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EXHIBIT 3.4
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
HEP OPERATING COMPANY, L.P.
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.................................................................................... 1
Section 1.2. Construction................................................................................... 11
ARTICLE II
ORGANIZATION
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......................................................................................... 13
Section 2.6. Power of Attorney.............................................................................. 13
Section 2.7. Term........................................................................................... 15
Section 2.8. Title to Partnership Assets.................................................................... 15
ARTICLE III
RIGHTS OF LIMITED PARTNERS
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. Access to Information.......................................................................... 16
ARTICLE IV
TRANSFERS OF PARTNERSHIP INTERESTS
Section 4.1. Transfer Generally............................................................................. 17
Section 4.2. Transfer of General Partner's General Partner 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
Section 5.1. Initial Contributions.......................................................................... 19
Section 5.2. Contributions Pursuant to the Contribution Agreement........................................... 19
Section 5.3. Additional Capital Contributions............................................................... 20
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HEP OPERATING COMPANY, L.P
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Section 5.4. Interest and Withdrawal........................................................................ 20
Section 5.5. Capital Accounts............................................................................... 20
Section 5.6. Loans from Partners............................................................................ 23
Section 5.7. Issuances of Additional Partnership Securities................................................. 23
Section 5.8. Limited Preemptive Rights...................................................................... 24
Section 5.9. Fully Paid and Non-Assessable Nature of Limited Partner Interests.............................. 25
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
Section 6.1. Allocations for Capital Account Purposes....................................................... 25
Section 6.2. Allocations for Tax Purposes................................................................... 29
Section 6.3. Distributions.................................................................................. 31
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
Section 7.1. Management..................................................................................... 32
Section 7.2. Certificate of Limited Partnership............................................................. 34
Section 7.3. Restrictions on the General Partner's Authority................................................ 34
Section 7.4. Reimbursement of the General Partner........................................................... 35
Section 7.5. Outside Activities............................................................................. 35
Section 7.6. Loans from the General Partner; Loans or Contributions
from the Partnership; Contracts with Affiliates; Certain Restrictions on the General Partner... 37
Section 7.7. Indemnification................................................................................ 38
Section 7.8. Liability of Indemnitees....................................................................... 40
Section 7.9. Resolution of Conflicts of Interest............................................................ 40
Section 7.10. Other Matters Concerning the General Partner.......................................... 42
Section 7.11. Reliance by Third Parties............................................................. 43
ARTICLE VIII
BOOKS, RECORDS AND ACCOUNTING
Section 8.1. Records and Accounting......................................................................... 43
Section 8.2. Fiscal Year.................................................................................... 44
ARTICLE IX
TAX MATTERS
Section 9.1. Tax Returns and Information.................................................................... 44
Section 9.2. Tax Elections.................................................................................. 44
Section 9.3. Tax Controversies.............................................................................. 44
Section 9.4. Withholding.................................................................................... 45
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HEP OPERATING COMPANY, L.P
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
ARTICLE X
ADMISSION OF PARTNERS
Section 10.1. Admission of Partners................................................................. 45
Section 10.2. Admission of Substituted Limited Partner.............................................. 45
Section 10.3. Admission of Additional Limited Partners.............................................. 46
Section 10.4. Admission of Successor or Transferee General Partner.................................. 46
Section 10.5. Amendment of Agreement and Certificate of Limited Partnership......................... 47
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
Section 11.1. Withdrawal of the General Partner..................................................... 47
Section 11.2. Removal of the General Partner........................................................ 48
Section 11.3. Interest of Departing Partner......................................................... 49
Section 11.4. Withdrawal of a Limited Partner....................................................... 49
ARTICLE XII
DISSOLUTION AND LIQUIDATION
Section 12.1. Dissolution........................................................................... 50
Section 12.2. Continuation of the Business of the Partnership After Dissolution..................... 50
Section 12.3. Liquidator............................................................................ 51
Section 12.4. Liquidation........................................................................... 52
Section 12.5. Cancellation of Certificate of Limited Partnership.................................... 52
Section 12.6. Return of Contributions............................................................... 53
Section 12.7. Waiver of Partition................................................................... 53
Section 12.8. Capital Account Restoration........................................................... 53
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT
Section 13.1. Amendment to be Adopted Solely by the General Partner................................. 53
Section 13.2. Amendment Procedures.................................................................. 55
ARTICLE XIV
MERGER
Section 14.1. Authority............................................................................. 55
Section 14.2. Procedure for Merger or Consolidation................................................. 55
Section 14.3. Approval by Limited Partners of Merger or Consolidation............................... 56
Section 14.4. Certificate of Merger................................................................. 57
Section 14.5. Effect of Merger...................................................................... 57
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HEP OPERATING COMPANY, L.P
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
ARTICLE XV
GENERAL PROVISIONS
Section 15.1. Addresses and Notices................................................................. 58
Section 15.2. Further Action........................................................................ 58
Section 15.3. Binding Effect........................................................................ 58
Section 15.4. Integration........................................................................... 58
Section 15.5. Creditors............................................................................. 58
Section 15.6. Waiver................................................................................ 58
Section 15.7. Counterparts.......................................................................... 59
Section 15.8. Applicable Law........................................................................ 59
Section 15.9. Invalidity of Provisions.............................................................. 59
Section 15.10. Consent of Partners................................................................... 59
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HEP OPERATING COMPANY, L.P
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
HEP OPERATING COMPANY, L.P.
THIS FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of HEP
Operating Company, L.P., dated as of [________,] 2004, is entered into by and
between HEP Logistics GP, L.L.C., a Delaware limited liability company, as the
General Partner, and Xxxxx Energy Partners, 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.
RECITALS:
WHEREAS, HEP Logistics GP, L.L.C. and Xxxxx Energy Partners, L.P.
formed the Partnership pursuant to the Agreement of Limited Partnership of HEP
Operating Company, L.P. dated as of April 16, 2004 (the "Prior Agreement") and a
Certificate of Limited Partnership date such date, which was filed with the
Secretary of State of the State of Delaware on April 19, 2004; and
WHEREAS, the Partners of the Partnership now desire to amend the Prior
Agreement to reflect additional contributions by the Partners and certain other
matters.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements contained herein, the parties hereto hereby amend the Prior Agreement
and, as so amended, restate it in its entirety as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.
"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
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HEP OPERATING COMPANY, L.P
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
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(e)(2) and 706(d) of the
Code and Treasury Regulation Section 1.751-1(b)(2)(ii), and (ii) the amount of
all distributions that, as of the end of such fiscal year, are reasonably
expected to be made to such Partner in subsequent years in accordance with the
terms of this Agreement or otherwise to the extent they exceed offsetting
increases to such Partner's Capital Account that are reasonably expected to
occur during (or prior to) the year in which such distributions are reasonably
expected to be made (other than increases as a result of a minimum gain
chargeback pursuant to Section 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 Partnership Interest shall
be the amount that such Adjusted Capital Account would be if such General
Partner Interest or other Partnership Interest were the only interest in the
Partnership held by such Partner from and after the date on which such General
Partner Interest or other Partnership 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. For
purposes of this definition, the term "control" means the possession, directly
or indirectly, through one or more intermediaries 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).
"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 First Amended and Restated Agreement of Limited
Partnership of HEP Operating Company, L.P., as it may be amended, supplemented
or restated from time to time.
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HEP OPERATING COMPANY, L.P
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
"Assets" means all assets conveyed, contributed or otherwise
transferred to the Partnership Group prior to or on the Closing Date pursuant to
the Contribution Agreement and any assets acquired by the Partnership Group
pursuant to the exercise of the purchase options granted pursuant to the Omnibus
Agreement.
"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 through one or more
intermediaries, 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:
(a) the sum of (i) all cash and cash equivalents of the
Partnership on hand at the end of such Quarter, and (ii) all additional
cash and cash equivalents of the Partnership 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, less
(b) 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
(including reserves for future capital expenditures and for anticipated
future credit needs of the Partnership) 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 or (iii) provide funds for distributions under
Section 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 (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 (as defined in the MLP Agreement) 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
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HEP OPERATING COMPANY, L.P
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
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.
"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.
"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 Partnership Interest shall be the amount
that such Capital Account would be if such General Partner Interest or other
Partnership Interest were the only interest in the Partnership held by such
Partner from and after the date on which such General Partner Interest or other
Partnership Interest was first issued.
"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 Contribution Agreement.
"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.
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.
"Closing Date" means the first date on which Common Units are sold by
the MLP to the Underwriters pursuant to the provisions of the Underwriting
Agreement.
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HEP OPERATING COMPANY, L.P
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
"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 any successor law.
"Commission" means the United States Securities and Exchange
Commission.
"Common Unit" has the meaning assigned to such term in the MLP
Agreement.
"Conflicts Committee" 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 LP Act, but excluding cash, contributed to
the Partnership. 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" means that certain Contribution, Conveyance
and Assumption Agreement, dated as of the Closing Date, among the Partnership,
General Partner, the MLP General Partner, the MLP, GP LLC, and certain other
parties, together with the additional conveyance documents and instruments
contemplated or referenced thereunder.
"Curative Allocation" means any allocation of an item of income, gain,
deduction, loss or credit pursuant to the provisions of Section 6.1(d)(ix).
"Delaware LP Act" means the Delaware Revised Uniform Limited
Partnership Act, 6 Del. C. Section 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.
"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 HEP Logistics GP, L.L.C. 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.
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HEP OPERATING COMPANY, L.P
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
"GP LLC" means Xxxxx Logistic Services, L.L.C., a Delaware limited
liability company and the general partner of the MLP.
"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, director,
officer, 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 director, officer, employee,
member, partner, agent, fiduciary or trustee of another Person; provided,
however, that a Person shall not be an Indemnitee by reason of providing, on a
fee-for-services basis, trustee, fiduciary or custodial services.
"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 LP 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 Xxxxx Energy Partners, L.P.
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HEP OPERATING COMPANY, L.P
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
"MLP Agreement" means the First Amended and Restated Agreement of
Limited Partnership of Xxxxx Energy Partners, L.P., as it may be amended,
supplemented or restated from time to time.
"MLP General Partner" means HEP Logistics Holdings, L.P., a Delaware
limited partnership and the general partner of the MLP.
"MLP Security" has the meaning assigned to the term "Partnership
Security" 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 year, the excess, if any, of the
Partnership's items of income and gain (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnership's items of loss and deduction (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation
of Net Income shall be determined in accordance with Section 5.5(b) and shall
not include any items specially allocated under Section 6.1(d).
"Net Loss" means, for any taxable year, the excess, if any, of the
Partnership's items of loss and deduction (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnership's items of income and gain (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation
of Net Loss shall be determined in accordance with Section 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. The items included in the determination
of Net Termination Gain shall be determined in accordance with Section 5.5(b)
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. The
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HEP OPERATING COMPANY, L.P
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
items included in the determination of Net Termination Loss shall be determined
in accordance with Section 5.5(b) 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.
"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(b), are attributable to a Nonrecourse Liability.
"Nonrecourse Liability" has the meaning set forth in Treasury
Regulation Section 1.752-1(a)(2).
"OLP Subsidiary" means a Subsidiary of the Partnership.
"Omnibus Agreement" means that Omnibus Agreement, dated as of the
Closing Date, among the Partnership, the General Partner, Xxxxx Corporation,
Navajo Pipeline Co., L.P., Navajo Refining Company, L.P., GP LLC, the MLP
General Partner and the MLP.
"Opinion of Counsel" means a written opinion of counsel (who may be
regular counsel to the Partnership or the General Partner or any of its
Affiliates) acceptable to the General Partner in its reasonable discretion.
"Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Treasury Regulation Section 1.704-2(i)(2).
"Partner Nonrecourse Deductions" means any and all items of loss,
deduction or expenditure (including, without limitation, any expenditure
described in Section 705(a)(2)(B) of the Code) that, in accordance with the
principles of Treasury Regulation Section 1.704-2(i), are attributable to a
Partner Nonrecourse Debt.
"Partners" means the General Partner and the Limited Partners.
"Partnership" means HEP Operating Company, L.P., a Delaware limited
partnership, and any successors thereto.
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HEP OPERATING COMPANY, L.P
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
"Partnership Group" means the Partnership and all OLP Subsidiaries,
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 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 (but excluding any options, rights, warrants and appreciation
rights relating to an equity interest in the Partnership).
"Percentage Interest" means the percentage interest in the Partnership
owned by each Partner upon completion of the transactions in Section 5.2 and
shall mean, (a) as to the General Partner, 0.001% and (b) as to the MLP,
99.999%.
"Person" means an individual, firm, partnership, corporation, limited
liability company, association, joint stock company, unincorporated
organization, joint venture, trust, court, governmental agency or any department
or political subdivision thereof or other entity.
"Pipelines and Terminals Agreement" means that certain Pipelines and
Terminals Agreement, dated as of the Closing Date, among the Partnership, the
General Partner, Xxxxx Corporation, Navajo Refining Company, L.P., Xxxxx
Refining and Marketing Company, GP LLC, the MLP General Partner, and the MLP.
"Prior Agreement" is defined in the Recitals.
"Quarter" means, unless the context requires otherwise, a fiscal
quarter (or, with respect to the fiscal quarter during which the Closing Date
occurs, the portion of such fiscal quarter remaining after the Closing Date) 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. 333-113588) 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 Common Units in the
Initial Offering.
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HEP OPERATING COMPANY, L.P
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
"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 an 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.
"Restricted Activities" has the meaning assigned to such term in the
Omnibus Agreement.
"Securities Act" means the Securities Act of 1933 and any successor to
such statute.
"Special Approval" has the meaning assigned to such term in the MLP
Agreement.
"Subsidiary" means, with respect to any Person, (a) a corporation of
which more than 50% of the voting power of shares entitled (without regard to
the occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly through one
or more intermediaries, at the date of determination; (b) a partnership (whether
general or limited) in which such Person or a Subsidiary of such Person is, at
the date of determination, a general or limited partner of such partnership, but
only if more than 50% of the partnership interests of such partnership
(considering all of the partnership interests of the partnership as a single
class) is owned, directly or indirectly, at the date of determination, by such
Person; 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 through one or more intermediaries, 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).
"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 the
Closing Date, 2002, among the Partnership, the General Partner, the MLP, the MLP
General Partner, GP LLC, Xxxxx Corporation and the Underwriters, providing for
the purchase of Common Units by such Underwriters.
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"Unit" has the meaning assigned to such term in the MLP Agreement.
"Unitholders" 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)).
"U.S. GAAP" means United States Generally Accepted Accounting
Principles consistently applied.
"Withdrawal Opinion of Counsel" has the meaning assigned to such term
in Section 11.1(b).
"Working Capital Borrowings" means borrowings used solely for working
capital purposes or to pay distributions to Partners made pursuant to a credit
facility or other arrangement to the extent such borrowings are required to be
reduced to a relatively small amount each year (or for the year in which the
Initial Offering is consummated, the 12-month period beginning on the Closing
Date) for an economically meaningful period of time.
Section 1.2. Construction.
(a) Unless the context otherwise requires, as used in this
Agreement: (i) a term defined in Section 1.1 has the meaning ascribed to it in
Section 1.1; (ii) capitalized terms used herein but not otherwise defined shall
have the meanings assigned to such terms in the MLP Agreement; (iii) an
accounting term not otherwise defined herein has the meaning ascribed to it in
accordance with U.S. GAAP; (iv) "or" is not exclusive; (v) "including" means
"including, without limitation;" (vi) words in the singular include the plural
and vice versa; (vii) words applicable to one gender apply to each gender;
(viii) the terms "hereof," "herein," "hereby," "hereto" and derivative or
similar words refer to this entire Agreement; (ix) the terms "Article" and
"Section" refer to the specified Article or Section of this Agreement; and (x)
the phrases "pursuant to," "as described in" and "subject to the terms of," when
used with reference to a particular Section of this Agreement, or words of
similar import, shall refer to such Section referenced therein.
(b) A reference to any Person includes such Person's successors
and permitted assigns.
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(c) Any reference to "days" shall mean calendar days unless
"Business Days" (as defined in Section 1.1) are expressly specified; references
to "calendar" mean the Gregorian calendar.
ARTICLE II
ORGANIZATION
Section 2.1. Formation.
The General Partner and the MLP previously formed the Partnership as a
limited partnership pursuant to the provisions of the Delaware LP Act, and
hereby amend and restate the Prior 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 LP 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 "HEP Operating Company, 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 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 Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 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
Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 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 and sell the Assets and any
similar assets or properties now or hereafter acquired by the Partnership; (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 the Partnership is permitted to engage in, or any
type of business or activity engaged in by the General Partner prior to the
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; (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 that lawfully may be conducted by a limited partnership
organized pursuant to the Delaware LP 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 the Partnership 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 MLP or any Subsidiary of the MLP. 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, or cause to be done, 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 the General Partner and, if a Liquidator shall have been selected
pursuant to Section 12.3, the Liquidator (and any successor to the Liquidator 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:
( ) 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
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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 determination of the rights, preferences
and privileges of any class or series of Partnership Interests issued
pursuant hereto; and (F) all certificates, documents and other
instruments (including agreements and a certificate of merger) relating
to a merger or consolidation of the Partnership pursuant to Article
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 heirs, successors, assigns and personal
representatives. Each such Limited Partner or Assignee hereby agrees to be bound
by any representation made by the
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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 LP Act and
shall continue in existence until the 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 LP 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 the General Partner or one or more of its Affiliates or one or
more nominees shall be held by the General Partner or such Affiliate or nominee
for the use and benefit of the Partnership in accordance with the provisions of
this Agreement; provided, however, that the General Partner shall use 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
conveyancing 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 any withdrawal or removal of the General Partner or as
soon thereafter as practicable, the General Partner shall use reasonable efforts
to effect the transfer of record title to the Partnership and, prior to any such
transfer, will provide for the use of such assets in a manner satisfactory to
the 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.
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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 LP
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 LP 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
director, officer, employee, manager, member, general partner, agent or trustee
of the General Partner or any of its Affiliates, or any officer, director,
employee, manager, 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 LP 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 and the Omnibus Agreement,
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. Access to Information.
(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
has 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;
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(ii) to obtain a copy of the Partnership's federal, state
and local income tax returns for each year promptly after they become
available;
(iii) to have furnished to him a current list of the name
and last known business, residence or mailing address of each Partner;
(iv) to have furnished to him 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 that 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 OLP or the Partnership Group, (B) could damage the OLP 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).
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 a
General Partner assigns its General Partner Interest to another Person who
becomes the General Partner or by which 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), and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other disposition by law
or otherwise.
(b) No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article IV. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article IV shall be null and void.
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(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 member interests of the General Partner.
Section 4.2. Transfer of General Partner's General Partner Interest.
No provision of this Agreement shall be construed to prevent (and the
Limited Partners do hereby expressly consent to) (a) the transfer by the General
Partner of all or a portion of its General Partner Interest to one or more
Affiliates, which transferred General Partner Interest, to the extent not
transferred to a successor General Partner, shall constitute a Limited Partner
Interest or (b) the transfer by the General Partner, in whole and not in part,
of its General Partner Interest upon (i) its merger, consolidation or other
combination into any other Person or the transfer by it of all or substantially
all of its assets to another Person or (ii) sale of all or substantially all of
the membership interests of the General Partner by its members if, in the case
of a transfer described in either clause (i) or (ii) of this sentence, the
rights and duties of the General Partner with respect to the General Partner
Interest so transferred are assumed by the transferee and the transferee agrees
to be bound by the provisions of this Agreement; provided, however, that in
either such case, the transferee is primarily controlled, directly or indirectly
through one or more intermediaries, by the MLP or the MLP General Partner or any
Person primarily controlling, directly or indirectly through one or more
intermediaries, the MLP or the MLP General Partner; provided, further, that in
either such case, such transferee furnishes to the Partnership an Opinion of
Counsel that such merger, consolidation, combination, transfer or assumption
will not result in a loss of limited liability of any Limited Partner or cause
the Partnership to be 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). In the case of a transfer pursuant to this Section 4.2 to a Person
proposed as a successor general partner of the Partnership, the transferee or
successor (as the case may be) shall, subject to compliance with the terms of
Section 10.4, be admitted to the Partnership as the General Partner immediately
prior to the transfer of the Partnership Interest, and the business of the
Partnership shall continue without dissolution.
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 in the immediately preceding sentence, or in connection with any pledge of
(or any related foreclosure on) a Partnership Interest of a Limited Partner
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 Partnership Interest or withdraw from the Partnership.
Section 4.4. Restrictions on Transfers.
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(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 the 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; or (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).
(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
LP Act, the General Partner made an initial Capital Contribution to the
Partnership in the amount of $0.10 in exchange for an interest in the
Partnership and was admitted as General Partner, and the MLP made an initial
Capital Contribution to the Partnership in the amount of $999.90 in exchange for
an interest in the Partnership and was admitted as a Limited Partner.
Section 5.2. Contributions Pursuant to the Contribution Agreement.
(a) On the Closing Date and pursuant to the Contribution
Agreement:
(i) the MLP General Partner shall contribute to the MLP,
as a Capital Contribution, all of its ownership interests in Pipeline
Assets, L.P., Pipeline GP, L.L.C., Navajo Southern, L.P. and Pipeline,
L.L.C. in exchange for (A) 2% general partner interest, subject to all
of the rights, privileges and duties of the MLP General Partner under
the MLP Agreement, (B) the Incentive Distribution Rights, (C) _______
Common Units, (D) _______ Subordinated Units, (E) the right to be
reimbursed for $_______ million in capital expenditures; and (F)
$______ million in cash;
(ii) Xxxxx Corporation shall contribute to the MLP , as a
Capital Contribution, all of its interest in Mountain Home, L.L.C. in
exchange for (A) _________ Common Units, (B) _________ Subordinated
Units, and (C) the right to be reimbursed for $________ million in
capital expenditures; and
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(iii) Navajo Refining Company, L.P. shall contribute to the
MLP as a capital contribution all of its interests in Refining Assets,
L.P., Refining GP, L.L.C. and Xxxxx Cross, L.L.C. in exchange for (A)
______ Subordinated Units, (B) ________ Common Units and (C) the right
to be reimbursed for $______ million in capital expenditures.
(b) Following the foregoing transactions, the General Partner owns
a 0.001% Partnership Interest as General Partner and the MLP owns a 99.99%
Partnership Interest as a Limited Partner.
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 an amount equal to the amount of the additional Capital
Contribution then made by such Limited Partner multiplied by the quotient
obtained by dividing 0.001 by 99.999. 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.
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 LP Act.
Section 5.5. Capital Accounts.
( ) 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
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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 decreased by (x) 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 (y) 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 that 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) of all property owned by any OLP
Subsidiary that is classified as a partnership for federal income tax
purposes.
(ii) All fees and other expenses incurred by the
Partnership to promote the sale of (or to sell) a Partnership Interest
that can neither be deducted nor amortized under Section 709 of the
Code, if any, shall, for purposes of Capital Account maintenance, be
treated as an item of deduction at the time such fees and other
expenses are incurred and shall be allocated among the Partners
pursuant to Section 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 that 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.
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(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.
(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, the Capital Accounts of all
Partners and the Carrying Value of each item of 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 item of property
immediately prior to such issuance and had been allocated to the
Partners 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
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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 items of property.
(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 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 that 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.
Section 5.7. Issuances of Additional Partnership Securities.
(a) The Partnership may issue (i) additional Partnership
Securities; (ii) options, rights, warrants and appreciation rights relating to
the Partnership Securities; and (iii) obligations, evidences of indebtedness or
other securities or economic interests convertible into or exchangeable for
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. The issuance
by the Partnership of
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Partnership Securities or rights, warrants or appreciation rights in respect
thereof shall be deemed an amendment to this Agreement.
(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 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
such 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; (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 the holder of each such Partnership
Security to vote on Partnership matters, including matters relating to the
relative designations, preferences, rights, powers and duties of such
Partnership Security.
(c) The General Partner is hereby authorized and directed to take,
or cause to be taken, 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 admission of Additional Limited Partners and (iii)
all additional issuances of Partnership Securities. The General Partner is
further authorized and directed to specify the relative rights, powers and
duties of the holders of the Partnership Interests or other Partnership
Securities being so issued. The General Partner shall do all things necessary to
comply with the Delaware LP Act and is authorized and directed to do all things
it deems necessary or advisable in connection with any future issuance of
Partnership Securities, including compliance with any statute, rule, regulation
or guideline of any federal, state or other governmental agency.
Section 5.8. 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) issuance or sale of any class or series of Partnership
Interests, whether unissued, held in the treasury or hereafter created; (c)
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) 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) issuance or sale of any other securities that may be issued or sold by the
Partnership.
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Section 5.9. 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, except as such non-assessability may be affected by
Section 17-607 of the Delaware LP 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 5.5(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, 0.001% to the General Partner and 99.999% to
the Limited Partners in accordance with 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, 0.001% to the General Partner and 99.999% 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);
(ii) Second, the balance, if any, 100% to the General
Partner.
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(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; and
(B) Second, 0.001% to the General Partner and
99.999% to the Limited Partners, in accordance with 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
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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.
(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
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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.
(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
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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.
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.
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(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 5.5(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.
(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) 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.
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(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 that 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 or appropriate in its sole
discretion, 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.
(a) Within 45 days following the end of each Quarter commencing
with the Quarter ending on [____________], 2004, an amount equal to 100% of
Available Cash with respect to such Quarter shall, subject to Section 17-607 of
the Delaware LP 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 LP Act.
(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.
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(c) The General Partner shall have the discretion to treat taxes
paid by the Partnership on behalf of, or amounts withheld with respect to, all
or less than all of the Partners, as a distribution of Available Cash to such
Partners.
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 that 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, or cause to be done, 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 interest in the Partnership, even if same results
in the terms of the transaction being less favorable to the Partnership
than would otherwise be the case);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees (including
employees having titles such as "president," "vice president,"
"secretary" and "treasurer") and agents, outside attorneys,
accountants, consultants and contractors and the determination of their
compensation and other terms of employment or hiring;
(viii) the maintenance of such insurance for the benefit of
the Partnership Group and the Partners 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 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.
(a) Notwithstanding any other provision of this Agreement, the MLP
Agreement, the Delaware LP 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 the Partnership hereby (i) approves, ratifies and confirms the
execution, delivery and performance by the parties thereto of this Agreement,
the Underwriting Agreement, the Omnibus Agreement, the Contribution Agreement,
the Pipelines and Terminals 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, as applicable, 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 (iii) agrees that the execution,
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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 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 LP Act. The General Partner shall use all reasonable efforts to
file or 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, or
cause to be filed, amendments to and restatements of the Certificate of Limited
Partnership and do, or cause to be done, 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 the 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.
(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
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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.
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 Omnibus Agreement, the General Partner shall not be
compensated for its services as General Partner or as 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 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.
(c) Subject to Section 5.8, the General Partner, in its sole
discretion and without the approval of the Limited Partners (who shall have no
right to vote in respect thereof), may propose and adopt on behalf of the
Partnership employee benefit plans, employee programs and employee practices, or
cause the Partnership to issue Partnership Interests in connection with or
pursuant to any employee benefit plan, employee program or employee practice
maintained or sponsored by the General Partner or any of its Affiliates, in each
case for the benefit of employees of the General Partner, any Group Member or
any Affiliate, or any of them, in respect of services performed, directly or
indirectly, for the benefit of the Partnership Group. Expenses incurred by the
General Partner in connection with any such plans, programs and practices shall
be reimbursed in accordance with Section 7.4(b). Any and all obligations of the
General Partner under any employee benefit plans, employee programs or employee
practices adopted by the General Partner as permitted by this Section 7.4(c)
shall constitute obligations of the General Partner hereunder and shall be
assumed by any 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 General
Partner Interest pursuant to Section 4.2.
Section 7.5. Outside Activities.
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(a) After the 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 and a general partner
or managing member, as the case may be, of any other partnership or limited
liability company of which the Partnership is, directly or indirectly, a partner
or member, and to undertake activities that are ancillary or related thereto,
(ii) except to the extent permitted in the Omnibus Agreement, 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 the
Partnership 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 and (iii) except to the extent permitted
in the Omnibus Agreement, shall not, and shall cause its Affiliates not to,
engage in any Restricted Activities.
(b) Xxxxx Corporation and certain of its Affiliates have entered
into the Omnibus Agreement with the Partnership and the MLP, which agreement
sets forth certain restrictions on the ability of Xxxxx Corporation and its
Affiliates to engage in Restricted Activities.
(c) Except as specifically restricted by Section 7.5(a) and the
Omnibus Agreement, 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.
(d) Subject to the terms of Section 7.5(a), Section 7.5(b),
Section 7.5(c) and the Omnibus Agreement, but otherwise notwithstanding anything
to the contrary in this Agreement, (i) the engaging in competitive activities by
any Indemnitee (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) except as set forth in the Omnibus Agreement, the General
Partner and the Indemnitees shall have no obligation to present business
opportunities to the Partnership.
(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.
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(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
OLP or any Group Member, and the OLP or any Group Member may borrow from the
General Partner or any of its Affiliates, funds needed or desired by the OLP 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 OLP, a subsidiary of the OLP or
a subsidiary of 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.
(b) The General Partner may itself, or may enter into an agreement
with the MLP General Partner or 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, the MLP General Partner or any of their 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
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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 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 Group), is
equitable to the Partnership.
(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 or
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
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Indemnitee reasonably believed to be in, or (in the case of a Person other than
the General Partner) 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 or the Contribution
Agreement (other than obligations incurred by the General Partner on behalf of
the 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.
(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 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
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"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 that 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.
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 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 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
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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 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
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
such approval shall be subject to the presumption that, in making its decision,
the Conflicts Committee acted on an informed basis, in good faith and in the
honest belief that the action taken was in the best interests of the Partnership
and the MLP and, in any proceeding brought by any Limited Partner or by or on
behalf of such Limited Partner or any other Limited Partners or the Partnership
challenging such approval, the Person bringing or prosecuting such proceeding
shall have the burden of overcoming such presumption. Any conflict of interest
and any resolution of such conflict of interest shall be conclusively deemed
fair and reasonable to the Partnership if such conflict of interest or
resolution is (i) approved by Special Approval, (ii) on terms no less favorable
to the Partnership than those generally being provided to or available from
unrelated third parties or (iii) fair to the Partnership, taking into account
the totality of the relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to the
Partnership). The General Partner may also adopt a resolution or course of
action that has not received Special Approval. The General Partner (including
the 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)
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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. In any proceeding brought by any Limited
Partner or by or on behalf of such Limited Partner or any other Limited Partners
or the Partnership alleging that such a resolution by the General Partner (and
not by the Conflicts Committee, whose resolution shall be conclusive as provided
above) is not fair to the Partnership, such Limited Partner shall have the
burden of proof of overcoming such conclusion. 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 LP Act or any other law, rule or regulation.
(b) Whenever this Agreement or any other agreement contemplated
hereby provides that the General Partner or any of its Affiliates is permitted
or required to make a decision (i) in its "sole discretion" or "discretion,"
that it deems "necessary or appropriate" or "necessary or advisable" or under a
grant of similar authority or latitude, 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, (ii) it may make such decision in its
sole discretion (regardless of whether there is a reference to "sole discretion"
or "discretion") unless another express standard is provided for, or (iii) in
"good faith" or under another express standard, the General Partner or such
Affiliate shall act under such express standard and shall not be subject to any
other or different standards imposed by this Agreement, the MLP Agreement, any
other agreement contemplated hereby or under the Delaware LP Act or any other
law, rule or regulation. In addition, any actions taken by the General Partner
or such Affiliate consistent with the standards of "reasonable discretion" set
forth in the definition of Available Cash shall not constitute a breach of any
duty of the General Partner to the Partnership 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 to exceed 0.001%
of the total amount distributed to all Partners or (B) hasten the expiration of
the Subordination Period or the conversion of any Subordinated Units into Common
Units.
(c) Whenever a particular transaction, arrangement or resolution
of a conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transactions.
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(d) The Limited Partner hereby authorizes the General Partner, on
behalf of the Partnership as a partner or member of a Group Member, to approve
of actions by the general partner or managing member 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 LP 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
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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 AND ACCOUNTING
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
information storage device; provided, that the books and records so maintained
are convertible into clearly legible written form within a reasonable period of
time. The books of the Partnership shall be maintained, for financial reporting
purposes, on an accrual basis in accordance with U.S. GAAP.
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 Partnership shall timely file all returns of the Partnership that
are required for federal, state and local income tax purposes on the basis of
the accrual method and a taxable year ending on December 31. The tax information
reasonably required by the Partners for federal and state income tax reporting
purposes with respect to a taxable year shall be furnished to them within 90
days of the close of the calendar year in which the Partnership's taxable year
ends. The classification, realization and recognition of income, gain, losses
and deductions and other items shall be on the accrual method of accounting for
federal income tax purposes.
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Section 9.2. Tax Elections.
(a) To the extent applicable for federal income tax purposes, 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) To the extent applicable for federal income tax purposes, 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
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 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 Partners.
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Upon the consummation of the transfers and conveyances described in
Section 5.2, the General Partner shall be the sole general partner of the
Partnership and the MLP shall be the sole limited partner of the Partnership.
Section 10.2. Admission of Substituted Limited Partner.
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 (a) the right to negotiate such Limited Partner
Interest to a purchaser or other transferee and (b) 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. Such Assignee shall become a
Substituted Limited Partner (x) at such time as the General Partner consents
thereto, which consent may be given or withheld in the General Partner's
discretion, and (y) 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.
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.
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(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, or cause to be taken, all steps necessary and appropriate
under the Delaware LP 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, or caused to be prepared and filed, 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;
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(ii) The General Partner transfers all of its rights as
General Partner pursuant to Section 4.2;
(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) 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;
(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; 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
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.
(a) 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 Closing Date and ending at 12:00 midnight, Central Standard
Time, on June 30, 2014, 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
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Partner or of the limited partners of the MLP or 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 previously
treated as such); (ii) at any time after 12:00 midnight, Central Standard Time,
on June 30, 2014, 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; (iii) at any time that the General Partner
ceases to be the General Partner pursuant to Section 11.1(a)(ii) or (iii). If
the General Partner gives a notice of withdrawal pursuant to Section 11.1(a)(i)
hereof, the Limited Partners may, prior to the effective date of such
withdrawal, elect a successor General Partner. 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 10.3.
Section 11.2. Removal of the General Partner.
The General Partner may be removed by the MLP. Upon the removal of the
General Partner by the MLP, the MLP shall elect a successor general partner for
the Partnership. The admission of any such successor General Partner to the
Partnership shall be subject to the provisions of Section 10.3.
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 be
purchased by the successor to the Departing Partner for an amount in cash equal
to the fair market value of such Partnership Interest, such amount to be
determined and payable as of the effective date of the Departing Partner's
departure. Such purchase 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.
For purposes of this Section 11.3(a), the fair market value of the
Departing Partner's General Partner 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
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independent expert, which third independent investment banking firm or other
independent expert shall determine the fair market value of the General Partner
Interest of the Departing Partner. In making its determination, such third
independent investment banking firm or other independent expert may consider the
value of the Partnership's assets, the rights and obligations of the Departing
Partner and other factors it may deem relevant.
(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:
(a) 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 10.4;
(b) an election to dissolve the Partnership by the General Partner
that is approved by all of the Limited Partners;
(c) the entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Delaware LP Act;
(d) the sale of all or substantially all of the assets and
properties of the Partnership Group; or
(e) the dissolution of the MLP.
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Section 12.2. Continuation of the Business of the Partnership After
Dissolution.
Upon 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, 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(e), 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:
(a) the reconstituted Partnership shall continue unless earlier
dissolved in accordance with this Article XII;
(b) 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; and
(c) 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 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 any Group Member would be treated
as an association taxable as a corporation or otherwise be taxable as an entity
for federal income tax purposes upon the exercise of such right to continue.
Section 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 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
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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 LP 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.
(b) Discharge of Liabilities. Liabilities of the Partnership
include amounts owed to the Liquidator as compensation for serving in such
capacity (subject to the terms of Section 12.3) and 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
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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.
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.
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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 (including any particular class
of Partnership Interests as compared to other classes of Partnership Interests)
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 LP 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
(as defined in the MLP Agreement) 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,
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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 members, 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.
Section 13.2. Amendment Procedures.
Except with respect to amendments of the type described in Section
13.1, all amendments to this Agreement shall be made in accordance with the
following requirements: Amendments to this Agreement may be proposed only by or
with the consent of the General Partner, which consent may be given or withheld
in its sole discretion. A 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
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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) that 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;
(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
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(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 that
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 limited partner in the MLP
or 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 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 substantially 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 LP Act.
Section 14.5. Effect of Merger.
(a) At the effective time of the certificate of merger:
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(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 or Assignee at the address appearing on the books
and records of the Partnership. 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 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.
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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
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.
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
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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:
HEP LOGISTICS GP, L.L.C.
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
LIMITED PARTNERS
XXXXX ENERGY PARTNERS, L.P.
By: HEP LOGISTICS HOLDINGS, L.P.
its General Partner
By: XXXXX LOGISTIC SERVICES, L.L.C.
its General Partner
By: ______________________________
Name: ____________________________
Title: ___________________________
SIGNATURE PAGE
HEP OPERATING COMPANY, L.P
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
