Exhibit 3.1
CONFORMED COPY
AMENDED AND RESTATED AGREEMENT
OF
LIMITED PARTNERSHIP
OF
BUCKEYE PARTNERS, L.P.
(As Amended and Restated as of April 24, 2002)
BUCKEYE PARTNERS, L.P.
TABLE OF CONTENTS
ARTICLE I - Definitions 1
Affiliate 1
Agent 2
Agreed Value 2
Agreement 2
Audit Committee 2
BMC 2
Business Day 2
Capital Accounts 2
Capital Contribution 2
Carrying Value 2
Certificate of Limited Partnership 2
Code 2
Contributed Property 3
Contributing Partner 3
Delaware Act 3
Designated Expenses 3
Eighty Percent Interest 3
ESOP 3
ESOP Loan 3
Exchange Act 3
Exchange Agreement 3
General Partner 3
GP Unit 3
Incentive Compensation Agreement 4
Indemnitee 4
Issue Price 4
Limited Partner 4
Liquidator 4
LP Certificate 4
LP Unit 4
Majority Interest 4
Management Agreements 4
Manager 4
NASDAQ 4
National Securities Exchange 4
Net Agreed Value 4
Operating Partnership Agreements 5
Operating Partnerships 5
Opinion of Counsel 5
Organizational Limited Partner 5
Partner 5
Partnership 5
Partnership Interest 5
Partnership Securities 5
Percentage Interest 5
Person 5
Pipe Line 5
Recapture Income 5
Record Date 5
Record Holder or Holder 5
Restricted Payment 6
Securities Act 6
Special Approval 6
Time of Delivery 6
Transfer Agent 6
Two-Thirds Interest 6
Unit 6
Unit Price 6
Units Register 6
Unrealized Gain 6
Unrealized Loss 7
ARTICLE II - Organizational Matters 7
2.1 Formation 7
2.2 Name 7
2.3 Principal Office; Registered Office 7
2.4 Power of Attorney 7
2.5 Term 9
2.6 Organizational Limited Partner 9
2.7 Organizational Certificate 9
ARTICLE III - Purpose 9
3.1 Purpose 9
ARTICLE IV - Capital Contributions; Purchases Pursuant
to
Purchase Agreements; Additional Issuances 9
4.1 General Partner Contributions 9
4.2 Limited Partner Contributions 10
4.3 Issuances of Additional LP Units and Other
Securities 10
4.4 No Preemptive Rights 11
4.5 No Interest 11
4.6 Loans from Partners 11
4.7 No Withdrawal 11
ARTICLE V - Capital Accounts; Distributions 11
5.1 Capital Accounts 11
5.2 Distributions in Respect of Units 13
ARTICLE VI - Income Tax Matters 13
6.1 Tax Allocations 14
6.2 Preparation of Tax Returns 14
6.3 Tax Elections 15
6.4 Tax Controversies 15
6.5 Withholding 15
ARTICLE VII - Management and Operation of Business;
Indemnification 15
7.1 Powers of General Partner 15
7.2 Duties of General Partner 16
7.3 Reliance by Third Parties 17
7.4 Compensation and Reimbursement of the General
Partner 17
7.5 Purchase or Sale of LP Units and Other Partnership
Securities 18
7.6 Partnership Funds 18
7.7 Outside Activities; Contracts with Affiliates;
Loans to or from Affiliates 18
7.8 Tax Basis and Value Determinations 19
7.9 Resolution of Conflicts of Interest; Standard of
Care 19
7.10 Other Matters Concerning the General Partner 21
7.11 Limited Liability; Indemnification 21
ARTICLE VIII - Rights and Obligations of Limited
Partners 22
8.1 Limitation of Liability 22
8.2 Management of Business 22
8.3 Outside Activities 23
8.4 Return of Capital 23
8.5 Rights of Limited Partners Relating to the
Partnership 23
ARTICLE IX - Books, Records, Accounting and Reports 24
9.1 Books, Records and Accounting 24
9.2 Fiscal Year 24
9.3 Reports 24
ARTICLE X - Issuance of LP Certificates; Transfer and
Exchange of LP Xxxxx 00
00.0 Xxxxxxx Xxxxxxxx of LP Certificates 24
10.2 Registration, Registration of Transfer and
Exchange 25
10.3 Mutilated, Destroyed, Lost or Stolen LP
Certificates 25
10.4 Persons Deemed Owners 26
ARTICLE XI - Transfer of GP Units 26
11.1 Transfer of GP Units 26
11.2 Successor General Partner 26
ARTICLE XII - Admission of Initial, Substituted and
Additional
Limited Partners and Successor General Partner 26
12.1 Admission of Initial Limited Partners 26
12.2 Admission of Substituted Limited Partners 27
12.3 Admission of Successor General Partner 27
12.4 Admission of Additional Limited Partners 27
12.5 Amendment of Agreement and Certificate of Limited
Partnership 27
ARTICLE XIII - Withdrawal or Removal of the General
Partner 27
13.1 Withdrawal or Removal of the General Partner 28
13.2 Sale of Former General Partner's Interest 28
ARTICLE XIV - Dissolution and Liquidation 29
14.1 Dissolution 29
14.2 Reconstitution 30
14.3 Liquidation 30
14.4 Distribution in Kind 31
14.5 Cancellation of Certificate of Limited Partnership 31
14.6 Return of Capital 32
14.7 Waiver of Partition 32
ARTICLE XV - Amendment of Partnership Agreement 32
15.1 Amendments Which May be Adopted Solely by the
General Partner 32
15.2 Other Amendments 33
15.3 Amendment Requirements 33
ARTICLE XVI - Meetings 33
16.1 Meetings 33
16.2 Record Date 33
16.3 Conduct of Meeting 34
16.4 Action Without a Meeting 34
ARTICLE XVII - Certain Restrictions 34
17.1 Additional Units 34
17.2 Certain Amendments 35
17.3 Sale of Assets 35
17.4 Restricted Payments by General Partner or Manager 35
ARTICLE XVIII - Right to Purchase Units 35
18.1 Right to Purchase Units 35
18.2 Notice of Election to Purchase 36
18.3 Purchase and Transfer of Units 36
ARTICLE XIX - General Provisions 36
19.1 Opinions Regarding Taxation as a Partnership 36
19.2 Personal Property 37
19.3 Addresses and Notices 37
19.4 Headings 37
19.5 Binding Effect 37
19.6 Integration 37
19.7 Waiver 37
19.8 Counterparts 37
19.9 Severability 37
19.10 Applicable Law 37
AMENDED AND RESTATED AGREEMENT
OF
LIMITED PARTNERSHIP
OF
BUCKEYE PARTNERS, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP,
dated as of April 24, 2002 (the "Agreement"), is entered into by
and among BUCKEYE PIPE LINE COMPANY, a Delaware corporation, and
the additional Persons that become Partners of the Partnership as
provided herein.
BACKGROUND
On December 31, 1998, Buckeye Management Company assigned
and transferred certain assets and liabilities, including all of
its GP Units (as defined in Article I below), to Buckeye Pipe
Line Company. Buckeye Pipe Line Company accepted the transfer of
those certain assets and liabilities and the GP Units, became the
General Partner of Buckeye Partners, L.P., and entered into the
Amended and Restated Agreement of Limited Partnership, dated as
of December 31, 1998 (the "Prior Partnership Agreement").
The General Partner desires to amend and restate the Prior
Partnership Agreement in its entirety to reflect (i) a change of
the principal office of the Partnership, (ii)revisions to the
section regarding the resolution of conflicts of interest and the
standard of care, and (iii) revisions to the section regarding
limited liability and indemnification.
ARTICLE I
Definitions
The following definitions shall for all purposes, unless
otherwise clearly indicated to the contrary, apply to the terms
used in this Agreement.
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly controls, is controlled by, or
is under common control with the Person in question; provided,
however, that, for purposes of the restrictive provisions of
Sections 7.6, 7.7 and 7.9, neither the Partnership nor any of the
Operating Partnerships nor any of their respective subsidiaries
shall be deemed to be affiliates of the General Partner. As used
herein, the term control means the possession, directly or
indirectly, 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. For purposes of
this Agreement, Buckeye Pipe Line Services Company, a
Pennsylvania corporation which provides services to the General
Partner and the Manager, shall be deemed an Affiliate of the
General Partner.
"Agent" has the meaning specified in Section 2.4
"Agreed Value" of any Contributed Property means the fair
market value of such property as of the time of contribution (or,
in the case of cash, the amount thereof), as determined by the
General Partner using such reasonable method of valuation as it
may adopt.
"Agreement" means this amended and restated agreement of
limited partnership, as amended or amended and restated from time
to time.
"Audit Committee" means a committee of the Board of
Directors of the General Partner composed of two or more
directors who (a) are not security holders, officers or employees
of the General Partner, (b) are not security holders (other than
LP Units of the Partnership), officers, directors or employees of
any Affiliate of the General Partner and (c) meet the
independence standards required to serve on an audit committee of
a board of directors by the National Securities Exchange on which
the LP Units are listed for trading.
"BMC" means Buckeye Management Company, a Delaware
corporation.
"Business Day" means any day other than a Saturday, a
Sunday, or a legal holiday recognized as such by the Government
of the United States or the State of New York.
"Capital Accounts" mean the capital accounts maintained with
respect to Units pursuant to Section 5.1(a).
"Capital Contribution" means any Contributed Property which
a Partner contributes to the Partnership.
"Carrying Value" means (a) with respect to Contributed
Property, the Agreed Value of such property reduced as of the
time of determination (but not below zero) by (i) all
depreciation, cost recovery and amortization deductions charged
to the Capital Accounts pursuant to Section 5.1(a) with respect
to such property and (ii) an appropriate amount to reflect any
sales, retirements and other dispositions of assets included in
such property, and (b) with respect to any other property, the
adjusted basis of such property for federal income tax purposes
as of the time of determination, in any case as may be adjusted
from time to time pursuant to Section 5.1(f).
"Certificate of Limited Partnership" means the Amended and
Restated Certificate of Limited Partnership filed with the
Secretary of State of the State of Delaware as described in the
first sentence of Section 2.7, as amended or restated from time
to time.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Contributed Property" means any cash, property or other
consideration (in such form as may be permitted under the
Delaware Act) contributed to the Partnership.
"Contributing Partner" means any Partner contributing
Contributed Property to the Partnership in exchange for Units (or
any transferee of such Units).
"Delaware Act" means the Delaware Revised Uniform Limited
Partnership Act, as amended from time to time, and any successor
to such Act.
"Designated Expenses" mean all costs and expenses (direct or
indirect) incurred by the General Partner which are directly or
indirectly related to the formation, capitalization, business or
activities of the Partnership and the Operating Partnerships
(including, without limitation, expenses, direct or indirect,
reasonably allocated to the General Partner by its Affiliates);
provided, however, that Designated Expenses shall not include (a)
any cost or expense for which the General Partner is not entitled
to be reimbursed by reason of the proviso at the end of Section
7.11(b), (b) severance costs not permitted to be reimbursed
pursuant to the Management Agreements in connection with the
withdrawal of the Manager, (c) any amounts which the General
Partner receives as incentive compensation under the Incentive
Compensation Agreement and pays over to officers or employees of
the Manager or (d) any cost or expense for which the General
Partner and its Affiliates are not entitled to be reimbursed
pursuant to the terms of the Exchange Agreement.
"Eighty Percent Interest" means Limited Partners holding an
aggregate of at least 80% of the outstanding LP Units.
"ESOP" means the Buckeye Pipe Line Services Company Employee
Stock Ownership Plan, as amended.
"ESOP Loan" means the loan to the ESOP due March 28, 2011 in
the original principal amount of $62,625,000 and guaranteed by
the General Partner and certain of its Affiliates, and shall
include any loans refinancing such loan.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor to such statute.
"Exchange Agreement" means the Exchange Agreement, dated as
of August 12, 1997, among the General Partner, the Manager, the
Partnership and each of the Operating Partnerships and Glenmoor,
Ltd., a Delaware corporation, as amended or restated from time to
time.
"General Partner" means Pipe Line, in its capacity as the
general partner of the Partnership, and any successor to Pipe
Line as such general partner.
"GP Unit" means a Partnership Interest issued pursuant to
Section 4.1 and representing a general partner's interest in the
Partnership.
"Incentive Compensation Agreement" means the incentive
compensation agreement, dated as of March 22, 1996, between BMC
and the Partnership, as amended or restated from time to time.
"Indemnitee" means the General Partner, any Affiliate of the
General Partner, any Person who is or was a director, officer,
employee or agent of the General Partner or any such Affiliate,
or any Person who is or was serving at the request of the General
Partner or any such Affiliate as a director, officer, partner,
trustee, employee or agent of another Person.
"Issue Price" means the price at which a Unit is purchased
from the Partnership.
"Limited Partner" means any limited partner of the
Partnership.
"Liquidator" has the meaning specified in Section 14.3.
"LP Certificate" means a certificate issued by the
Partnership, substantially in the form of Annex A to this
Agreement, evidencing ownership of one or more LP Units.
"LP Unit" means a Partnership Interest issued pursuant to
Section 4.2 or 4.3 and representing a limited partner's interest
in the Partnership.
"Majority Interest" means Limited Partners holding an
aggregate of more than 50% of the outstanding LP Units.
"Management Agreements" mean the management agreements,
dated as of November 18, 1986, pursuant to which the Manager
will manage the Operating Partnerships, in each case as amended
or restated from time to time.
"Manager" means Pipe Line, in its capacity as the general
partner and manager of the Operating Partnerships, and any
successor to Pipe Line as such general partner and manager.
"NASDAQ" means the National Association of Securities
Dealers Automated Quotation System.
"National Securities Exchange" means an exchange registered
with the Securities and Exchange Commission under Section 6(a) of
the Exchange Act.
"Net Agreed Value" means (a) in the case of any Contributed
Property, the Agreed Value of such Contributed Property reduced
by any indebtedness either assumed by the Partnership upon
contribution of such Contributed Property or to which such
Contributed Property is subject when contributed, (b) in the case
of any property distributed to a Partner pursuant to Section 5.2,
14.3 or 14.4, the fair market value of such property at the time
of such distribution reduced by any indebtedness either assumed
by such Partner upon such distribution or to which such property
is subject at the time of distribution.
"Operating Partnership Agreements" mean the amended and
restated agreements of limited partnership, dated as of December
23, 1986, governing the rights and obligations of the partners of
the Operating Partnerships and certain related matters, as
amended or restated from time to time.
"Operating Partnerships" mean Buckeye Pipe Line Company,
L.P., Buckeye Pipe Line Company of Michigan, L.P., Buckeye Tank
Terminals Company, L.P., Everglades Pipe Line Company, L.P., and
Laurel Pipe Line Company, L.P., each a Delaware limited
partnership.
"Opinion of Counsel" means a written opinion of counsel (who
may be regular counsel of the General Partner or any of its
Affiliates) acceptable to the General Partner.
"Organizational Limited Partner" means Pennsylvania Company,
a Delaware corporation, acting as the organizational limited
partner pursuant to this Agreement.
"Partner" means the General Partner or a Limited Partner.
"Partnership" means Buckeye Partners, L.P., a Delaware
limited partnership.
"Partnership Interest" means a general partner's or limited
partner's interest in the Partnership.
"Partnership Securities" has the meaning specified in
Section 4.3.
"Percentage Interest" means, with respect to any Partner,
the number of Units held by such Partner divided by the number of
Units outstanding.
"Person" means an individual, a corporation, a limited
liability company, a partnership, a trust, an unincorporated
organization, an association or any other entity.
"Pipe Line" means Buckeye Pipe Line Company, a Delaware
corporation.
"Recapture Income" means any gain recognized by the
Partnership upon the disposition of any asset of the Partnership
that is not a capital gain due to the recapture of certain
deductions previously taken with respect to such asset.
"Record Date" means the date established by the General
Partner for determining the identity of Limited Partners entitled
(a) to notice of or to vote at any meeting of Limited Partners,
to vote by ballot or approve Partnership action in writing
without a meeting or to exercise rights in respect of any other
lawful action of Limited Partners, or (b) to receive any report
or distribution.
"Record Holder" or "Holder" of (a) any LP Unit means the
Person in whose name such Unit is registered in the Units
Register or (b) any GP Unit means the General Partner.
"Restricted Payment" means any dividend, distribution or
other payment in respect of the capital stock of the General
Partner or the Manager, as the case may be.
"Securities Act" means the Securities Act of 1933, as
amended from time to time, and any successor to such statute.
"Special Approval" means approval by a majority of the
members of the Audit Committee.
"Time of Delivery" means December 23, 1986.
"Transfer Agent" means the bank, trust company or other
Person appointed from time to time by the Partnership to act as
successor transfer agent and registrar for LP Units.
"Two-Thirds Interest" means Limited Partners holding an
aggregate of at least two-thirds of the outstanding LP Units.
"Unit" means a GP Unit or an LP Unit.
"Unit Price" of a Unit means, as of any date of
determination, (a) if such Unit is one of a class of Units listed
or admitted to trading on a National Securities Exchange, the
average of the last reported sales prices per Unit regular way
or, in case no such reported sale takes place on any such day,
the average of the last reported bid and asked prices per Unit
regular way, in either case on the principal National Securities
Exchange on which such class of Units is listed or admitted to
trading (or, if such class of Units is listed or admitted to
trading on the New York Stock Exchange, on the New York Stock
Exchange Composite Tape), for the five trading days immediately
preceding the date of determination; (b) if such Unit is not of a
class of Units listed or admitted to trading on a National
Securities Exchange but is of a class quoted by NASDAQ, the
average of the last reported sales prices per Unit or, in case no
such reported sale takes place on any such day or in case last
reported sales prices are not quoted by NASDAQ, the average of
the last bid and asked prices per Unit, for the five trading days
immediately preceding such date of determination, as furnished by
the National Quotation Bureau Incorporated or such other
nationally recognized quotation service as may be selected by the
General Partner for such purpose, if said Bureau is not at the
time furnishing quotations; or (c) if such Unit is not of a class
of Units listed for trading on a National Securities Exchange or
quoted by NASDAQ, an amount equal to the fair market value of
such Unit as of such date of determination, as determined by the
General Partner using any reasonable method of valuation it may
select.
"Units Register" has the meaning specified in Section 10.2.
"Unrealized Gain" attributable to a Partnership property
means, as of any date of determination, the excess, if any, of
the fair market value of such property as of such date of
determination over the Carrying Value of such property as of such
date of determination (prior to any adjustment to be made
pursuant to Section 5.1(f) as of such date).
"Unrealized Loss" attributable to a Partnership property
means, as of any date of determination, the excess, if any, of
the Carrying Value of such property as of such date of
determination (prior to any adjustment to be made pursuant to
Section 5.1(f) as of such date) over the fair market value of
such property as of such date of determination.
ARTICLE II
Organizational Matters
2.1 Formation. Subject to the provisions of this Agreement, the
General Partner and the Organizational Limited Partner originally
formed the Partnership as a limited partnership pursuant to the
provisions of the Delaware Act. The General Partner, pursuant to
the authority contained in Article XV of this Agreement, does
hereby amend and restate this Agreement in its entirety to
continue the Partnership as a limited partnership pursuant to the
provisions of the Delaware Act and to set forth the rights and
obligations of the Partners and certain matters related thereto.
Except as expressly provided herein to the contrary, the rights
and obligations of the Partners and the administration,
dissolution and termination of the Partnership shall be governed
by the Delaware Act.
2.2 Name. The name of the Partnership shall be, and the
business of the Partnership shall be conducted under the name of,
"Buckeye Partners, L.P."; provided, however, that (a) the
Partnership's business may be conducted under any other name or
names deemed advisable by the General Partner, (b) the General
Partner in its sole discretion may change the name of the
Partnership at any time and from time to time and (c) the name
under which the Partnership conducts business shall include
"Ltd." or "Limited Partnership" (or similar words or letters)
where necessary for purposes of maintaining the limited liability
status of each Limited Partner or otherwise complying with the
laws of any jurisdiction that so requires.
2.3 Principal Office; Registered Office. (a) The principal
office of the Partnership shall be 0000 Xxxxxxx Xxxx, Xxxxxx,
Xxxxxxxxxxxx 00000, or such other place as the General Partner
may from time to time designate. The Partnership may maintain
offices at such other places as the General Partner deems
advisable.
(b) The address of the Partnership's registered office in the
State of Delaware shall be Corporation Trust Center, 0000 Xxxxxx
Xxxxxx, xx xxx Xxxx xx Xxxxxxxxxx, Xxxxxx of Xxx Xxxxxx, Xxxxxxxx
00000, and the name of the Partnership's registered agent for
service of process at such address shall be The Corporation Trust
Company.
2.4 Power of Attorney. (a) Each Limited Partner hereby
constitutes and appoints the General Partner or, if a Liquidator
shall have been selected pursuant to Section 14.3, the
Liquidator, with full power of substitution, as such Limited
Partner's true and lawful agent and attorney-in-fact ("Agent"),
with full power and authority in such Limited Partner's name,
place and stead to:
(i) execute, swear to, acknowledge, deliver, file and record in
the appropriate public offices (A) all certificates, documents
and other instruments (including, without limitation, this
Agreement and the Certificate of Limited Partnership and any
amendments or restatements thereof) which the Agent deems
appropriate or necessary to form or 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) under the laws of any state or jurisdiction;
(B) all certificates, documents and other instruments which the
Agent deems appropriate or necessary to reflect any amendments,
changes or modifications of this Agreement in accordance with its
terms; (C) all conveyances and other documents or instruments
which the Agent deems appropriate or necessary 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, substitution,
withdrawal or removal of any Partner pursuant to Article XII,
XIII or XIV and other events described in Article XII, XIII or
XIV; and (E) all certificates, documents and other instruments
(including, without limitation, this Agreement and the
Certificate of Limited Partnership and any amendments or
restatements thereof) relating to the determination of the
rights, preferences and privileges of any class or series of
Units issued pursuant to Section 4.4; and
(ii) execute, swear to, acknowledge and file all ballots,
consents, approvals, waivers, certificates, documents and other
instruments which the Agent deems appropriate or necessary in
order to make, evidence, give, confirm or ratify any vote,
consent, approval, agreement or other action which is made or
given by the Partners hereunder, is deemed to be made or given by
the Partners hereunder, is consistent with the terms of this
Agreement or is deemed by the Agent to be appropriate or
necessary to effectuate the terms or intent of this Agreement or
the purposes of the Partnership; provided, however, that, if any
vote or approval of Limited Partners is specifically required for
an action by any provision of this Agreement, the Agent may
exercise the power of attorney made in this subsection (ii) to
take such action only after such vote or approval is obtained.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall
survive and not be affected by the subsequent death,
incompetency, disability, incapacity, dissolution, bankruptcy or
termination of any Limited Partner and the transfer of all or any
portion of such Limited Partner's Units and shall extend to such
Limited Partner's heirs, transferees, successors, assigns and
personal representatives. Each Limited Partner hereby agrees to
be bound by any representations made by the Agent acting in good
faith pursuant to such power of attorney; and each Limited
Partner hereby waives any and all defenses which may be available
to contest, negate or disaffirm the action of the Agent taken in
good faith pursuant to such power of attorney. Each Limited
Partner shall execute and deliver to the Agent, within 15 days
after receipt of the Agent's request therefor, such further
designations, powers of attorney and other instruments as the
Agent deems appropriate or necessary to effectuate the terms or
intent of this Agreement or the purposes of the Partnership.
2.5 Term. The Partnership shall continue in existence until the
close of Partnership business on December 31, 2036 or until the
earlier termination of the Partnership in accordance with the
provisions of Article XIV.
2.6 Organizational Limited Partner. At and as of the Time of
Delivery, the Partnership interest of the Organizational Limited
Partner shall be terminated and the Partnership Interest of BMC
shall be as described in Section 4.1.
2.7 Organizational Certificate. An Amended and Restated
Certificate of Limited Partnership of the Partnership has been
filed with the Secretary of State of the State of Delaware as
required by the Delaware Act. The General Partner shall cause to
be filed such other certificates or documents as may be required
for the formation, operation and qualification of a limited
partnership in Delaware and any other state in which the
Partnership may elect to do business. The General Partner shall
thereafter file any necessary amendments to the Certificate of
Limited Partnership and any such other certificates and documents
and do all things requisite to the maintenance of the Partnership
as a limited partnership (or as a partnership in which the
Limited Partners have limited liability) under the laws of
Delaware and any other state in which the Partnership may elect
to do business. Subject to applicable law, the General Partner
may omit from the Certificate of Limited Partnership and any such
other certificates and documents, and from all amendments
thereto, the names and addresses of the Limited Partners and
information relating to the Capital Contributions and shares of
profits and compensation of the Limited Partners, or state such
information in the aggregate rather than with respect to each
individual Limited Partner.
ARTICLE III
Purpose
3.1 Purpose. The purpose and business of the Partnership shall
be to engage in any lawful activity for which limited
partnerships may be organized under the Delaware Act.
ARTICLE IV
Capital Contributions; Purchases Pursuant
to Purchase Agreements; Additional Issuances
4.1 General Partner Contributions. (a) At and as of the Time
of Delivery, the General Partner contributed to the Partnership,
in exchange for 121,212 GP Units (i.e., a 1% Percentage
Interest), an amount equal to $2,424,240.
(b) Following the Time of Delivery, whenever a Limited Partner
makes a Capital Contribution to the Partnership pursuant to
Section 4.3, the General Partner shall contribute to the
Partnership, in exchange for a number of GP Units equal to 1/99th
of the total number of LP Units then being purchased, Contributed
Property (which may include LP Units) having a Net Agreed Value
equal to 1/99th of the aggregate Net Agreed Value of all Capital
Contributions to the Partnership then being made pursuant to
Section 4.3, unless the General Partner receives an Opinion of
Counsel that the failure to make such additional Capital
Contribution would not result in the Partnership or any of the
Operating Partnerships being treated as an association taxable as
a corporation for federal income tax purposes.
4.2 Limited Partner Contributions. At and as of the Time of
Delivery, each underwriting firm which entered into an
underwriting agreement with the Partnership contributed to the
Partnership, in exchange for the number of LP Units specified
therein an amount in cash equal to the Issue Price for such LP
Units (as specified in such underwriting agreement) multiplied by
the number of LP Units being so purchased.
4.3 Issuances of Additional LP Units and Other Securities. (a)
The General Partner is hereby authorized to cause the Partnership
to issue, in addition to the LP Units issued pursuant to Section
4.2, additional LP Units, or classes or series thereof, or
options, rights, warrants or appreciation rights relating thereto
or any other type of equity security that the Partnership may
lawfully issue, any secured or unsecured debt obligations of the
Partnership, or debt obligations of the Partnership convertible
into any class or series of equity securities of the Partnership
(collectively, "Partnership Securities"), for any Partnership
purpose, at any time or from time to time, to Partners or to
other Persons (including, without limitation, to employee benefit
plans sponsored by the General Partner, the Partnership, any of
the Operating Partnerships, the Manager or any of their
respective Affiliates), for such consideration and on such terms
and conditions, and entitling the holders thereof to such
relative rights and powers, as shall be established by the
General Partner in its sole discretion, all without the approval
of any Limited Partners, except as provided in Section 17.1.
(b) Without limiting the generality of the foregoing (but
subject to the provisions of Section 17.1), the additional
Partnership Securities to be issued by the Partnership under this
Section 4.3 may contain provisions with respect to (i) the
allocation of items of Partnership income, gain, loss, deduction
and credit; (ii) the right to share in Partnership distributions;
(iii) rights upon dissolution and liquidation of the Partnership;
(iv) whether any such issue of Partnership Securities may be
acquired by the Partnership, by purchase, redemption or
otherwise, and if so, the price at which, and the terms and
conditions upon which, such Partnership Securities may be
purchased, redeemed or otherwise acquired by the Partnership; (v)
the conversion rights applicable to any such issue of Partnership
Securities, and if so, the rate at which, and the terms and
conditions upon which, such Partnership Securities may be
converted into any other class or series of Partnership
Securities; (vi) the terms and conditions upon which any such
Partnership Securities will be issued, assigned, or transferred;
and (vii) the right, if any, of the holders of any such issue of
Partnership Securities to vote on Partnership matters.
(c) The General Partner is hereby authorized and directed to do
all acts which it deems appropriate or necessary in connection
with each issuance of Units or other securities by the
Partnership and to amend this Agreement in any manner which it
deems appropriate or necessary to provide for each such issuance,
to admit additional limited partners in connection therewith and
to specify the relative rights, powers and duties of the holders
of the Units or other securities being so issued, all without the
approval of any Limited Partners, except as provided in Section
17.1.
4.4 No Preemptive Rights. No Partner shall have any preemptive
right with respect to the issuance or sale of Units or other
securities that may be issued by the Partnership.
4.5 No Interest. No interest shall be paid by the Partnership
on Capital Contributions.
4.6 Loans from Partners. Loans or other advances by a Partner
to or for the account of the Partnership shall not be considered
Capital Contributions.
4.7 No Withdrawal. No Partner shall be entitled to withdraw any
part of its Capital Contributions or its Capital Account or to
receive any distributions from the Partnership except as provided
herein.
ARTICLE V
Capital Accounts; Distributions
5.1 Capital Accounts. (a) The Partnership shall maintain for
each Partner a separate Capital Account with respect to Units in
accordance with the regulations issued pursuant to Section 704 of
the Code. The Capital Account of any Partner shall be increased
by (i) the Net Agreed Value of all Capital Contributions made by
such Partner in exchange for Units and (ii) all items of income
and gain computed in accordance with Section 5.1 (b) and
allocated to such Partner pursuant to Section 5.1(c) and reduced
by (iii) the Net Agreed Value of all distributions of cash or
property made to such Partner with respect to Units and (iv) all
items of deduction and loss computed in accordance with Section
5.1(b) and allocated to such Partner pursuant to Section 5.1(c).
(b) For purposes of computing the amount of each item of income,
gain, loss or deduction to be reflected in the Capital Accounts,
the determination, recognition and classification of such item
shall be the same as its determination, recognition and
classification for federal income tax purposes, provided that:
(i) Any deductions for depreciation, cost recovery or
amortization attributable to any Partnership property shall be
determined as if the adjusted basis of such property was equal to
the Carrying Value of such property. Upon an adjustment to the
Carrying Value of any Partnership property subject to
depreciation, cost recovery or amortization pursuant to Section
5.1(e) or 7.8, any further deductions for such depreciation, cost
recovery or amortization attributable to such property shall be
determined as if the adjusted basis of such property was equal to
the Carrying Value of such property immediately following such
adjustment.
(ii) If the Partnership's adjusted basis in property subject to
depreciation, cost recovery or amortization is reduced for
federal income tax purposes pursuant to Section 48(q) (1) of the
Code, the amount of such reduction shall be deemed to be an
additional item of deduction in the year such property is placed
in service. Any restoration of such basis pursuant to Section
48(q) (2) of the Code shall be deemed to be an additional item of
income in the year of restoration.
(iii) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined by
the Partnership as if the adjusted basis of such property as of
such date of disposition was equal in amount to the Carrying
Value of such property as of such date.
(iv) 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
shall be treated as items of deduction.
(v) The computation of all items of income, gain, loss and
deduction shall be made without regard to any election under
Section 754 of the Code which may be made by the Partnership and,
as to those items described in Section 705(a)(1)(B) or Section
705(a)(2)(B) of the Code, without regard to the fact that such
items are not includible in gross income or are neither currently
deductible nor capitalizable for federal income tax purposes.
(c) (i) For purposes of maintaining the Capital Accounts
and except as otherwise provided in this Section 5.1 (c), each
item of income, gain, loss and deduction (computed in accordance
with Section 5.1 (b)) shall be allocated to the Partners in
accordance with their respective Percentage Interests.
(ii) If any Partner unexpectedly receives any adjustment
allocation or distribution 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 a deficit in its Capital Account
created by such adjustment, allocation or distribution as
quickly as possible.
(iii) To preserve uniformity of Units, the General Partner
shall have sole discretion pursuant to Section 6.1(c) to make
special allocations of income or deduction that do not have a
material adverse effect on the Limited Partners and are
consistent with the principles of Section 704 of the Code.
(iv) If there is a net decrease in Partnership minimum gain,
within the meaning of Treasury Regulation Section 1.704-1(b) (4)
(iv), during a Partnership taxable year, all Partners with
deficit balances in their Capital Accounts, computed as described
in Treasury Regulation Section 1.704-1(b)(4)(iv)(c) at the end of
such year, will be allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in the
amounts and in the proportions needed to eliminate such deficits
as quickly as possible, before any other allocations are made
under Section 704(b) of the Code.
(d) (i) Except as otherwise provided in this Section
5.1(d), a transferee of LP Units shall, upon becoming a Limited
Partner, succeed to the portion of the transferor's Capital
Account maintained with respect to the Units transferred.
(ii) If a transfer of Units causes a termination of the
Partnership under Section 708(b)(1)(B) of the Code, the
Partnership properties shall be deemed to have been distributed
in liquidation of the Partnership to the Partners (including the
transferee of the Units) pursuant to Sections 14.4 and 14.5 and
recontributed by such Partners and transferees in reconstitution
of the Partnership. The Capital Accounts of such reconstituted
Partnership shall be maintained in accordance with this Article
V.
(e) If any additional LP Units are to be issued pursuant to
Section 4.3, or if any Partnership Property is to be distributed,
the Capital Accounts of the Partners (and the Carrying Values of
all Partnership properties) shall, immediately prior to such
issuance or distribution, be adjusted (consistent with the
provisions hereof and of Section 704(b) of the Code) upwards or
downwards to reflect any Unrealized Gain or Unrealized Loss
attributable to all Partnership properties (as if such Unrealized
Gain or Unrealized Loss had been recognized upon an actual sale
of such properties immediately prior to such issuance). In
determining such Unrealized Gain or Unrealized Loss, the fair
market value of Partnership properties, as of any date of
determination, (i) shall, in the case of the issuance of
additional LP Units, be deemed to be equal to (A) the number of
Units outstanding, as of the date of determination, times the
Issue Price for which such additional LP Units are so issued,
plus (B) the amount of any Partnership indebtedness outstanding
as of the date of determination, and (ii) shall, in the case of
the distribution of Partnership property, be determined in the
manner provided in Section 14.3.
5.2 Distributions in Respect of Units. (a) From time to time,
not less often than quarterly, the General Partner shall review
the Partnership's accounts to determine whether distributions are
appropriate. The General Partner may make such cash
distributions as it, in its sole discretion, may determine,
without being limited to current or accumulated income or gains,
from any Partnership funds, including, without limitation,
Partnership revenues, Capital Contributions or borrowed funds.
In its sole discretion, the General Partner may also distribute
to the Partners other Partnership property, additional Units or
other securities of the Partnership or other entities.
All distributions in respect of Units shall be made
concurrently to all Record Holders on the Record Date set for
purposes of such distribution and shall be prorated in accordance
with such Record Holders' respective Percentage Interests as of
such Record Date.
(b) Amounts paid pursuant to Section 7.4, any Management
Agreement, any Operating Partnership Agreement or the Incentive
Compensation Agreement shall not be deemed to be distributions
for purposes of this Agreement.
ARTICLE VI
Income Tax Matters
6.1 Tax Allocations. (a) For federal income tax purposes, each
item of income, gain, loss, deduction and credit of the
Partnership shall be allocated among the Partners in accordance
with their Percentage Interests except that the General Partner
shall have the authority to make such other allocations as are
necessary and appropriate to comply with Section 704 of the Code
and the regulations issued pursuant thereto.
(b) Gain resulting from the sale or other taxable disposition of
Partnership assets and allocated to (or recognized by) a Partner
(or its successor in interest) for federal income tax purposes
shall be deemed to be Recapture Income to the extent such Partner
has been allocated or has claimed any deduction directly or
indirectly giving rise to the treatment of such gain as Recapture
Income.
(c) To preserve uniformity of LP Units, the General Partner
shall have sole discretion to (i) adopt such conventions as it
deems appropriate or necessary in determining the amount of
depreciation and cost recovery deductions; (ii) make special
allocations of income or deduction and (iii) amend the provisions
of this Agreement as appropriate (x) to reflect the proposal or
promulgation of regulations under Section 704(c) of the Code or
(y) otherwise to preserve the uniformity of Units issued or sold
from time to time. The General Partner may adopt such
conventions and make such allocations and amendments only if they
would not have a material adverse effect on the Limited Partners
and are consistent with the principles of Section 704 of the
Code.
(d) Items of Partnership income, gain, loss, deduction and
credit shall, for federal income tax purposes, be determined on a
monthly basis (or other basis, as required or permitted by
Section 706 of the Code) and shall be allocated to the Persons
who are Record Holders of Units as of the close of business on
the first day of such month; provided, however, that gain or loss
on a sale or other disposition of all or a substantial portion of
the assets of the Partnership shall be allocated to the Persons
who are Record Holders of Units as of the close of business on
the date of sale.
(e) Pursuant to Section 704(c) of the Code, items of income,
gain, loss, deduction and credit attributable to Contributed
Property shall be allocated in such a manner as to take into
account the variation between the basis of such property to the
Partnership and its Carrying Value.
6.2 Preparation of Tax Returns. The General Partner shall
arrange for the preparation and timely filing of all returns of
Partnership income, gains, losses, deductions, credits and other
items necessary for federal and state income tax purposes and
shall use all reasonable efforts to furnish to the Limited
Partners within 90 days after the close of the taxable year the
tax information reasonably required for federal and state income
tax reporting purposes. The classification, realization and
recognition of income, gains, losses, deductions, credits and
other items shall be on the accrual method of accounting for
federal income tax purposes, unless the General Partner shall
determine otherwise in its sole discretion.
6.3 Tax Elections. Except as otherwise provided herein, the
General Partner shall, in its sole discretion, determine whether
to make any available election. The General Partner shall elect
under Section 754 of the Code to cause the basis of Partnership
property to be adjusted for federal income tax purposes as
provided by Sections 734 and 743 of the Code, but the General
Partner may seek to revoke this election if the General Partner
determines that such revocation is in the best interests of the
Limited Partners.
6.4 Tax Controversies. Subject to the provisions hereof, the
General Partner is designated as the Tax Matters Partner (as
defined in Section 6231 of the Code) and is authorized and
required to represent the Partnership (at the Partnership's
expense) in connection with all examinations of the Partnership's
affairs by tax authorities, including resulting administrative
and judicial proceedings, and to expend Partnership funds for
professional services and costs associated therewith. Each
Limited Partner agrees to cooperate with the General Partner and
to do or refrain from doing any and all things reasonably
required by the General Partner to conduct such proceedings.
6.5 Withholding. The General Partner is authorized to take any
action necessary to comply with any withholding requirements
established by applicable law, including, without limitation,
with regard to (a) the sale of United States real property
interests, (b) the distributions of cash or property to any
Partner which is a foreign Person, and (c) the transfer of Units.
ARTICLE VII
Management and Operation of Business; Indemnification
7.1 Powers of General Partner. Except as otherwise expressly
provided in this Agreement, all powers to control and manage the
business and affairs of the Partnership shall be exclusively
vested in the General Partner, and no Limited Partner shall have
any power to control or manage the business and affairs of the
Partnership.
In addition to the powers now or hereafter granted a general
partner of a limited partnership under applicable law or which
are granted to the General Partner under any other provisions of
this Agreement, the General Partner is hereby authorized and
empowered, in the name of and on behalf of the Partnership, to do
and perform any and all acts and things which it deems
appropriate or necessary in the conduct of the business and
affairs of the Partnership, including, without limitation, the
following:
(a) to lend or borrow money, to assume, guarantee or otherwise
become liable for indebtedness and other liabilities and to issue
evidences of indebtedness;
(b) to buy, lease (as lessor or lessee), sell, mortgage,
encumber or otherwise acquire or dispose of any or all of the
assets of the Partnership;
(c) to own, use and invest the assets of the Partnership;
(d) to purchase or sell products, services and supplies;
(e) to make tax, regulatory and other filings, and to render
periodic and other reports, to governmental agencies or bodies
having jurisdiction over the assets or business of the
Partnership;
(f) to open, maintain and close bank accounts and to draw checks
and other orders for the payment of money;
(g) to negotiate, execute and perform any contracts, conveyances
or other instruments;
(h) to distribute Partnership cash;
(i) to utilize the services of officers and employees of the
General Partner or of any other Persons and to select and dismiss
employees (if any) and outside attorneys, accountants,
consultants and contractors;
(j) to maintain insurance for the benefit of the Partnership and
the Partners;
(k) to form, participate in or contribute or loan cash or
property to limited or general partnerships, joint ventures,
corporations or similar arrangements;
(l) to expand the business activities in which the Partnership
is engaged or engage in new business activities by acquisition or
internal development;
(m) to conduct litigation and incur legal expenses and otherwise
deal with or settle claims or disputes; and
(n) to purchase, sell or otherwise acquire or dispose of Units;
in each case at such times and upon such terms and conditions as
the General Partner deems appropriate or necessary, and subject
to any express restrictions contained elsewhere in this
Agreement.
7.2 Duties of General Partner. The General Partner shall manage
the business and affairs of the Partnership in the manner the
General Partner deems appropriate or necessary. Without limiting
the generality of the foregoing, the General Partner's duties
shall include the following:
(a) to take possession of the assets of the Partnership;
(b) to staff and operate the business of the Partnership with
the officers and employees of the General Partner or of other
Persons;
(c) to render or cause to be rendered engineering, environmental
and other technical services and perform or cause to be
performed financial, accounting, logistical and other
administrative functions for the Partnership;
(d) to render such reports and make such periodic and other
filings as may be required under applicable federal, state and
local laws, rules and regulations;
(e) to provide or cause to be provided purchasing, procurement,
repair and other services for the Partnership; and
(f) to conduct the business of the Partnership in accordance
with this Agreement and all applicable laws, rules and
regulations;
in each case in such a manner as the General Partner deems
appropriate or necessary.
7.3 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
has full power and authority to encumber, sell or otherwise use
in any manner any and all assets of the Partnership and to enter
into any contracts on behalf of the Partnership, and such Person
shall be entitled to deal with the General Partner 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 which may be available against such
Person to contest, negate or disaffirm any action of the General
Partner in connection with any such dealing. In no event shall
any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the
necessity or expedience of any act or action of the General
Partner or 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.
7.4 Compensation and Reimbursement of the General Partner. (a)
Except as provided in this Section 7.4 or elsewhere in this
Agreement, the Incentive Compensation Agreement or any other
agreement contemplated or permitted hereby or thereby, the
General Partner shall not be compensated for its services as
General Partner to the Partnership.
(b) The General Partner shall be promptly reimbursed for all
Designated Expenses, in addition to any reimbursement as a result
of indemnification in accordance with Section 7.11. The General
Partner shall determine such Designated Expenses in any
reasonable manner determined by it.
(c) The General Partner may propose and adopt without the
approval of the Limited Partners fringe benefit plans, including,
without limitation, plans comparable to those that covered
employees employed by the predecessors to the Operating
Partnerships and plans involving the issuance of Units, for the
benefit of employees of the General Partner, Partnership, any
of the Operating Partnerships, the Manager or any of their
respective Affiliates in respect of services performed, or
obligated to be performed, directly or indirectly, for the
benefit of the Partnership or any of the Operating Partnerships.
7.5 Purchase or Sale of LP Units and Other Partnership
Securities. The General Partner may, on behalf of the
Partnership, purchase or otherwise acquire or sell or otherwise
dispose of LP Units and other Partnership Securities. As long as
LP Units are held by the Partnership or any of the Operating
Partnerships, such LP Units or other Partnership Securities shall
not be considered outstanding for any purpose. The General
Partner or any of its Affiliates may also purchase or otherwise
acquire or sell or otherwise dispose of LP Units and other
Partnership Securities for its own account.
7.6 Partnership Funds. The funds of the Partnership shall be
deposited in such account or accounts as shall be designated by
the General Partner, and shall not be commingled with the funds
of the General Partner or any of its Affiliates. All withdrawals
from or charges against such accounts shall be made by the
General Partner or by its agents, which agents may be Affiliates
of the General Partner. Funds of the Partnership may be invested
as determined by the General Partner.
7.7 Outside Activities; Contracts with Affiliates; Loans to or
from Affiliates. (a) The General Partner shall not have or
permit the Manager to have any business interests or engage in
any business activities except for those relating to the
Partnership and the Operating Partnerships.
(b) Any Affiliate of the General Partner (other than the
Manager) and any director, officer, partner or employee of the
General Partner or any of its Affiliates 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 and the Operating Partnerships, for their own account
and for the account of others, without having or incurring any
obligation to offer any interest in such businesses or activities
to the Partnership, the Operating Partnerships or any Partner.
Neither the Partnership, the Operating Partnerships nor any of
the Partners shall have any rights by virtue of this Agreement or
the partnership relationship governed hereby in any such business
interests.
(c) Each of the Limited Partners hereby approves, ratifies and
confirms the execution, delivery and performance of the Operating
Partnership Agreements, the Incentive Compensation Agreement, the
Management Agreements, and the Exchange Agreement and agrees that
the General Partner is authorized to execute, deliver and perform
the other agreements, acts, transactions and matters described
therein on behalf of the Partnership without the approval or vote
of any Limited Partners, notwithstanding any other provision of
this Agreement or the Operating Partnership Agreements.
(d) Subject to the provisions of Section 7.4(a), the General
Partner and its Affiliates may enter into contracts with, or
render services to, the Partnership or any of the Operating
Partnerships, provided that such contracts or services are on
terms that are fair and reasonable to the Partnership.
(e) Neither the General Partner nor any of its Affiliates shall
sell, transfer or convey property to, or purchase property from,
the Partnership, directly or indirectly, except pursuant to
transactions that are fair and reasonable to the Partnership.
(f) The General Partner or any of its Affiliates may lend to the
Partnership funds needed by the Partnership for such periods of
time as the General Partner may determine; provided, however,
that the General Partner or an Affiliate may not charge the
Partnership interest greater than the rate (including points or
other financing charges or fees) that would be charged to the
Partnership by unrelated lenders on comparable loans. The
Partnership shall reimburse the General Partner or its Affiliate,
as the case may be, for any costs incurred by the General Partner
or Affiliate in connection with the borrowing of funds obtained
by such General Partner or Affiliate and loaned to the
Partnership.
(g) The Partnership may lend funds to the General Partner or any
of its Affiliates; provided, however, that the Partnership may
not lend funds to the General Partner or an Affiliate unless such
funds consist of funds available after provision for working
capital and such reserves as the General Partner deems
appropriate and such loan shall bear interest at the rate
(including points or other financing charges or fees) that the
General Partner would be charged by unrelated lenders on
comparable loans.
7.8 Tax Basis and Value Determinations. To the extent that the
General Partner is required pursuant to the provisions of this
Agreement to establish fair market values or allocate amounts
realized, tax basis, Agreed Values or Net Agreed Values, the
General Partner shall establish such values and make such
allocations in a manner that is reasonable and fair to the
Limited Partners, taking into account all applicable laws,
governmental regulations, rulings and decisions. The General
Partner may, in its sole discretion, modify or revise such
allocations in order to comply with such laws, governmental
regulations, rulings or decisions or to the extent it otherwise
deems such modification or revision appropriate or necessary.
The General Partner is authorized, to the extent deemed by it to
be appropriate or necessary, to utilize the services of an
independent appraiser in establishing such values or allocations
and the General Partner shall in such cases be entitled to rely
on the values or allocations established by such independent
appraiser.
7.9 Resolution of Conflicts of Interest; Standard of Care. (a)
Unless otherwise expressly provided in this Agreement or any
other agreement contemplated hereby, whenever a conflict of
interest exists or arises between the General Partner or any of
its Affiliates, on the one hand, and the Partnership or any
Limited Partner, on the other hand, any resolution or course of
action by the General Partner or such Affiliate 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 or of any agreement contemplated hereby, or of a duty
stated or implied by law or equity, if the resolution or course
of action is, or by operation of this Agreement is deemed to be,
fair and reasonable to the Partnership. The General Partner
shall be authorized but not required in connection with its
resolution of such conflict of interest to seek Special Approval
of such resolution. Any conflict of interest and any resolution
of such conflict of interest shall be conclusively deemed fair
and reasonable to the Partnership if such conflict of interest or
resolution is (i) approved by Special Approval (as long as the
material facts known to the General Partner or such Affiliate
regarding any proposed transaction were disclosed to the Audit
Committee at the time of its approval), (ii) on terms no less
favorable to the Partnership than those generally being provided
to or available from unrelated third parties, or (iii) fair to
the Partnership, taking into account the totality of the
relationships among 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. In connection with the determination by the General
Partner (including the Audit Committee in connection with Special
Approval) of what is fair and reasonable to the Partnership in
connection with its resolution of a conflict of interest, the
General Partner shall be authorized to consider (A) the relative
interests of each party to such conflict, agreement, transaction
or situation, and the benefits and burdens relating to such
interests; (B) any customary or accepted industry practices, and
any customary or historical dealings with a particular Person;
(C) any applicable generally accepted accounting or engineering
practices or principles; and (D) such additional factors as the
General Partner (including the Audit Committee) determines in its
sole discretion to be relevant, reasonable or appropriate under
the circumstances. Nothing contained in this Agreement, however,
is intended to, nor shall it be construed to require the General
Partner (including the Audit Committee) to consider the interests
of any Person other than the Partnership. In the absence of bad
faith by the General Partner, the resolution, action or terms so
made, taken or provided by the General Partner shall not
constitute a breach of this Agreement or any other agreement
contemplated hereby or a breach of any standard of care or duty
imposed hereby or under the Delaware Act or any other applicable
law, rule or regulation.
(b) Whenever a particular transaction, arrangement or resolution
of a conflict of interest is required under this Agreement or any
agreement contemplated hereby to be fair and/or reasonable to any
Person, the fair and/or reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of
similar or related transactions.
(c) Whenever this Agreement or any other agreement contemplated
hereby provides that the General Partner or any of its Affiliates
is permitted or required to make a decision (i) in its
"discretion" or under a grant of similar authority or latitude,
the General Partner or such Affiliate shall be entitled, to the
extent permitted by applicable law, 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 or the Limited Partners, or
(ii) in its "good faith" or under another express standard, the
General Partner or such Affiliate shall act under such express
standard and, except as required by applicable law, shall not be
subject to any other or different standards imposed by this
Agreement, any other agreement contemplated hereby or applicable
law.
7.10 Other Matters Concerning the General Partner. (a) The
General Partner (including the Audit Committee) may rely and
shall be protected in acting or refraining from acting upon any
certificate, document or other instrument believed by it to be
genuine and to have been signed or presented by the proper party
or parties.
(b) The General Partner (including the Audit Committee) may
consult with legal counsel, accountants, appraisers, management
consultants, investment bankers and other consultants and
advisors selected by it and any opinion or advice of any such
Person as to matters which the General Partner (including the
Audit Committee) believes to be within such Person's professional
or expert competence shall be full and complete authorization and
protection with respect to any action taken or suffered or
omitted by the General Partner (including the Audit Committee)
hereunder in good faith and in accordance with such opinion or
advice.
(c) The General Partner (including the Audit Committee) 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
(including the Audit Committee) shall not be responsible for any
misconduct or negligence on the part of any such agent appointed
by the General Partner in good faith.
7.11 Limited Liability; Indemnification. (a) Notwithstanding
anything to the contrary in this Agreement, and except to the
extent required by applicable law, no Indemnitee shall be liable
to the Partnership or any Partner for any action taken or omitted
to be taken by such Indemnitee, provided that such Indemnitee
acted in good faith and such action or omission does not involve
the gross negligence or willful misconduct of such Indemnitee.
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, of itself, create a presumption
that an Indemnitee did not act in good faith or that an action or
omission involves gross negligence or willful misconduct.
(b) The Partnership shall, to the extent permitted by applicable
law, indemnify each Indemnitee against expenses (including legal
fees and expenses), judgments, fines and amounts paid in
settlement, actually and reasonably incurred by such Indemnitee,
in connection with any threatened, pending or completed claim,
demand, action, suit or proceeding to which such Indemnitee was
or is a party or is threatened to be made a party, by reason of
(i) such Indemnitee's status as a General Partner, any Affiliate
of the General Partner, any Person who is or was a director,
officer, employee or agent of the General Partner or any such
Affiliate, or any Person who is or was serving at the request of
the General Partner or any such Affiliate as a director, officer,
partner, trustee, employee or agent of another Person or (ii) any
action taken or omitted to be taken by such Indemnitee in any
capacity referred to in clause (i) of this Section 7.11(b),
relating to this Agreement or the property, business, affairs or
management of the Partnership or any of the Operating
Partnerships (provided that the Indemnitee acted in good faith
and the act or omission which is the basis of such claim, demand,
action, suit or proceeding does not involve the gross negligence
or willful misconduct of such Indemnitee).
(c) Expenses (including legal fees and expenses) incurred in
defending any claim, demand, action, suit or proceeding subject
to Section 7.11(b) shall be paid by the Partnership in advance of
the final disposition of such claim, demand, action, suit or
proceeding upon receipt of an undertaking (which need not be
secured) by or on behalf of the Indemnitee to repay such amount
if it shall ultimately be determined, by a court of competent
jurisdiction, that the Indemnitee is not entitled to be
indemnified by the Partnership as authorized hereunder.
(d) The indemnification provided by Section 7.11(b) shall be in
addition to any other rights to which an Indemnitee may be
entitled, and shall continue as to an Indemnitee who has ceased
to serve in a capacity for which the Indemnitee is entitled to
indemnification and shall inure to the benefit of the heirs,
successors, assigns, administrators and personal representatives
of the Indemnitee.
(e) To the extent commercially reasonable, the Partnership shall
purchase and maintain insurance on behalf of the Indemnitees
against any liability which may be asserted against or expense
which may be incurred by an Indemnitee in connection with the
Partnership's activities, whether or not the Partnership would
have the power to indemnify an Indemnitee against such liability
under the provisions of this Agreement.
(f) An Indemnitee shall not be denied indemnification in whole
or in part under Section 7.11(b) 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.
(g) The provisions of this Section 7.11 are for the benefit of
the Indemnitees and the heirs, successors, assigns,
administrators and personal representatives of the Indemnitees
and shall not be deemed to create any rights for the benefit of
any other Persons.
(h) For purposes of this Section 7.11, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of
an employee benefit plan whenever the performance of duties by
such Indemnitee for the Partnership also imposes duties on, or
otherwise involves services by, such Indemnitee to the plan or
participants or beneficiaries of the plan; excise taxes assessed
on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute "fines" within the
meaning of Section 7.11(b); and action taken or omitted by an
Indemnitee with respect to any employee benefit plan in the
performance of duties by such Indemnitee for a purpose reasonably
believed by such Indemnitee to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be
for a purpose which does not involve gross negligence or willful
misconduct.
(i) In no event may an Indemnitee subject the Limited Partners
to personal liability by reason of the indemnification provisions
set forth in this Agreement.
(j) No amendment, modification or repeal of this Section 7.11 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 7.11 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 whether such claims may arise or be
asserted.
ARTICLE VIII
Rights and Obligations of Limited Partners
8.1 Limitation of Liability. The Limited Partners shall have no
liability under this Agreement (including, without limitation,
liability under Section 7.11).
8.2 Management of Business. No Limited Partner shall, in its
capacity as a Limited Partner, take part in the operation,
management or control (within the meaning of the Delaware Act) of
the Partnership's business, transact any business in the
Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such
business by a director, officer, employee or agent of a General
Partner or an Affiliate of the General Partner in such Person's
capacity as such (whether or not such Person is also a Limited
Partner) shall not affect, impair or eliminate the limitations on
the liability of the Limited Partners under this Agreement.
8.3 Outside Activities. Limited Partners 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 or the Operating Partnerships. Neither the
Partnership, the Operating Partnerships nor any of the other
Partners shall have any rights by virtue of this Agreement or the
partnership relationship created hereby in any business ventures
of any Limited Partner.
8.4 Return of Capital. No Limited Partner 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.
8.5 Rights of Limited Partners Relating to the Partnership. In
addition to other rights provided by this Agreement or by
applicable law, each Limited Partner shall have the right for a
proper purpose reasonably related to such Limited Partner's
interest in the Partnership, upon reasonable demand and at such
Limited Partner's own expense:
(a) to obtain true and full information regarding the status of
the business and financial condition of the Partnership;
(b) promptly after becoming available, to obtain a copy of the
Partnership's federal and state income tax returns for each year;
(c) to obtain a current list of the name and address of each
Partner as set forth in the Units Register;
(d) to obtain a description and statement of the Net Agreed
Value of any Capital Contribution made or agreed to be made by
each Partner, and the date on which such Partner became a
Partner;
(e) to obtain a copy of this Agreement and the Certificate of
Limited Partnership and all amendments thereto, together with
executed copies of any powers of attorney pursuant to which this
Agreement, the Certificate of Limited Partnership and all
amendments thereto have been executed; and
(f) to obtain such other information regarding the affairs of
the Partnership as may be just and reasonable;
provided, however, that the General Partner may keep confidential
from the Limited Partners, for such period of time as the General
Partner deems reasonable, any information which the General
Partner reasonably believes to be in the nature of trade secrets
or other information the disclosure of which the General Partner
in good faith believes could damage the Partnership or its
business or be in violation of applicable law, including, without
limitation, federal securities law, or which the Partnership is
required by agreements with third parties to keep confidential.
ARTICLE IX
Books, Records, Accounting and Reports
9.1 Books, Records and Accounting. The General Partner shall
keep or cause to be kept books and records with respect to the
Partnership's business, which books and records shall at all
times be kept at the principal office of the Partnership. Any
books and records maintained by the Partnership in the regular
course of its business, including the Units Register, books of
account and records of Partnership proceedings, may be kept on,
or be in the form of, punch cards, disks, magnetic tape,
photographs, micrographics or any other information storage
device, provided that the records so kept 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 the accrual basis, or on a cash basis
adjusted periodically to an accrual basis, as the General Partner
shall determine in its sole discretion, in accordance with
generally accepted accounting principles and applicable law.
9.2 Fiscal Year. The fiscal year of the Partnership for
financial reporting purposes shall be the calendar year, unless
the General Partner shall determine otherwise in its sole
discretion.
9.3 Reports. (a) As soon as practicable, but in no event later
than 90 days after the close of each fiscal year, the General
Partner shall cause to be mailed to each Record Holder of LP
Units as of the last day of that fiscal year reports containing
financial statements of the Partnership for the fiscal year,
presented in accordance with generally accepted accounting
principles, including a balance sheet, statement of income,
statement of Partners' capital and statement of changes in
financial position, such statements to be audited by a nationally
recognized firm of independent public accountants selected by the
General Partner.
(b) As soon as practicable, but in no event later than 45 days
after the close of each calendar quarter, except the last
calendar quarter of each fiscal year, the General Partner shall
cause to be mailed to each Record Holder of LP Units as of the
last day of that calendar quarter a quarterly report for the
calendar quarter containing such financial and other information
as the General Partner deems appropriate.
ARTICLE X
Issuance of LP Certificates; Transfer and Exchange of LP Units
10.1 Initial Issuance of LP Certificates. Upon the issuance of
LP Units to any Person, the Partnership will issue one or more LP
Certificates in the name of such Person evidencing the number of
such LP Units being so issued. LP Certificates shall be executed
on behalf of the Partnership by the General Partner. No LP
Certificate shall be valid for any purpose until manually
countersigned by the Transfer Agent.
10.2 Registration, Registration of Transfer and Exchange. (a)
The Partnership will cause to be kept a register (the "Units
Register") in which, subject to such reasonable regulations as it
may prescribe and subject to the provisions of Section 10.2(b),
the Partnership will provide for the registration of LP Units and
of transfers of such LP Units. The Transfer Agent is hereby
appointed registrar for the purpose of registering LP Units and
transfers of such LP Units as herein provided.
Upon surrender for registration of transfer or exchange of
any LP Certificate, and subject to the provisions of Section
10.2(b), the General Partner on behalf of the Partnership will
execute, and the Transfer Agent will countersign and deliver, in
the name of the holder or the designated transferee or
transferees, as required pursuant to the holder's instructions,
one or more new LP Certificates evidencing the same aggregate
number of LP Units as did the LP Certificate so surrendered.
(b) Every LP Certificate surrendered for registration of
transfer or exchange shall be duly endorsed on the reverse side
thereof, or be accompanied by a written instrument of transfer in
form satisfactory to the General Partner or the Transfer Agent,
as the case may be, duly executed, in either case by the holder
thereof or such holder's attorney duly authorized in writing.
Every LP Certificate surrendered for registration of transfer
shall be duly accepted on the reverse side thereof, or be
accompanied by a written instrument of acceptance to the same
effect in form satisfactory to the General Partner or the
Transfer Agent, as the case may be, duly executed, in either case
by the transferee or such transferee's attorney duly authorized
in writing. As a condition to the issuance of any new LP
Certificate under this Section 10.2, the General Partner may
require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto.
10.3 Mutilated, Destroyed, Lost or Stolen LP Certificates. (a)
If any mutilated LP Certificate is surrendered to the Transfer
Agent, the General Partner on behalf of the Partnership shall
execute and the Transfer Agent shall countersign and deliver in
exchange therefor a new LP Certificate evidencing the same number
of LP Units as did the LP Certificate so surrendered.
(b) If there shall be delivered to the General Partner and the
Transfer Agent (i) evidence to their satisfaction of the
destruction, loss or theft of any LP Certificate and (ii) such
security or indemnity as may be required by them to save each of
them and any of their agents harmless, then, in the absence of
notice to the General Partner or the Transfer Agent that such LP
Certificate has been acquired by a bona fide purchaser, the
General Partner on behalf of the Partnership shall execute and
upon its request the Transfer Agent shall countersign and
deliver, in lieu of any such destroyed, lost or stolen
Certificate, a new LP Certificate evidencing the same number of
LP Units as did the LP Certificate so destroyed, lost or stolen.
(c) As a condition to the issuance of any new LP Certificate
under this Section 10.3, the General Partner may require the
payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the
Transfer Agent) connected therewith.
(d) Every new LP Certificate issued pursuant to this Section
10.3 in lieu of any destroyed, lost or stolen LP Certificate
shall evidence an original additional Partnership Interest in the
Partnership, whether or not the destroyed, lost or stolen LP
Certificate shall be at any time enforceable by anyone, and shall
be entitled to all the benefits of this Agreement equally and
proportionately with any and all other LP Units duly issued
hereunder.
10.4 Persons Deemed Owners. Prior to due presentment of an LP
Certificate for registration of transfer and satisfaction of the
requirements of Section 10.2(b) with respect thereto, (a) the
Partnership, the General Partner, the Transfer Agent and any
agent of any of the foregoing may deem and treat the Record
Holder as the absolute owner thereof and of the LP Units
evidenced thereby for all purposes whatsoever and (b) a
transferee shall not be entitled to distributions or allocations
or any other rights in respect of the LP Units evidenced thereby
other than the right to further transfer such LP Units.
ARTICLE XI
Transfer of GP Units
11.1 Transfer of GP Units. The General Partner may not transfer
any GP Units unless (a) all of its GP Units are being transferred
and the transferee assumes all of the rights and obligations of
the General Partner hereunder, (b) the transfer is to an
Affiliate of the General Partner or is in connection with the
General Partner's merger or consolidation with, or a transfer of
all or substantially all of the General Partner's assets to,
another Person, or the transfer is approved by a Majority
Interest, and (c) the Partnership receives an Opinion of Counsel
that such transfer would not result in the loss of limited
liability of any Limited Partner or cause the Partnership or any
of the Operating Partnerships to be treated as an association
taxable as a corporation for federal income tax purposes.
11.2 Successor General Partner. Any transferee of GP Units
pursuant to Section 11.1 shall automatically be admitted to the
Partnership as the successor General Partner, and the transferor
of such GP Units shall automatically cease to be the General
Partner, effective at the time provided in Section 12.3. No such
transfer shall be deemed a withdrawal pursuant to Article XIII.
ARTICLE XII
Admission of Initial, Substituted and Additional
Limited Partners and Successor General Partner
12.1 Admission of Initial Limited Partners. At and as of the
Time of Delivery, the initial Record Holders of LP Units
purchased pursuant to Section 4.2 shall automatically become
Limited Partners and the Organizational Limited Partner shall
automatically cease to be a Limited Partner.
12.2 Admission of Substituted Limited Partners. A transferee of
LP Units shall automatically be admitted to the Partnership as a
Limited Partner (and the transferor of such LP Units shall, if
such transferor is assigning all of such transferor's LP Units,
automatically cease to be a Limited Partner) at and as of the
time the transfer is registered on the Units Register pursuant to
Section 10.2.
12.3 Admission of Successor General Partner. A successor General
Partner approved pursuant to Section 13.1 or the proviso to
Section 14.1 or the transferee of all of the GP Units pursuant to
Section 11.1 shall be admitted to the Partnership as the
successor General Partner, effective as of the date an amendment
or restatement of the Certificate of Limited Partnership is filed
with the Secretary of State of the State of Delaware affecting
such substitution; provided, however, that no such successor
shall be so admitted to the Partnership until it has agreed in
writing to assume the former General Partner's obligations
hereunder. This Agreement and the Certificate of Limited
Partnership shall be amended as appropriate to reflect the
termination of the former General Partner as a general partner
and the admission of the successor General Partner.
12.4 Admission of Additional Limited Partners. (a) A Person
(other than the initial Record Holders of LP Units pursuant to
Section 4.2 or a transferee of LP Units) 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) a written
instrument of acceptance in a form satisfactory to the General
Partner of all of the terms and conditions of this Agreement,
including, without limitation, the power of attorney granted in
Section 2.4 hereof, and (ii) such other documents and instruments
as may be required in the discretion of the General Partner to
affect such Person's admission as an additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section
12.4, no Person shall be admitted as an additional Limited
Partner without the consent of the General Partner, which consent
may be given or withheld in the General Partner's sole
discretion. The admission of any Person as an additional Limited
Partner shall become effective at and as of the time the name of
such Person is recorded on the books and records of the
Partnership, following the consent of the General Partner to such
admission.
12.5 Amendment of Agreement and Certificate of Limited
Partnership. The General Partner shall take all steps necessary
and appropriate under the Delaware Act to amend the records of
the Partnership and, if necessary, this Agreement and the
Certificate of Limited Partnership to reflect the admission of
any Partner.
ARTICLE XIII
Withdrawal or Removal of the General Partner
13.1 Withdrawal or Removal of the General Partner. (a) Pipe Line
agrees to act as General Partner of the Partnership until the
later of (i) the date which is twenty-five years after the Time
of Delivery or (ii) the date the ESOP Loan is paid in full,
subject to its right to transfer all of its GP Units pursuant to
Section 11.1. At any time after the later of (i) the date which
is twenty-five years after the Time of Delivery or (ii) the date
the ESOP Loan is paid in full, the General Partner may withdraw
from the Partnership effective upon at least 90 days' advance
written notice to the Limited Partners, such withdrawal to take
effect on the date specified in such notice, provided that such
withdrawal is approved by an Eighty Percent Interest or the
Partnership has received an Opinion of Counsel that such
withdrawal would not result in the loss of limited liability of
any Limited Partner or result in the Partnership or any Operating
Partnership being treated as an association taxable as a
corporation for federal income tax purposes. Any such withdrawal
shall also constitute the withdrawal of the Manager from the
Operating Partnerships, as provided in the Operating Partnership
Agreements. If the General Partner gives a notice of withdrawal,
a Majority Interest may, prior to the effective date of such
withdrawal, approve a successor General Partner. The Person so
approved (or its designated Affiliates) shall become the
successor general partner or partners of the Operating
Partnerships, as provided in the Operating Partnership
Agreements. If no successor General Partner is so approved, the
Partnership shall be dissolved pursuant to Section 14.1. Pipe
Line further agrees that it shall not withdraw as general partner
of any Operating Partnership, except in connection with its
withdrawal as General Partner.
(b) The General Partner may be removed only by an Eighty Percent
Interest, and only if (i) in connection therewith, a successor
General Partner is approved by a Majority Interest, (ii) the
Partnership shall have received an Opinion of Counsel that the
removal of the General Partner and the approval of a successor
General Partner will not result in the loss of limited liability
of any Limited Partner or cause the Partnership or any of the
Operating Partnerships to be treated as an association taxable as
a corporation for federal income tax purposes, (iii) the
successor General Partner or an Affiliate thereof assumes the
liabilities and obligations of the General Partner and its
Affiliates under the Exchange Agreement and agrees to indemnify
and hold harmless the General Partner and its Affiliates from any
liability or obligation arising out of, or causes the General
Partner and its Affiliates to be released from, any and all
liabilities and obligations (including loan guarantees) under
fringe benefit plans sponsored by the General Partner or any of
its Affiliates in connection with the business of the Partnership
or any of the Operating Partnerships, except as otherwise
prohibited by this Agreement, and (iv) all required regulatory
approvals for removal of the Manager shall have been obtained.
Such removal shall be effective upon the admission of the
successor General Partner pursuant to Section 12.3. The Person
so approved (or its designated Affiliates) shall become the
successor general partner or partners of the Operating
Partnerships, as provided in the Operating Partnership
Agreements.
13.2 Sale of Former General Partner's Interest. If a successor
General Partner is approved pursuant to Section 13.1 or 14.2 or
the proviso to Section 14.1, such successor shall purchase the GP
Units of the former General Partner for an amount in cash equal
to the fair market value thereof, determined as of the date the
successor General Partner is admitted pursuant to Section 12.3.
The fair market value of the GP Units shall include the value of
all rights associated with being the General Partner, including,
without limitation, the General Partner's pro rata interest in
the Partnership, the right to receive incentive compensation
pursuant to the Incentive Compensation Agreement or compensation
under any other agreement between the Partnership and the General
Partner in effect on the date the successor General Partner is so
admitted, and shall be reduced by the value of the assumption by
the successor General Partner or its Affiliate of the obligations
of the General Partner and its Affiliates pursuant to Section
13.1(b)(iii). Such fair market value shall be determined by
agreement between the former General Partner and its successor
or, failing agreement within 30 days after the date the successor
General Partner is so admitted, by a firm of independent
appraisers jointly selected by the former General Partner and its
successor (or, if the former General Partner and its successor
cannot agree on the selection of such a firm within 45 days after
the date the successor General Partner is so admitted, by a firm
of independent appraisers selected by two firms, one of which
will be selected by the former General Partner and the other of
which will be selected by the successor).
ARTICLE XIV
Dissolution and Liquidation
14.1 Dissolution. The Partnership shall be dissolved, and its
affairs shall be wound up, upon:
(a) expiration of the term as provided in Section 2.5;
(b) withdrawal of the General Partner pursuant to Section 13.1
(unless a Person becomes a successor General Partner prior to or
on the effective date of such withdrawal);
(c) bankruptcy or dissolution of the General Partner, or any
other event that results in the General Partner ceasing to be a
general partner in the Partnership (other than by reason of a
withdrawal or removal pursuant to Section 13.1 or a transfer
pursuant to Section 11.1); or
(d) an election by the General Partner to dissolve the
Partnership which is approved by a Two-Thirds Interest;
provided, however, that the Partnership shall not be dissolved
upon an event described in Section 14.1(b) if, within 90 days of
such event, all Partners agree in writing to continue the
business of the Partnership and to the appointment of a successor
General Partner.
For purposes of this Section 14.1, bankruptcy of the General
Partner shall be deemed to have occurred when (i) it commences a
voluntary proceeding seeking liquidation, reorganization or other
relief under any bankruptcy, insolvency or other similar law now
or hereafter in effect, (ii) it seeks, consents to or acquiesces
in the appointment of a trustee, receiver or liquidator for it or
for all or any substantial part of its properties, (iii) it is
adjudged a bankrupt or insolvent, or has entered against it a
final and nonappealable order for relief, under any bankruptcy,
insolvency or similar law now or hereafter in effect, (iv) it
executes and delivers a general assignment for the benefit of its
creditors, (v) it files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed
against it in any involuntary proceeding of the nature described
in clause (i) above, or (vi) (1) any involuntary proceeding of
the nature described in clause (i) above has not been dismissed
120 days after the commencement thereof, (2) the appointment
without its consent or acquiescence of a trustee, receiver or
liquidator for it or for all or any substantial part of its
properties has not been vacated or stayed within 90 days of such
appointment, or (3) such appointment has been stayed but is not
vacated within 90 days after the expiration of any such stay.
14.2 Reconstitution. Upon dissolution of the Partnership in
accordance with Section 14.1(b) or (c), and a failure of all
Partners to agree to continue the business of the Partnership and
to the appointment of a successor General Partner as provided in
the proviso to Section 14.1, then within 180 days after the event
described in Section 14.1(b) or (c), a Majority Interest may
elect to reconstitute the Partnership and continue its business
by forming a new partnership on terms identical to those set
forth in this Agreement and having as a general partner a Person
approved by a Majority Interest. Upon any such election by a
Majority Interest, all Partners shall be bound thereby and shall
be deemed to have consented thereto. Unless such an election is
made within such 180-day period, the Partnership shall conduct
only activities necessary to wind up its affairs. If such an
election is made within such 180-day period, then (a) the
reconstituted partnership shall continue until the end of the
term set forth in Section 2.5 unless earlier dissolved in
accordance with this Article XIV and (b) all necessary steps
shall be taken to cancel this Agreement and the Certificate of
Limited Partnership and to enter into 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 this Agreement; provided
that the right of a Majority Interest 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 (i) the exercise of the right would not result in
the loss of limited liability of any Limited Partner and (ii)
neither the Partnership nor the reconstituted partnership would
be treated as an association taxable as a corporation for federal
income tax purposes.
14.3 Liquidation. Upon dissolution of the Partnership, unless
the Partnership is reconstituted pursuant to Section 14.2, the
General Partner, or in the event the General Partner has
withdrawn from the Partnership, been removed or dissolved or
become bankrupt (as defined in Section 14.1), a liquidator or
liquidating committee approved by a Majority Interest shall be
the liquidator of the Partnership (the "Liquidator"). The
Liquidator (if other than the General Partner) shall be entitled
to receive such compensation for its services as may be approved
by a Majority Interest. The Liquidator shall agree not to resign
at any time without 15 days' prior written notice and (if other
than the General Partner) may be removed at any time, with or
without cause, by notice of removal approved by a Majority
Interest upon dissolution, resignation or removal of the
Liquidator, a successor and substitute Liquidator (who shall have
and succeed to all rights, powers and obligations of the original
Liquidator) shall, within 30 days thereafter, be approved by a
Majority Interest. Except as expressly provided in this Article
XIV, the Liquidator approved in the manner provided herein shall
have and may exercise, without further authorization or approval
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
restrictions set forth in Article XVII) to the extent appropriate
or necessary 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. The Liquidator shall liquidate the assets of the
Partnership and apply and distribute the proceeds of such
liquidation in the following order of priority, unless otherwise
required by mandatory provisions of applicable law:
(a) to creditors of the Partnership (including Partners); and
(b) to the Partners, in proportion to and to the extent of the
positive balances in their respective Capital Accounts;
provided, however, that the Liquidator may place in escrow a
reserve of cash or other assets of the Partnership for
contingent liabilities in an amount determined by the Liquidator
to be appropriate for such purposes.
14.4 Distribution in Kind. Notwithstanding the provisions of
Section 14.3 requiring the liquidation of the assets of the
Partnership, but subject to the order of priorities set forth
therein, if on dissolution of the Partnership the Liquidator
determines that an immediate sale of part or all of the
Partnership's assets would be impractical or would cause undue
loss to the Partners, the Liquidator may, in its sole discretion,
defer for a reasonable time the liquidation of any assets except
those necessary to satisfy liabilities of the Partnership and
may, in its sole discretion, distribute to the Partners, or to
specific classes of Partners, as tenants in common, in lieu of
cash, and as their interests may appear in accordance with the
provisions of Section 14.3 (b), undivided interests in such
Partnership assets as the Liquidator deems not suitable for
liquidation. Any distributions in kind shall be subject to such
conditions relating to the disposition and management thereof as
the Liquidator deems reasonable and equitable and to any joint
ownership agreements or other agreements governing the ownership
and operation of such properties at such time. The Liquidator
shall determine the fair market value of any property distributed
in kind using such reasonable method of valuation as it may
adopt.
14.5 Cancellation of Certificate of Limited Partnership. Upon
the completion of the distribution of Partnership property
pursuant to Sections 14.3 and 14.4, the Partnership shall be
terminated, and the Liquidator (or the Limited Partners if
necessary) shall cause the cancellation of the Certificate of
Limited Partnership and all qualifications of the Partnership as
a foreign limited partnership in jurisdictions other than the
State of Delaware and shall take such other actions as may be
necessary to terminate the Partnership.
14.6 Return of Capital. The General Partner shall not be
personally liable for 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.
14.7 Waiver of Partition. Each Partner hereby waives any rights
to partition of the Partnership property.
ARTICLE XV
Amendment of Partnership Agreement
15.1 Amendments Which May be Adopted Solely by the General
Partner. Subject to Section 15.3, the General Partner may amend
any provision of this Agreement without the consent of any
Limited Partner, and may 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, in the location of
the principal place of business of the Partnership or in the
registered office or registered agent of the Partnership;
(b) a change that the General Partner deems appropriate or
necessary to (i) 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 jurisdiction or (ii) ensure that neither the
Partnership nor any of the Operating Partnerships will be treated
as an association taxable as a corporation for federal income tax
purposes;
(c) a change to divide outstanding Units into a greater number
of Units, to combine outstanding Units into a smaller number of
Units or to reclassify Units in a manner that in the good faith
opinion of the General Partner, does not adversely affect any
class of Limited Partners in any material respect;
(d) a change that the General Partner in its sole discretion
deems appropriate or necessary to (i) satisfy any requirements,
conditions or guidelines contained in any order, rule or
regulation of any federal or state agency or contained in any
federal or state statute or (ii) facilitate the trading of any
Units or comply with any rule, regulation, requirement, condition
or guideline of any National Securities Exchange on which any
Units are or will be listed or admitted to trading, or NASDAQ if
any Units are or will be quoted on NASDAQ;
(e) a change that is appropriate or necessary, as stated in an
Opinion of Counsel, to prevent the Partnership, the Operating
Partnerships, the General Partner, its Affiliates and their
respective directors and officers from in any manner being
subjected to the provisions of the Investment Company Act of
1940, as amended, the Investment Advisers Act of 1940, as
amended, or "plan asset" regulations adopted under the Employee
Retirement Income Security Act of 1974, as amended, whether or
not substantially similar to plan asset regulations currently
applied or proposed by the United States Department of Labor;
(f) a change that is required or contemplated by any provision
of this Agreement, including, without limitation, Sections 4.3,
12.3 and 12.5;
(g) a change that in the good faith opinion of the General
Partner does not adversely affect the Limited Partners in any
material respect; or
(h) any changes or events similar to the foregoing.
15.2 Other Amendments. Amendments to this Agreement may be
proposed only by the General Partner. Subject to Section 15.3, a
proposed amendment (other than amendments adopted pursuant to
Section 15.1) shall be effective only when approved by a Majority
Interest. The General Partner shall notify all Limited Partners
upon final adoption of any proposed amendment.
15.3 Amendment Requirements. Notwithstanding the provisions of
Sections 15.1 and 15.2, (i) the approval of an Eighty Percent
Interest shall be required for any amendment unless the
Partnership has received an Opinion of Counsel that such
amendment would not result in the loss of limited liability of
any Limited Partner or result in the Partnership or any Operating
Partnership being treated as an association taxable as a
corporation for federal income tax purposes, (ii) no provision of
this Agreement which establishes a percentage of the Limited
Partners required to take or approve any action shall be amended
in any respect which would have the affect of reducing the voting
requirement, unless such amendment is approved by at least such
percentage of Limited Partners, and (iii) this Section 15.3 shall
be amended only with the approval of an Eighty Percent Interest.
ARTICLE XVI
Meetings
16.1 Meetings. Meetings of Limited Partners may be called by the
General Partner or by Limited Partners holding an aggregate of at
least 20% of the outstanding LP Units. Within 60 days after
receipt by the General Partner of a written proposal to call a
meeting signed by Limited Partners holding the requisite number
of LP Units and indicating the purpose for which the meeting is
to be called (or such longer period as shall be reasonably
required by the General Partner in order to prepare documents
required therefor), the General Partner shall cause a notice of
the meeting to be given to each Limited Partner. A meeting shall
be held at a time and place determined by the General Partner
within 60 days after the giving of notice of the meeting. A
Majority Interest represented in person or by proxy shall
constitute a quorum at a meeting of the Partners.
16.2 Record Date. For purposes of determining the Limited
Partners entitled to notice of or to vote at any meeting or to
give approvals without a meeting as provided in Section 16.4, the
General Partner may set a Record Date, which date for purposes of
notice of a meeting shall not be less than 10 days nor more than
60 days before the date of the meeting.
16.3 Conduct of Meeting. (a) The General Partner shall have full
power and authority concerning the manner of conducting any
meeting of Limited Partners or the solicitation of proxies or
consents in writing, including, without limitation, the
determination of Persons entitled to vote, the existence of a
quorum, the conduct of voting, the validity and effect of any
proxies, and the determination of any controversies, votes or
challenges arising in connection with or during the meeting or
voting. The General Partner shall designate an individual to
serve as chairman of any meeting and shall further designate an
individual to take the minutes of any meeting, which individuals
may be directors or officers of the General Partner. All minutes
shall be kept with the records of the Partnership maintained by
the General Partner.
(b) The General Partner may vote its LP Units in such manner as
it in its sole discretion may determine.
16.4 Action Without a Meeting. Any action that may be taken at a
meeting of the Limited Partners may be taken without a meeting if
approvals in writing setting forth the action so taken are signed
by Limited Partners holding in the aggregate at least the minimum
number of LP Units that would be necessary to authorize or take
such action at a meeting at which all the Limited Partners were
present and voted. Prompt notice of the taking of action without
a meeting shall be given to the Limited Partners who have not
approved in writing. If approvals to the taking of any action by
the Limited Partners is solicited by any Person other than by or
on behalf of the General Partner, the approvals shall have no
force and effect unless and until (a) they are deposited with the
Partnership in care of the General Partner, (b) approvals
sufficient to take the action proposed are dated as of a date not
more than 90 days prior to the date sufficient consents are
deposited with the Partnership, and (c) the Partnership receives
an Opinion of Counsel that giving effect to such approvals would
not result in the loss of limited liability of any Limited
Partner or cause the Partnership or any of the Operating
Partnerships to be treated as an association taxable as a
corporation for federal income tax purposes.
ARTICLE XVII
Certain Restrictions
17.1 Additional Units. (a) Without the prior approval of a Two-
Thirds Interest, the General Partner shall not cause the
Partnership to issue any class or series of LP Units having
preferences or other special or senior rights over the LP Units
issued pursuant to Section 4.2.
(b) The General Partner shall not cause the Partnership to issue
Units to the General Partner or any of its Affiliates (other than
pursuant to Section 4.1) unless (i) the Units are of a class
which is, prior to such issuance, listed or admitted to trading
on a National Securities Exchange or quoted by NASDAQ and the Net
Agreed Value of the Contributed Property being contributed in
exchange for such Units is at least equal to the number of Units
being so issued times the Unit Price of such Units or (ii) such
issuance is approved by a Majority Interest.
17.2 Certain Amendments. (a) Without the prior approval of a Two-
Thirds Interest, the General Partner shall not amend the
Incentive Compensation Agreement or permit the Partnership or any
Operating Partnership to amend any compensation arrangement for
the General Partner or the Manager, unless, in any case, such
amendment does not, in the good faith opinion of the General
Partner, adversely affect the Limited Partners in any material
respect.
(b) The General Partner shall not cause the Partnership to
approve any amendment to an Operating Partnership Agreement
pursuant to Section 13.2 thereof unless such amendment is
approved by a Majority Interest.
17.3 Sale of Assets. Without the prior approval of a Two-Thirds
Interest, the General Partner shall not permit the sale or other
disposition of all or substantially all of the consolidated
assets owned by the Partnership and the Operating Partnerships.
17.4 Restricted Payments by General Partner or Manager. (a) The
General Partner shall not declare or make any Restricted Payment
unless (i) after giving effect thereto, the General Partner's
assets that can be reached by creditors (excluding its
Partnership Interest and any notes receivable from or payable to
the Partnership) would have a fair market value (using such
reasonable method of valuation as the General Partner may adopt)
equal to or greater than $5,000,000, (ii) the Partnership has
received an Opinion of Counsel that such Restricted Payment would
not result in the Partnership or any Operating Partnership being
treated as an association taxable as a corporation for federal
income tax purposes, or (iii) such Restricted Payment is approved
by an Eighty Percent Interest.
(b) The General Partner shall not permit the Manager to declare
or make any Restricted Payment unless (i) after giving effect
thereto, the Manager's assets that can be reached by creditors
(excluding its partnership interest in any Operating Partnership
and any notes receivable from or payable to such Operating
Partnership) would have a fair market value (using such
reasonable method of calculation as the General Partner may
adopt) equal to or greater than $5,000,000, (ii) the Partnership
has received an Opinion of Counsel that such Restricted Payment
would not result in the Partnership or any Operating Partnership
being treated as an association taxable as a corporation for
federal income tax purposes, or (iii) such Restricted Payment is
approved by an Eighty Percent Interest.
ARTICLE XVIII
Right to Purchase Units
18.1 Right to Purchase Units. If fewer than 10% of the
outstanding LP Units are held by Persons other than the General
Partner and its Affiliates, the General Partner shall have the
right, which it may assign to the Partnership or any Affiliate,
to purchase all, but not less than all, of the LP Units that
remain outstanding and are held by Persons other than the General
Partner and its Affiliates. Any such purchase shall be at a
price per LP Unit in cash (the "Purchase Price") equal to the
greater of the Unit Price on the date of purchase (the "Purchase
Date") or the Issue Price for such LP Units, in either case
multiplied by (a) 1.2, if the Purchase Date is after December 31,
1996 and on or prior to December 31, 2001, (b) 1.1, if the
Purchase Date is after December 31, 2001 and on or prior to
December 31, 2006, or (c) 1.0, if the Purchase Date is after
December 31, 2006.
18.2 Notice of Election to Purchase. In the event the General
Partner, any Affiliate of the General Partner or the Partnership
elects to exercise such right to purchase LP Units pursuant to
Section 18.1, the General Partner shall cause the Transfer Agent
to give written notice of such election to purchase (the "Notice
of Election to Purchase") to the Record Holders at least 10, but
not more than 60, days prior to the Purchase Date. Such Notice
of Election to Purchase shall also be published in daily
newspapers of general circulation printed in the English language
and published in the Borough of Manhattan, New York. The Notice
of Election to Purchase shall specify the Purchase Date and the
Purchase Price and state that the General Partner, its Affiliate
or the Partnership, as the case may be, has elected to purchase
such LP Units, upon surrender thereof in exchange for payment,
and at such place as specified. Any such Notice of Election to
Purchase mailed to a Record Holder of LP Units at his address as
reflected in the Units Register shall be conclusively presumed to
have been given whether or not the owner receives such notice.
18.3 Purchase and Transfer of Units. On or prior to the Purchase
Date, the General Partner, its Affiliate or the Partnership, as
the case may be, shall deposit with the Transfer Agent cash in an
amount equal to the amount required to purchase all outstanding
LP Units held by Persons other than the General Partner or its
Affiliates. If the Notice of Election to Purchase shall have
been duly given as aforesaid and if on or prior to the Purchase
Date the cash shall have been deposited with the Transfer Agent
in trust for the benefit of the holders of LP Units subject to
purchase as provided herein, then from and after the Purchase
Date, whether or not any LP Units shall have been surrendered for
purchase, all rights of the holders of such LP Units (including,
without limitation, any rights pursuant to Articles V, VI and
XIV) shall thereupon cease, except the right to receive the
Purchase Price therefor, without interest, upon surrender to the
Transfer Agent of the LP Certificates representing such LP Units,
and such LP Units shall thereupon be transferred to the General
Partner, its Affiliate or the Partnership, as the case may be, on
the Units Register, and the General Partner, its Affiliate or the
Partnership, as the case may be, shall be deemed to be the owner
of all such LP Units from and after the Purchase Date and shall
have all rights as the owner of such LP Units.
ARTICLE XIX
General Provisions
19.1 Opinions Regarding Taxation as a Partnership.
Notwithstanding any other provisions of this Agreement, the
requirement, as a condition to any action proposed to be taken
under this Agreement, that the Partnership receive an Opinion of
Counsel that the proposed action would not result in the
Partnership or any of the Operating Partnerships being treated as
an association taxable as a corporation for federal income tax
purposes (a) shall not be applicable to the extent that the
Partnership or any of the Operating Partnerships is at such time
treated in all material respects as an association taxable as a
corporation for federal income tax purposes and (b) shall be
deemed satisfied by an Opinion of Counsel containing conditions,
limitations and qualifications which are acceptable to the
General Partner in its sole discretion.
19.2 Personal Property. The Partnership Interest of any Partner
shall be personal property for all purposes.
19.3 Addresses and Notices. Any notice, demand, request, payment
or report required or permitted to be given or made to a Limited
Partner under this Agreement shall be in writing and shall be
deemed given or made when delivered in person or when sent by
first class mail or by other means of written communication to
the Limited Partner at such Limited Partner's address as shown on
the Units Register. Any notice to the Partnership or the General
Partner shall be deemed given if received in writing by the
General Partner at the principal office of the Partnership
designated pursuant to Section 2.3.
19.4 Headings. All article or section headings in this Agreement
are for convenience only and shall not be deemed to control or
affect the meaning or construction of any of the provisions
hereof.
19.5 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto (including the
additional Persons that become Limited Partners as provided
herein) and their heirs, executors, administrators, successors,
legal representatives and assigns.
19.6 Integration. This Agreement constitutes the entire
agreement among the parties pertaining to the subject matter
hereof and supersedes all prior agreements and understandings
pertaining thereto.
19.7 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 a waiver of any such breach or of
any other covenant, duty, agreement or condition.
19.8 Counterparts. This Agreement may be executed in any number
of counterparts, all of which together shall constitute one
agreement binding on the parties hereto (including the additional
Persons that become Limited Partners as provided herein).
19.9 Severability. 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
hereof, or of such provision in other respects, shall not be
affected thereby.
19.10 Applicable Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the
State of Delaware.
In Witness Whereof, this Agreement has been duly executed by
the General Partner on behalf of itself and as agent and attorney-
in-fact for the Limited Partners, as of the date first above
written.
BUCKEYE PIPE LINE COMPANY,
as General Partner
By: /S/ Xxxxxxx X. Xxxx, Xx.
Title: President and Chief
Executive Officer
