AMENDMENT NO. 4 TO AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF REGENCY ENERGY PARTNERS LP
AMENDMENT NO. 4 TO AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
REGENCY ENERGY PARTNERS LP
AGREEMENT OF LIMITED PARTNERSHIP OF
REGENCY ENERGY PARTNERS LP
This Amendment No. 4 to the Amended and Restated Agreement of Limited Partnership of Regency
Energy Partners LP (this “Amendment"), dated as of January 15, 2008, is entered into and
effectuated by Regency GP LP, a Delaware limited partnership, as the General Partner, pursuant to
authority granted to it in Section 5.6 of the Amended and Restated Agreement of Limited Partnership
of Regency Energy Partners LP, dated as of February 3, 2006, as amended by Amendment No. 1 thereto,
dated as of August 15, 2006, Amendment No. 2 thereto, dated as of September 21, 2006, and Amendment
No. 3 thereto, dated as of January 7, 2008 (collectively, the “Partnership Agreement").
Capitalized terms used but not defined herein are used as defined in the Partnership Agreement.
RECITALS:
Section 5.6 of the Partnership Agreement provides that the General Partner, without the
approval of any Limited Partners, may issue additional Partnership Securities, or classes or series
thereof, for any Partnership purpose at any time and from time to time, and may issue such
Partnership Securities for such consideration and on such terms and conditions as shall be
established by the General Partner in its sole discretion.
Section 13.1(g) of the Partnership Agreement provides that the General Partner, without the
approval of any Partner, may amend any provision of the Partnership Agreement necessary or
advisable in connection with the authorization or issuance of any class or series of Partnership
Securities pursuant to Section 5.6 of the Partnership Agreement.
The General Partner deems it in the best interest of the Partnership to effect this Amendment
in order to provide for the issuance of the Class D Common Units to certain persons pursuant to
that certain Agreement and Plan of Merger, dated as of December 11, 2007 among the Partnership, CDM
Resource Management, Ltd., a Texas limited liability partnership (“CDM”), each of the partners of
CDM, and ADJHR, LLC, a Delaware limited liability company and an indirect wholly owned subsidiary
of the Partnership.
NOW, THEREFORE, the Partnership Agreement is hereby amended as follows:
Section 1. Amendment.
(a) Section 1.1 is hereby amended to add or amend and restate the following definitions
in the appropriate alphabetical order:
(i)
“Class D Common Unit” means a Partnership Security representing a
fractional part of the Partnership Interests of all Limited Partners, and having the
rights and obligations specified with respect to the Class D Common Units in this
Agreement. Other than to the extent that this Amendment provides for specific
different rights, preferences or designations, the term “Class
D Common Unit” refers to a Common Unit and each Class D Common Unit shall be
treated as if it were a Common Unit for all purposes.
(ii) “Class D Conversion Date” has the meaning assigned to such term in Section
5.13(b)(vii).
(iii) “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 and after taking into account any other form of discount
with respect to the price at which a Unit is purchased from the Partnership;
provided, however, that, in the case of the Class D Common Units, the Issue Price
shall be $31.36 per unit.
(iv) “Merger Agreement” means the Agreement and Plan of Merger, dated as of
December 11, 2007, among the Partnership, CDM Resource Management, Ltd., a Texas
limited partnership (“CDM”), CDMR Holdings, LLC and CDM OLP GP, LLC, both Delaware
limited liability companies, and ADJHR, LLC, a Delaware limited liability company
and an indirect wholly owned subsidiary of the Partnership.
(v) “Partnership Security” means any class or series of equity interest in the
Partnership (but excluding any options, rights, warrants and appreciation rights
relating to an equity interest in the Partnership), including, without limitation,
Common Units, Class D Common Units, Subordinated Units and Incentive Distribution
Rights.
(vi) “Share of Additional Book Basis Derivative Items” means, in connection
with any allocation of Additional Book Basis Derivative Items for any taxable
period, (i) with respect to the Unitholders holding Common Units, Class D Common
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, (ii) with respect to the General Partner (as holder of
the General Partner Interest), the amount that bears the same ratio to such
Additional Book Basis Derivative Items as the General Partner’s Remaining Net
Positive Adjustments as of the end of such period bears to the Aggregate Remaining
Net Positive Adjustments as of that time, and (iii) 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.
(vii) “Unit” means a Partnership Security that is designated as a “Unit” and
shall include Common Units, Class D Common Units and Subordinated Units, but shall
not include (i) General Partner Units (or the General Partner Interest represented
thereby) or (ii) Incentive Distribution Rights.
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(viii) “Unit Majority” means, during the Subordination Period, at least a
majority of the Outstanding Common Units and Class D Common Units (excluding Common
Units and Class D Common Units owned by the General Partner and its Affiliates)
voting as a class and at least a majority of the Outstanding Subordinated Units
voting as a single class and, after the end of the Subordination Period, at least a
majority of the Outstanding Units.
(b) Section 4.8(c) of the Partnership Agreement is hereby amended and restated to read
in its entirety:
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). The transfer of a Class D
Common Unit that has converted into a Common Unit shall be subject to the
restrictions imposed by Section 6.7(e).
(c) Section 5.5(a) of the Partnership Agreement is hereby amended to add the following
at the end of such section:
The initial Capital Account balance in respect of each Class D Common Unit shall be
the Issue Price for such Class D Common Unit, and the initial Capital Account
balance of each holder of Class D Common Units in respect of all Class D Common
Units held shall be the product of such initial balance for a Class D Common Unit
multiplied by the number of Class D Common Units held thereby.
(d) Section 5.5(d)(i) of the Partnership Agreement is hereby amended to add the
following at the end of such section:
Any adjustments that are made under this paragraph in connection with the issuance
of the Class D Common Units shall be based on the Issue Price of the Class D Common
Units.
(e) Article V is hereby amended to add a new Section 5.13 creating a new series of
Units to read in its entirety:
Section 5.13 Establishment of Class D Common Units.
(a) General. The General Partner hereby designates and creates a series of Units to be
designated as “Class D Common Units” and consisting of a total of 7,276,507 Class D Common
Units, having the same rights and preferences, and subject to the same duties and
obligations as the Common Units, except as set forth in this Section 5.13.
(b) Rights of Class D Common Units. During the period commencing upon the date of
issuance of the Class D Common Units and ending on the Class D Conversion Date, the Class D
Common Units shall have the following rights and preferences and shall be subject to the
following duties and obligations:
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(i) Allocations. Except as otherwise provided in this Agreement, no items of
Partnership income, gain, loss, deduction and credit shall be allocated to the Class
D Common Units under Section 6.1(a) and (b).
(ii) Distributions. The Class D Common Units shall not have the right to share
in regular quarterly Partnership distributions of cash from Operating Surplus. In
no event shall this be construed as a limitation on distributions from Capital
Surplus.
(iii) Allocation of Net Termination Gain to Class D Common Unitholders.
Notwithstanding anything to the contrary in Section 6.1(c)(i), Unitholders holding
Class D Common Units shall be allocated Net Termination Gain in accordance with
Section 6.1(c)(i); provided, that
(A) Unitholders holding Class D Common Units shall not receive any
allocation pursuant to Section 6.1(c)(i)(B) or Section 6.1(c)(i)(C); and
(B) following any allocation made pursuant to Section 6.1(c)(i)(B) and
prior to any allocation made pursuant to Section 6.1(c)(i)(C), any remaining
Net Termination Gain shall be allocated (x) to the General Partner in
accordance with its Percentage Interest and (y) to all Unitholders holding
Class D Common Units, Pro Rata, a percentage equal to 100% less the
percentage applicable to subclause (x) of this clause (B), until the Capital
Account in respect of each Class D Common Unit then Outstanding is equal to
its Unrecovered Capital, determined for the taxable year (or portion
thereof) to which this allocation of gain relates.
(iv) Allocation of Net Termination Loss to Class D Common Unitholders.
Notwithstanding anything to the contrary in Section 6.1(c)(ii), with respect to
allocations made in accordance with Section 6.1(c)(ii), Unitholders holding Class D
Common Units shall be allocated Net Termination Loss in accordance with Section
6.1(c)(ii)(B) in the same manner as Unitholders holding Common Units.
(v) Voting Rights. The Class D Common Units shall have voting rights that are
identical to the voting rights of the Common Units and shall vote with the Common
Units as a single class, so that each Class D Common Unit will be entitled to one
vote on each matter with respect to which each Common Unit is entitled to vote.
Each reference in the Partnership Agreement to a vote of holders of Common Units
shall be deemed to be a reference to the holders of Common Units and Class D Common
Units.
(vi) Certificates. (A) The Class D Common Units shall be evidenced by
certificates in such form as the General Partner may approve and, subject to the
satisfaction of any applicable legal, regulatory and contractual requirements,
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may be assigned or transferred in a manner identical to the assignment and
transfer of other Units; unless and until the General Partner determines to assign
the responsibility to another Person, the General Partner will act as the registrar
and transfer agent for the Class D Common Units. The certificates evidencing Class
D Common Units shall be separately identified and shall not bear the same CUSIP
number as the certificates evidencing Common Units.
(B) In addition to any legend required by the Partnership Agreement to be
included on any certificate representing Class D Common Units (or Common Units
issuable upon conversion thereof) a legend shall be placed on the certificates
representing the Class D Common Units (and the Common Units issuable upon conversion
thereof) as required by, and until eligible to be removed as provided in, Section
5.9(b)(i) of the Merger Agreement.
(vii) Conversion. Each Class D Common Unit will automatically convert into
Common Units on a one-for-one basis on the close of business on the first Business
Day after the record date for payment pursuant to Section 6.4(a) or Section 6.4(b),
as the case may be, of the cash distribution for the Quarter ending December 31,
2008; provided, however, that in accordance with Section 5.17 of the Merger
Agreement a number of Class D Common Units may convert into Common Units prior to
the date specified in the preceding clause of this sentence (the “Class D Conversion
Date"). The holder of any Class D Common Unit shall surrender the certificates
evidencing such Class D Common Units for conversion at the office of the General
Partner. In such case, the Partnership shall, as soon as practicable thereafter,
issue and deliver at such office to the Person in whose name the surrendered Class D
Common Units were registered one or more certificates evidencing Common Units,
registered in the name of such Person, for the number of Common Units to which such
Person shall be entitled as aforesaid.
(f) Section 6.1(d)(iii)(A) of the Partnership Agreement is hereby amended to read in
its entirety:
(A) If the amount of cash or the Net Agreed Value of any property
distributed (except (x) for any difference resulting from the application of
Section 5.13(b)(ii) or (y) cash or property distributed or deemed
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 product obtained
by multiplying (aa) the quotient determined by
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dividing (x) the General Partner’s Percentage Interest at the time in which the
greater cash or property distribution occurs by (y) the sum of 100 less the
General Partner’s Percentage Interest at the time in which the greater cash
or property distribution occurs times (bb) the sum of the amounts allocated
in clause (1) above.
(g) Article VI is hereby amended to add a new Section 6.1(d)(xiv) as follows:
“(xiv) Allocations for Class D Common Units.
(A) With respect to any taxable period of the Partnership ending upon,
or after, a Book-Up Event, a Book-Down Event or a sale of all or
substantially all of the assets of the Partnership occurring after the date
of issuance of Class D Common Units, Partnership items of income, gain, loss
or deduction for such taxable period shall be allocated (1) to the Partners
holding Class D Common Units or converted Class D Common Units that are
Outstanding as of the time of such event in proportion to the number of
Class D Common Units or converted Class D Common Units held by such
Partners, and/or (2) to the Partners holding Common Units (other than Class
D Common Units or converted Class D Common Units) that are Outstanding as of
the time of such event in proportion to the number of Common Units held by
such Partners, until the Capital Account of each Class D Common Unit or
converted Class D Common Unit is equal to the Per Unit Capital Amount for a
then outstanding Common Unit (other than a converted Class D Common Unit).
(B) With respect to any taxable period of the Partnership ending upon,
or after, the transfer of converted Class D Common Units to a Person that is
not an Affiliate of the holder, Partnership items of income, gain, loss or
deduction for such taxable period shall be allocated (1) to the Partners
transferring such converted Class D Common Units in proportion to the number
of converted Class D Common Units transferred by such Partners, and/or (2)
to the Partners holding Common Units (other than Class D Common Units or
converted Class D Common Units) that are Outstanding as of the time of such
event in proportion to the number of Common Units held by such Partners,
until the Capital Account of such converted Class D Common Unit is equal to
the Per Unit Capital Amount for a then outstanding Common Unit (other than a
converted Class D Common Unit).
(h) Article VI is hereby amended to add a new Section 6.7(e) as follows:
(c) A Unitholder holding a Class D Common Unit that has converted into a Common
Unit pursuant to Section 5.13 shall be required to provide notice to the General
Partner of the transfer of the converted Class D Common Unit within the earlier of
(i) 30 days following such transfer and (ii) the last Business Day of the calendar
year during which such transfer occurred, unless (x) the
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transfer is to an Affiliate of the holder or (y) by virtue of the application of
Section 6.1(d)(xiv)(B) to a prior transfer of the Unit or the application of Section
6.1(d)(xiv)(A), the General Partner has previously determined, based on advice of
counsel, that the converted Class D Common Unit should have, as a substantive
matter, like intrinsic economic and federal income tax characteristics of an Initial
Common Unit. In connection with the condition imposed by this Section 6.7(e), the
General Partner shall take whatever steps are required to provide economic
uniformity to the converted Class D Common Units in preparation for a transfer of
such Units, including the application of Section 6.1(d)(xiv)(B); 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 (for this
purpose the allocations of income, gain, loss and deductions with respect to Class D
Common Units or Common Units will be deemed not to have a material adverse effect on
the Unitholders holding Common Units).
Section 2. Ratification of Partnership Agreement. Except as expressly modified and
amended herein, all of the terms and conditions of the Partnership Agreement shall remain in full
force and effect.
Section 3. General Authority. The appropriate officers of the General Partner are
hereby authorized to make such clarifying and conforming changes as they deem necessary or
appropriate, and to interpret the Partnership Agreement, to give effect to the intent and purpose
of this Amendment.
Section 4. Governing Law. This Amendment shall be construed in accordance with and
governed by the laws of the State of Delaware, without regard to principles of conflicts of laws.
(Signature page follows)
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IN WITNESS WHEREOF, the General Partner has executed this Amendment as of the date first set
forth above.
GENERAL PARTNER: | ||||
REGENCY GP LP | ||||
By: | Regency GP LLC, | |||
its General Partner | ||||
By: | /s/ Xxxxxxx X. Xxxxx, Xx. | |||
Authorized Officer: Xxxxxxx X. Xxxxx, Xx. | ||||
Title: Senior Vice President |
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