all costs incurred on behalf of
the MLP pursuant to this Agreement in accordance with a Capital Budget, with a
comparison of the actual expenditures under that Capital Budget to the amounts
budgeted thereunder;
(f) a detailed accounting of the costs incurred pursuant to
Section 11.3; and
(g) any such information as may be requested by the MLP.
Atlas America shall provide that statement to the MLP within thirty (30) days
after the end of each month. The aggregate Gathering Fee, less the amounts in
clauses (d), (e) and (f) above, shall be due and payable by the Resource
Entities to an account designated by the MLP simultaneously with the MLP's
receipt of Atlas America's statement described above.
9.2. Quarterly Reports. In addition, Atlas America shall provide to the
MLP, not later than fifteen (15) business days after the end of each three-month
period ending on March 31, June 30, September 30 or December 31 of any year
(each a "Fiscal Quarter"), a report setting forth, with respect to both the
preceding Fiscal Quarter and estimated for the Fiscal Quarter thereafter (each,
a "Report"):
(a) the location and number of all Resource Entities' Xxxxx
for which drilling was commenced or completed;
(b) the status of all Resource Entities' Xxxxx for which
drilling is continuing;
(c) the number of Resource Entities' Xxxxx connected or
otherwise added to the Gathering System; and
(d) any such information as may be requested by the MLP.
A Report shall be substantially in the form attached hereto as Exhibit G or in
such other form as may be reasonably acceptable to the MLP.
ARTICLE 10. TERM
10.1. Term. Subject to the other provisions of this Agreement, this
Agreement shall become effective as of its date and shall remain in effect so
long as gas is produced in economic quantities without a lapse of more than
ninety (90) days from any of the Resource Entities' Xxxxx.
10.2. Termination. Notwithstanding Section 10.1, this Agreement shall
terminate, and no party shall have any further obligation hereunder (except for
any amounts outstanding and due as of the date of termination) if the Resource
Entities fail at any time to timely pay any Gathering Fee, and any related late
fees, to the MLP for a period of two consecutive months, whereupon the MLP may
terminate this Agreement upon twenty (20) days prior Notice to the Resource
Entities; provided, however, that if the Resource Entities cure the default and
pay any late fees thereon within such 20-day period, then this Agreement will
continue in effect. Upon any termination hereunder, the obligations of the
Resource Entities under Article 11 shall survive with respect to any matters
related to the period prior to termination.
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10.3. Change of Control; Material Adverse Effect. Notwithstanding
anything in this Agreement to the contrary and except as set forth in this
Section 10.3, the MLP and Atlas America each may terminate the application of
this Agreement as to any Resource Entities' Xxxxx (and the Resource Entities'
Gas therefrom) drilled or completed after the date of a Change of Control or
Material Adverse Effect, except for Resource Entities' Xxxxx required to be
connected to the Gathering System pursuant to Section 4.1. Any Notice of
termination under this Section 10.3 given by Atlas America shall not be
effective until one (1) year after the date of the Notice. Atlas America shall
give the MLP prompt notice of the occurrence of a Change of Control or a
Material Adverse Effect. For purposes of this Agreement, a "Change of Control"
means (a) the acquisition of Atlas America by virtue of being merged into or
consolidated with, a Person deemed not to be an Affiliate of Resource America
following the transaction, (b) the sale, assignment or other disposition of more
than fifty percent (50%) of the capital stock or other ownership rights in Atlas
America to a Person deemed not to be an Affiliate of Resource America following
the transaction or (c) the sale of all or substantially all of the assets of
Atlas America to a Person deemed not to be an Affiliate of Resource America
following the transaction. For purposes of this Agreement, a "Material Adverse
Effect" means a circumstance or event or set of circumstances or events that
renders Atlas America incapable of timely performing any of its material
obligations under this Agreement.
10.4. Uneconomic Operation. Notwithstanding Section 10.1, if at any
time the MLP determines, in its sole discretion and whether or not based upon a
recommendation by Atlas America, that continued operation of all or any part of
the Gathering System is not economically justified, the MLP may cease receiving
Resource Entities' Gas from the relevant part of the Gathering System and
terminate this Agreement as to such part of the Gathering System (the
"Terminated System) by giving at least ninety (90) days' notice to the Resource
Entities. In such event, and concurrently with such notice, the MLP shall offer
the Resource Entities the right to purchase the Terminated System from the MLP
for $10.00. The Resource Entities shall exercise such right on or before sixty
(60) days after receipt of the termination notice. The Resource Entities shall
be responsible for all costs and expenses related to such purchase, including
filing fees, and such purchase shall be without recourse, representation or
warranty. Closing on the purchase shall be on the day specified in the
termination notice as the termination date. If the Terminated System is acquired
by the Resource Entities and remains connected to any other portion of the
Gathering System, the Resource Entities shall have the right to deliver natural
gas from the Terminated System to the Gathering System, and this Agreement shall
continue in effect with respect to the natural gas so delivered by the Resource
Entities.
ARTICLE 11. COSTS AND EXPENSES; LIABILITY
11.1. Costs to be Borne by the Resource Entities. Except as
specifically set forth in this Agreement, the Resource Entities shall pay and
bear all costs and expenses related to their provision of services under this
Agreement and the Gathering System, including its operation and maintenance.
16
11.2. Capital Budget.
(a) Attached hereto as Exhibit H is a detailed capital budget
for the Gathering System for the period from the date of closing under the
Contribution Agreement to December 31, 2002 and for the 2003 calendar year.
Atlas America shall, no later than ninety (90) days before the end of the 2003
calendar year and each calendar year thereafter, submit a capital budget for the
coming year. Any capital budgets approved by the MLP in accordance with Section
11.2(b) and additions or increases thereto approved by the MLP shall constitute
a "Capital Budget." Each Capital Budget shall list all Resource Entities' Xxxxx
projected for drilling and connection in any given year (categorized based on
the applicable clause of Section 4.2), together with projected costs and
expenses, with respect to each Resource Entities' Well, applicable to the
construction described in Section 4.2(b), (c) or (d), which costs shall include
only costs related to the construction of applicable Flow Lines, extension of
the Gathering System, additional compression requirements for the Gathering
System and title costs related to Section 4.4. Atlas America shall include in
the Capital Budget portion relating to Section 4.2(d) the proposed Third Party
Gathering Fee. Each Capital Budget shall indicate the projected quarter in which
Atlas America expects to incur the applicable costs and expenses.
(b) Each Capital Budget shall be subject to review and
approval by the MLP, which approval shall not be unreasonably denied, delayed or
withheld. Notwithstanding the foregoing, the MLP may elect in its own discretion
not to include in a Capital Budget the costs for a Resource Entities' Well that
would be subject to Section 4.2(d), whereupon the Resource Entities may
construct the Flow Line to an Other Delivery Point or to the Third Party
Gathering System, the Flow Line shall be the property of the Resource Entities
and the gas delivered from such Resource Entities' Well to the Other Delivery
Point or Third Party Gathering System will not be subject to the Gathering Fee
or the Operating Fee. The Capital Budget for the year ending December 31, 2002
shall not be in excess of $1,750,000. Until the approval by the MLP, the prior
year's budget (adjusted for throughput volume increases during such year over
the volume assumed for purposes of such year's budget) shall be applicable. The
MLP and Atlas America shall use their reasonable best efforts to approve the
Capital Budget prior to the beginning of the applicable calendar year. To the
extent not captured by Sections 4.2(b),(c) or (d), any costs in a Capital Budget
shall be payable in accordance with Section 9.1, but in no event more than 110%
of the actual cost thereof.
11.3. Sales, General and Administrative Costs. Simultaneously with
Atlas America's submission of any Capital Budget pursuant to Section 11.2(a),
Atlas America shall deliver to the MLP an estimate of the projected sales,
general and administrative costs that reflect an allocation of Atlas America
salaried personnel directly attributable to the management of the Gathering
System, related benefits at 23% of the allocated salary, vehicles and other
costs related to the operation of the Gathering System. The MLP shall be
responsible for payment of costs for such items provided by Atlas America plus
10%, and for actual costs of such items provided by third parties.
11.4. Taxes. The Resource Entities shall pay or cause to be paid all
taxes and assessments imposed on the Resource Entities hereunder with respect to
the Resource Entities' Gas gathered hereunder prior to and including its
delivery to the MLP. The Resource Entities shall pay, in the name of and on
behalf of the MLP, all taxes, levies or charges that the MLP may be required to
pay with respect to the Gathering System or to collect from the Resource
Entities by reason of all services performed for the Resource Entities hereunder
other than sales taxes for a sale made by the MLP, taxes or assessments with
respect to the MLP's income, capital, other properties, franchises or similar
matters relating solely to the MLP's general business activities or partnership
or corporate existence or those of any of its subsidiaries. The Resource
Entities shall pay any taxes or other statutory charges levied or assessed
against any of the facilities used for the purposes of carrying out the
provisions of this Agreement.
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11.5. Resource Entities' Indemnity. The Resource Entities shall,
jointly and severally, indemnify, hold harmless and defend the MLP, the general
partner of the MLP and the officers, agents, employees, representatives and
contractors of the MLP and such general partner (each, an "MLP Indemnified
Person") against any liability, loss or damage whatsoever, including fees,
liens, taxes, costs and attorneys fees (collectively, a "Loss"), suffered by an
MLP Indemnified Person, where such Loss arises, directly or indirectly, out of
any demand, assertion, claim, action or proceeding, judicial or otherwise, cause
of action or suit (collectively an "Indemnity Claim") brought by any Person and
related, directly or indirectly and without limitation, to:
(a) any costs, expenses or taxes payable by the Resource
Entities hereunder;
(b) the operation of the Gathering System and related
facilities;
(c) any Resource Entities' Well;
(d) any breach by the Resource Entities of this Agreement
(excluding Losses claimed or asserted by or on behalf of the MLP for breach of
this Agreement);
(e) any assertion of ownership of, or an interest in, any part
of the Gathering System or the easements, fixtures or facilities related thereto
by any third party, or any other failure of the MLP's title to the Gathering
System or any portion thereof;
(f) a third party assertion of ownership of, or an interest
in, any part of the Resource Entities' Gas or the Resource Entities' Xxxxx;
(g) a third party assertion of an economic interest in the
Resource Entities' Gas or a Resource Entities' Well; and
(h) the lack of odorization of any natural gas in the
Gathering System;
provided, however, that that the Loss was not caused in whole or in material
part by the gross negligence or willful misconduct of an MLP Indemnified Person.
11.6. Notice and Defense of Third Party Claims.
(a) The MLP, promptly upon its discovery of facts giving rise
to an Indemnity Claim, shall give prompt Notice thereof to the Resource
Entities, together with a statement of such information respecting any of the
foregoing as the MLP shall have. The Notice shall include a formal demand for
indemnification under this Agreement. The Resource Entities will not be
obligated to indemnify any MLP Indemnified Person with respect to any Indemnity
Claim if the MLP failed to notify the Resource Entities in accordance with the
provisions of this Agreement in sufficient time to permit the Resource Entities
or their counsel to defend against such matter and to make a timely response
thereto including, without limitation, any responsive motion or answer to a
complaint, petition, notice or other legal, equitable or administrative process
relating to the indemnity Claim, but only insofar as such failure to notify the
Resource Entities has actually resulted in prejudice or damage to the Resource
Entities.
18
(b) The Resource Entities shall be entitled, at their cost and
expense, to contest and defend by all appropriate legal proceedings any
Indemnity Claim with respect to which the Resource Entities are called upon by
the MLP to indemnify any MLP Indemnified Party under the provisions of this
Agreement; provided, that Notice of the intention to so contest shall be
delivered by the Resource Entities to the MLP within twenty (20) days from the
date of receipt by the Resource Entities of Notice by the MLP of the assertion
of the Indemnity Claim. Any such contest may be conducted in the name and on
behalf of the Resource Entities or such MLP Indemnified Party, as may be
appropriate. Such contest shall be conducted by reputable counsel employed by
the Resource Entities and not reasonably objected to by the MLP, but the MLP
shall have the right but not the obligation to participate in such proceedings
and to be represented by counsel of its own choosing at its sole cost and
expense. The Resource Entities shall have full authority to determine all action
to be taken with respect thereto; provided, however, that the Resource Entities
will not have the authority to subject the MLP or such MLP Indemnified Party to
any obligation whatsoever, other than the performance of purely ministerial
tasks or obligations not involving material expense. If the Resource Entities
elect not to contest any such Indemnity Claim, the Resource Entities shall be
bound by the result obtained with respect thereto by the MLP. If the Resource
Entities shall have assumed the defense of an Indemnity Claim, such MLP
Indemnified Party shall agree to any settlement, compromise or discharge of an
Indemnity Claim that the Resource Entities may recommend and that by its terms
obligates the Resource Entities to pay the full amount of the liability in
connection with such Indemnity Claim (which agreement shall be contingent on the
making of such payment), which releases such MLP Indemnified Party completely in
connection with such Indemnity Claim and which would not otherwise adversely
affect such MLP Indemnified Party.
(c) If requested by the Resource Entities, the MLP shall
cooperate with the Resource Entities and its counsel in contesting any Indemnity
Claim that the Resource Entities elect to contest or, if appropriate, in making
any counterclaim against the person asserting the Indemnity Claim, or any
cross-complaint against any person, and the Resource Entities will reimburse the
MLP or any MLP Indemnified Party for any out-of-pocket expenses incurred by it
in so cooperating. At no cost or expense to the MLP or any MLP Indemnified
Party, the Resource Entities shall cooperate with the MLP or any MLP Indemnified
Party and their counsel in contesting any Indemnity Claim.
(d) The MLP agrees to afford the Resource Entities and their
counsel the opportunity to be present at, and to participate in, conferences
with all persons, including Governmental Authorities, asserting any Indemnity
Claim against the MLP or any MLP Indemnified Party or conferences with
representatives of or counsel for such persons.
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11.7. Overdue Payments. Any amount under this Agreement not paid by the
Resource Entities to the MLP when due shall be subject to a late fee of eighteen
percent (18%), compounded daily, until paid. No late fee shall be applied to any
amount owed by the MLP to the Resource Entities and for which the Resource
Entities failed to reduce a payment to the MLP therefor.
11.8. Breach of Section 4.1. The parties acknowledge that the
performance by the Resource Entities or by Resource America of their obligations
under Section 4.1 are unique and specifically identifiable, and that a breach of
such obligations would result in unquantifiable damages to the MLP. Therefore,
as liquidated damages and not as a penalty:
(a) if the Resource Entities and Resource America breach their
commitment specified in Section 4.1 to drill and connect 175 new Connectable
Xxxxx no later than March 15, 2003, then the Resource Entities and Resource
America shall pay to the MLP each month, beginning on March 15, 2003 and ending
no later than March 15, 2005, an amount equal to the product of (a) $1,000.00
multiplied by (b) 175 minus the number of new Connectable Xxxxx that have been
drilled and connected (pursuant to Section 4.2) since January 2, 2002 and up
until the 15th day of that month; and
(b) if the Resource Entities and Resource America breach their
commitment specified in Section 4.1 to drill and connect 500 new Connectable
Xxxxx no later than March 15, 2005, then the Resource Entities and Resource
America shall pay to the MLP an amount equal to the product of (a) 500 minus the
number of new Connectable Xxxxx drilled and connected (pursuant to Section 4.2)
since January 2, 2002 and up to March 15, 2005, multiplied by (b) $50,000.00.
The parties understand and agree that Sections 11.8(a) and (b) are
cumulative and not exclusive of each other. Any amounts payable to the MLP
pursuant to this Section 11.8 shall be due and payable to an account designated
by the MLP within fifteen calendar (15) days after the due date of such payment.
ARTICLE 12. FORCE MAJEURE
12.1. Non-Performance. No failure or delay in performance, whether in
whole or in part, by either the MLP or any of the Resource Entities shall be
deemed to be a breach hereof (other than the obligation of the Resource Entities
to pay the MLP's Gathering Fee when due under this Agreement if the failure to
pay or delay in payment is not the result of a bank holiday or other inability
of a bank or financial institution to effect a transfer of funds) when such
failure or delay is occasioned by or due to a Force Majeure Event; provided,
however, that a party claiming relief from its obligations under this Agreement
as a result of a Force Majeure Event shall not be relieved from its obligations
to the extent that the failure or delay in performance was a result of its
having failed to remedy the Force Majeure Event as set forth in Section 12.3
below.
12.2. Force Majeure Notice. The party affected by a Force Majeure Event
shall give Notice to the other party as soon as reasonably possible of the Force
Majeure Event and the expected duration of the Force Majeure Event.
20
12.3. Remedy of a Force Majeure Notice. The affected party shall use
all reasonable efforts to remedy each Force Majeure Event and resume full
performance under this Agreement as soon as reasonably practicable, except that
the settlement of strikes, lockouts or other labor disputes of a party shall be
entirely within the discretion of the affected party.
ARTICLE 13. GOVERNMENTAL RULES AND REGULATIONS
13.1. FERC and other Governmental Authorities. This Agreement and all
operations hereunder shall be subject to all valid laws, orders, directives,
rules, and regulations of any Governmental Authority having jurisdiction in the
premises, whether state or federal. Notwithstanding any other provisions in this
Agreement, in the event that FERC or any other Governmental Authority imposes a
rule, regulation, order, law or statute that directly or indirectly materially
and adversely affects a party's ability to perform its obligations under this
Agreement, such imposition of a rule, regulation, order, law or statute shall
constitute a Force Majeure Event and the provisions set forth in Article 12
shall apply.
13.2. No action. Atlas America covenants that it will take no action
that would subject the MLP (as a result of the operation of the Gathering
System) or the Gathering System to any orders, directives, rules or regulations
of, or promulgated pursuant to, the Public Utility Holding Company Act of 1935,
as amended, FERC or any utility related Governmental Authority; provided,
however, that Atlas America may take any action that would not change in any
material respect the operations of the Gathering System as conducted on the date
of, or as contemplated by, this Agreement, unless otherwise specifically
directed by the MLP based on circumstances that arise after the date hereof.
ARTICLE 14. INSURANCE
Atlas America shall procure and maintain insurance coverage (with the
MLP to be named as an additional insured as to liability insurance and as loss
payee as to property insurance) relating to its obligations hereunder and with
respect to the Gathering System, including its operation, maintenance and
replacement, consistent with its past practices.
ARTICLE 15. TERMINATION OF OTHER AGREEMENTS
By their execution of this Agreement, each MLP entity and each of the
Resource Entities consents to and does hereby terminate all rights and
obligations each of the parties may have under the Omnibus Agreement and the
Distribution Support Agreement, effective as of the date hereof.
ARTICLE 16. MISCELLANEOUS
16.1. No Joint Venture. This Agreement does not create a relationship
of partnership, corporation, joint venture, association for profit, or any other
relationship among any of the parties, such that any one party is liable in any
manner for the obligations of any other party.
16.2. Independent Contractor. The Resource Entities shall at all times
during the term hereof act as an independent contractor. None of the Resource
Entities' employees, sub-contractors, agents or representatives shall be
considered employees of the MLP. In no event shall the Resource Entities, or any
of their employees, subcontractors, agents or representatives, have the
authority to contractually bind or obligate the MLP or incur any liability for
or on behalf of the MLP not specifically provided for in this Agreement or
approved in writing by the MLP.
21
16.3. Amendment. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by each party to be bound
thereby; provided, however, that Atlas America shall revise Exhibit D from time
to time to reflect any additional Delivery Points that may be established by
Atlas America on the Gathering System, and shall promptly give Notice thereof to
the MLP.
16.4. Extension; Waiver. At any time, the parties may (a) extend the
time for the performance of any of the obligations or other acts of the other
parties, (b) waive any inaccuracies in the representations and warranties
contained in this Agreement or in any document delivered pursuant to this
Agreement and (c) waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in writing signed on behalf
of such party, and no such waiver shall operate or be construed as a waiver of
any subsequent breach by the other party. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (regardless of whether similar), nor shall any such waiver
constitute a continuing waiver unless otherwise expressly provided.
16.5. Entire Agreement. This Agreement (a) shall constitute the entire
agreement between the parties with respect to the subject matter hereof, and
shall supersede all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof; and (b) is not
intended to confer upon any other Person any rights or remedies hereunder. Each
party to this Agreement agrees that no other party to this Agreement (including
its agents and representatives) has made any representation, warranty, covenant
or agreement to or with such party relating to the Agreement or the transactions
contemplated hereby.
16.6. Severability. If any provision of this Agreement is rendered or
declared illegal or unenforceable by reason of any existing or subsequently
enacted legislation, or by decree of a court of last resort, the MLP and the
Resource Entities shall promptly meet and negotiate substitute provisions for
those rendered or declared illegal or unenforceable, but all of the remaining
provisions of this Agreement shall remain in full force and effect, so long as
the economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such determination,
the parties shall negotiate in good faith in an effort to agree upon a suitable
and equitable substitute provision to effect the original intent of the parties.
16.7. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective permitted successors and
assigns. Nothing in this Agreement, express or implied, is intended to confer
upon any person or entity other than the parties hereto and their respective
permitted successors and assigns, any rights, benefits or obligations hereunder.
In that regard, no holder of units representing limited partner units of ANR or
its assignee or any other Person shall have the right, separate and apart from
ANR, to enforce any provision of this Agreement or to compel any party to this
Agreement to comply with its terms.
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16.8. Assignment. Any party may assign its rights and obligations under
this Agreement subject to the following: (a) no terms or provisions of this
Agreement, including, without limitation, any rights and obligations of any
party hereto, shall be altered or amended as a result of giving effect to such
assignment, (b) the assigning party must first provide the other party with
Notice of any assignment and copies of all documents related thereto, and (c)
the nonassigning party shall have consented to the financial capability of the
assignee (which capability shall be at least that of the assignor) and the
capability of the assignee to perform its obligations under this Agreement,
which consent shall not be unreasonably withheld. The provisions of the prior
sentence shall also apply to any sale of substantially all of the Resource
Entities' Xxxxx or the Gathering System or the sale or series of sales that
results in a change in more than 50% of the equity ownership of a party (except
if this Agreement is terminated pursuant to Section 10.3) to a Person other than
an Affiliate of that party or to public holders. This Agreement shall be binding
upon (a) any purchaser of the Gathering System and (b) any purchaser of a
Resource Entities' Well or any part thereof or interest therein that is subject
to this Agreement; provided, however, that nothing in this Agreement shall in
any way prevent either party from pledging or mortgaging all or any part of a
Resource Entities' Well or the Gathering System as security under any mortgage,
deed of trust or other similar lien, or from pledging this Agreement or any
benefits accruing hereunder without the assumption of obligations hereunder by
the pledgee or mortgagee or other grantee under such an instrument, including
upon foreclosure. Except as set forth in Section 10.3, no transfer of a Resource
Entities' Well, or any part thereof or interest therein, or of all or
substantially all of the Gathering System, shall be made unless the transferee
thereof shall assume and agree in writing to be bound by this Agreement.
16.9. Exploration and Production. Upon the sale or other disposition of
Atlas America, neither the Resource Entities nor their Affiliates shall engage
in the exploration for, or production of, oil or natural gas in the Area of
Mutual Interest for a period of two (2) years from the date such sale or other
disposition is consummated.
16.10. Notices. Any notice, request, instruction, or correspondence or
other document to be given hereunder by either party to the other (herein
collectively called "Notice") shall be in writing and delivered in person or by
courier service requiring acknowledgement of receipt of delivery or mailed by
certified mail, postage prepaid and return receipt requested, or by telecopier,
as follows:
(a) if to any of the Resource Entities or Resource
America, to:
Resource America, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxx
Telecopy: (000) 000-0000
23
with a copy (which will not constitute Notice) to:
Ledgewood Law Firm, P.C.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX
Attention: Xxxxxxx X. Abt
Telecopy: (000) 000-0000
(b) if to the MLP, to:
Atlas Natural Resources, L.P.
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Attention: President
Telecopy: (000) 000-0000
with a copy (which will not constitute Notice) to:
Xxxxx, Xxxxx & Xxxxx
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx
Telecopy: (000) 000-0000.
Notice given by personal delivery, courier service or mail shall be effective
upon actual receipt. Notice given by telecopier shall be confirmed by
appropriate answer back and shall be effective upon actual receipt if received
during the recipient's normal business hours, or at the beginning of the
recipient's next business day after receipt if not received during the
recipient's normal business hours. Any party may change any address to which
Notice is to be given to it by giving Notice as provided above of such change of
address.
16.11. Counterparts and Facsimile Execution. This Agreement may be
executed in one or more original or facsimile counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
16.12. Governing Law. All questions concerning the construction,
interpretation and validity of this Agreement shall be governed by and construed
and enforced in accordance with the internal law of the State of Delaware,
without giving effect to any choice or conflict of law provision or rule
(whether in the State of Delaware or any other jurisdiction) that would cause
the application of the law of any jurisdiction other than the State of Delaware.
In furtherance of the foregoing, the internal law of the State of Delaware will
control the interpretation and construction of this Agreement, even if under
such jurisdiction's choice of law or conflict of law analysis, the internal law
of some other jurisdiction would ordinarily or necessarily apply.
16.13. Construction. Unless the context of this Agreement otherwise
requires
24
(a) Whenever the context may require, any pronouns used herein
shall indicate the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural and vice-versa, and
words using the singular or plural number also include the plural or singular
number, respectively.
(b) Whenever this Agreement refers to a number of days, such
number shall refer to calendar days unless business days are specified A
business day shall mean a day on which commercial banks are open for business in
New York, New York.
(c) The headings of the sections of this Agreement are
inserted as a matter of convenience and for reference only and in no way define,
limit or describe the scope of this Agreement or the meaning of any provision of
this Agreement. The terms "Article" or "Section" refer to the specified Article
or Section of this Agreement, and references to sections, schedules and exhibits
contained herein refer to the respective sections, schedules and exhibits in
this Agreement.
(d) The words "hereof," "herein," and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
(e) Whenever the words "included," "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation."
(f) THE PARTIES AGREE THAT THEY HAVE BEEN REPRESENTED BY
COUNSEL DURING THE NEGOTIATION AND EXECUTION OF THIS AGREEMENT AND THEREFORE
WAIVE THE APPLICATION OF ANY LAW, REGULATION, HOLDING OR RULE OF CONSTRUCTION
PROVIDING THAT AMBIGUITIES IN AN AGREEMENT OR OTHER DOCUMENT WILL BE CONSTRUED
AGAINST THE PARTY DRAFTING SUCH AGREEMENT OR DOCUMENT.
16.14. Form of Payment. Unless otherwise specifically stated to the
contrary, all payments hereunder shall be made in United States dollars and,
unless the parties making and receiving such payments shall agree otherwise or
the provisions hereof provide otherwise, shall be made by wire or interbank
transfer of immediately available funds by Noon New York, New York time on the
date such payment is due to such account as the party receiving payment may
designate in writing.
16.15. Further Assurances. In connection with this Agreement and all
transactions contemplated by this Agreement, each signatory party hereto agrees
to execute and deliver such additional documents and instruments and to perform
such additional acts as may be necessary or appropriate to effectuate, carry out
and perform all of the terms, provisions and conditions of this Agreement and
all such transactions.
[The remainder of this page has been intentionally left blank.]
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IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first written above.
THE MLP:
ATLAS NATURAL RESOURCES OPERATING PARTNERSHIP, L.P.
By: Atlas Natural Resources GP, LLC
Its general partner
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
ATLAS NATURAL RESOURCES, L.P.
By: Atlas Natural Resources GP, LLC
Its general partner
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
THE RESOURCE ENTITIES:
ATLAS AMERICA, INC.
By: ---------------------------------
Xxxxxxx X. Xxxxxxx
Executive Vice President and Secretary
RESOURCE ENERGY, INC.
By: ---------------------------------
Xxxxxxx X. Xxxxxxx
President and Secretary
26
VIKING RESOURCES CORPORATION
By: ---------------------------------
Xxxxxxx X. Xxxxxxx
Secretary
RESOURCE AMERICA, INC.
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
27
Exhibit A
The Gathering System
28
Exhibit B
Resource Entities' Existing Well Interests
29
Exhibit C
Existing Third Party Well Interests
30
Exhibit D
Delivery Points
31
Exhibit E
Components of the Operating Fee
Direct Third Party Expenses
Compressor Rental and Maintenance
Pipeline Repair and Maintenance
Contract Labor
Meter Expenses (Integration, Reading, etc.)
Power, Fuel and Water
Taxes
Insurance (Liability)
Other
Atlas Expenses
Pipeline Maintenance
Hourly Labor
Benefits
Vehicles
Other
Compressor Maintenance
Labor
Benefits
Vehicles
Other
32
Exhibit F
Potential Acquisition Criteria
33
Exhibit G
Form of Quarterly Report
34
Exhibit H
Capital Budget
35
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS.............................................2
ARTICLE 2. OPERATION OF GATHERING SYSTEM...........................6
2.1. Management of Gathering System..............................6
2.2. Standard of Conduct.........................................6
ARTICLE 3. FILES...................................................6
3.1. Inspection and Audit........................................6
3.2. Retention...................................................7
3.3. Maintenance.................................................7
ARTICLE 4. XXXXX AND FLOW LINES....................................7
4.1. Drilling and Connection of New Xxxxx........................7
4.2. Construction of Flow Lines..................................7
4.3. Potential Acquisitions......................................8
4.4. Title......................................................10
4.5. New Investment Programs....................................10
ARTICLE 5. GATHERING SERVICES.....................................10
5.1. Receipt of Gas.............................................10
5.2. Redelivery of Gas..........................................11
5.3. Resource Entities' Field Fuel..............................11
5.4. Commingling Resource Entities' Gas.........................11
5.5. Resource Entities' Gas.....................................11
5.6. House, Royalty or Farm Gas.................................11
ARTICLE 6. DELIVERY PRESSURE AND GAS QUALITY......................11
6.1. Receipt Points; Delivery Points............................11
6.2. Compression................................................11
6.3. Wellhead Equipment.........................................12
6.4. Gas Quality................................................12
ARTICLE 7. MEASUREMENT AND TESTING................................12
7.1. Measurement Equipment......................................12
7.2. Delivery Points............................................12
7.3. Chart Integration..........................................12
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TABLE OF CONTENTS
(continued)
Page
7.4. Unit of Volume..............................................12
7.5. Testing Procedures..........................................13
7.6. Meter Inaccuracy............................................13
7.7. Meter Testing...............................................13
ARTICLE 8. GATHERING FEE...........................................13
8.1. Calculation.................................................13
8.2. Ceiling.....................................................14
ARTICLE 9. BILLING AND PAYMENT.....................................14
9.1. Monthly Statements..........................................14
9.2. Quarterly Reports...........................................15
ARTICLE 10. TERM....................................................15
10.1. Term........................................................15
10.2. Termination.................................................15
10.3. Change of Control; Material Adverse Effect..................16
10.4. Uneconomic Operation........................................16
ARTICLE 11. COSTS AND EXPENSES; LIABILITY...........................16
11.1. Costs to be Borne by the Resource Entities..................16
11.2. Capital Budget..............................................17
11.3. Sales, General and Administrative Costs.....................17
11.4. Taxes.......................................................17
11.5. Resource Entities' Indemnity................................18
11.6. Notice and Defense of Third Party Claims....................18
11.7. Overdue Payments............................................20
11.8. Breach of Section 4.1.......................................20
ARTICLE 12. FORCE MAJEURE...........................................20
12.1. Non-Performance.............................................20
12.2. Force Majeure Notice........................................20
12.3. Remedy of a Force Majeure Notice............................21
ARTICLE 13. GOVERNMENTAL RULES AND REGULATIONS......................21
13.1. FERC and other Governmental Authorities.....................21
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TABLE OF CONTENTS
(continued)
13.2. No action...................................................21
ARTICLE 14. INSURANCE...............................................21
ARTICLE 15. TERMINATION OF OTHER AGREEMENTS.........................21
ARTICLE 16. MISCELLANEOUS...........................................21
16.1. No Joint Venture............................................21
16.2. Independent Contractor......................................21
16.3. Amendment...................................................22
16.4. Extension; Waiver...........................................22
16.5. Entire Agreement............................................22
16.6. Severability................................................22
16.7. Binding Effect..............................................22
16.8. Assignment..................................................23
16.9. Exploration and Production..................................23
16.10. Notices.....................................................23
16.11. Counterparts and Facsimile Execution........................24
16.12. Governing Law...............................................24
16.13. Construction................................................24
16.14. Form of Payment.............................................25
16.15. Further Assurances..........................................25
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Exhibit D to Contribution Agreement
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ATLAS NATURAL RESOURCES OPERATING PARTNERSHIP, L.P.
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ATLAS NATURAL RESOURCES OPERATING PARTNERSHIP, L.P.
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
ATLAS NATURAL RESOURCES OPERATING PARTNERSHIP, L.P., dated as of __________,
2002, is entered into by and between Atlas Natural Resources GP, LLC, a Delaware
limited liability company, as the General Partner, and Atlas Natural Resources,
L.P., a Delaware limited partnership, as the Limited Partner, together with any
other Persons who hereafter become Partners in the Partnership or parties hereto
as provided herein.
R E C I T A L S:
WHEREAS, the General Partner and the MLP formed the Partnership
pursuant to the Agreement of Limited Partnership of Atlas Operating Partners,
L.P. dated as of September 14, 1999 (the "Original Agreement"), and a
Certificate of Limited Partnership filed with the Secretary of State of the
State of Delaware on such date; and
WHEREAS, the General Partner and the MLP executed and entered into the
Amended and Restated Agreement of Limited Partnership of Atlas Pipeline
Operating Partnership, L.P. dated February 2, 2000 (the "Amended Partnership
Agreement");
WHEREAS, Vulcan Intermediary, L.L.C. and New Vulcan Holdings, L.L.C.
(together, the "Contributors"), the MLP, the General Partner and Resource
America, Inc. entered into a Contribution Agreement dated as of January 18,
2002, relating to the contribution to the MLP by the Contributors of limited
partnership interests in Triton Coal Company, LP in consideration for the
issuance by the MLP of particular MLP Securities (the "Contribution Agreement");
and
WHEREAS, in connection with the Contribution Agreement and the
transactions contemplated thereby, the Partners of the Partnership desire to
amend and restate the Amended Partnership Agreement;
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements contained herein, the parties hereto hereby amend the Amended
Partnership Agreement and, as so amended, restate it in its entirety as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
-----------
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
Capitalized terms used herein but not otherwise defined shall have the meaning
assigned to such term in the MLP Agreement.
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"Additional Limited Partner" means a Person admitted to the Partnership
as a Limited Partner pursuant to Section 10.3 and who is shown as such on the
books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each fiscal year of the Partnership:
(a) increased by any amounts that such Partner is obligated to restore under the
standards set by Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed
obligated to restore under Treasury Regulation Sections 1.704- 2(g) and
1.704-2(i)(5)); and
(b) decreased by:
(i) the amount of all losses and deductions that, as of the end of such
fiscal year, are reasonably expected to be allocated to such Partner in
subsequent years under Sections 704(b)(2) and 706(d) of the Code and
Treasury Regulation Section 1.751-1(b)(2)(ii); and
(ii) the amount of all distributions that, as of the end of such fiscal
year, are reasonably expected to be made to such Partner in subsequent
years in accordance with the terms of this Agreement or otherwise to
the extent they exceed offsetting increases to such Partner's Capital
Account that are reasonably expected to occur during (or prior to) the
year in which such distributions are reasonably expected to be made
(other than increases as a result of a minimum gain chargeback pursuant
to Section 6.1(d)(i) or 6.1(d)(ii)).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith. The "Adjusted Capital Account" of a Partner
in respect of a General Partner Interest or any other specified interest in the
Partnership shall be the amount which such Adjusted Capital Account would be if
such General Partner Interest or other interest in the Partnership were the only
interest in the Partnership held by a Partner from and after the date on which
such General Partner Interest or other interest was first issued.
"Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii).
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question. As used
herein, the term "control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.
"Agreed Allocation" means any allocation, other than a Required
Allocation, of an item of income, gain, loss or deduction pursuant to the
provisions of Section 6.1, including, without limitation, a Curative Allocation
(if appropriate to the context in which the term "Agreed Allocation" is used).
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"Agreed Value" of any Contributed Property means the fair market value
of such property or other consideration at the time of contribution as
determined by the General Partner using such reasonable method of valuation as
it may adopt. The General Partner shall, in its discretion, use such method as
it deems reasonable and appropriate to allocate the aggregate Agreed Value of
Contributed Properties contributed to the Partnership in a single or integrated
transaction among each separate property on a basis proportional to the fair
market value of each Contributed Property.
"Agreement" means this Second Amended and Restated Agreement of Limited
Partnership of Atlas Natural Resources Operating Partnership, L.P., as it may be
amended, supplemented or restated from time to time.
"Amended Partnership Agreement" has the meaning assigned to such term
in the recitals hereto.
"Assignee" means a Person to whom one or more Limited Partner Interests
have been transferred in a manner permitted under this Agreement, but who has
not been admitted as a Substituted Limited Partner.
"Associate" means, when used to indicate a relationship with any
Person:
(a) any corporation or organization of which such Person is a director, officer
or partner or is, directly or indirectly, the owner of 20% or more of any class
of voting stock or other voting interest;
(b) any trust or other estate in which such Person has at least a 20% beneficial
interest or as to which such Person serves as trustee or in a similar fiduciary
capacity; and
(c) any relative or spouse of such Person, or any relative of such spouse, who
has the same principal residence as such Person.
"Available Cash" means, with respect to any Quarter ending prior to the
Liquidation Date:
(d) the sum of:
(i) all cash and cash equivalents of the Partnership Group on hand at the
end of such Quarter from all sources; and
(ii) all additional cash and cash equivalents of the Partnership Group on
hand on the date of determination of Available Cash with respect to
such Quarter resulting from Working Capital Borrowings made subsequent
to the end of such Quarter;
(e) less the amount of any cash reserves that is necessary or appropriate in the
reasonable discretion of the General Partner to:
(i) provide for the proper conduct of the business of the Partnership Group
(including reserves for future capital expenditures and for anticipated
future credit needs of the Partnership Group) subsequent to such
Quarter;
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(ii) comply with applicable law or any loan agreement, security agreement,
mortgage, debt instrument or other agreement or obligation to which any
Group Member is a party or by which it is bound or its assets are
subject; and
(iii) provide funds for distributions under Sections 6.4 or 6.5 of the MLP
Agreement in respect of any one or more of the next four Quarters;
provided, however, that the General Partner may not establish cash reserves
pursuant to (b)(iii) above if the effect of such reserves would be that the MLP
is unable to distribute the Minimum Quarterly Distribution on all Common Units,
plus any Cumulative Common Unit Arrearage on all Common Units, with respect to
such Quarter; and provided further, that disbursements made by a Group Member or
cash reserves established, increased or reduced after the end of such Quarter
but on or before the date of determination of Available Cash with respect to
such Quarter shall be deemed to have been made, established, increased or
reduced, for purposes of determining Available Cash, within such Quarter if the
General Partner so determines. Notwithstanding the foregoing, "Available Cash"
with respect to the Quarter in which the Liquidation Date occurs and any
subsequent Quarter shall equal zero.
Taxes paid by the Partnership on behalf of, or amounts withheld with respect to,
all or less than all of the Partners shall not be considered cash disbursements
of the Partnership that reduce Available Cash, but the payment or withholding
thereof shall be deemed to be a distribution of Available Cash to the applicable
Partners. Alternatively, in the discretion of the General Partner, such taxes
(if pertaining to all Partners) may be considered to be cash disbursements of
the Partnership which reduce Available Cash, but the payment or withholding
thereof shall not be deemed to be a distribution of Available Cash to such
Partners.
"Book-Tax Disparity" means with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Section 5.5 and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
"Business Day" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States of
America or the states of New York or Wyoming shall not be regarded as a Business
Day.
"Capital Account" means the capital account maintained for a Partner
pursuant to Section 5.5. The "Capital Account" of a Partner in respect of a
General Partner Interest or any other specified interest in the Partnership
shall be the amount which such Capital Account would be if such General Partner
Interest or other specified interest in the Partnership were the only interest
in the Partnership held by a Partner from and after the date on which such
General Partner Interest or other specified interest in the Partnership was
first issued.
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"Capital Contribution" means any cash, cash equivalents or the Net
Agreed Value of Contributed Property that a Partner contributes to the
Partnership pursuant to this Agreement or the Initial Contribution Agreement.
"Capital Interests" means, with respect to any corporation, any and all
shares, participations, rights or other equivalent interests in the capital of
the corporation, and with respect to any partnership or limited liability
company, any and all partnership or membership interests (whether general or
limited) and any other interests or participations that confer on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, such partnership or limited liability company.
"Carrying Value" means:
(a) with respect to a Contributed Property, the Agreed Value of such property
reduced (but not below zero) by all depreciation, amortization and cost recovery
deductions charged to the Partners' and Assignees' Capital Accounts in respect
of such Contributed Property; and
(b) with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
Notwithstanding the previous sentence, the Carrying Value of any property shall
be adjusted from time to time in accordance with Sections 5.5(d)(i) and
5.5(d)(ii) and to reflect changes, additions or other adjustments to the
Carrying Value for dispositions and acquisitions of Partnership properties, as
deemed appropriate by the General Partner.
"Certificate of Limited Partnership" means the Certificate of Limited
Partnership of the Partnership filed with the Secretary of State of the State of
Delaware as referenced in Section 7.2, as such Certificate of Limited
Partnership may be amended, supplemented or restated from time to time.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time. Any reference herein to a specific section or sections
of the Code shall be deemed to include a reference to any corresponding
provision of successor law.
"Commission" means the United States Securities and Exchange
Commission.
"Common Unit" has the meaning assigned to such term in the MLP
Agreement.
"Contributed Property" means each property or other asset, in such form
as may be permitted by the Delaware Act, but excluding cash, contributed to the
Partnership (or deemed contributed to a new partnership on termination of the
Partnership pursuant to section 708 of the Code). Once the Carrying Value of a
Contributed Property is adjusted pursuant to Section 5.5(d), such property shall
no longer constitute a Contributed Property, but shall be deemed an Adjusted
Property.
"Contribution Agreement" has the meaning assigned to such term in the
recitals hereto.
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"Curative Allocation" means any allocation of an item of income, gain,
deduction, loss or credit pursuant to the provisions of Section 6.1(d)(ix).
"Deferred Participation Unit" has the meaning assigned to such term in
the MLP Agreement.
"Delaware Act" means the Delaware Revised Uniform Limited Partnership
Act, 6 Del C. Sections 17-101, et seq., as amended, supplemented or restated
from time to time, and any successor to such statute.
"Departing Partner" means a former General Partner from and after the
effective date of any withdrawal or removal of such former General Partner
pursuant to Sections 11.1 or 11.2.
"Economic Risk of Loss" has the meaning set forth in Treasury
Regulation Section 1.752-2(a).
"Event of Withdrawal" has the meaning assigned to such term in Section
11.1(a).
"General Partner" means Atlas Natural Resources GP, LLC and its
successors and permitted assigns as general partner of the Partnership.
"General Partner Interest" means the ownership interest of the General
Partner in the Partnership (in its capacity as a general partner without
reference to any Limited Partner Interest held by it) and includes any and all
benefits to which the General Partner is entitled as provided in this Agreement,
together with all obligations of the General Partner to comply with the terms
and provisions of this Agreement.
"Group Member" means a member of the Partnership Group.
"Indemnitee" means:
(a) the General Partner;
(b) any Departing Partner;
(c) any Person who is or was an Affiliate of the General Partner or any
Departing Partner;
(d) any Person who is or was a member, partner, officer, director, employee,
agent or trustee of any Group Member, the General Partner or any Departing
Partner or any Affiliate of any Group Member, the General Partner or any
Departing Partner; and
(e) any Person who is or was serving at the request of the General Partner or
any Departing Partner or any Affiliate of the General Partner or any Departing
Partner as an officer, director, employee, member, partner, agent, fiduciary or
trustee of another Person; provided, that a Person shall not be an Indemnitee by
reason of providing, on a fee-for-services basis, trustee, fiduciary or
custodial services.
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"Initial Closing Date" means February 2, 2000.
"Initial Common Units" means the Common Units sold in the Initial
Offering.
"Initial Contribution Agreement" means that certain Contribution and
Assumption Agreement, dated as of the Initial Closing Date, by and among the
General Partner, the MLP, the Partnership and certain other parties named
therein, together with any additional documents and instruments contemplated or
referenced thereunder.
"Initial Offering" means the initial offering and sale of the Initial
Common Units to the public, as described in the Registration Statement.
"Limited Partner" means any Person that is admitted to the Partnership
as a limited partner pursuant to the terms and conditions of this Agreement; but
the term Limited Partner shall not include any Person from and after the time
such Person withdraws as a Limited Partner from the Partnership.
"Limited Partner Interest" means the ownership interest of a Limited
Partner or Assignee in the Partnership and includes any and all benefits to
which such Limited Partner or Assignee is entitled as provided in this
Agreement, together with all obligations of such Limited Partner or Assignee to
comply with the terms and provisions of this Agreement.
"Liquidation Date" means (a) in the case of an event giving rise to the
dissolution of the Partnership of the type described in clauses (a) and (b) of
the first sentence of Section 12.2, the date on which the applicable time period
during which the Partners have the right to elect to reconstitute the
Partnership and continue its business has expired without such an election being
made, and (b) in the case of any other event giving rise to the dissolution of
the Partnership, the date on which such event occurs.
"Liquidator" means one or more Persons selected by the General Partner
to perform the functions described in Section 12.3 as liquidating trustee of the
Partnership within the meaning of the Delaware Act.
"Merger Agreement" has the meaning assigned to such term in Section
14.1.
"Minimum Quarterly Distribution" has the meaning assigned to such term
in the MLP Agreement.
"MLP" means Atlas Natural Resources, L.P.
"MLP Agreement" means the Second Amended and Restated Agreement of
Limited Partnership of Atlas Natural Resources, L.P., as it may be amended,
supplemented or restated from time to time.
"MLP Security" has the meaning assigned to the term "Partnership
Security" in the MLP Agreement.
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"National Securities Exchange" has the meaning assigned to such term in
the MLP Agreement.
"Net Agreed Value" means, (a) in the case of any Contributed Property,
the Agreed Value of such property reduced by any liabilities either assumed by
the Partnership upon such contribution or to which such property is subject when
contributed, and (b) in the case of any property distributed to a Partner or
Assignee by the Partnership, the Partnership's Carrying Value of such property
(as adjusted pursuant to Section 5.5(d)(ii)) at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner or
Assignee upon such distribution or to which such property is subject at the time
of distribution, in either case, as determined under Section 752 of the Code.
"Net Income" means, for any taxable period, the excess, if any, of the
Partnership's items of income and gain (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable period over the Partnership's items of loss and deduction (other
than those items taken into account in the computation of Net Termination Gain
or Net Termination Loss) for such taxable period. The items included in the
calculation of Net Income shall be determined in accordance with Section 5.5(b)
and shall not include any items specially allocated under Section 6.1(d).
"Net Loss" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable period over the Partnership's items of income and gain (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable period. The items included in the calculation
of Net Loss shall be determined in accordance with Section 5.5(b) and shall not
include any items specially allocated under Section 6.1(d).
"Net Termination Gain" means, for any taxable year, the sum, if
positive, of all items of income, gain, loss or deduction recognized by the
Partnership after the Liquidation Date or any Unrealized Gain deemed recognized
by the Partnership pursuant to Section 5.5(d). The items included in the
determination of Net Termination Gain shall be determined in accordance with
Sections 5.5(b) and 5.5(d) and shall not include any items of income, gain or
loss specially allocated under Section 6.1(d).
"Net Termination Loss" means, for any taxable year, the sum, if
negative, of all items of income, gain, loss or deduction recognized by the
Partnership after the Liquidation Date or any Unrealized Loss deemed recognized
by the Partnership pursuant to Section 5.5(d). The items included in the
determination of Net Termination Loss shall be determined in accordance with
Sections 5.5(b) and 5.5(d) and shall not include any items of income, gain or
loss specially allocated under Section 6.1(d).
"Nonrecourse Built-in Gain" means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or pledge
securing a Nonrecourse Liability, the amount of any taxable gain that would be
allocated to the Partners pursuant to Sections 6.2(b)(i)(A), 6.2(b)(ii)(A) and
6.2(b)(iii) if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.
-8-
"Nonrecourse Deductions" means any and all items of loss, deduction or
expenditures (described in Section 705(a)(2)(B) of the Code) that, in accordance
with the principles of Treasury Regulation Section 1.704-2(b), are attributable
to a Nonrecourse Liability.
"Nonrecourse Liability" has the meaning set forth in Treasury
Regulation Section 1.752-1(a)(2).
"Operating Subsidiaries" means Atlas Pipeline Ohio, LLC, a Pennsylvania
limited liability company, Atlas Pipeline Pennsylvania, LLC, a Pennsylvania
limited liability company, and Atlas Pipeline New York LLC, a Pennsylvania
limited liability company and any respective successor thereto; provided,
however, that unless the context requires otherwise, any references herein to
the term Operating Subsidiaries shall also be deemed to include, to the extent
of the Partnership's ownership therein, any partnerships, limited liability
companies, joint ventures or other entities formed or acquired by the
Partnership in connection with the conduct by the Partnership of the business
and activities permitted by the terms of Section 2.4.
"Operating Subsidiary Agreement" with respect to any Operating
Subsidiary means the Limited Liability Company Agreement or such similar
organizational and governing documents of such Operating Subsidiary, as such
agreements and documents may be amended, supplemented or restated from time to
time.
"Opinion of Counsel" means a written opinion of counsel (which may be
regular counsel to the Partnership or the General Partner or any of their
Affiliates) acceptable to the General Partner in its reasonable discretion.
"Original Agreement" has the meaning assigned to such term in the
recitals hereto.
"Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Treasury Regulation Section 1.704-2(i)(2).
"Partner Nonrecourse Deductions" means any and all items of loss,
deduction or expenditure (including, without limitation, any expenditure
described in Section 705(a)(2)(B) of the Code) that, in accordance with the
principles of Treasury Regulation Section 1.704-2(i), are attributable to a
Partner Nonrecourse Debt.
"Partners" means the General Partner and Limited Partners.
"Partnership" means Atlas Natural Resources Operating Partnership,
L.P., a Delaware limited partnership, and any successors thereto.
"Partnership Group" means the Partnership, each Operating Subsidiary
and any Subsidiary of any such entity, treated as a single consolidated entity.
"Partnership Interest" means an ownership interest of a Partner in the
Partnership, which shall include the General Partner Interest and the Limited
Partner Interest(s).
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"Partnership Minimum Gain" means that amount determined in accordance
with the principles of Treasury Regulation Section 1.704-2(d).
"Percentage Interest" means the percentage interest in the Partnership
held by each Partner upon completion of the transactions described in Section
5.2 and shall mean, (a) as to the General Partner, 1.0101%, (b) and as to the
MLP, 98.9899%.
"Person" means an individual or a corporation, limited liability
company, partnership, joint venture, trust, unincorporated organization,
association, government agency or political subdivision thereof or other entity.
"Pro Rata" means, when modifying Partners and Assignees, apportioned
among such Partners and Assignees in accordance with their relative Percentage
Interests.
"Quarter" means, unless the context requires otherwise, a fiscal
quarter of the Partnership.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Section 734 or Section
743 of the Code) upon the disposition of any property or asset of the
Partnership, which gain is characterized as ordinary income because it
represents the recapture of deductions previously taken with respect to such
property or asset.
"Registration Statement" means the Registration Statement on Form S-1
(Registration No. 333-85193) as it has been or as it may be amended or
supplemented from time to time, filed by the MLP with the Commission under the
Securities Act to register the offering and sale of the Initial Common Units in
the Initial Offering.
"Required Allocations" means (a) any limitation imposed on any
allocation of Net Losses or Net Termination Losses under Section 6.1(b) or
6.1(c)(ii) and (b) any allocation of an item of income, gain, loss or deduction
pursuant to Section 6.1(d)(i), 6.1(d)(ii), 6.1(d)(iv), 6.1(d)(vii) or
6.1(d)(ix).
"Residual Gain" or "Residual Loss" means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of a Contributed Property
or Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 6.2(b)(i)(A) or 6.2(b)(ii)(A), respectively, to eliminate
Book-Tax Disparities.
"Securities Act" means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to such statute.
"Special Approval" has the meaning assigned to such term in the MLP
Agreement.
"Subordinated Unit" has the meaning assigned to such term in the MLP
Agreement.
"Subordination Period" has the meaning assigned to such term in the MLP
Agreement.
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"Subsidiary" means, with respect to any Person:
(a) a corporation of which more than 50% of the voting power of shares of
Capital Interests entitled (without regard to the occurrence of any contingency)
to vote in the election of directors or other governing body of such corporation
is owned, directly or indirectly, at the date of determination, by such Person,
by one or more Subsidiaries of such Person or a combination thereof;
(b) a partnership (whether general or limited) in which such Person or a
Subsidiary of such Person is, at the date of determination, a general or limited
partner of such partnership, but only if more than 50% of the Capital Interests
of such partnership (considering all of the partnership interests of the
partnership as a single class) is owned, directly or indirectly, at the date of
determination, by such Person, by one or more Subsidiaries of such Person, or a
combination thereof; or
(c) any other Person (other than a corporation or a partnership) in which such
Person, one or more Subsidiaries of such Person, or a combination thereof,
directly or indirectly, at the date of determination, has (i) at least a
majority ownership interest or (ii) the power to elect or direct the election of
a majority of the directors or other governing body of such Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 10.2 in place of and with
all the rights of a Limited Partner and who is shown as a Limited Partner on the
books and records of the Partnership.
"Surviving Business Entity" has the meaning assigned to such term in
Section 14.2(b).
"Transfer" has the meaning assigned to such term in Section 4.4(a).
"Underwriter" means each Person named as an underwriter in Schedule I
to the Underwriting Agreement who purchases Common Units pursuant thereto.
"Underwriting Agreement" means the Underwriting Agreement dated January
27, 2000, among the Underwriters, the MLP, the Partnership and certain other
parties, providing for the purchase of the Initial Common Units by such
Underwriters.
"Unit" has the meaning assigned to such term in the MLP Agreement.
"Unit Majority" has the meaning assigned to such term in the MLP
Agreement.
"Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a) the fair
market value of such property as of such date (as determined under Section
5.5(d)) over (b) the Carrying Value of such property as of such date (prior to
any adjustment to be made pursuant to Section 5.5(d) as of such date).
"Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a) the Carrying
Value of such property as of such date (prior to any adjustment to be made
pursuant to Section 5.5(d) as of such date) over (b) the fair market value of
such property as of such date (as determined under Section 5.5(d)).
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"U.S. GAAP" means United States Generally Accepted Accounting
Principles consistently applied.
"Working Capital Borrowings" means borrowings exclusively for working
capital purposes or to pay distributions to Partners and made pursuant to a
credit facility or other arrangement requiring all such borrowings thereunder to
be reduced to a relatively small amount each year for an economically meaningful
period of time.
SECTION 1.2 Construction.
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Unless the context requires otherwise: (a) any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa; (b) references to Articles and Sections refer to Articles and
Sections of this Agreement; and (c) the term "include" or "includes" means
includes, without limitation, and "including" means including, without
limitation.
ARTICLE II
ORGANIZATION
SECTION 2.1 Formation.
The Partnership was previously formed as a limited partnership pursuant
to the provisions of the Delaware Act. The Partners thereto subsequently entered
into the Amended Partnership Agreement. The Partners hereby amend and restate
the Amended Partnership Agreement in its entirety. This amendment and
restatement shall become effective on the date of this Agreement. Except as
expressly provided to the contrary in this Agreement, the rights, duties
(including fiduciary duties), liabilities and obligations of the Partners and
the administration, dissolution and termination of the Partnership shall be
governed by the Delaware Act. All Partnership Interests shall constitute
personal property of the owner thereof for all purposes and a Partner has no
interest in specific Partnership property.
SECTION 2.2 Name.
The name of the Partnership shall be "Atlas Natural Resources Operating
Partnership, L.P." The Partnership's business may be conducted under any other
name or names deemed necessary or appropriate by the General Partner in its sole
discretion, including the name of the MLP or the General Partner. The words
"Limited Partnership," "L.P." or "Ltd." or similar words or letters shall be
included in the Partnership's name where necessary for the purpose of complying
with the laws of any jurisdiction that so requires. The General Partner in its
discretion may change the name of the Partnership at any time and from time to
time and shall notify the other Partner(s) of such change in the next regular
communication to the Partners.
SECTION 2.3 Registered Office; Registered Agent; Principal Office; Other
Offices.
Unless and until changed by the General Partner, the registered office
of the Partnership in the State of Delaware shall be located at Corporation
Trust Center, 0000 Xxxxxx Xxxxxx Xxxxxxxxxx, Xxxxxxxx 00000, and the registered
agent for service of process on the Partnership in the State of Delaware at such
registered office shall be The Corporation Trust Company. The principal office
of the Partnership shall be located at 000 X. Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx
00000, or such other place as the General Partner may from time to time
designate by notice to the Limited Partners. The Partnership may maintain
offices at such other place or places within or outside the State of Delaware as
the General Partner deems necessary or appropriate. The address of the General
Partner shall be 000 X. Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx 00000, or such other
place as the General Partner may from time to time designate by notice to the
Limited Partners.
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SECTION 2.4 Purpose and Business.
The purpose and nature of the business to be conducted by the
Partnership shall be to:
(a) acquire, manage, operate, lease, sell and otherwise deal with the assets or
properties contributed to the Partnership by the Partners or hereafter acquired
by the Partnership;
(b) serve as a member, partner, participant or shareholder, as applicable, of
any Operating Subsidiary and, in connection therewith, to exercise all the
rights and powers conferred upon the Partnership as a member of such Operating
Subsidiary pursuant to the Operating Subsidiary Agreement;
(c) engage directly in, or enter into or form any corporation, partnership,
joint venture, limited liability company or other arrangement to engage
indirectly in any type of business or activity engaged in by the Operating
Subsidiaries and their respective Subsidiaries prior to the Initial Closing Date
and, in connection therewith, to exercise all of the rights and powers conferred
upon the Partnership pursuant to the agreements relating to such business
activity;
(d) engage directly in, or enter into or form any corporation, partnership,
joint venture, limited liability company or other arrangement to engage
indirectly in, any type of business or activity that is approved by the General
Partner and which lawfully may be conducted by a limited partnership organized
pursuant to the Delaware Act and, in connection therewith, to exercise all of
the rights and powers conferred upon the Partnership pursuant to the agreements
relating to such business activity; and
(e) do anything necessary or appropriate to the foregoing, including the making
of capital contributions or loans to a Group Member, the MLP or any Subsidiary
of the MLP;
provided, however, in the case of (c) and (d) above, that the General Partner
reasonably determines, as of the date of the acquisition or commencement of such
activity, that such activity (i) generates "qualifying income" (as such term is
defined pursuant to Section 7704 of the Code) or (ii) enhances the operations of
an activity of the Partnership that generates qualifying income. The General
Partner has no obligation or duty to the Partnership, the Limited Partners, or
the Assignees to propose or approve, and in its discretion may decline to
propose or approve, the conduct by the Partnership of any business.
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SECTION 2.5 Powers.
The Partnership shall be empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described in Section
2.4 and for the protection and benefit of the Partnership.
SECTION 2.6 Power of Attorney.
(a) Each Partner and each Assignee hereby constitutes and appoints, severally
and not jointly, the General Partner and, if a Liquidator shall have been
selected pursuant to Section 12.3, the Liquidator (and any successor to either
by merger, transfer, assignment, election or otherwise) and each of their
authorized officers and attorneys-in-fact, as the case may be, with full power
of substitution, as its true and lawful agent and attorney-in-fact, with full
power and authority in his name, place and xxxxx, to:
(i) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices:
(A) all certificates, documents and other instruments (including
this Agreement and the Certificate of Limited Partnership and
all amendments or restatements hereof or thereof) that the
General Partner or the Liquidator deems necessary or
appropriate to form, qualify or continue the existence or
qualification of the Partnership as a limited partnership (or
a partnership in which the limited partners have limited
liability) in the State of Delaware and in all other
jurisdictions in which the Partnership may conduct business or
own property;
(B) all certificates, documents and other instruments that the
General Partner or the Liquidator deems necessary or
appropriate to reflect, in accordance with its terms, any
amendment, change, modification or restatement of this
Agreement;
(C) all certificates, documents and other instruments (including
conveyances and a certificate of cancellation) that the
General Partner or the Liquidator deems necessary or
appropriate to reflect the dissolution and liquidation of the
Partnership pursuant to the terms of this Agreement;
(D) all certificates, documents and other instruments relating to
the admission, withdrawal, removal or substitution of any
Partner pursuant to, or other events described in, Article IV,
X, XI or XII;
(E) all certificates, documents and other instruments relating to
the Capital Contribution of any Partner;
(F) all certificates, documents and other instruments relating to
the determination of the rights, preferences and privileges of
any class or series of Partnership Interests issued pursuant
hereto; and
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(G) all certificates, documents and other instruments (including
agreements and a certificate of merger) relating to a merger
or consolidation of the Partnership pursuant to Article XIV;
and
(ii) execute, swear to, acknowledge, deliver, file and record all
ballots, consents, approvals, waivers, certificates, documents and other
instruments necessary or appropriate, in the discretion of the General Partner
or the Liquidator, to make, evidence, give, confirm or ratify any vote, consent,
approval, agreement or other action that is made or given by the Partners
hereunder or is consistent with the terms of this Agreement or is necessary or
appropriate, in the discretion of the General Partner or the Liquidator, to
effectuate the terms or intent of this Agreement; provided, that when required
by any provision of this Agreement that establishes a percentage of the Limited
Partners or of the Limited Partners of any class or series required to take any
action, the General Partner and the Liquidator may exercise the power of
attorney made in this Section 2.6(a)(ii) only after the necessary vote, consent
or approval of the Limited Partners or of the Limited Partners of such class or
series, as applicable.
Nothing contained in this Section 2.6(a) shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article XIII
or as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be irrevocable and a
power coupled with an interest, and it shall survive and, to the maximum extent
permitted by law, not be affected by the subsequent death, incompetency,
disability, incapacity, dissolution, bankruptcy or termination of any Limited
Partner or Assignee and the transfer of all or any portion of such Limited
Partner's or Assignee's Partnership Interest and shall extend to such Limited
Partner's or Assignee's successors and assigns. Each such Limited Partner or
Assignee hereby agrees to be bound by any representation made by the General
Partner or the Liquidator acting in good faith pursuant to such power of
attorney; and each such Limited Partner or Assignee, to the maximum extent
permitted by law, hereby waives any and all defenses that may be available to
contest, negate or disaffirm the action of the General Partner or the Liquidator
taken in good faith under such power of attorney. Each Limited Partner or
Assignee shall execute and deliver to the General Partner or the Liquidator,
within 15 days after receipt of the request therefor, such further designation,
powers of attorney and other instruments as the General Partner or the
Liquidator deems necessary to effectuate this Agreement and the purposes of the
Partnership.
SECTION 2.7 Term.
The term of the Partnership commenced upon the filing of the
Certificate of Limited Partnership in accordance with the Delaware Act and shall
continue in existence until the close of Partnership business on December 31,
2098 or until the earlier dissolution of the Partnership in accordance with the
provisions of Article XII. The existence of the Partnership as a separate legal
entity shall continue until the cancellation of the Certificate of Limited
Partnership as provided in the Delaware Act.
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SECTION 2.8 Title to Partnership Assets.
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partner or Assignee, individually or collectively, shall
have any ownership interest in such Partnership assets or any portion thereof.
Title to any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner, one or more of its Affiliates or one or more
nominees, as the General Partner may determine. The General Partner hereby
declares and warrants that any Partnership assets for which record title is held
in the name of (a) the General Partner, (b) one or more of its Affiliates or (c)
one or more nominees shall be held by the General Partner or such Affiliate or
nominee for the use and benefit of the Partnership in accordance with the
provisions of this Agreement; provided, however, that the General Partner shall
use reasonable efforts to cause record title to such assets (other than those
assets in respect of which the General Partner determines that the expense and
difficulty of conveying makes transfer of record title to the Partnership
impracticable) to be vested in the Partnership as soon as reasonably
practicable; provided, further, that, prior to the withdrawal or removal of the
General Partner or as soon thereafter as practicable, the General Partner shall
use reasonable efforts to effect the transfer of record title of such assets to
the Partnership and, prior to any such transfer, will provide for the use of
such assets by the Partnership in a manner satisfactory to the General Partner.
All Partnership assets shall be recorded as the property of the Partnership in
its books and records, irrespective of the name in which record title to such
Partnership assets is held.
ARTICLE III
RIGHTS OF LIMITED PARTNERS
SECTION 3.1 Limitation of Liability.
The Limited Partners and the Assignees shall have no liability under
this Agreement except as expressly provided in this Agreement or in the Delaware
Act.
SECTION 3.2 Management of Business.
No Limited Partner or Assignee, in its capacity as such, shall
participate in the operation, management or control (within the meaning of the
Delaware Act) of the Partnership's business, transact any business in the
Partnership's name or have the power to sign documents for or otherwise bind the
Partnership. Any action taken by any Affiliate of a General Partner or any
officer, director, employee, member, general partner, agent or trustee of a
General Partner or any of its Affiliates, or any officer, director, employee,
member, general partner, agent or trustee of a Group Member, in its capacity as
such, shall not be deemed to be participation in the control of the business of
the Partnership by a limited partner of the Partnership (within the meaning of
Section 17-303(a) of the Delaware Act) and shall not affect, impair or eliminate
the limitations on the liability of the Limited Partners or Assignees under this
Agreement.
SECTION 3.3 Outside Activities of the Limited Partners.
Subject to the provisions of Section 7.5, which shall continue to be
applicable to the Persons referred to therein, regardless of whether such
Persons shall also be Limited Partners or Assignees, any Limited Partner or
Assignee shall be entitled to and may have business interests and engage in
business activities in addition to those relating to the Partnership, including
business interests and activities in direct competition with the Partnership
Group. Neither the Partnership nor any of the other Partners or Assignees shall
have any rights by virtue of this Agreement in any business ventures of any
Limited Partner or Assignee.
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SECTION 3.4 Rights of Limited Partners.
--------------------------
(a) In addition to other rights provided by this Agreement or by
applicable law, and except as limited by Section 3.4(b), each Limited Partner
shall have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon reasonable written demand
and at such Limited Partner's own expense:
(i) to obtain true and full information regarding the status of
the business and financial condition of the Partnership;
(ii) to obtain promptly after becoming available, a copy of the
Partnership's federal, state and local income tax returns for
each year;
(iii) to have furnished to it a current list of the name and last
known business, residence or mailing address of each Partner;
(iv) to have furnished to it a copy of this Agreement and the
Certificate of Limited Partnership and all amendments thereto,
together with a copy of the executed copies of all powers of
attorney pursuant to which this Agreement, the Certificate of
Limited Partnership and all amendments thereto have been
executed;
(v) to obtain true and full information regarding the amount of
cash and a description and statement of the Net Agreed Value
of any other Capital Contribution by each Partner and which
each Partner has agreed to contribute in the future, and the
date on which each became a Partner; and
(vi) to obtain such other information regarding the affairs of the
Partnership as is just and reasonable.
(b) The General Partner may keep confidential from the Limited Partners
and Assignees, for such period of time as the General Partner deems reasonable,
(i) any information that the General Partner reasonably believes to be in the
nature of trade secrets or (ii) other information the disclosure of which the
General Partner in good faith believes (A) is not in the best interests of the
MLP or the Partnership Group, (B) could damage the MLP or the Partnership Group
or (C) that any Group Member is required by law or by agreement with any third
party to keep confidential (other than agreements with Affiliates of the
Partnership the primary purpose of which is to circumvent the obligations set
forth in this Section 3.4).
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ARTICLE IV
TRANSFERS OF PARTNERSHIP INTERESTS
SECTION 4.1 Transfer Generally.
------------------
(a) The term "transfer," when used in this Agreement with respect to a
Partnership Interest, shall be deemed to refer to a transaction by which (i) the
General Partner assigns its General Partner Interest to another Person who
becomes the General Partner, (ii) the holder of a Limited Partner Interest
assigns such Limited Partner Interest to another Person who is or becomes a
Limited Partner (or an Assignee) or (iii) a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other disposition of a
Partnership Interest, by law or otherwise, occurs.
(b) No Partnership Interest shall be transferred, in whole or in part, except in
accordance with the terms and conditions set forth in this Article IV. Any
transfer or purported transfer of a Partnership Interest not made in accordance
with this Article IV shall be null and void.
(c) Nothing contained in this Agreement shall be construed to prevent a
disposition by any member, shareholder or partner, as applicable, of the General
Partner of any or all of the issued and outstanding Capital Interests of the
General Partner.
(d) Partnership Interests shall not be certificated and the General Partner is
hereby appointed as registrar and transfer agent for the purpose of registering
and transferring all Partnership Interests.
SECTION 4.2 Transfer of General Partner's Partnership Interest.
--------------------------------------------------
If the General Partner transfers its interest as the general partner of
the MLP to any Person in accordance with the provisions of the MLP Agreement,
such General Partner shall contemporaneously therewith transfer all, but not
less than all, of its General Partner Interest herein to such Person, and the
Limited Partners and Assignees, if any, hereby expressly consent to such
transfer. Except as set forth in the immediately preceding sentence and in
Section 5.2, the General Partner may not transfer all or any part of its General
Partner Interest.
SECTION 4.3 Transfer of a Limited Partner's Partnership Interest.
----------------------------------------------------
A Limited Partner may transfer all, but not less than all, of its
Partnership Interest as a Limited Partner in connection with the merger,
consolidation or other combination of such Limited Partner with or into any
other Person or the transfer by such Limited Partner of all or substantially all
of its assets to another Person, and following any such transfer such Person may
become a Substituted Limited Partner pursuant to Article X. Except as set forth
(a) in the immediately preceding sentence, (b) in Section 5.2 or (c) in
connection with any pledge of (or any related foreclosure on) a Limited
Partnership Interest solely for the purpose of securing, directly or indirectly,
indebtedness of the Partnership or the MLP, a Limited Partner may not transfer
all or any part of its Limited Partnership Interest or withdraw from the
Partnership.
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SECTION 4.4 Restrictions on Transfers.
-------------------------
(a) Notwithstanding the other provisions of this Article IV, no
transfer of any Partnership Interest shall be made if such transfer would:
(i) violate the then applicable federal or state securities laws
or rules and regulations of the Commission, any state
securities commission or any other governmental authority with
jurisdiction over such transfer;
(ii) terminate the existence or qualification of the Partnership or
the MLP under the laws of the jurisdiction of its formation;
(iii) cause the Partnership or the MLP to be treated as an
association taxable as a corporation or otherwise to be taxed
as an entity for federal income tax purposes (to the extent
not already so treated or taxed); or
(iv) cause an unregistered class of Partnership Interests to be
required to be registered under the Securities Act.
(b) The General Partner may impose restrictions on the transfer of
Partnership Interests if a subsequent Opinion of Counsel determines that such
restrictions are necessary to avoid a significant risk of the Partnership or the
MLP becoming taxable as a corporation or otherwise to be taxed as an entity for
federal income tax purposes. The restrictions may be imposed by making such
amendments to this Agreement as the General Partner may determine to be
necessary or appropriate to impose such restrictions.
ARTICLE V
CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
SECTION 5.1 Initial Contributions.
---------------------
In connection with the formation of the Partnership under the Delaware
Act, the General Partner made an initial Capital Contribution to the Partnership
in the amount of $10 in exchange for a 1% interest in the Partnership and was
admitted as the General Partner, and the Limited Partner made an initial Capital
Contribution to the Partnership in the amount of $990 in exchange for a 99%
interest in the Partnership and was admitted as a Limited Partner. As of the
Initial Closing Date, the interest of the Limited Partner was redeemed as
provided in the Initial Contribution Agreement; the initial Capital
Contributions of each Partner were refunded and the Limited Partner ceased to be
a Limited Partner of the Partnership. One percent of any interest or other
profit that may have resulted from the investment or other use of such initial
Capital Contributions was allocated and distributed to the Limited Partner, and
the balance thereof was allocated and distributed to the General Partner.
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SECTION 5.2 Contributions Pursuant to the Contribution Agreement.
----------------------------------------------------
(a) On the Initial Closing Date and pursuant to the Initial Contribution
Agreement, the General Partner contributed all of its membership interest in the
Operating Subsidiaries to the Partnership in exchange for (i) an additional
General Partner Interest in the Partnership, (ii) a Limited Partner Interest in
the Partnership and (iii) the right to receive $25.1 million in cash.
(b) On the Initial Closing Date and pursuant to the Initial Contribution
Agreement, the General Partner contributed its Limited Partner Interest to the
MLP in exchange for (i) the continuation of its 1% general partner interest in
the MLP, (ii) 1,641,026 Initial Subordinated Units and (iii) the reimbursement
of certain expenses related to the formation and business activities of the MLP
and the Partnership.
(c) On the Initial Closing Date and pursuant to the Initial Contribution
Agreement, the MLP offered Common Units to the public in the Initial Offering
and the General Partner contributed cash to the MLP in exchange for a
continuation of its 1% general partner interest in the MLP and the Incentive
Distribution Rights (as defined in the MLP Agreement).
(d) On the Initial Closing Date and pursuant to the Initial Contribution
Agreement, the MLP contributed the cash received from the Initial Offering of
Common Units to the Partnership in exchange for a continuation of its Limited
Partner Interest in the Partnership.
(e) On the Initial Closing Date and pursuant to the Initial Contribution
Agreement, the Partnership (i) paid certain expenses related to the transactions
described in the Registration Statement, (ii) satisfied the $25.1 million cash
right of the General Partner, (iii) contributed cash to the Operating
Subsidiaries to retire qualified debt secured by certain of the assets held by
the Operating Subsidiaries, (iv) created working capital and (v) purchased the
interest of unaffiliated partners in two partnerships conveyed to the
Partnership with two of the Operating Subsidiaries in connection with the
dissolution of such partnerships.
(f) Following the transactions described in subsections (a) through (e) above,
the General Partner holds a 1.0101% General Partner Interest and the MLP holds a
98.9899% Limited Partner Interest.
SECTION 5.3 Additional Capital Contributions.
--------------------------------
With the consent of the General Partner, any Limited Partner may, but
shall not be obligated to, make additional Capital Contributions to the
Partnership. Contemporaneously with the making of any Capital Contributions by a
Limited Partner, in addition to those provided in Sections 5.1 and 5.2, the
General Partner shall be obligated to make an additional Capital Contribution to
the Partnership in amounts equal to 1.0, respectively, divided by 99.0 times the
amount of the additional Capital Contribution then made by such Limited Partner.
Except as set forth in the immediately preceding sentence and in Article XII,
the General Partner shall not be obligated to make any additional Capital
Contributions to the Partnership.
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SECTION 5.4 Interest and Withdrawal.
-----------------------
No interest shall be paid by the Partnership on Capital Contributions.
No Partner or Assignee shall be entitled to the withdrawal or return of its
Capital Contribution, except to the extent, if any, that distributions made
pursuant to this Agreement or upon termination of the Partnership may be
considered as such by law and then only to the extent provided for in this
Agreement. Except to the extent expressly provided in this Agreement, no Partner
or Assignee shall have priority over any other Partner or Assignee either as to
the return of Capital Contributions or as to profits, losses or distributions.
Any such return shall be a compromise to which all Partners and Assignees agree
within the meaning of Section 17-502(b) of the Delaware Act.
SECTION 5.5 Capital Accounts.
----------------
(a) The Partnership shall maintain for each Partner (or a beneficial owner of
Partnership Interests held by a nominee in any case in which the nominee has
furnished the identity of such owner to the Partnership in accordance with
Section 6031(c) of the Code or any other method acceptable to the General
Partner in its sole discretion) owning a Partnership Interest a separate Capital
Account with respect to such Partnership Interest in accordance with the rules
of Treasury Regulation Section 1.704-1(b)(2)(iv).
(i) Such Capital Account shall be increased by:
(A) the amount of all Capital Contributions made to the
Partnership with respect to such Partnership Interest pursuant
to this Agreement; and
(B) all items of Partnership income and gain (including, without
limitation, income and gain exempt from tax) computed in
accordance with Section 5.5(b) and allocated with respect to
such Partnership Interest pursuant to Section 6.1; and
(ii) decreased by:
(A) the amount of cash or Net Agreed Value of all actual and
deemed distributions of cash or property made with respect to
such Partnership Interest pursuant to this Agreement; and
(B) all items of Partnership deduction and loss computed in
accordance with Section 5.5(b) and allocated with respect to
such Partnership Interest pursuant to Section 6.1.
(b) For purposes of computing the amount of any item of income, gain,
loss or deduction which is to be allocated pursuant to Article VI and is to be
reflected in the Partners' Capital Accounts, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes (including,
without limitation, any method of depreciation, cost recovery or amortization
used for that purpose), provided, that:
(i) Solely for purposes of this Section 5.5, the Partnership shall
be treated as owning directly its proportionate share (as
determined by the General Partner based upon the provisions of
the applicable Operating Subsidiary Agreements) of all
property owned by any Subsidiary of the Partnership that is
either ignored for federal income tax purposes or classified
as a partnership for federal income tax purposes.
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(ii) All fees and other expenses incurred by the Partnership to
promote the sale of (or to sell) a Partnership Interest that
can neither be deducted nor amortized under Section 709 of the
Code, if any, shall, for purposes of Capital Account
maintenance, be treated as an item of deduction at the time
such fees and other expenses are incurred and shall be
allocated among the Partners pursuant to Section 6.1.
(iii) Except as otherwise provided in Treasury Regulation Section
1.704- 1(b)(2)(iv)(m), computation of all items of income,
gain, loss and deduction shall be made without regard to any
election under Section 754 of the Code which may be made by
the Partnership and, as to those items described in Section
705(a)(1)(B) or 705(a)(2)(B) of the Code, without regard to
the fact that such items are not includable in gross income or
are neither currently deductible nor capitalized for federal
income tax purposes. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to
Section 734(b) or 743(b) of the Code is required, pursuant to
Treasury Regulation Section 1.704- 1(b)(2)(iv)(m), to be taken
into account in determining Capital Accounts, the amount of
such adjustment in the Capital Accounts shall be treated as an
item of gain or loss.
(iv) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as
if the adjusted basis of such property as of such date of
disposition were equal in amount to the Partnership's Carrying
Value with respect to such property as of such date.
(v) In accordance with the requirements of Section 704(b) of the
Code, any deductions for depreciation, cost recovery or
amortization attributable to any Contributed Property shall be
determined as if the adjusted basis of such property on the
date it was acquired by the Partnership were equal to the
Agreed Value of such property. Upon an adjustment pursuant to
Section 5.5(d) to the Carrying Value of any Partnership
property subject to depreciation, cost recovery or
amortization, any further deductions for such depreciation,
cost recovery or amortization attributable to such property
shall be determined (A) as if the adjusted basis of such
property were equal to the Carrying Value of such property
immediately following such adjustment and (B) using a rate of
depreciation, cost recovery or amortization derived from the
same method and useful life (or, if applicable, the remaining
useful life) as is applied for federal income tax purposes;
provided, however, that, if the asset has a zero adjusted
basis for federal income tax purposes, depreciation, cost
recovery or amortization deductions shall be determined using
any reasonable method that the General Partner may adopt.
(vi) If the Partnership's adjusted basis in a depreciable or cost
recovery property is reduced for federal income tax purposes
pursuant to Section 48(q)(1) or 48(q)(3) of the Code, the
amount of such reduction shall, solely for purposes hereof, be
deemed to be an additional depreciation or cost recovery
deduction in the year such property is placed in service and
shall be allocated among the Partners pursuant to Section 6.1.
Any restoration of such basis pursuant to Section 48(q)(2) of
the Code shall, to the extent possible, be allocated in the
same manner to the Partners to whom such deemed deduction was
allocated.
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(c) A transferee of a Partnership Interest shall succeed to a pro rata portion
of the Capital Account of the transferor relating to the Partnership Interest so
transferred.
(d) (i) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), on an issuance of additional Partnership Interests for
cash or Contributed Property or the conversion of the General Partner's
Partnership Interest to Common Units pursuant to Section 11.3(a), the Capital
Accounts of all Partners and the Carrying Value of each Partnership property
immediately prior to such issuance shall be adjusted upward or downward to
reflect any Unrealized Gain or Unrealized Loss attributable to such Partnership
property, as if such Unrealized Gain or Unrealized Loss had been recognized on
an actual sale of each such property immediately prior to such issuance and had
been allocated to the Partners at such time pursuant to Section 6.1(c). In
determining such Unrealized Gain or Unrealized Loss, the aggregate cash amount
and fair market value of all Partnership assets (including, without limitation,
cash or cash equivalents) immediately prior to the issuance of additional
Partnership Interests shall be determined by the General Partner using such
reasonable method of valuation as it may adopt; provided, however, that the
General Partner, in arriving at such valuation, must take fully into account the
fair market value of the Partnership Interests of all Partners at such time. The
General Partner shall allocate such aggregate value among the assets of the
Partnership (in such manner as it determines in its discretion to be reasonable)
to arrive at a fair market value for individual properties.
(ii) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), immediately prior to any actual or deemed distribution to
a Partner of any Partnership property (other than a distribution of cash that is
not in redemption or retirement of a Partnership Interest), the Capital Accounts
of all Partners and the Carrying Value of all Partnership property shall be
adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as if such Unrealized Gain or
Unrealized Loss had been recognized in a sale of such property immediately prior
to such distribution for an amount equal to its fair market value, and had been
allocated to the Partners, at such time, pursuant to Section 6.1(c). In
determining such Unrealized Gain or Unrealized Loss the aggregate cash amount
and fair market value of all Partnership assets (including, without limitation,
cash or cash equivalents) immediately prior to a distribution shall (A) in the
case of an actual distribution which is not made pursuant to Section 12.4 or in
the case of a deemed distribution, be determined and allocated in the same
manner as that provided in Section 5.5(d)(i) or (B) in the case of a liquidating
distribution pursuant to Section 12.4, be determined and allocated by the
Liquidator using such reasonable method of valuation as it may adopt.
SECTION 5.6 Loans from Partners.
-------------------
Loans by a Partner to the Partnership shall not constitute Capital
Contributions. If any Partner shall advance funds to the Partnership in excess
of the amounts required hereunder to be contributed by it to the capital of the
Partnership, the making of such excess advances shall not result in any increase
in the amount of the Capital Account of such Partner. The amount of any such
excess advances shall be a debt obligation of the Partnership to such Partner
and shall be payable or collectible only out of the Partnership assets in
accordance with the terms and conditions upon which such advances are made.
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SECTION 5.7 Limited Preemptive Rights.
-------------------------
Except as provided in Section 5.3, no Person shall have preemptive,
preferential or other similar rights with respect to:
(a) additional Capital Contributions;
(b) the issuance or sale of any class or series of Partnership Interests,
whether unissued, held in the treasury or hereafter created;
(c) the issuance of any obligations, evidences of indebtedness or other
securities of the Partnership convertible into or exchangeable for, or carrying
or accompanied by any rights to receive, purchase or subscribe to, any such
Partnership Interests;
(d) the issuance of any right of subscription to or right to receive, or any
warrant or option for the purchase of, any such Partnership Interests; or
(e) the issuance or sale of any other securities that may be issued or sold by
the Partnership.
SECTION 5.8 Fully Paid and Non-Assessable Nature of Partnership Interests.
All Partnership Interests issued to Limited Partners pursuant to, and
in accordance with the requirements of, this Article V shall be fully paid and
non-assessable Partnership Interests, except as such non-assessability may be
affected by Section 17-607 of the Delaware Act.
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
SECTION 6.1 Allocations for Capital Account Purposes.
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For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Section 5.5(b)) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.
(a) Net Income. After giving effect to the special allocations set forth in
Section 6.1(d), Net Income for each taxable year and all items of income, gain,
loss and deduction taken into account in computing Net Income for such taxable
year shall be allocated among the Partners as follows:
(i) First, 100% to the General Partner until the aggregate Net Income
allocated to the General Partner pursuant to this Section 6.1(a)(i) for
the current taxable year and all previous taxable years is equal to the
aggregate Net Losses allocated to the General Partner pursuant to
Section 6.1(b)(ii) for all previous taxable years;
(ii) Second, 1.0101% to the General Partner and 98.9899% to the Limited
Partners, in proportion to their respective Percentage Interests.
(b) Net Losses. After giving effect to the special allocations set forth in
Section 6.1(d), Net Losses for each taxable period and all items of income,
gain, loss and deduction taken into account in computing Net Losses for such
taxable period shall be allocated among the Partners as follows:
(i) First, 1.0101% to the General Partner, and 98.9899% to the Limited
Partners, in accordance with their respective Percentage Interests; provided,
however, that Net Losses shall not be allocated to a Limited Partner pursuant to
this Section 6.1(b)(i) to the extent that such allocation would cause a Limited
Partner to have a deficit balance in its Adjusted Capital Account at the end of
such taxable year (or increase any existing deficit balance in such Limited
Partner's Adjusted Capital Account);
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(ii) Second, the balance, if any, 100% to the General Partner.
(c) Net Termination Gains and Losses. After giving effect to the special
allocations set forth in Section 6.1(d), all items of income, gain, loss and
deduction taken into account in computing Net Termination Gain or Net
Termination Loss for such taxable period shall be allocated in the same manner
as such Net Termination Gain or Net Termination Loss is allocated hereunder. All
allocations under this Section 6.1(c) shall be made after Capital Account
balances have been adjusted by all other allocations provided under this Section
6.1 and after all distributions of Available Cash provided under Section 6.4
have been made with respect to the taxable period ending on or before the
Liquidation Date; provided, however, that solely for purposes of this Section
6.1(c), Capital Accounts shall not be adjusted for distributions made pursuant
to Section 12.4.
(i) If a Net Termination Gain is recognized (or deemed recognized
pursuant to Section 5.5(d)), such Net Termination Gain shall be allocated among
the Partners in the following manner (and the Capital Accounts of the Partners
shall be increased by the amount so allocated in each of the following
subclauses, in the order listed, before an allocation is made pursuant to the
next succeeding subclause):
(A) First, to each Partner having a deficit balance in its Capital
Account, in the proportion that such deficit balance bears to
the total deficit balances in the Capital Accounts of all
Partners, until each such Partner has been allocated Net
Termination Gain equal to any such deficit balance in its
Capital Account;
(B) Second, 100% to the Limited Partners in proportion to their
respective Percentage Interests, until the Limited Partners
have been allocated an amount of Net Termination Gain pursuant
to this Section 6.1(c)(i)(B) equal to the total amount of
income or gain previously allocated to the General Partner
pursuant to Section 6.1(d)(x); and
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(C) Third, 1.0101% to the General Partner and 98.9899% to the
Limited Partners, in proportion to their respective Percentage
Interests.
(ii) If a Net Termination Loss is recognized (or deemed recognized
pursuant to Section 5.5(d)), such Net Termination Loss shall be allocated among
the Partners in the following manner:
(A) First, to the General Partner and the Limited Partners in
proportion to, and to the extent of, the positive balances in
their respective Capital Accounts; and
(B) Second, the balance, if any, 100% to the General Partner.
(d) Special Allocations. Notwithstanding any other provision of this
Section 6.1, the following special allocations shall be made for such taxable
period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding any other
provision of this Section 6.1, if there is a net decrease in Partnership Minimum
Gain during any Partnership taxable period, each Partner shall be allocated
items of Partnership income and gain for such period (and, if necessary,
subsequent periods) in the manner and amounts provided in Treasury Regulation
Sections 1.704-2(f)(6), 1.704-2(g)(2) and 1.704-2(j)(2)(i), or any successor
provision. For purposes of this Section 6.1(d), each Partner's Adjusted Capital
Account balance shall be determined, and the allocation of income or gain
required hereunder shall be effected, prior to the application of any other
allocations pursuant to this Section 6.1(d) with respect to such taxable period
(other than an allocation pursuant to Sections 6.1(d)(v) and 6.1(d)(vi)). This
Section 6.1(d)(i) is intended to comply with the Partnership Minimum Gain
chargeback requirement in Treasury Regulation Section 1.704- 2(f) and shall be
interpreted consistently therewith.
(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain.
Notwithstanding the other provisions of this Section 6.1 (other than Section
6.1(d)(i)), except as provided in Treasury Regulation Section 1.704-2(i)(4), if
there is a net decrease in Partner Nonrecourse Debt Minimum Gain during any
Partnership taxable period, any Partner with a share of Partner Nonrecourse Debt
Minimum Gain at the beginning of such taxable period shall be allocated items of
Partnership income and gain for such period (and, if necessary, subsequent
periods) in the manner and amounts provided in Treasury Regulation Sections
1.704-2(i)(4) and 1.704-2(j)(2)(ii), or any successor provisions. For purposes
of this Section 6.1(d), each Partner's Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required hereunder shall be
effected, prior to the application of any other allocations pursuant to this
Section 6.1(d), other than Section 6.1(d)(i) and other than an allocation
pursuant to Sections 6.1(d)(v) and 6.1(d)(vi), with respect to such taxable
period. This Section 6.1(d)(ii) is intended to comply with the chargeback of
items of income and gain requirement in Treasury Regulation Section
1.704-2(i)(4) and shall be interpreted consistently therewith.
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(iii) Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Treasury
Regulation Sections 1.704- 1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
allocated to such Partner in an amount and manner sufficient to eliminate, to
the extent required by the Treasury Regulations promulgated under Section 704(b)
of the Code, the deficit balance, if any, in its Adjusted Capital Account
created by such adjustments, allocations or distributions as quickly as possible
unless such deficit balance is otherwise eliminated pursuant to Section
6.1(d)(i) or (ii).
(iv) Gross Income Allocations. In the event any Partner has a deficit
balance in its Capital Account at the end of any Partnership taxable period in
excess of the sum of (A) the amount such Partner is required to restore pursuant
to the provisions of this Agreement and (B) the amount such Partner is deemed
obligated to restore pursuant to Treasury Regulation Sections 1.704-2(g) and
1.704-2(i)(5), such Partner shall be specially allocated items of Partnership
gross income and gain in the amount of such excess as quickly as possible;
provided, that an allocation pursuant to this Section 6.1(d)(iv) shall be made
only if and to the extent that such Partner would have a deficit balance in its
Capital Account as adjusted after all other allocations provided for in this
Section 6.1 have been tentatively made as if this Section 6.1(d)(iv) were not in
this Agreement.
(v) Nonrecourse Deductions. Nonrecourse Deductions for any taxable
period shall be allocated to the Partners in accordance with their respective
Percentage Interests. If the General Partner determines in its good faith
discretion that the Partnership's Nonrecourse Deductions must be allocated in a
different ratio to satisfy the safe harbor requirements of the Treasury
Regulations promulgated under Section 704(b) of the Code, the General Partner is
authorized, upon notice to the other Partners, to revise the prescribed ratio to
the numerically closest ratio that does satisfy such requirements.
(vi) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for
any taxable period shall be allocated 100% to the Partner that bears the
Economic Risk of Loss with respect to the Partner Nonrecourse Debt to which such
Partner Nonrecourse Deductions are attributable in accordance with Treasury
Regulation Section 1.704-2(i). If more than one Partner bears the Economic Risk
of Loss with respect to a Partner Nonrecourse Debt, such Partner Nonrecourse
Deductions attributable thereto shall be allocated between or among such
Partners in accordance with the ratios in which they share such Economic Risk of
Loss.
(vii) Nonrecourse Liabilities. For purposes of Treasury Regulation
Section 1.752- 3(a)(3), the Partners agree that Nonrecourse Liabilities of the
Partnership in excess of the sum of (A) the amount of Partnership Minimum Gain
and (B) the total amount of Nonrecourse Built-in Gain shall be allocated among
the Partners in accordance with their respective Percentage Interests.
(viii) Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(c)
of the Code is required, pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis), and such item of gain or loss shall be
specially allocated to the Partners in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted pursuant to such
Section of the Treasury Regulations.
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(ix) Curative Allocation. (A) Notwithstanding any other provision of
this Section 6.1, other than the Required Allocations, the Required Allocations
shall be taken into account in making the Agreed Allocations so that, to the
extent possible, the net amount of items of income, gain, loss and deduction
allocated to each Partner pursuant to the Required Allocations and the Agreed
Allocations, together, shall be equal to the net amount of such items that would
have been allocated to each such Partner under the Agreed Allocations had the
Required Allocations and the related Curative Allocation not otherwise been
provided in this Section 6.1. Notwithstanding the preceding sentence, Required
Allocations relating to (1) Nonrecourse Deductions shall not be taken into
account except to the extent that there has been a decrease in Partnership
Minimum Gain and (2) Partner Nonrecourse Deductions shall not be taken into
account except to the extent that there has been a decrease in Partner
Nonrecourse Debt Minimum Gain. Allocations pursuant to this Section
6.1(d)(ix)(A) shall only be made with respect to Required Allocations to the
extent the General Partner reasonably determines that such allocations will
otherwise be inconsistent with the economic agreement among the Partners.
Further, allocations pursuant to this Section 6.1(d)(ix)(A) shall be deferred
with respect to allocations pursuant to clauses (1) and (2) hereof to the extent
the General Partner reasonably determines that such allocations are likely to be
offset by subsequent Required Allocations.
(B) The General Partner shall have reasonable discretion, with
respect to each taxable period, to (1) apply the provisions of
Section 6.1(d)(ix)(A) in whatever order is most likely to
minimize the economic distortions that might otherwise result
from the Required Allocations, and (2) divide all allocations
pursuant to Section 6.1(d)(ix)(A) among the Partners in a
manner that is likely to minimize such economic distortions.
(x) Special Allocation of Income. For the 2000 taxable year, the
General Partner was allocated $2,778,000 of partnership items of gross income
and gain with respect to its General Partner Interest which would otherwise have
been allocated to the Limited Partners. For the 2001 taxable year, the General
Partner was allocated $1,603,000 of partnership items of gross income and gain
with respect to its General Partner Interest which would otherwise have been
allocated to the Limited Partners.
SECTION 6.2 Allocations for Tax Purposes.
----------------------------
(a) Except as otherwise provided herein, for federal income tax
purposes, each item of income, gain, loss and deduction shall be allocated among
the Partners in the same manner as its correlative item of "book" income, gain,
loss or deduction is allocated pursuant to Section 6.1.
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(b) In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated for
federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in
the manner provided under Section 704(c) of the Code that
takes into account the variation between the Agreed Value of
such property and its adjusted basis at the time of
contribution; and (B) any item of Residual Gain or Residual
Loss attributable to a Contributed Property shall be allocated
among the Partners in the same manner as its correlative item
of "book" gain or loss is allocated pursuant to Section 6.1.
(ii) (A) In the case of an Adjusted Property, such items shall (1)
first, be allocated among the Partners in a manner consistent
with the principles of Section 704(c) of the Code to take into
account the Unrealized Gain or Unrealized Loss attributable to
such property and the allocations thereof pursuant to Sections
5.5(d)(i) or 5.5(d)(ii), and (2) second, in the event such
property was originally a Contributed Property, be allocated
among the Partners in a manner consistent with Section
6.2(b)(i)(A); and (B) any item of Residual Gain or Residual
Loss attributable to an Adjusted Property shall be allocated
among the Partners in the same manner as its correlative item
of "book" gain or loss is allocated pursuant to Section 6.1.
(iii) The General Partner shall apply the principles of Treasury
Regulation Section 1.704-3(d) to eliminate Book-Tax
Disparities.
(c) For the proper administration of the Partnership and for the
preservation of uniformity of the Units or other limited partner interests of
the MLP (or any class or classes thereof), the General Partner shall have sole
discretion to (i) adopt such conventions as it deems appropriate in determining
the amount of depreciation, amortization and cost recovery deductions; (ii) make
special allocations for federal income tax purposes of income (including,
without limitation, gross income) or deductions; and (iii) amend the provisions
of this Agreement as appropriate (x) to reflect the proposal or promulgation of
Treasury Regulations under Section 704(b) or Section 704(c) of the Code or (y)
otherwise to preserve or achieve uniformity of the Units or other limited
partner interests of the MLP (or any class or classes thereof). The General
Partner may adopt such conventions, make such allocations and make such
amendments to this Agreement as provided in this Section 6.2(c) only if such
conventions, allocations or amendments would not have a material adverse effect
on the Partners, the holders of any class or classes of Units or other limited
partner interests of the MLP issued and outstanding or the Partnership and if
such allocations are consistent with the principles of Section 704 of the Code.
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(d) The General Partner in its discretion may determine to depreciate
or amortize the portion of an adjustment under Section 743(b) of the Code
attributable to unrealized appreciation in any Adjusted Property (to the extent
of the unamortized Book-Tax Disparity) using a predetermined rate derived from
the depreciation or amortization method and useful life applied to the
Partnership's common basis of such property, despite any inconsistency of such
approach with Treasury Regulation Section 1.167(c)-l(a)(6), Proposed Treasury
Regulation 1.197-2(g)(3), or any successor regulations thereto. If the General
Partner determines that such reporting position cannot reasonably be taken, the
General Partner may adopt depreciation and amortization conventions under which
all purchasers acquiring limited partner interests of the MLP in the same month
would receive depreciation and amortization deductions, based upon the same
applicable rate as if they had purchased a direct interest in the Partnership's
property. If the General Partner chooses not to utilize such aggregate method,
the General Partner may use any other reasonable depreciation and amortization
conventions to preserve the uniformity of the intrinsic tax characteristics of
any limited partner interests of the MLP that would not have a material adverse
effect on the Partners or the holders of any class or classes of limited partner
interests of the MLP.
(e) Any gain allocated to the Partners upon the sale or other taxable
disposition of any Partnership asset shall, to the extent possible, after taking
into account other required allocations of gain pursuant to this Section 6.2, be
characterized as Recapture Income in the same proportions and to the same extent
as such Partners (or their predecessors in interest) have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.
(f) All items of income, gain, loss, deduction and credit recognized by
the Partnership for federal income tax purposes and allocated to the Partners in
accordance with the provisions hereof shall be determined without regard to any
election under Section 754 of the Code which may be made by the Partnership;
provided, however, that such allocations, once made, shall be adjusted as
necessary or appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
(g) The General Partner may adopt such methods of allocation of income,
gain, loss or deduction between a transferor and a transferee of a Partnership
Interest as it determines necessary, to the extent permitted or required by
Section 706 of the Code and the regulations or rulings promulgated thereunder.
(h) Allocations that would otherwise be made to a Partner under the
provisions of this Article VI shall instead be made to the beneficial owner of
Partnership Interests held by a nominee in any case in which the nominee has
furnished the identity of such owner to the Partnership in accordance with
Section 6031(c) of the Code or any other method acceptable to the General
Partner in its sole discretion.
SECTION 6.3 Distributions.
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(a) Within 45 days following the end of each Quarter commencing with
the Quarter ending on September 30, 1999, an amount equal to 100% of Available
Cash with respect to such Quarter shall, subject to Section 17-607 of the
Delaware Act, be distributed in accordance with this Article VI by the
Partnership to the Partners in accordance with their respective Percentage
Interests. The immediately preceding sentence shall not require any distribution
of cash if and to the extent such distribution would be prohibited by applicable
law or by any loan agreement, security agreement, mortgage, debt instrument or
other agreement or obligation to which the Partnership is a party or by which it
is bound or its assets are subject. All distributions required to be made under
this Agreement shall be made subject to Section 17-607 of the Delaware Act.
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(b) In the event of the dissolution and liquidation of the Partnership,
all receipts received during or after the Quarter in which the Liquidation Date
occurs, other than from borrowings described in (a)(ii) of the definition of
Available Cash, shall be applied and distributed solely in accordance with, and
subject to the terms and conditions of, Section 12.4.
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
SECTION 7.1 Management.
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(a) The General Partner shall conduct, direct and manage all activities
of the Partnership in a manner that the General Partner determines is in the
best interest of the MLP. Except as otherwise expressly provided in this
Agreement, all management powers over the business and affairs of the
Partnership shall be exclusively vested in the General Partner, and neither the
Limited Partner nor any Assignee shall have any management power over the
business and affairs of the Partnership. In addition to the powers now or
hereafter granted a general partner of a limited partnership under applicable
law or which are granted to the General Partner under any other provision of
this Agreement, the General Partner, subject to Section 7.3, shall have full
power and authority to do all things and on such terms as it, in its sole
discretion, may deem necessary or appropriate to conduct the business of the
Partnership, to exercise all powers set forth in Section 2.5 and to effectuate
the purposes set forth in Section 2.4, including the following:
(i) the making of any expenditures, the lending or borrowing of
money, the assumption or guarantee of, or other contracting
for, indebtedness and other liabilities, the issuance of
evidences of indebtedness, including indebtedness that is
convertible into a Partnership Interest, and the incurring of
any other obligations;
(ii) the making of tax, regulatory and other filings, or rendering
of periodic or other reports to governmental or other agencies
having jurisdiction over the business or assets of the
Partnership;
(iii) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any or all of the assets of the
Partnership or the merger or other combination of the
Partnership with or into another Person (the matters described
in this clause (iii) being subject, however, to any prior
approval that may be required by Section 7.3);
(iv) the use of the assets of the Partnership (including cash on
hand) for any purpose consistent with the terms of this
Agreement, including the financing of the conduct of the
operations of the Partnership Group, subject to Section 7.6,
the lending of funds to other Persons (including the MLP and
any member of the Partnership Group), the repayment of
obligations of the MLP or any member of the Partnership Group
and the making of capital contributions to any member of the
Partnership Group;
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(v) the negotiation, execution and performance of any contracts,
conveyances or other instruments (including instruments that
limit the liability of the Partnership under contractual
arrangements to all or particular assets of the Partnership,
with the other party to the contract to have no recourse
against the General Partner or its assets other than its
interests in the Partnership, even if same results in the
terms of the transaction being less favorable to the
Partnership than would otherwise be the case);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees (including employees
having titles such as "president," "vice president,"
"secretary" and "treasurer") and agents, outside attorneys,
accountants, consultants and contractors and the determination
of their compensation and other terms of employment or hiring;
(viii) the maintenance of such insurance for the benefit of the
Partnership Group and the Partners as it deems necessary or
appropriate;
(ix) the formation of, or acquisition of an interest in, and the
contribution of property and the making of loans to, any
further limited or general partnerships, joint ventures,
corporations, limited liability companies or other
relationships (including the acquisition of interests in, and
the contributions of property to, any Operating Subsidiary
from time to time) subject to the restrictions set forth in
Section 2.4;
(x) the control of any matters affecting the rights and
obligations of the Partnership, including the bringing and
defending of actions at law or in equity and otherwise
engaging in the conduct of litigation and the incurring of
legal expense and the settlement of claims and litigation; and
(xi) the indemnification of any Person against liabilities and
contingencies to the extent permitted by law.
(xii) the undertaking of any action in connection with the
Partnership's participation in any Operating Subsidiary as a
member, partner, participant or shareholder, as applicable.
(b) Notwithstanding any other provision of this Agreement, the MLP
Agreement, the Delaware Act or any applicable law, rule or regulation, each of
the Partners and Assignees and each other Person who may acquire a Partnership
Interest hereby:
(i) approves, ratifies and confirms the execution, delivery and
performance by the parties thereto of this Agreement, the MLP
Agreement, the Underwriting Agreement, the Initial
Contribution Agreement, the Contribution Agreement and the
other agreements and documents described in or filed as
exhibits to the Registration Statement that are related to the
transactions contemplated by the Registration Statement;
(ii) agrees that the General Partner (on its own or through any
officer of the Partnership) is authorized to execute, deliver
and perform the agreements referred to in clause (i) of this
sentence and the other agreements, acts, transactions and
matters described in or contemplated by the Registration
Statement on behalf of the Partnership without any further
act, approval or vote of the Partners or the Assignees or the
other Persons who may acquire an interest in the Partnership;
and
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(iii) agrees that the execution, delivery or performance by the
General Partner, the MLP, any Group Member or any Affiliate of
any of them, of this Agreement or any agreement authorized or
permitted under this Agreement (including the exercise by the
General Partner or any Affiliate of the General Partner of the
rights accorded pursuant to Article XV), shall not constitute
a breach by the General Partner of any duty that they may owe
the Partnership or the Limited Partners or any other Persons
under this Agreement (or any other agreements) or of any duty
stated or implied by law or equity.
SECTION 7.2 Certificate of Limited Partnership.
----------------------------------
The General Partner has caused the Certificate of Limited Partnership
to be filed with the Secretary of State of the State of Delaware as required by
the Delaware Act and shall use all reasonable efforts to cause to be filed such
other certificates or documents as may be determined by the General Partner in
its sole discretion to be reasonable and necessary or appropriate for the
formation, continuation, qualification and operation of a limited partnership
(or a partnership in which the limited partners have limited liability) in the
State of Delaware or any other state in which the Partnership may elect to do
business or own property. To the extent that such action is determined by the
General Partner in its sole discretion to be reasonable and necessary or
appropriate, the General Partner shall file amendments to and restatements of
the Certificate of Limited Partnership and do all things to maintain the
Partnership as a limited partnership (or a partnership or other entity in which
the limited partners have limited liability) under the laws of the State of
Delaware or of any other state in which the Partnership may elect to do business
or own property. Subject to the terms of Section 3.4(a), the General Partner
shall not be required, before or after filing, to deliver or mail a copy of the
Certificate of Limited Partnership, any qualification document or any amendment
thereto to any Limited Partner or Assignee.
SECTION 7.3 Restrictions on General Partner's Authority.
-------------------------------------------
(a) The General Partner may not, without written approval of the
specific act by the Limited Partners or by other written instrument executed and
delivered by the Limited Partners subsequent to the date of this Agreement, take
any action in contravention of this Agreement, including, except as otherwise
provided in this Agreement, (i) committing any act that would make it impossible
to carry on the ordinary business of the Partnership; (ii) possessing
Partnership property, or assigning any rights in specific Partnership property,
for other than a Partnership purpose; (iii) admitting a Person as a Partner;
(iv) amending this Agreement in any manner or (v) transferring its General
Partner Interest.
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(b) Except as provided in Articles XII and XIV, the General Partner may
not sell, exchange or otherwise dispose of all or substantially all of the
Partnership's assets in a single transaction or a series of related transactions
(including by way of merger, consolidation or other combination) or approve on
behalf of the Partnership the sale, exchange or other disposition of all or
substantially all of the assets of the Partnership, without the approval of the
Limited Partners; provided, however, that this provision shall not preclude or
limit the General Partner's ability to mortgage, pledge, hypothecate or grant a
security interest in all or substantially all of the assets of the Partnership
and shall not apply to any forced sale of any or all of the assets of the
Partnership pursuant to the foreclosure of, or other realization upon, any such
encumbrance. Without the approval of at least a Unit Majority, the General
Partner shall not, on behalf of the MLP, (i) consent to any amendment to this
Agreement or, except as expressly permitted by Section 7.9(d) of the MLP
Agreement, take any action permitted to be taken by a Partner, in either case,
that would have a material adverse effect on the MLP as a Partner or (ii) except
as permitted under Sections 4.6, 11.1 or 11.2 of the MLP Agreement, elect or
cause the MLP to elect a successor general partner of the Partnership.
SECTION 7.4 Reimbursement of the General Partner.
------------------------------------
(a) Except as provided in this Section 7.4 and elsewhere in this Agreement or in
the MLP Agreement, the General Partner shall not be compensated for its services
as General Partner, general partner of the MLP or as a general partner or
managing member of any Group Member.
(b) The General Partner shall be reimbursed on a monthly basis, or such other
reasonable basis as the General Partner may determine in its sole discretion,
for (i) all direct and indirect expenses it incurs or payments it makes on
behalf of the Partnership (including salary, bonus, incentive compensation and
other amounts paid to any Person including Affiliates of such General Partner to
perform services for the Partnership or for such General Partner in the
discharge of its duties to the Partnership), and (ii) all other necessary or
appropriate expenses allocable to the Partnership or otherwise reasonably
incurred by such General Partner in connection with operating the Partnership's
business (including expenses allocated to such General Partner by its
Affiliates). The General Partner shall determine the expenses that are allocable
to the Partnership in any reasonable manner determined by the General Partner in
its sole discretion. Reimbursements pursuant to this Section 7.4 shall be in
addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 7.7.
SECTION 7.5 Outside Activities.
------------------
(a) After the Initial Closing Date, the General Partner, for so long as it is
the General Partner of the Partnership:
(i) agrees that its sole business will be to act as the general
partner of the Partnership, the general partner of the MLP,
and a general partner, managing member, or shareholder of any
other partnership, limited liability company or corporation of
which the Partnership or the MLP is, directly or indirectly, a
partner, member or shareholder, as the case may be, and to
undertake activities that are ancillary or related thereto
(including being a limited partner in the MLP); and
(ii) shall not engage in any business or activity or incur any
debts or liabilities except in connection with or incidental
to (A) its performance as general partner or managing member,
as the case may be, of the Partnership, the MLP or one or more
Group Members or as described in or contemplated by the
Registration Statement or (B) the acquiring, owning or
disposing of debt or equity securities in any Group Member.
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(b) Except as specifically restricted by Section 7.5(a), each
Indemnitee (other than the General Partner) shall have the right to engage in
businesses of every type and description and other activities for profit and to
engage in and possess an interest in other business ventures of any and every
type or description, whether in businesses engaged in or anticipated to be
engaged in by the MLP or any Group Member, independently or with others,
including business interests and activities in direct competition with the
business and activities of the MLP or any Group Member, and none of the same
shall constitute a breach of this Agreement or any duty express or implied by
law to the MLP or any Group Member or any Partner or Assignee. Neither the MLP
nor any Group Member, any Limited Partner, nor any other Person shall have any
rights by virtue of this Agreement, the MLP Agreement or the partnership
relationship established hereby or thereby in any business ventures of any
Indemnitee.
(c) Subject to the terms of Section 7.5(a) and Section 7.5(b), but
otherwise notwithstanding anything to the contrary in this Agreement, (i) the
engaging in competitive activities by any Indemnitees (other than the General
Partner) in accordance with the provisions of this Section 7.5 is hereby
approved by the Partnership and all Partners, (ii) it shall be deemed not to be
a breach of the General Partner's fiduciary duty or any other obligation of any
type whatsoever of the General Partner for the Indemnitees (other than the
General Partner) to engage in such business interests and activities in
preference to or to the exclusion of the Partnership and (iii) the General
Partner and the Indemnities shall have no obligation to present business
opportunities to the Partnership.
(d) The General Partner and any of its Affiliates may acquire Units or
other MLP Securities in addition to those acquired on the Initial Closing Date
and, except as otherwise provided in this Agreement, shall be entitled to
exercise all rights relating to such Units or MLP Securities.
(e) The term "Affiliates" when used in Section 7.5(a) and Section
7.5(e) with respect to the General Partner shall not include any Group Member or
any Subsidiary of the MLP or any Group Member.
(f) Anything in this Agreement to the contrary notwithstanding, to the
extent that provisions of Sections 7.7, 7.8, 7.9, 7.10 or other Sections of this
Agreement purport or are interpreted to have the effect of restricting the
fiduciary duties that might otherwise, as a result of Delaware or other
applicable law, be owed by the General Partner to the Partnership and its
Limited Partners, or to constitute a waiver or consent by the Limited Partners
to any such restriction, such provisions shall be inapplicable and have no
effect in determining whether the General Partner has complied with its
fiduciary duties in connection with determinations made by it under this Section
7.5.
SECTION 7.6 Loans from the General Partner; Loans or Contributions from
the Partnership; Contracts with Affiliates; Certain Restrictions on the General
Partner.
(a) The General Partner or any of its Affiliates may lend to the MLP or
any Group Member, and the MLP or any Group Member may borrow from the General
Partner or any of its Affiliates, funds needed or desired by the MLP or the
Group Member for such periods of time and in such amounts as the General Partner
may determine; provided, however, that in any such case the lending party may
not charge the borrowing party interest at a rate greater than the rate that
would be charged the borrowing party or impose terms less favorable to the
borrowing party than would be charged or imposed on the borrowing party by
unrelated lenders on comparable loans made on an arm's-length basis (without
reference to the lending party's financial abilities or guarantees). The
borrowing party shall reimburse the lending party for any costs (other than any
additional interest costs) incurred by the lending party in connection with the
borrowing of such funds. For purposes of this Section 7.6(a) and Section 7.6(b),
the term "Group Member" shall include any Affiliate of a Group Member that is
controlled by the Group Member. No Group Member may lend funds to the General
Partner or any of its Affiliates (other than the MLP, a Subsidiary of the MLP or
a Subsidiary of another Group Member).
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(b) The Partnership may lend or contribute to any Group Member, and any
Group Member may borrow from the Partnership, funds on terms and conditions
established in the sole discretion of the General Partner; provided, however,
that the Partnership may not charge the Group Member interest at a rate less
than the rate that would be charged to the Group Member (without reference to
the General Partner's financial abilities or guarantees) by unrelated lenders on
comparable loans. The foregoing authority shall be exercised by the General
Partner in its sole discretion and shall not create any right or benefit in
favor of any Group Member or any other Person.
(c) The General Partner may itself, or may enter into an agreement with
any of its Affiliates to, render services to a Group Member or to the General
Partner in the discharge of its duties as the general partner of the
Partnership. Any services rendered to a Group Member by the General Partner or
any of its Affiliates shall be on terms that are fair and reasonable to the
Partnership; provided, however, that the requirements of this Section 7.6(c)
shall be deemed satisfied as to (i) any transaction approved by Special
Approval, (ii) any transaction, the terms of which are no less favorable to the
Partnership Group than those generally being provided to or available from
unrelated third parties or (iii) any transaction that, taking into account the
totality of the relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to the
Partnership Group), is equitable to the Partnership Group. The provisions of
Section 7.4 shall apply to the rendering of services described in this Section
7.6(c).
(d) The Partnership Group may transfer assets to joint ventures, other
partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.
(e) Neither the General Partner nor any of its Affiliates shall sell,
transfer or convey any property to, or purchase any property from, the
Partnership, directly or indirectly, except pursuant to transactions that are
fair and reasonable to the Partnership; provided, however, that the requirements
of this Section 7.6(e) shall be deemed to be satisfied as to (i) the
transactions effected pursuant to Sections 5.2 and 5.3, the Initial Contribution
Agreement, the Contribution Agreement and any other transactions described in or
contemplated by the Registration Statement, (ii) any transaction approved by
Special Approval, (iii) any transaction, the terms of which are no less
favorable to the Partnership than those generally being provided to or available
from unrelated third parties, or (iv) any transaction that, taking into account
the totality of the relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to the
Partnership), is equitable to the Partnership.
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(f) The General Partner and its Affiliates will have no obligation to
permit any Group Member to use any facilities or assets of the General Partner
and its Affiliates, except as may be provided in contracts entered into from
time to time specifically dealing with such use, nor shall there be any
obligation on the part of the General Partner or its Affiliates to enter into
such contracts.
(g) Without limitation of Sections 7.6(a) through 7.6(f), and
notwithstanding anything to the contrary in this Agreement, the existence of the
conflicts of interest described in the Registration Statement are hereby
approved by all Partners.
SECTION 7.7 Indemnification.
---------------
(a) To the fullest extent permitted by law but subject to the
limitations expressly provided in this Agreement, all Indemnitees shall be
indemnified and held harmless by the Partnership from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest, settlements and
other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, in which
any Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, by reason of its status as an Indemnitee; provided, that in each case
the Indemnitee acted in good faith and in a manner that such Indemnitee
reasonably believed to be in, or not opposed to, the best interests of the
Partnership and, with respect to any criminal proceeding, had no reasonable
cause to believe its conduct was unlawful; provided, further, no indemnification
pursuant to this Section 7.7 shall be available to the General Partner with
respect to its obligations incurred pursuant to the Underwriting Agreement, the
Initial Contribution Agreement and the Contribution Agreement (other than
obligations incurred by the General Partner on behalf of the MLP, the
Partnership or any Operating Subsidiary). The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that the
Indemnitee acted in a manner contrary to that specified above. Any
indemnification pursuant to this Section 7.7 shall be made only out of the
assets of the Partnership, it being agreed that the General Partner shall not be
personally liable for such indemnification and shall have no obligation to
contribute or loan any monies or property to the Partnership to enable it to
effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including legal
fees and expenses) incurred by an Indemnitee who is indemnified pursuant to
Section 7.7(a) in defending any claim, demand, action, suit or proceeding shall,
from time to time, be advanced by the Partnership prior to the final disposition
of such claim, demand, action, suit or proceeding upon receipt by the
Partnership of any undertaking by or on behalf of the Indemnitee to repay such
amount if it shall be determined that the Indemnitee is not entitled to be
indemnified as authorized in this Section 7.7.
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(c) The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, both as to actions in the Indemnitee's capacity as an Indemnitee and
as to actions in any other capacity (including any capacity under the
Underwriting Agreement), and shall continue as to an Indemnitee who has ceased
to serve in such capacity and shall inure to the benefit of the heirs,
successors, assigns and administrators of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the General
Partner or its Affiliates for the cost of) insurance, on behalf of the General
Partner, its Affiliates and such other Persons as the General Partner shall
determine, against any liability that may be asserted against or expense that
may be incurred by such Person in connection with the Partnership's activities
or such Person's activities on behalf of the Partnership, regardless of whether
the Partnership would have the power to indemnify such Person against such
liability under the provisions of this Agreement.
(e) For purposes of this Section 7.7, the Partnership shall be deemed
to have requested an Indemnitee to serve as fiduciary of an employee benefit
plan whenever the performance by it of its duties to the Partnership also
imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute "fines" within the meaning of Section 7.7(a); and action taken
or omitted by it with respect to any employee benefit plan in the performance of
its duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is in, or not opposed to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 7.7 or any
provision hereof shall in any manner terminate, reduce or impair the right of
any past, present or future Indemnitee to be indemnified by the Partnership, nor
the obligations of the Partnership to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 7.7 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
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SECTION 7.8 Liability of Indemnitees.
------------------------
(a) Notwithstanding anything to the contrary set forth in this
Agreement, no Indemnitee shall be liable for monetary damages to the
Partnership, the Limited Partners, the Assignees or any other Persons who have
acquired interests in the Partnership, Common Units or other MLP Securities, for
losses sustained or liabilities incurred as a result of any act or omission if
such Indemnitee acted in good faith.
(b) Subject to its obligations and duties as General Partner set forth
in Section 7.1(a), the General Partner may exercise any of the powers granted to
it by this Agreement and perform any of the duties imposed upon it hereunder
either directly or by or through its agents, and the General Partner shall not
be responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.
(c) To the extent that, at law or in equity, an Indemnitee has duties
(including fiduciary duties) and liabilities relating thereto to the Partnership
or to the Limited Partners, the General Partner and any other Indemnitee acting
in connection with the Partnership's business or affairs shall not be liable to
the Partnership or to any Partner for its good faith reliance on the provisions
of this Agreement. The provisions of this Agreement, to the extent that they
restrict or otherwise modify the duties and liabilities of an Indemnitee
otherwise existing at law or in equity, are agreed by the Partners to replace
such other duties and liabilities of such Indemnitee.
(d) Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability to the Partnership, the Limited Partners, the
General Partner, and the Partnership's and General Partner's directors, officers
and employees under this Section 7.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.
SECTION 7.9 Resolution of Conflicts of Interest.
-----------------------------------
(a) Unless otherwise expressly provided in this Agreement or the MLP
Agreement, whenever a potential conflict of interest exists or arises between
the General Partner or any of its Affiliates, on the one hand, and the
Partnership, the MLP, any Operating Subsidiary, any Partner or any Assignee, on
the other, any resolution or course of action by the General Partner or its
Affiliates in respect of such conflict of interest shall be permitted and deemed
approved by all Partners, and shall not constitute a breach of this Agreement of
the MLP Agreement, of any Operating Subsidiary Agreement, of any agreement
contemplated herein or therein, or of any duty stated or implied by law or
equity, if the resolution or course of action is, or by operation of this
Agreement is deemed to be, fair and reasonable to the Partnership. The General
Partner shall be authorized but not required in connection with its resolution
of such conflict of interest to seek Special Approval of such resolution. Any
conflict of interest and any resolution of such conflict of interest shall be
conclusively deemed fair and reasonable to the Partnership if such conflict of
interest or resolution is:
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(i) approved by Special Approval (as long as the material facts
known to the General Partner or any of its Affiliates
regarding any proposed transaction were disclosed to the
Conflicts Committee at the time it gave its approval);
(ii) on terms no less favorable to the Partnership than those
generally being provided to or available from unrelated third
parties; or
(iii) fair to the Partnership, taking into account the totality of
the relationships between the parties involved (including
other transactions that may be particularly favorable or
advantageous to the Partnership).
(b) The General Partner may also adopt a resolution or course of action
that has not received Special Approval. The General Partner (including the
Conflicts Committee in connection with Special Approval) shall be authorized in
connection with its determination of what is "fair and reasonable" to the
Partnership and in connection with its resolution of any conflict of interest to
consider:
(i) the relative interests of any party to such conflict,
agreement, transaction or situation and the benefits and
burdens relating to such interest;
(ii) any customary or accepted industry practices and any customary
or historical dealings with a particular Person;
(iii) any applicable generally accepted accounting practices or
principles; and
(iv) such additional factors as the General Partner (including the
Conflicts Committee) determines in its sole discretion to be
relevant, reasonable or appropriate under the circumstances.
Nothing contained in this Agreement, however, is intended to
nor shall it be construed to require the General Partner
(including the Conflicts Committee) to consider the interests
of any Person other than the Partnership.
In the absence of bad faith by the General Partner, the resolution, action or
terms so made, taken or provided by the General Partner with respect to such
matter shall not constitute a breach of this Agreement or any other agreement
contemplated herein or a breach of any standard of care or duty imposed herein
or therein or, to the extent permitted by law, under the Delaware Act or any
other law, rule or regulation.
(c) Whenever this Agreement or any other agreement contemplated hereby
provides that the General Partner or any of its Affiliates is permitted or
required to make a decision:
(i) in its "sole discretion" or "discretion," that it deems
"necessary or appropriate" or "necessary or advisable" or
under a grant of similar authority or latitude, except as
otherwise provided herein, the General Partner or such
Affiliate shall be entitled to consider only such interests
and factors as it desires and shall have no duty or obligation
to give any consideration to any interest of, or factors
affecting, the Partnership, the MLP, any Limited Partner or
any Assignee;
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(ii) it may make such decision in its sole discretion (regardless
of whether there is a reference to "sole discretion" or
"discretion") unless another express standard is provided for;
or
(iii) in "good faith" or under another express standard, the General
Partner or such Affiliate shall act under such express
standard and shall not be subject to any other or different
standards imposed by this Agreement, the MLP Agreement, the
Operating Subsidiary Agreement any other agreement
contemplated hereby or under the Delaware Act or any other
law, rule or regulation.
(d) In addition, any actions taken by the General Partner or such
Affiliate consistent with the standards of "reasonable discretion" set forth in
the definition of Available Cash shall not constitute a breach of any duty of
the General Partner to the Partnership or the Limited Partners. The General
Partner shall have no duty, express or implied, to sell or otherwise dispose of
any asset of the Partnership Group other than in the ordinary course of
business. No borrowing by any Group Member or the approval thereof by the
General Partner shall be deemed to constitute a breach of any duty of the
General Partner to the Partnership or the Limited Partners by reason of the fact
that the purpose or effect of such borrowing is directly or indirectly to (i)
enable distributions to the General Partner or its Affiliates to exceed 1.0101%
of the total amount distributed to all Partners or (ii) hasten the expiration of
the Subordination Period, the conversion of any Deferred Participation Units
into Subordinated Units or the conversion of any Subordinated Units into Common
Units.
(e) Whenever a particular transaction, arrangement or resolution of a
conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transactions.
(f) The Limited Partner(s) hereby authorizes the General Partner, on
behalf of the Partnership as a partner or member of a Group Member, to approve
of actions by the general partner of such Group Member similar to those actions
permitted to be taken by the General Partner pursuant to this Section 7.9.
SECTION 7.10 Other Matters Concerning the General Partner.
--------------------------------------------
(a) The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion (including an Opinion of Counsel) of such Persons as to matters
that the General Partner reasonably believes to be within such Person's
professional or expert competence shall be conclusively presumed to have been
done or omitted in good faith and in accordance with such opinion.
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(c) The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers, a duly appointed attorney or attorneys-in-fact or the duly authorized
officers of the Partnership.
(d) Any standard of care and duty imposed by this Agreement or under
the Delaware Act or any applicable law, rule or regulation shall be modified,
waived or limited, to the extent permitted by law, as required to permit the
General Partner to act under this Agreement or any other agreement contemplated
by this Agreement and to make any decision pursuant to the authority prescribed
in this Agreement, so long as such action is reasonably believed by the General
Partner to be in, or not inconsistent with, the best interests of the
Partnership.
SECTION 7.11 Reliance by Third Parties.
-------------------------
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner and any officer of the General Partner authorized by the General Partner
to act on behalf of and in the name of the Partnership has full power and
authority to encumber, sell or otherwise use in any manner any and all assets of
the Partnership and to enter into any authorized contracts on behalf of the
Partnership, and such Person shall be entitled to deal with the General Partner
or any such officer as if it were the Partnership's sole party in interest, both
legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies that may be available against such Person to contest,
negate or disaffirm any action of the General Partner or any such officer in
connection with any such dealing. In no event shall any Person dealing with the
General Partner or any such officer or its representatives be obligated to
ascertain that the terms of the Agreement have been complied with or to inquire
into the necessity or expedience of any act or action of the General Partner or
any such officer or its representatives. Each and every certificate, document or
other instrument executed on behalf of the Partnership by the General Partner or
its representatives shall be conclusive evidence in favor of any and every
Person relying thereon or claiming thereunder that (a) at the time of the
execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (b) the Person executing and delivering
such certificate, document or instrument was duly authorized and empowered to do
so for and on behalf of the Partnership and (c) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
SECTION 8.1 Records and Accounting.
----------------------
The General Partner shall keep or cause to be kept at the principal
office of the Partnership appropriate books and records with respect to the
Partnership's business, including all books and records necessary to provide to
the Limited Partners any information required to be provided pursuant to Section
3.4(a). Any books and records maintained by or on behalf of the Partnership in
the regular course of its business, including books of account and records of
Partnership proceedings, may be kept on, or be in the form of, computer disks,
hard drives, punch cards, magnetic tape, photographs, micrographics or any other
commonly recognized information storage device; provided, that the books and
records so maintained are convertible into clearly legible written form within a
reasonable period of time. The books of the Partnership shall be maintained, for
both tax and financial reporting purposes, on an accrual basis. The books of the
Partnership shall be maintained for financial reporting purposes in accordance
with U.S. GAAP.
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SECTION 8.2 Fiscal Year.
-----------
The fiscal year of the Partnership shall be a fiscal year ending
December 31.
ARTICLE IX
TAX MATTERS
SECTION 9.1 Tax Returns and Information.
---------------------------
The General Partner shall arrange for the preparation and timely filing
of all returns of the Partnership that are required for federal, state and local
income tax purposes on the basis of the accrual method and a taxable year ending
on December 31. The General Partner shall use all reasonable efforts to furnish,
within 90 days of the close of the calendar year in which the Partnership's
taxable year ends, the tax information reasonably required by the Limited
Partners for federal and state income tax reporting purposes with respect to a
taxable year. The classification, realization and recognition of income, gain,
losses and deductions and other items shall be on the accrual method of
accounting for federal income tax purposes.
SECTION 9.2 Tax Elections.
-------------
(a) The Partnership shall make the election under Section 754 of the Code in
accordance with applicable regulations thereunder, subject to the reservation of
the right to seek to revoke any such election upon the General Partner's
determination that such revocation is in the best interests of the Limited
Partners.
(b) The Partnership shall elect to deduct expenses incurred in organizing the
Partnership ratably over a sixty-month period as provided in Section 709 of the
Code.
(c) Except as otherwise provided herein, the General Partner shall determine
whether the Partnership should make any other elections permitted by the Code.
SECTION 9.3 Tax Controversies.
-----------------
Subject to the provisions hereof, the General Partner is designated as
the Tax Matters Partner (as defined in the Code) and is authorized and required
to represent the Partnership (at the Partnership's expense) in connection with
all examinations of the Partnership's affairs by tax authorities, including
resulting administrative and judicial proceedings, and to expend Partnership
funds for professional services and costs associated therewith. Each Partner and
Assignee agrees to cooperate with the General Partner and to do or refrain from
doing any or all things reasonably required by the General Partner to conduct
such proceedings.
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SECTION 9.4 Withholding.
-----------
Notwithstanding any other provision of this Agreement, the General
Partner is authorized to take any action that it determines in its discretion to
be necessary or appropriate to cause the Partnership and any Operating
Subsidiary to comply with any withholding requirements established under the
Code or any other federal, state or local law including, without limitation,
pursuant to Sections 1441, 1442, 1445 and 1446 of the Code. To the extent that
the Partnership is required or elects to withhold and pay over to any taxing
authority any amount resulting from the allocation or distribution of income to
any Partner or Assignee (including, without limitation, by reason of Section
1446 of the Code), the amount withheld may at the discretion of the General
Partner be treated by the Partnership as a distribution of cash pursuant to
Section 6.3 in the amount of such withholding from such Partner.
ARTICLE X
ADMISSION OF PARTNERS
SECTION 10.1 Admission of General Partner.
----------------------------
Upon the consummation of the transfers and conveyances described in
Section 5.2, the General Partner became the sole general partner of the
Partnership and the MLP became the sole limited partner of the Partnership.
SECTION 10.2 Admission of Substituted Limited Partner.
----------------------------------------
(a) By transfer of a Limited Partner Interest in accordance with
Article IV, the transferor shall be deemed to have given the transferee the
right to seek admission as a Substituted Limited Partner subject to the
conditions of, and in the manner permitted under, this Agreement. A transferor
of a Limited Partner Interest shall, however, only have the authority to convey
to a purchaser or other transferee (i) the right to negotiate such Limited
Partner Interest to a purchaser or other transferee and (ii) the right to
request admission as a Substituted Limited Partner to such purchaser or other
transferee in respect of the transferred Limited Partner Interests. Each
transferee of a Limited Partner Interest shall be an Assignee and be deemed to
have applied to become a Substituted Limited Partner with respect to the Limited
Partner Interests so transferred to such Person.
(b) Such Assignee shall become a Substituted Limited Partner (i) at
such time as the General Partner consents thereto, which consent may be given or
withheld in the General Partner's discretion, and (ii) when any such admission
is shown on the books and records of the Partnership. If such consent is
withheld, such transferee shall remain an Assignee. An Assignee shall have an
interest in the Partnership equivalent to that of a Limited Partner with respect
to allocations and distributions, including liquidating distributions, of the
Partnership. With respect to voting rights attributable to Limited Partner
Interests that are held by Assignees, the General Partner shall be deemed to be
the Limited Partner with respect thereto and shall, in exercising the voting
rights in respect of such Limited Partner Interests on any matter, vote such
Limited Partner Interests at the written direction of the Assignee. If no such
written direction is received, such Partnership Interests will not be voted. An
Assignee shall have no other rights of a Limited Partner.
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SECTION 10.3 Admission of Additional Limited Partners.
----------------------------------------
(a) A Person (other than the General Partner, the MLP or a Substituted
Limited Partner) who makes a Capital Contribution to the Partnership in
accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the General Partner (i)
evidence of acceptance in form satisfactory to the General Partner of all of the
terms and conditions of this Agreement, including the power of attorney granted
in Section 2.6, and (ii) such other documents or instruments as may be required
in the discretion of the General Partner to effect such Person's admission as an
Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section 10.3, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's discretion. The admission of any Person as an Additional Limited
Partner shall become effective on the date upon which the name of such Person is
recorded as such in the books and records of the Partnership, following the
consent of the General Partner to such admission.
SECTION 10.4 Admission of Successor or Transferee General Partner.
----------------------------------------------------
A successor General Partner approved pursuant to Section 11.1 or 11.2
or the transferee of or successor to all of the General Partner's Partnership
Interest pursuant to Section 4.2 who is proposed to be admitted as a successor
General Partner shall, subject to compliance with the terms of Section 11.3, if
applicable, be admitted to the Partnership as the General Partner effective
immediately prior to the withdrawal or removal of the predecessor or
transferring General Partner, pursuant to Section 11.1 or 11.2 or the transfer
of the General Partner Interest pursuant to Section 4.2, provided, however, that
no such successor shall be admitted to the Partnership until compliance with the
terms of Section 4.2 has occurred and such successor has executed and delivered
such other documents or instruments as may be required to effect such admission.
Any such successor shall, subject to the terms hereof, carry on the business of
the members of the Partnership Group without dissolution.
SECTION 10.5 Amendment of Agreement and Certificate of Limited Partnership.
To effect the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Delaware Act to
amend the records of the Partnership to reflect such admission and, if
necessary, to prepare as soon as practicable an amendment to this Agreement and,
if required by law, the General Partner shall prepare and file an amendment to
the Certificate of Limited Partnership, and the General Partner may for this
purpose, among others, exercise the power of attorney granted pursuant to
Section 2.6.
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ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
SECTION 11.1 Withdrawal of the General Partner.
---------------------------------
(a) The General Partner shall be deemed to have withdrawn from the Partnership
upon the occurrence of any one of the following events (each such event herein
referred to as an "Event of Withdrawal");
(i) The General Partner voluntarily withdraws from the Partnership
by giving written notice to the other Partners;
(ii) The General Partner transfers all of its General Partner
Interests pursuant to Section 4.2;
(iii) The General Partner is removed pursuant to Section 11.2;
(iv) The General Partner withdraws from, or is removed as the
General Partner of, the MLP;
(v) The General Partner (A) makes a general assignment for the
benefit of creditors; (B) files a voluntary bankruptcy
petition for relief under Chapter 7 of the United States
Bankruptcy Code; (C) files a petition or answer seeking for
itself a liquidation, dissolution or similar relief (but not a
reorganization or readjustment) under any law; (D) files an
answer or other pleading admitting or failing to contest the
material allegations of a petition filed against the General
Partner in a proceeding of the type described in clauses
(A)-(C) of this Section 11.1(a)(v); or (E) seeks, consents to
or acquiesces in the appointment of a trustee (but not a
debtor in possession), receiver or liquidator of the General
Partner or of all or any substantial part of its properties;
(vi) A final and non-appealable order of relief under Chapter 7 of
the United States Bankruptcy Code is entered by a court with
appropriate jurisdiction pursuant to a voluntary or
involuntary petition by or against the General Partner that
the General Partner is bankrupt or insolvent; or
(vii) (A) in the event the General Partner is a corporation, a
certificate of dissolution or its equivalent is filed for the
General Partner, or 90 days expire after the date of notice to
the General Partner of revocation of its charter without a
reinstatement of its charter, under the laws of its state of
incorporation; (B) in the event the General Partner is a
partnership or limited liability company, the dissolution and
commencement of winding up of the General Partner; (C) in the
event the General Partner is acting in such capacity by virtue
of being a trustee of a trust, the termination of the trust;
(D) in the event the General Partner is a natural person, his
death or adjudication of incompetency; and (E) otherwise in
the event of the termination of the General Partner.
If an Event of Withdrawal specified in Section 11.1(a)(iv)(with respect to
withdrawal), (v), (vi) or (vii)(A), (B), (C) or (E) occurs, the withdrawing
General Partner shall give notice to the Limited Partners within 30 days after
such occurrence. The Partners hereby agree that only the Events of Withdrawal
described in this Section 11.1 shall result in the withdrawal of the General
Partner from the Partnership.
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(b) Withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal shall not constitute a breach of this
Agreement under the following circumstances:
(i) at any time during the period beginning on the Initial Closing
Date and ending at 12:00 midnight, Eastern Standard Time, on
the last day of the Subordination Period, the General Partner
voluntarily withdraws by giving at least 90 days advance
notice of its intention to withdraw to the Limited Partners;
provided, that prior to the effective date of such withdrawal,
the withdrawal is approved by the Limited Partners and the
General Partner delivers to the Partnership an Opinion of
Counsel ("Withdrawal Opinion of Counsel") that such withdrawal
(following the selection of the successor General Partner)
would not result in the loss of the limited liability of any
Limited Partner, of the limited partners of the MLP or of the
non-managing members, limited partners or shareholders, as
applicable, of the Operating Subsidiaries or cause the
Partnership, the MLP or the Operating Subsidiaries to be
treated as an association taxable as a corporation or
otherwise to be taxed as an entity for federal income tax
purposes (to the extent not previously treated as such);
(ii) at any time after 12:00 midnight, Eastern Standard Time, on
the last day of the Subordination Period, the General Partner
voluntarily withdraws by giving at least 90 days' advance
notice to the Limited Partners, such withdrawal to take effect
on the date specified in such notice; or
(iii) at any time that the General Partner ceases to be the General
Partner pursuant to Section 11.1(a)(ii), (iii) or (iv).
(c) If the General Partner gives a notice of withdrawal pursuant to Section
11.1(a)(i) hereof or Section 11.1(a)(i) of the MLP Agreement, the Limited
Partners may, prior to the effective date of such withdrawal, elect a successor
General Partner; provided, however, that such successor shall be the same
person, if any, that is elected by the limited partners of the MLP pursuant to
Section 11.1 of the MLP Agreement as the successor to the general partner of the
MLP. If, prior to the effective date of the General Partner's withdrawal, a
successor is not selected by the Limited Partners as provided herein or the
Partnership does not receive a Withdrawal Opinion of Counsel, the Partnership
shall be dissolved in accordance with Section 12.1. Any successor General
Partner elected in accordance with the terms of this Section 11.1 shall be
subject to the provisions of Section 10.4.
SECTION 11.2 Removal of the General Partner.
------------------------------
(a) The General Partner shall be removed if the General Partner is
removed as the general partner of the MLP pursuant to Section 11.2 of the MLP
Agreement. Such removal shall be effective concurrently with the effectiveness
of the removal of the General Partner as the general partner of the MLP pursuant
to the terms of the MLP Agreement. If a successor general partner for the MLP is
elected in connection with the removal of the General Partner, such successor
general partner for the MLP shall, upon admission pursuant to Article X herein,
automatically become the successor General Partner of the Partnership. The
admission of any such successor General Partner to the Partnership shall be
subject to the provisions of Section 10.4.
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(b) The General Partner shall be removed if the MLP, in its sole
discretion, approves the removal. Any action by the MLP to remove the General
Partner as provided in this Section 11.2(b) must also provide for the election
of a successor General Partner by the MLP. Removal of the General Partner shall
be effective immediately following the admissions of a successor General Partner
pursuant to Article X. The admission of any successor General Partner to the
Partnership shall be subject to the provisions of Section 10.4.
SECTION 11.3 Interest of Departing Partner.
-----------------------------
(a) The Partnership Interest of the Departing Partner departing as a
result of withdrawal or removal pursuant to Section 11.1 or 11.2 shall (unless
it is otherwise required to be converted into Common Units pursuant to Section
11.3(c) of the MLP Agreement) be purchased by the successor to the Departing
Partner for cash in the manner specified in the MLP Agreement. Such purchase (or
conversion into Common Units, as applicable) shall be a condition to the
admission to the Partnership of the successor as the General Partner. Any
successor General Partner shall indemnify the Departing Partner as to all debts
and liabilities of the Partnership arising on or after the effective date of the
withdrawal or removal of the Departing Partner.
(b) The Departing Partner shall be entitled to receive all
reimbursements due such Departing Partner pursuant to Section 7.4, including any
employee-related liabilities (including severance liabilities), incurred in
connection with the termination of any employees employed by such Departing
Partner for the benefit of the Partnership.
SECTION 11.4 Withdrawal of a Limited Partner.
-------------------------------
Without the prior written consent of the General Partner, which may be
granted or withheld in its sole discretion, and except as provided in Section
10.1, no Limited Partner shall have the right to withdraw from the Partnership.
ARTICLE XII
DISSOLUTION AND LIQUIDATION
SECTION 12.1 Dissolution.
-----------
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the removal or withdrawal of the General Partner, if a successor General Partner
is elected pursuant to Section 11.1 or 11.2, the Partnership shall not be
dissolved and such successor General Partner shall continue the business of the
Partnership. The Partnership shall dissolve, and (subject to Section 12.2) its
affairs shall be wound up, upon:
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(a) the expiration of its term as provided in Section 2.7;
(b) an Event of Withdrawal of the General Partner as provided in
Section 11.1(a) (other than Section 11.1(a)(ii)), unless a successor is elected
and a Withdrawal Opinion of Counsel is received as provided in Section 11.1(b)
herein or 11.2 of the MLP Agreement and such successor is admitted to the
Partnership pursuant to Section 10.3;
(c) an election to dissolve the Partnership by the General Partner that
is approved by all of the Limited Partners;
(d) the entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Delaware Act;
(e) the sale of all or substantially all of the assets and properties
of the Partnership Group; or
(f) the dissolution of the MLP.
SECTION 12.2 Continuation of the Business of the Partnership After Dissolution.
Upon (a) dissolution of the Partnership following an Event of
Withdrawal caused by the withdrawal or removal of the General Partner as
provided in Section 11.1(a)(i) or (iii) and the failure of the Partners to
select a successor to such Departing Partner pursuant to Section 11.1 or 11.2,
then within 90 days thereafter, or (b) dissolution of the Partnership upon an
event constituting an Event of Withdrawal as defined in Section 11.1(a)(iv), (v)
or (vi) of the MLP Agreement, then, to the maximum extent permitted by law,
within 180 days thereafter, all of the Limited Partners may elect to
reconstitute the Partnership and continue its business on the same terms and
conditions set forth in this Agreement by forming a new limited partnership on
terms identical to those set forth in this Agreement and having as a general
partner a Person approved by a majority in interest of the Limited Partners. In
addition, upon dissolution of the Partnership pursuant to Section 12.1(f), if
the MLP is reconstituted pursuant to Section 12.2 of the MLP Agreement, the
reconstituted MLP may, within 180 days after such event of dissolution, acting
alone, regardless of whether there are any other Limited Partners, elect to
reconstitute the Partnership in accordance with the immediately preceding
sentence. Upon any such election by the Limited Partners or the MLP, as the case
may be, all Partners shall be bound thereby and shall be deemed to have approved
same. Unless such an election is made within the applicable time period as set
forth above, the Partnership shall conduct only activities necessary to wind up
its affairs. If such an election is so made, then:
(i) the reconstituted Partnership shall continue until the end of
the term set forth in Section 2.7 unless earlier dissolved in
accordance with this Article XII;
(ii) if the successor General Partner is not the former General
Partner, then the interest of the former General Partner shall
be purchased by the successor General Partner or converted
into Common Units as provided in the MLP Agreement; and
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(iii) all necessary steps shall be taken to cancel this Agreement
and the Certificate of Limited Partnership and to enter into
and, as necessary, to file, a new partnership agreement and
certificate of limited partnership, and the successor General
Partner may for this purpose exercise the power of attorney
granted the General Partner pursuant to Section 2.6; provided,
that the right to approve a successor General Partner and to
reconstitute and to continue the business of the Partnership
shall not exist and may not be exercised unless the
Partnership has received an Opinion of Counsel that (x) the
exercise of the right would not result in the loss of limited
liability of the Limited Partners or any limited partner of
the MLP and (y) neither the Partnership, the reconstituted
limited partnership, the MLP nor the Operating Subsidiaries
would be treated as an association taxable as a corporation or
otherwise be taxable as an entity for federal income tax
purposes (to the extent not previously treated as such) upon
the exercise of such right to continue.
SECTION 12.3 Liquidator.
----------
Upon dissolution of the Partnership, unless the Partnership is
continued under an election to reconstitute and continue the Partnership
pursuant to Section 12.2, the General Partner, or in the event the General
Partner has been dissolved or removed, become bankrupt as set forth in Section
11.1 or withdrawn from the Partnership, a liquidator or liquidating committee
approved by the Limited Partners, shall select one or more Persons to act as
Liquidator. The Liquidator (if other than the General Partner) shall be entitled
to receive such compensation for its services as may be approved by a majority
of the Limited Partners. The Liquidator (if other than the General Partner)
shall agree not to resign at any time without 15 days' prior notice and may be
removed at any time, with or without cause, by notice of removal approved by a
majority in interest of the Limited Partners. Upon dissolution, removal or
resignation of the Liquidator, a successor and substitute Liquidator (who shall
have and succeed to all rights, powers and duties of the original Liquidator)
shall within 30 days thereafter be approved by at least a majority in interest
of the Limited Partners. The right to approve a successor or substitute
Liquidator in the manner provided herein shall be deemed to refer also to any
such successor or substitute Liquidator approved in the manner herein provided.
Except as expressly provided in this Article XII, the Liquidator approved in the
manner provided herein shall have and may exercise, without further
authorization or consent of any of the parties hereto, all of the powers
conferred upon the General Partner under the terms of this Agreement (but
subject to all of the applicable limitations, contractual and otherwise, upon
the exercise of such powers, other than the limitation on sale set forth in
Section 7.3(b)) to the extent necessary or desirable in the good faith judgment
of the Liquidator to carry out the duties and functions of the Liquidator
hereunder for and during such period of time as shall be reasonably required in
the good faith judgment of the Liquidator to complete the winding up and
liquidation of the Partnership as provided for herein.
SECTION 12.4 Liquidation.
-----------
The Liquidator shall proceed to dispose of the assets of the
Partnership, discharge its liabilities, and otherwise wind up its affairs in
such manner and over such period as the Liquidator determines to be in the best
interest of the Partners, subject to Section 17-804 of the Delaware Act and the
following:
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(a) Disposition of Assets. The assets may be disposed of by public or
private sale or by distribution in kind to one or more Partners on such terms as
the Liquidator and such Partner or Partners may agree. If any property is
distributed in kind, the Partner receiving the property shall be deemed for
purposes of Section 12.4(c) to have received cash equal to its fair market
value; and contemporaneously therewith, appropriate cash distributions must be
made to the other Partners. The Liquidator may, in its absolute discretion,
defer liquidation or distribution of the Partnership's assets for a reasonable
time if it determines that an immediate sale or distribution of all or some of
the Partnership's assets would be impractical or would cause undue loss to the
Partners. The Liquidator may, in its absolute discretion, distribute the
Partnership's assets, in whole or in part, in kind if it determines that a sale
would be impractical or would cause undue loss to the Partners.
(b) Discharge of Liabilities. Liabilities of the Partnership include
amounts owed to Partners otherwise than in respect of their distribution rights
under Article VI. With respect to any liability that is contingent, conditional
or unmatured or is otherwise not yet due and payable, the Liquidator shall
either settle such claim for such amount as it thinks appropriate or establish a
reserve of cash or other assets to provide for its payment. When paid, any
unused portion of the reserve shall be distributed as additional liquidation
proceeds.
(c) Liquidation Distributions. All property and all cash in excess of
that required to discharge liabilities as provided in Section 12.4(b) shall be
distributed to the Partners in accordance with, and to the extent of, the
positive balances in their respective Capital Accounts, as determined after
taking into account all Capital Account adjustments (other than those made by
reason of distributions pursuant to this Section 12.4(c)) for the taxable year
of the Partnership during which the liquidation of the Partnership occurs (with
such date of occurrence being determined pursuant to Treasury Regulation Section
1.704-1(b)(2)(ii)(g)), and such distribution shall be made by the end of such
taxable year (or, if later, within 90 days after said date of such occurrence).
SECTION 12.5 Cancellation of Certificate of Limited Partnership.
--------------------------------------------------
Upon the completion of the distribution of Partnership cash and
property as provided in Section 12.4 in connection with the liquidation of the
Partnership, the Partnership shall be terminated and the Certificate of Limited
Partnership, and all qualifications of the Partnership as a foreign limited
partnership in jurisdictions other than the State of Delaware, shall be canceled
and such other actions as may be necessary to terminate the Partnership shall be
taken.
SECTION 12.6 Return of Contributions.
-----------------------
The General Partner shall not be personally liable for, and shall have
no obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate, the return of the Capital Contributions of the Limited
Partners, or any portion thereof, it being expressly understood that any such
return shall be made solely from Partnership assets.
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SECTION 12.7 Waiver of Partition.
-------------------
To the maximum extent permitted by law, each Partner hereby waives any
right to partition of the Partnership property.
SECTION 12.8 Capital Account Restoration.
---------------------------
No Limited Partner shall have any obligation to restore any negative
balance in its Capital Account upon liquidation of the Partnership. The General
Partner shall be obligated to restore any negative balance in its Capital
Account upon liquidation of its interest in the Partnership by the end of the
taxable year of the Partnership during which such liquidation occurs, or, if
later, within 90 days after the date of such liquidation.
SECTION 12.9 Reasonable Time for Winding Up.
A reasonable time shall be allowed for the orderly winding up of
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 12.4 in order to minimize any losses otherwise attendant
upon such winding up, and the provisions of this Agreement shall remain in
effect between the Partners during the period of liquidation.
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT
SECTION 13.1 Amendment to be Adopted Solely by the General Partner.
Each Partner agrees that the General Partner, without the approval of
any Partner or Assignee, may amend any provision of this Agreement and execute,
swear to, acknowledge, deliver, file and record whatever documents may be
required in connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the
principal place of business of the Partnership, the registered agent of the
Partnership or the registered office of the Partnership;
(b) admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement;
(c) a change that, in the sole discretion of the General Partner, is
necessary or advisable to qualify or continue the qualification of the
Partnership as a limited partnership or a partnership in which the Limited
Partners have limited liability under the laws of any state or to ensure that no
Group Member will be treated as an association taxable as a corporation or
otherwise taxed as an entity for federal income tax purposes;
(d) a change that, in the discretion of the General Partner:
(i) does not adversely affect the Limited Partners in any material
respect;
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(ii) is necessary or advisable to (A) satisfy any requirements,
conditions or guidelines contained in any opinion, directive,
order, ruling or regulation of any federal or state agency or
judicial authority or contained in any federal or state
statute (including the Delaware Act) or (B) facilitate the
trading of limited partner interests of the MLP (including the
division of any class or classes of outstanding limited
partner interests of the MLP into different classes to
facilitate uniformity of tax consequences within such classes
of limited partner interests of the MLP) or comply with any
rule, regulation, guideline or requirement of any National
Securities Exchange on which such limited partner interests
are or will be listed for trading, compliance with any of
which the General Partner determines in its discretion to be
in the best interests of the MLP and the limited partners of
the MLP;
(iii) is required to effect the intent expressed in the Registration
Statement or the intent of the provisions of this Agreement or
is otherwise contemplated by this Agreement; or
(iv) is required to conform the provisions of this Agreement with
the provisions of the MLP Agreement as the provisions of the
MLP Agreement may be amended, supplemented or restated from
time to time;
(e) a change in the fiscal year or taxable year of the Partnership and
any changes that, in the discretion of the General Partner, are necessary or
advisable as a result of a change in the fiscal year or taxable year of the
Partnership including, if the General Partner shall so determine, a change in
the definition of "Quarter" and the dates on which distributions are to be made
by the Partnership;
(f) an amendment that is necessary, in the Opinion of Counsel, to
prevent the Partnership, or the General Partner or their directors, officers,
trustees or agents from in any manner being subjected to the provisions of the
Investment Company Act of 1940, as amended, the Investment Advisers Act of 1940,
as amended, or "plan asset" regulations adopted under the Employee Retirement
Income Security Act of 1974, as amended, regardless of whether such are
substantially similar to plan asset regulations currently applied or proposed by
the United States Department of Labor;
(g) any amendment expressly permitted in this Agreement to be made by
the General Partner acting alone;
(h) an amendment effected, necessitated or contemplated by a Merger
Agreement approved in accordance with Section 14.3;
(i) an amendment that, in the discretion of the General Partner, is
necessary or advisable to reflect, account for and deal with appropriately the
formation by the Partnership of, or investment by the Partnership in, any
corporation, partnership, joint venture, limited liability company or other
entity, in connection with the conduct by the Partnership of activities
permitted by the terms of Section 2.4;
(j) a merger or conveyance pursuant to Section 14.3(d); or
(k) any other amendments substantially similar to the foregoing.
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SECTION 13.2 Amendment Procedures.
--------------------
Except with respect to amendments of the type described in Section
13.1, all amendments to this Agreement may be proposed only by or with the
consent of the General Partner which consent may be given or withheld in its
sole discretion, and any such proposed amendment shall be effective upon its
approval by the Limited Partners.
ARTICLE XIV
MERGER
SECTION 14.1 Authority.
---------
The Partnership may merge or consolidate with one or more corporations,
limited liability companies, business trusts or associations, real estate
investment trusts, common law trusts or unincorporated businesses, including a
general partnership or limited partnership, formed under the laws of the State
of Delaware or any other state of the United States of America, pursuant to a
written agreement of merger or consolidation ("Merger Agreement") in accordance
with this Article XIV.
SECTION 14.2 Procedure for Merger or Consolidation.
-------------------------------------
Merger or consolidation of the Partnership pursuant to this Article XIV
requires the prior approval of the General Partner. If the General Partner shall
determine, in the exercise of its discretion, to consent to the merger or
consolidation, the General Partner shall approve the Merger Agreement, which
shall set forth:
(a) The names and jurisdictions of formation or organization of each of
the business entities proposing to merge or consolidate;
(b) The name and jurisdiction of formation or organization of the
business entity that is to survive the proposed merger or consolidation (the
"Surviving Business Entity");
(c) The terms and conditions of the proposed merger or consolidation;
(d) The manner and basis of exchanging or converting the equity
securities of each constituent business entity for, or into, cash, property or
general or limited partner interests, rights, securities or obligations of the
Surviving Business Entity; and (i) if any general or limited partner interests,
securities or rights of any constituent business entity are not to be exchanged
or converted solely for, or into, cash, property or general or limited partner
interests, rights, securities or obligations of the Surviving Business Entity,
the cash, property or general or limited partner interests, rights, securities
or obligations of any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity) which the holders of such general or
limited partner interests, securities or rights are to receive in exchange for,
or upon conversion of their general or limited partner interests, securities or
rights, and (ii) in the case of securities represented by certificates, upon the
surrender of such certificates, which cash, property or general or limited
partner interests, rights, securities or obligations of the Surviving Business
Entity or any general or limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity), or evidences thereof, are to be
delivered;
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(e) A statement of any changes in the constituent documents or the
adoption of new constituent documents (the articles or certificate of
incorporation, articles of trust, declaration of trust, certificate or agreement
of limited partnership or other similar charter or governing document) of the
Surviving Business Entity to be effected by such merger or consolidation;
(f) The effective time of the merger, which may be the date of the
filing of the certificate of merger pursuant to Section 14.4 or a later date
specified in or determinable in accordance with the Merger Agreement (provided,
that if the effective time of the merger is to be later than the date of the
filing of the certificate of merger, the effective time shall be fixed no later
than the time of the filing of the certificate of merger and stated therein);
and
(g) Such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or appropriate by the General Partner.
SECTION 14.3 Approval by Limited Partners of Merger or Consolidation.
(a) Except as provided in Section 14.3(d), the General Partner, upon its
approval of the Merger Agreement, shall direct that the Merger Agreement be
submitted to a vote of the Limited Partners, whether at a special meeting or by
written consent, in either case in accordance with the requirements of Article
XIII. A copy or a summary of the Merger Agreement shall be included in or
enclosed with the notice of a special meeting or the written consent.
(b) Except as provided in Section 14.3(d), the Merger Agreement shall be
approved upon receiving the affirmative vote or consent of the Limited Partners.
(c) Except as provided in Section 14.3(d), after such approval by vote or
consent of the Limited Partners, and at any time prior to the filing of the
certificate of merger pursuant to Section 14.4, the merger or consolidation may
be abandoned pursuant to provisions therefor, if any, set forth in the Merger
Agreement.
(d) Notwithstanding anything else contained in this Article XIV or in this
Agreement, the General Partner is permitted, in its discretion, without Limited
Partner approval, to merge the Partnership or any Group Member into, or convey
all of the Partnership's assets to, another limited liability entity which shall
be newly formed and shall have no assets, liabilities or operations at the time
of such Merger other than those it receives from the Partnership or other Group
Member if:
(i) the General Partner has received an Opinion of Counsel that
the merger or conveyance, as the case may be, would not result
in the loss of the limited liability of any Limited Partner,
any limited partner in the MLP or any member, limited partner
or shareholder, as applicable, of the Operating Subsidiaries
or cause the Partnership, the MLP or the Operating
Subsidiaries to be treated as an association taxable as a
corporation or otherwise to be taxed as an entity for federal
income tax purposes (to the extent not previously treated as
such);
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(ii) the sole purpose of such merger or conveyance is to effect a
mere change in the legal form of the Partnership into another
limited liability entity; and
(iii) the governing instruments of the new entity provide the
Limited Partners and the General Partner with the same rights
and obligations as are herein contained.
SECTION 14.4 Certificate of Merger.
---------------------
Upon the required approval by the General Partner and the Limited
Partners of a Merger Agreement, a certificate of merger shall be executed and
filed with the Secretary of State of the State of Delaware in conformity with
the requirements of the Delaware Act.
SECTION 14.5 Effect of Merger.
----------------
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the
business entities that has merged or consolidated, and all
property, real, personal and mixed, and all debts due to any
of those business entities and all other things and causes of
action belonging to each of those business entities, shall be
vested in the Surviving Business Entity and after the merger
or consolidation shall be the property of the Surviving
Business Entity to the extent they were of each constituent
business entity;
(ii) the title to any real property vested by deed or otherwise in
any of those constituent business entities shall not revert
and is not in any way impaired because of the merger or
consolidation;
(iii) all rights of creditors and all liens on or security interests
in property of any of those constituent business entities
shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent
business entities shall attach to the Surviving Business
Entity and may be enforced against it to the same extent as if
the debts, liabilities and duties had been incurred or
contracted by it.
(b) A merger or consolidation effected pursuant to this Article shall
not be deemed to result in a transfer or assignment of assets or liabilities
from one entity to another.
ARTICLE XV
GENERAL PROVISIONS
SECTION 15.1 Addresses and Notices.
---------------------
Any notice, demand, request, report or proxy materials required or
permitted to be given or made to a Partner or Assignee under this Agreement
shall be in writing and shall be deemed given or made when delivered in person
or when sent by first class United States mail or by other means of written
communication to the Partner at the address described in Section 2.3 herein. Any
notice to the Partnership shall be deemed given if received by the General
Partner at the principal office of the Partnership designated pursuant to
Section 2.3. The General Partner may rely and shall be protected in relying on
any notice or other document from a Partner, Assignee or other Person if
believed by it to be genuine.
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SECTION 15.2 Further Action.
--------------
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
SECTION 15.3 Binding Effect.
--------------
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
SECTION 15.4 Integration.
-----------
This Agreement constitutes the entire agreement among the parties
hereto pertaining to the subject matter hereof and supersedes all prior
agreements and understandings pertaining thereto.
SECTION 15.5 Creditors.
---------
None of the provisions of this Agreement shall be for the benefit of,
or shall be enforceable by, any creditor of the Partnership.
SECTION 15.6 Waiver.
------
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach of any other covenant, duty, agreement or condition.
SECTION 15.7 Counterparts.
------------
This Agreement may be executed in counterparts, all of which together
shall constitute an agreement binding on all the parties hereto, notwithstanding
that all such parties are not signatories to the original or the same
counterpart. Each party shall become bound by this Agreement immediately upon
affixing its signature hereto, independently of the signature of any other
party.
SECTION 15.8 Applicable Law.
--------------
This Agreement shall be construed in accordance with and governed by
the laws of the State of Delaware, without regard to the principles of conflicts
of law.
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SECTION 15.9 Invalidity of Provisions.
------------------------
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
SECTION 15.10 Consent of Partners.
-------------------
Each Partner hereby expressly consents and agrees that, whenever in
this Agreement it is specified that an action may be taken upon the affirmative
vote or consent of less than all of the Partners, such action may be so taken
upon the concurrence of less than all of the Partners and each Partner shall be
bound by the results of such action.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
ATLAS NATURAL RESOURCES GP, LLC
By:
-------------------------------------
Xxxxxxx X. Xxxxxxx
President, Chief Operating Officer
and Secretary
LIMITED PARTNER:
ATLAS NATURAL RESOURCES, L.P.
By: ATLAS NATURAL RESOURCES GP, LLC
By:
-------------------------------
Xxxxxxx X. Xxxxxxx
President, Chief Operating
Officer and Secretary
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Table of Contents
Page
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ARTICLE I DEFINITIONS................................................................................1
SECTION 1.1 Definitions.......................................................................1
SECTION 1.2 Construction.....................................................................12
ARTICLE II ORGANIZATION..............................................................................12
SECTION 2.1 Formation........................................................................12
SECTION 2.2 Name.............................................................................12
SECTION 2.3 Registered Office; Registered Agent; Principal Office; Other Offices.............12
SECTION 2.4 Purpose and Business.............................................................13
SECTION 2.5 Powers...........................................................................14
SECTION 2.6 Power of Attorney................................................................14
SECTION 2.7 Term.............................................................................15
SECTION 2.8 Title to Partnership Assets......................................................16
ARTICLE III RIGHTS OF LIMITED PARTNERS................................................................16
SECTION 3.1 Limitation of Liability..........................................................16
SECTION 3.2 Management of Business...........................................................16
SECTION 3.3 Outside Activities of the Limited Partners.......................................16
SECTION 3.4 Rights of Limited Partners.......................................................17
ARTICLE IV TRANSFERS OF PARTNERSHIP INTERESTS........................................................18
SECTION 4.1 Transfer Generally...............................................................18
SECTION 4.2 Transfer of General Partner's Partnership Interest...............................18
SECTION 4.3 Transfer of a Limited Partner's Partnership Interest.............................18
SECTION 4.4 Restrictions on Transfers........................................................19
ARTICLE V CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS...............................19
SECTION 5.1 Initial Contributions............................................................19
SECTION 5.2 Contributions Pursuant to the Contribution Agreement.............................19
SECTION 5.3 Additional Capital Contributions.................................................20
SECTION 5.4 Interest and Withdrawal..........................................................20
SECTION 5.5 Capital Accounts.................................................................21
SECTION 5.6 Loans from Partners..............................................................23
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SECTION 5.7 Limited Preemptive Rights........................................................24
SECTION 5.8 Fully Paid and Non-Assessable Nature of Partnership Interests....................24
ARTICLE VI ALLOCATIONS AND DISTRIBUTIONS.............................................................24
SECTION 6.1 Allocations for Capital Account Purposes.........................................24
SECTION 6.2 Allocations for Tax Purposes.....................................................28
SECTION 6.3 Distributions....................................................................30
ARTICLE VII MANAGEMENT AND OPERATION OF BUSINESS......................................................31
SECTION 7.1 Management.......................................................................31
SECTION 7.2 Certificate of Limited Partnership...............................................33
SECTION 7.3 Restrictions on General Partner's Authority......................................33
SECTION 7.4 Reimbursement of the General Partner.............................................34
SECTION 7.5 Outside Activities...............................................................34
SECTION 7.6 Loans from the General Partner; Loans or Contributions from the
Partnership; Contracts with Affiliates; Certain Restrictions on the
General Partner..................................................................35
SECTION 7.7 Indemnification..................................................................37
SECTION 7.8 Liability of Indemnitees.........................................................39
SECTION 7.9 Resolution of Conflicts of Interest..............................................39
SECTION 7.10 Other Matters Concerning the General Partner.....................................41
SECTION 7.11 Reliance by Third Parties........................................................42
ARTICLE VIII BOOKS, RECORDS, ACCOUNTING AND REPORTS....................................................42
SECTION 8.1 Records and Accounting...........................................................42
SECTION 8.2 Fiscal Year......................................................................43
ARTICLE IX TAX MATTERS...............................................................................43
SECTION 9.1 Tax Returns and Information......................................................43
SECTION 9.2 Tax Elections....................................................................43
SECTION 9.3 Tax Controversies................................................................43
SECTION 9.4 Withholding......................................................................44
ARTICLE X ADMISSION OF PARTNERS.....................................................................44
SECTION 10.1 Admission of General Partner.....................................................44
SECTION 10.2 Admission of Substituted Limited Partner.........................................44
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SECTION 10.3 Admission of Additional Limited Partners.........................................45
SECTION 10.4 Admission of Successor or Transferee General Partner.............................45
SECTION 10.5 Amendment of Agreement and Certificate of Limited Partnership....................45
ARTICLE XI WITHDRAWAL OR REMOVAL OF PARTNERS.........................................................46
SECTION 11.1 Withdrawal of the General Partner................................................46
SECTION 11.2 Removal of the General Partner...................................................47
SECTION 11.3 Interest of Departing Partner....................................................48
SECTION 11.4 Withdrawal of a Limited Partner..................................................48
ARTICLE XII DISSOLUTION AND LIQUIDATION...............................................................48
SECTION 12.1 Dissolution......................................................................48
SECTION 12.2 Continuation of the Business of the Partnership After Dissolution................49
SECTION 12.3 Liquidator.......................................................................50
SECTION 12.4 Liquidation......................................................................50
SECTION 12.5 Cancellation of Certificate of Limited Partnership...............................51
SECTION 12.6 Return of Contributions..........................................................51
SECTION 12.7 Waiver of Partition..............................................................52
SECTION 12.8 Capital Account Restoration......................................................52
SECTION 12.9 Reasonable Time for Winding Up...................................................52
ARTICLE XIII AMENDMENT OF PARTNERSHIP AGREEMENT........................................................52
SECTION 13.1 Amendment to be Adopted Solely by the General Partner............................52
SECTION 13.2 Amendment Procedures.............................................................54
ARTICLE XIV MERGER....................................................................................54
SECTION 14.1 Authority........................................................................54
SECTION 14.2 Procedure for Merger or Consolidation............................................54
SECTION 14.3 Approval by Limited Partners of Merger or Consolidation..........................55
SECTION 14.4 Certificate of Merger............................................................56
SECTION 14.5 Effect of Merger.................................................................56
ARTICLE XV GENERAL PROVISIONS........................................................................56
SECTION 15.1 Addresses and Notices............................................................56
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(continued)
Page
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SECTION 15.2 Further Action...................................................................57
SECTION 15.3 Binding Effect...................................................................57
SECTION 15.4 Integration......................................................................57
SECTION 15.5 Creditors........................................................................57
SECTION 15.6 Waiver...........................................................................57
SECTION 15.7 Counterparts.....................................................................57
SECTION 15.8 Applicable Law...................................................................57
SECTION 15.9 Invalidity of Provisions.........................................................58
SECTION 15.10 Consent of Partners..............................................................58
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