EXHIBIT 3.2
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
SUBURBAN PROPANE, L.P.
TABLE OF CONTENTS
PAGE
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RECITALS:................................................................ 1
ARTICLE I DEFINITIONS................................................. 2
1.1 Definitions................................................. 2
1.2 Construction................................................ 10
ARTICLE II ORGANIZATION................................................ 10
2.1 Formation................................................... 10
2.2 Name........................................................ 11
2.3 Registered Office; Registered Agent; Principal Office;
Other Offices............................................... 11
2.4 Purpose and Business........................................ 11
2.5 Powers...................................................... 12
2.6 Power of Attorney........................................... 12
2.7 Term........................................................ 13
2.8 Title to Partnership Assets................................. 13
ARTICLE III RIGHTS OF THE LIMITED PARTNERS.............................. 14
3.1 Limitation of Liability..................................... 14
3.2 Management of Business...................................... 14
3.3 Rights of Limited Partners Relating to the Partnership...... 14
3.4 Outside Activities of the Limited Partners.................. 15
ARTICLE IV TRANSFER OF PARTNERSHIP INTERESTS........................... 16
4.1 Transfer Generally.......................................... 16
4.2 Transfer of the General Partner's Partnership Interest...... 16
4.3 Transfer of the Limited Partners' Partnership Interests..... 16
4.4 Restrictions on Transfers................................... 17
ARTICLE V CONTRIBUTIONS AND INITIAL TRANSFERS......................... 17
5.1 Organizational Contributions................................ 17
5.2 [Intentionally Deleted.].................................... 17
5.3 Additional Capital Contributions............................ 17
5.4 Interest and Withdrawal..................................... 17
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(CONTINUED)
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5.5 Capital Accounts............................................ 18
5.6 Loans from Partners......................................... 20
5.7 No Preemptive Rights........................................ 20
5.8 Fully Paid and Non-Assessable Nature of Limited Partner
Partnership Interests....................................... 21
ARTICLE VI ALLOCATIONS AND DISTRIBUTIONS............................... 21
6.1 Allocations for Capital Account Purposes.................... 21
6.2 Allocations for Tax Purposes................................ 24
6.3 [Intentionally Deleted.].................................... 25
6.4 General Distributions....................................... 26
ARTICLE VII MANAGEMENT AND OPERATION OF BUSINESS........................ 26
7.1 Management.................................................. 26
7.2 The Board of Supervisors; Appointment; Manner of Acting..... 29
7.3 Removal of Members of the Board of Supervisors.............. 29
7.4 Resignations of Members of the Board of Supervisors......... 29
7.5 Vacancies on the Board of Supervisors....................... 29
7.6 Meetings; Committees; Chairman.............................. 29
7.7 Officers.................................................... 31
7.8 Compensation................................................ 33
7.9 Restrictions on General Partner's and Board of Supervisors'
Authority................................................... 33
7.10 Reimbursement of the General Partner; Employee Benefit
Plans....................................................... 33
7.11 Outside Activities of the General Partner................... 34
7.12 Loans from the General Partner; Contracts with Affiliates;
Certain Restrictions on the General Partner................. 35
7.13 Indemnification............................................. 36
7.14 Liability of Indemnitees.................................... 38
7.15 Resolution of Conflicts of Interest......................... 39
7.16 Other Matters Concerning the General Partner and the Board
of Supervisors.............................................. 40
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7.17 Reliance by Third Parties................................... 41
ARTICLE VIII BOOKS, RECORDS, ACCOUNTING AND REPORTS...................... 42
8.1 Records and Accounting...................................... 42
8.2 Fiscal Year................................................. 42
ARTICLE IX TAX MATTERS................................................. 42
9.1 Tax Returns and Information................................. 42
9.2 Tax Elections............................................... 43
9.3 Tax Controversies........................................... 43
9.4 Withholding................................................. 43
ARTICLE X ADMISSION OF PARTNERS....................................... 43
10.1 Current Partners............................................ 43
10.2 Admission of Substituted Limited Partners................... 43
10.3 Admission of Successor General Partner...................... 44
10.4 Admission of Additional Limited Partners.................... 44
10.5 Amendment of Agreement and Certificate of Limited
Partnership................................................. 45
ARTICLE XI WITHDRAWAL OR REMOVAL OF PARTNERS........................... 45
11.1 Withdrawal of the General Partner........................... 45
11.2 Removal of the General Partner.............................. 47
11.3 Interest of Departing Partner and Successor General Partner;
Delegation of Authority to the Board of Supervisors by
Successor General Partner................................... 47
11.4 Withdrawal of the Limited Partner........................... 47
ARTICLE XII DISSOLUTION AND LIQUIDATION................................. 48
12.1 Dissolution................................................. 48
12.2 [Intentionally omitted]..................................... 48
12.3 Liquidator.................................................. 48
12.4 Liquidation................................................. 49
12.5 Cancellation of Certificate of Limited Partnership.......... 50
12.6 Return of Capital Contributions............................. 50
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12.7 Waiver of Partition......................................... 50
12.8 Capital Account Restoration................................. 50
ARTICLE XIII AMENDMENT OF PARTNERSHIP AGREEMENT.......................... 50
13.1 Amendment to be Adopted Solely by the Board of Supervisors.. 50
13.2 Amendment Procedures........................................ 52
ARTICLE XIV MERGER...................................................... 52
14.1 Authority................................................... 52
14.2 Procedure for Merger or Consolidation....................... 52
14.3 Approval by Limited Partners of Mergers or Consolidations... 53
14.4 Certificate of Merger....................................... 53
14.5 Effect of Merger............................................ 54
ARTICLE XV GENERAL PROVISIONS.......................................... 54
15.1 Addresses and Notices....................................... 54
15.2 References.................................................. 54
15.3 Further Action.............................................. 55
15.4 Binding Effect.............................................. 55
15.5 Integration................................................. 55
15.6 Creditors................................................... 55
15.7 Waiver...................................................... 55
15.8 Counterparts................................................ 55
15.9 Applicable Law.............................................. 55
15.10 Invalidity of Provisions.................................... 56
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THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
SUBURBAN PROPANE, L.P.
THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
SUBURBAN PROPANE, L.P. dated as of October 19, 2006, is entered into by and
among Suburban Energy Services Group LLC, a Delaware limited liability company,
as the General Partner, Suburban Propane Partners, L.P., a Delaware limited
partnership, as a Limited Partner, and Suburban LP Holding, LLC, a Delaware
limited liability company, as a Limited Partner, together with any other Persons
who become Partners in the Partnership or parties hereto as provided herein. In
consideration of the covenants, conditions and agreements contained herein, the
parties hereto hereby agree as follows:
RECITALS:
WHEREAS, Suburban Propane GP, Inc., a Delaware corporation and the
initial general partner of the Partnership (the "Initial General Partner"), and
certain other parties organized the Partnership as a Delaware limited
partnership pursuant to an Amended and Restated Agreement of Limited Partnership
dated as of March 4, 1996 (the "Original Agreement"); and
WHEREAS, the Second Amended and Restated Agreement of Limited
Partnership of the Partnership, dated as of May 26, 1999 amended and restated
the Original Agreement in its entirety, (the "Second Restated Agreement"); and
WHEREAS, the Partnership, the MLP and the General Partner have entered
into an Exchange Agreement, dated as of July 27, 2006 (the "Exchange
Agreement"); and the MLP, Suburban LP, Suburban LP Holding, Inc., and the
General Partner have entered into a First Amendment and Assignment Agreement
amending the Second Restated Agreement, dated as of the date hereof (the "OLP
Amendment"); and
WHEREAS, pursuant to the OLP Amendment, inter alia Suburban LP has
been admitted to the Partnership as a Limited Partner; and
WHEREAS, in connection with the transactions contemplated by the
Exchange Agreement, the OLP Amendment and the MLP Agreement (as defined herein),
the Partners, pursuant to their authority under Section 13 of the Agreement,
desire to amend and restate the Second Restated Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements made
herein, the Second Restated Agreement is hereby amended and restated in its
entirety as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions.
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
Capitalized terms used herein but not otherwise defined shall have the meanings
assigned to such terms in the MLP Agreement.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 10.4 and who is shown as
such on the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each calendar year, (a) increased by any amounts
that such Partner is obligated to restore under the standards set by Treasury
Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to restore under
Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and (b) decreased by
(i) the amount of all losses and deductions that, as of the end of such calendar
year, are reasonably expected to be allocated to such Partner in subsequent
years under Sections 704(e)(2) and 706(d) of the Code and Treasury Regulation
Section 1.751-1(b)(2)(ii), and (ii) the amount of all distributions that, as of
the end of such calendar year, are reasonably expected to be made to such
Partner in subsequent years in accordance with the terms of this Agreement or
otherwise to the extent they exceed offsetting increases to such Partner's
Capital Account that are reasonably expected to occur during (or prior to) the
year in which such distributions are reasonably expected to be made (other than
increases as a result of a minimum gain chargeback pursuant to Section 6.1(c)(i)
or 6.1(c)(ii)). The foregoing definition of Adjusted Capital Account is intended
to comply with the provisions of Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii).
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question. As used
herein, the term "control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.
"Agreed Allocation" means any allocation, other than a Required
Allocation, of an item of income, gain, loss or deduction pursuant to the
provisions of Section 6.1, including, without limitation, a Curative Allocation
(if appropriate to the context in which the term "Agreed Allocation" is used).
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"Agreed Value" of any Contributed Property means the fair market value
of such property or other consideration at the time of contribution as
determined by the Board of Supervisors using such reasonable method of valuation
as it may adopt. The Board of Supervisors shall, in its discretion, use such
method as it deems reasonable and appropriate to allocate the aggregate Agreed
Value of Contributed Properties contributed to the Partnership in a single or
integrated transaction among each separate property on a basis proportional to
the fair market value of each Contributed Property.
"Agreement" means this Third Amended and Restated Agreement of Limited
Partnership of Suburban Propane, L.P., as it may be amended, supplemented or
restated from time to time.
"Audit Committee" means a committee of the Board of Supervisors of the
Partnership composed of the same individuals who serve as the audit committee of
the MLP.
"Available Cash," means, with respect to any Quarter ending prior to
the Liquidation Date,
(a) the sum of (i) all cash and cash equivalents of the Partnership
Group on hand at the end of such Quarter, and (ii) all additional cash and cash
equivalents of the Partnership Group on hand on the date of determination of
Available Cash with respect to such Quarter resulting from borrowings for
working capital purposes, in each case subsequent to the end of such Quarter,
less
(b) the amount of any cash reserves that is necessary or appropriate
in the reasonable discretion of the Board of Supervisors to (i) provide for the
proper conduct of the business of the Partnership Group (including reserves for
future capital expenditures) subsequent to such Quarter, and (ii) comply with
applicable law or any loan agreement, security agreement, mortgage, debt
instrument or other agreement or obligation to which any Group Member is a party
or by which it is bound or its assets are subject; provided, however, that
disbursements made by a Group Member or cash reserves established, increased or
reduced after the end of such Quarter but on or before the date of determination
of Available Cash with respect to such Quarter shall be deemed to have been
made, established, increased or reduced, for purposes of determining Available
Cash, within such Quarter if the Board of Supervisors so determines.
Notwithstanding the foregoing, "Available Cash" with respect to the
Quarter in which the Liquidation Date occurs and any subsequent Quarter shall
equal zero.
"Board of Supervisors" shall mean the board of supervisors of the
Partnership, composed of those individuals who serve as members of the MLP's
board of supervisors, to whom the General Partner irrevocably delegates, and in
which is vested, pursuant to Section 7.1, and subject to Section 7.9, the power
to manage the business and activities of the Partnership. The Board of
Supervisors shall constitute a committee with the meaning of Section
17-303(b)(7) of the Delaware Act.
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"Book-Tax Disparity" means with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Section 5.5 and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
"Business Day" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States of
America or the states of New York or New Jersey shall not be regarded as a
Business Day.
"Capital Account" means the capital account maintained for a Partner
pursuant to Section 5.5.
"Capital Contribution" means any cash, cash equivalents or the Net
Agreed Value of Contributed Property that a Partner contributes or has
contributed to the Partnership pursuant to this Agreement (or the Original
Agreement) or the Contribution and Conveyance Agreement.
"Capitalized Lease Obligations" means obligations to pay rent or other
amounts under any lease of (or other arrangement conveying the right to use)
real and/or personal property, which obligations are accounted for as a capital
lease on a balance sheet under U.S. GAAP; for the purpose hereof the amount of
such obligations shall be the capitalized amount reflected on such balance
sheet.
"Carrying Value" means (a) with respect to a Contributed Property, the
Agreed Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions charged to the Partners' Capital
Accounts in respect of such Contributed Property, and (b) with respect to any
other Partnership property, the adjusted basis of such property for federal
income tax purposes, all as of the time of determination. The Carrying Value of
any property shall be adjusted from time to time in accordance with Sections
5.5(d)(i) and 5.5(d)(ii) and to reflect changes, additions or other adjustments
to the Carrying Value for dispositions and acquisitions of Partnership
properties, as deemed appropriate by the Board of Supervisors.
"Cause" means a court of competent jurisdiction has entered a final,
non-appealable judgment finding a Person liable for actual fraud, gross
negligence or willful or wanton misconduct in its capacity as general partner of
the Partnership or as a member of the Board of Supervisors, as the case may be.
"Certificate of Limited Partnership" means the Certificate of Limited
Partnership of the Partnership filed with the Secretary of State of the State of
Delaware as referenced in Section 2.1, as such Certificate of Limited
Partnership may be amended, supplemented or restated from time to time.
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"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time. Any reference herein to a specific section or sections
of the Code shall be deemed to include a reference to any corresponding
provision of future law.
"Commission" means the United States Securities and Exchange
Commission.
"Contributed Property" means each property or other asset, in such
form as may be permitted by the Delaware Act, but excluding cash, contributed to
the Partnership. Once the Carrying Value of a Contributed Property is adjusted
pursuant to Section 5.5(d), such property shall no longer constitute a
Contributed Property, but shall be deemed an Adjusted Property.
"Contribution and Conveyance Agreement" means that certain
Contribution, Conveyance and Assumption Agreement, dated as of March 4, 1996,
among the Initial General Partner, the MLP, the Partnership and certain other
parties, together with the additional conveyance documents and instruments
contemplated or referenced thereunder.
"Curative Allocation" means any allocation of an item of income, gain,
deduction, loss or credit pursuant to the provisions of Section 6.1(c)(ix).
"Delaware Act" means the Delaware Revised Uniform Limited Partnership
Act, 6 Del C. Sections 17-101, et seq., as amended, supplemented or restated
from time to time, and any successor to such statute.
"Departing Partner" means a former General Partner from and after the
effective date of any event of withdrawal, including the removal of such former
General Partner pursuant to Section 11.1 or 11.2.
"Economic Risk of Loss" has the meaning set forth in Treasury
Regulation Section 1.752-2(a).
"Event of Withdrawal" has the meaning assigned to such term in Section
11.1(a).
"Exchange Agreement" has the meaning assigned to such term in the
Recitals hereof.
"General Partner" means Suburban Energy Services Group LLC, a Delaware
limited liability company, as general partner of the Partnership.
"Group Member" means a member of the Partnership Group.
"Indebtedness," as used in Section 7.9(b), means, as applied to any
Person, without duplication, any indebtedness, exclusive of deferred taxes, (i)
in respect of borrowed money (whether or not the recourse of the lender is to
the whole of the assets of such Person or only to a portion thereof); (ii)
evidenced by bonds, notes, debentures or similar instruments or letters of
credit in support of bonds, notes, debentures or similar instruments; (iii)
representing the balance deferred and unpaid of the purchase price of any
property, if and to the extent such
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indebtedness would appear as a liability on a balance sheet of such Person
prepared in accordance with U.S. GAAP (but excluding trade accounts payable
arising in the ordinary course of business that are not overdue by more than 90
days or are being contested by such Person in good faith); (iv) any Capitalized
Lease Obligations of such Person; and (v) Indebtedness of others guaranteed by
such Person, including, without limitation, every obligation of such Person (A)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or to purchase (or to advance or supply funds for the purchase
of) any security for the payment of such Indebtedness, or (B) to maintain
working capital, equity capital or other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness.
"Indemnitee" means (a) the members of the Board of Supervisors or the
members of the board of supervisors of the MLP or any other Group Member, (b)
the General Partner, any Departing Partner and any Person who is or was an
Affiliate of the General Partner or any Departing Partner, (c) any Person who is
or was a member, partner, director, officer, employee, agent or trustee of the
MLP, any Group Member, the General Partner or any Departing Partner or any
Affiliate or the MLP, any Group Member, the General Partner or any Departing
Partner and (e) any Person who is or was serving at the request of the Board of
Supervisors, the General Partner or any Departing Partner or any Affiliate of
the General Partner or any Departing Partner as a member, partner, director,
officer, employee, partner, agent, fiduciary or trustee of another Person, in
each case, acting in such capacity; provided, that a Person shall not be an
Indemnitee by reason of providing, on a fee-for-services basis, trustee,
fiduciary or custodial services.
"Initial General Partner" means Suburban Propane GP, Inc., a Delaware
corporation.
"Limited Partner" means, collectively, unless the context otherwise
requires, the MLP, Suburban LP, each Substituted Limited Partner, each
Additional Limited Partner and any Departing Partner upon the change of its
status from General Partner to Limited Partner pursuant to Section 11.3.
"Liquidation Date" means (a) in the case of an event giving rise to
the dissolution of the Partnership of the type described in clauses (a) and (b)
of the first sentence of Section 12.2, the date on which the applicable time
period during which the Partners have the right to elect to reconstitute the
Partnership and continue its business has expired without such an election being
made, and (b) in the case of any other event giving rise to the dissolution of
the Partnership, the date on which such event occurs.
"Liquidator" means one or more Persons selected by the Board of
Supervisors to perform the functions described in Section 12.3.
"Merger Agreement" has the meaning assigned to such term in Section
14.1.
"MLP" means Suburban Propane Partners, L.P., a Delaware limited
partnership.
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"MLP Agreement" means the Third Amended and Restated Agreement of
Limited Partnership of the MLP, as it may be amended, supplemented or restated
from time to time.
"Net Agreed Value" means, (a) in the case of any Contributed Property,
the Agreed Value of such property reduced by any liabilities either assumed by
the Partnership upon such contribution or to which such property is subject when
contributed, and (b) in the case of any property distributed to a Partner by the
Partnership, the Partnership's Carrying Value of such property (as adjusted
pursuant to Section 5.5(d)(ii)) at the time such property is distributed,
reduced by any indebtedness either assumed by such Partner upon such
distribution or to which such property is subject at the time of distribution,
in either case, as determined under Section 752 of the Code.
"Net Income" means, for any taxable year, the excess, if any, of the
Partnership's items of income and gain for such taxable year over the
Partnership's items of loss and deduction for such taxable year. The items
included in the calculation of Net Income shall be determined in accordance with
Section 5.5(b) and shall not include any items specially allocated under Section
6.1(c).
"Net Loss" means, for any taxable year, the excess, if any, of the
Partnership's items of loss and deduction for such taxable year over the
Partnership's items of income and gain for such taxable year. The items included
in the calculation of Net Loss shall be determined in accordance with Section
5.5(b) and shall not include any items specially allocated under Section 6.1(c).
"Nonrecourse Built-in Gain" means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or pledge
securing a Nonrecourse Liability, the amount of any taxable gain that would be
allocated to the Partners pursuant to Sections 6.2(b)(i)(A), 6.2(b)(ii)(A) and
6.2(b)(iii) if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.
"Nonrecourse Deductions" means any and all items of loss, deduction or
expenditures (including, without limitation, any expenditure described in
Section 705(a)(2)(B) of the Code) that, in accordance with the principles of
Treasury Regulation Section 1.704-2(b), are attributable to a Nonrecourse
Liability.
"Nonrecourse Liability" has the meaning set forth in Treasury
Regulation Section 1.752-1(a)(2).
"OLP Subsidiary" means a Subsidiary of the Partnership.
"Officers" means the Chief Executive Officer, the President, any Vice
Presidents, the Secretary, the Treasurer, any Assistant Secretaries or Assistant
Treasurers and any other officers of the Partnership appointed by the Board of
Supervisors pursuant to Section 7.7.
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"Opinion of Counsel" means a written opinion of counsel (who may be
regular counsel to the Partnership or the General Partner or any of their
Affiliates) acceptable to the Board of Supervisors in its reasonable discretion.
"Original Agreement" has the meaning assigned to such term in the
Recitals to this Agreement.
"Original Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership of the MLP dated as of March 4, 1996.
"Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Treasury Regulation Section 1.704-2(i)(2).
"Partner Nonrecourse Deductions" means any and all items of loss,
deduction or expenditure (including, without limitation, any expenditure
described in Section 705(a)(2)(B) of the Code) that, in accordance with the
principles of Treasury Regulation Section 1.704-2(i), are attributable to a
Partner Nonrecourse Debt.
"Partners" means the General Partner and the Limited Partner.
"Partnership" means Suburban Propane, L.P., a Delaware limited
partnership, and any successors thereto.
"Partnership Group" means the Partnership and the OLP Subsidiaries,
treated as a single consolidated entity.
"Partnership Interest" means the interest of a Partner in the
Partnership.
"Partnership Minimum Gain" means that amount determined in accordance
with the principles of Treasury Regulation Section 1.704-2(d).
"Percentage Interest" means (a) as to the General Partner (in its
capacity as General Partner without reference to any limited partner interests
held by it) zero, (b) as to the MLP as a Limited Partner, 99.9%, and (c) as to
Suburban LP as a Limited Partner, 0.1%.
"Person" means an individual or a corporation, limited liability
company, partnership, limited liability partnership, joint venture, trust,
unincorporated organization, association, government agency or political
subdivision thereof or other entity.
"Quarter" means, unless the context requires otherwise, a fiscal
quarter of the Partnership.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Section 734 or 743 of the
Code) upon the
8
disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"Required Allocations" means (a) any limitation imposed on any
allocation of Net Losses, and (b) any allocation of an item of income, gain,
loss or deduction pursuant to Section 6.1(c)(i), 6.1(c)(ii), 6.1(c)(iii),
6.1(c)(vi) or 6.1(c)(viii).
"Residual Gain" or "Residual Loss" means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of a Contributed Property
or Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 6.2(b)(i)(A) or 6.2(b)(ii)(A), respectively, to eliminate
Book-Tax Disparities.
"Securities Act" means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to such statute.
"Special Approval" means approval by a majority of the members of the
Audit Committee.
"Subsidiary" means, with respect to any Person, (a) a corporation of
which more than 50% of the voting power of shares entitled (without regard to
the occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of such Person or
a combination thereof, (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the
partnership interests of such partnership (considering all of the partnership
interests of the partnership as a single class) is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person or a combination thereof, or (c) any other Person
(other than a corporation or a partnership) in which such Person, one or more
Subsidiaries of such Person, or a combination thereof, directly or indirectly,
at the date of determination, has (i) at least a majority ownership interest or
(ii) the power to elect or direct the election of a majority of the directors or
other governing body of such Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 10.2 in place of and with
all the rights of a Limited Partner and who is shown as a Limited Partner on the
books and records of the Partnership.
"Suburban LP" means Suburban LP Holding, LLC, a Delaware limited
liability company.
"Surviving Business Entity" has the meaning assigned to such term in
Section 14.2(b).
"Transfer" has the meaning assigned to such term in Section 4.1(a).
9
"Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a) the fair
market value of such property as of such date (as determined under Section
5.5(d)) over (b) the Carrying Value of such property as of such date (prior to
any adjustment to be made pursuant to Section 5.5(d) as of such date).
"Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a) the Carrying
Value of such property as of such date (prior to any adjustment to be made
pursuant to Section 5.5(d) as of such date) over (b) the fair market value of
such property as of such date (as determined under Section 5.5(d)).
"U.S. GAAP" means United States Generally Accepted Accounting
Principles consistently applied.
"Withdrawal Opinion of Counsel" has the meaning assigned to such term
in Section 11.1(b).
1.2 Construction.
Unless the context requires otherwise: (a) any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa; (b) references to Articles and Sections refer to Articles and
Sections of this Agreement; and (c) "include" or "includes" means includes,
without limitation, and "including" means including, without limitation.
ARTICLE II
ORGANIZATION
2.1 Formation.
The Initial General Partner and the MLP previously formed the
Partnership as a limited partnership upon the filing on December 19, 1995 of the
Certificate of Limited Partnership with the Secretary of State of the State of
Delaware pursuant to the provisions of the Delaware Act. The General Partner and
the MLP hereby amend and restate the Second Restated 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. This amendment and restatement shall become
effective on the date of this Agreement. Except as expressly provided to the
contrary in this Agreement, the rights and obligations of the Partners and the
administration, dissolution and termination of the Partnership shall be governed
by the Delaware Act. All Partnership Interests shall constitute personal
property of the owner thereof for all purposes.
The Initial General Partner has caused the Certificate of Limited
Partnership to be filed with the Secretary of State of the State of Delaware as
required by the Delaware Act and the General Partner shall use all reasonable
efforts to cause to be filed such other certificates or
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documents as may be determined by the Board of Supervisors to be reasonable and
necessary or appropriate for the formation, continuation, qualification and
operation of a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware or any other state in
which the Partnership may elect to do business or own property. To the extent
that such action is determined by the Board of Supervisors to be reasonable and
necessary or appropriate, the General Partner shall file amendments to and
restatements of the Certificate of Limited Partnership and do all things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of Delaware
or of any other state in which the Partnership may elect to do business or own
property, including in connection with the Exchange Agreement and the
transactions contemplated thereby. Subject to the provisions of Section 3.4(a),
the Partnership shall not be required, before or after filing, to deliver or
mail a copy of the Certificate of Limited Partnership, any qualification
document or any amendment thereto to any Limited Partner.
2.2 Name.
The name of the Partnership shall be "Suburban Propane, L.P." The
Partnership's business may be conducted under any other name or names deemed
necessary or appropriate by the Board of Supervisors, including, if consented to
by the General Partner in its sole discretion, the name of the General Partner.
The words "Limited Partnership," "L.P.," "Ltd." or similar words or letters
shall be included in the Partnership's name where necessary for the purpose of
complying with the laws of any jurisdiction that so requires. The Board of
Supervisors in its discretion may change the name of the Partnership at any time
and from time to time and shall notify the Limited Partners of such change in
the next regular communication to the Limited Partners.
2.3 Registered Office; Registered Agent; Principal Office; Other Offices.
Unless and until changed by the Board of Supervisors or the Chief
Executive Officer, the registered office of the Partnership in the State of
Delaware shall be located at Corporation Trust Center, 1209 Orange Street, New
Castle County, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the registered agent for service
of process on the Partnership in the State of Delaware at such registered office
shall be The Corporation Trust Company. The principal office of the Partnership
shall be located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇ or such other place as the Board of Supervisors may from time to time
designate by notice to the Limited Partner. The Partnership may maintain offices
at such other place or places within or outside the State of Delaware as the
Board of Supervisors deems necessary or appropriate. The address of the General
Partner shall be ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇ or such other place as the General Partner may from time to time
designate by notice to the Limited Partners.
2.4 Purpose and Business.
The purpose and nature of the business to be conducted by the
Partnership shall be to (a) acquire, manage and operate the assets and
properties held by the Partnership, (b) engage directly in, or enter into or
form any corporation, partnership, joint venture, limited
11
liability company or other arrangement to engage indirectly in, any business
activity that is approved by the Board of Supervisors and which may lawfully be
conducted by a limited partnership organized pursuant to the Delaware Act and,
in connection therewith, to exercise all of the rights and powers conferred upon
the Partnership pursuant to the agreements relating to such business activity
and (c) do anything necessary or appropriate to the foregoing, including the
making of capital contributions or loans to any Group Member, the MLP or any
Subsidiary of the MLP. The Board of Supervisors has no obligation or duty to the
Partnership or the Limited Partners to propose or approve, and in its discretion
may decline to propose or approve, the conduct by the Partnership of any
business.
2.5 Powers.
The Partnership shall be empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described in Section
2.4 and for the protection and benefit of the Partnership.
2.6 Power of Attorney.
(a) The Limited Partners hereby constitute and appoint the Chief
Executive Officer and President of the Partnership and, if a Liquidator shall
have been selected pursuant to Section 12.3, the Liquidator, severally (and any
successor to the Liquidator by merger, transfer, assignment, election or
otherwise) and each of their authorized officers and attorneys-in-fact, as the
case may be, with full power of substitution, as his true and lawful agent and
attorney-in-fact, with full power and authority in his name, place and ▇▇▇▇▇,
to:
(i) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (A) all certificates, documents and other
instruments (including this Agreement and the Certificate of Limited
Partnership and all amendments or restatements thereof) that the Board of
Supervisors or the Liquidator deems necessary or appropriate to form,
qualify or continue the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and in all other jurisdictions
in which the Partnership may conduct business or own property; (B) all
certificates, documents and other instruments that the Board of Supervisors
or the Liquidator deems necessary or appropriate to reflect, in accordance
with its terms, any amendment, change, modification or restatement of this
Agreement; (C) all certificates, documents and other instruments (including
conveyances and a certificate of cancellation) that the Board of
Supervisors or the Liquidator deems necessary or appropriate to reflect the
dissolution and liquidation of the Partnership pursuant to the terms of
this Agreement; (D) all certificates, documents and other instruments
relating to the admission, withdrawal, removal or substitution of any
Partner pursuant to, or other events described in, Article IV, X, XI or
XII; (E) all certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of any class or
series of Partnership Interests; and (F) all certificates, documents and
other instruments (including agreements and a certificate of merger)
relating to a merger or consolidation of the Partnership pursuant to
Article XIV; and
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(ii) execute, swear to, acknowledge, deliver, file and record all
ballots, consents, approvals, waivers, certificates, documents and other
instruments necessary or appropriate, in the discretion of the Board of
Supervisors or the Liquidator, to make, evidence, give, confirm or ratify
any vote, consent, approval, agreement or other action that is made or
given by the Partners hereunder or is consistent with the terms of this
Agreement or is necessary or appropriate, in the discretion of the Board of
Supervisors or the Liquidator, to effectuate the terms or intent of this
Agreement; provided, that when the approval of the Limited Partners is
required by any provision of this Agreement, the Chief Executive Officer
and President of the Partnership and the Liquidator may exercise the power
of attorney made in this Section 2.6(a)(ii) only after the necessary
consent or approval of the Limited Partners is obtained.
Nothing contained in this Section 2.6(a) shall be construed as authorizing the
Board of Supervisors to amend this Agreement except in accordance with Article
XIII or as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive and, to
the maximum extent permitted by law, not be affected by the subsequent death,
incompetency, disability, incapacity, dissolution, bankruptcy or termination of
the Limited Partners and the transfer of all or any portion of the Limited
Partner's Partnership Interest and shall extend to the Limited Partner's heirs,
successors, assigns and personal representatives. The Limited Partners hereby
agree to be bound by any representation made by the Chief Executive Officer or
President of the Partnership or the Liquidator acting in good faith pursuant to
such power of attorney; and the Limited Partners hereby waive, to the maximum
extent permitted by law, any and all defenses that may be available to contest,
negate or disaffirm the action of the Chief Executive Officer or President of
the Partnership or the Liquidator taken in good faith under such power of
attorney. The Limited Partners shall execute and deliver to the Chief Executive
Officer or President of the Partnership or the Liquidator, within 15 days after
receipt of the request therefor, such further designation, powers of attorney
and other instruments as the Chief Executive Officer or President of the
Partnership or the Liquidator deems necessary to effectuate this Agreement and
the purposes of the Partnership.
2.7 Term.
The term of the Partnership commenced upon the filing of the
Certificate of Limited Partnership in accordance with the Delaware Act and shall
continue until the close of Partnership business on September 30, 2085, or until
the earlier dissolution of the Partnership in accordance with the provisions of
Article XII.
2.8 Title to Partnership Assets.
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partner individually or collectively, shall have any
ownership interest in such Partnership assets or any
13
portion thereof. Title to any or all of the Partnership assets may be held in
the name of the Partnership, the General Partner or one or more nominees, as the
Board of Supervisors may determine. The General Partner hereby declares and
warrants that any Partnership assets for which record title is held in the name
of the General Partner or one or more nominees shall be held by the General
Partner or nominee for the use and benefit of the Partnership in accordance with
the provisions of this Agreement; provided, however, that the General Partner
shall use reasonable efforts to cause record title to such assets (other than
those assets in respect of which the Board of Supervisors determines that the
expense and difficulty of conveyancing makes transfer of record title to the
Partnership impracticable) to be vested in the Partnership as soon as reasonably
practicable; provided, further, that, prior to an event of withdrawal of the
General Partner or as soon thereafter as practicable, the General Partner shall
use reasonable efforts to effect the transfer of record title to the Partnership
and, prior to any such transfer, will provide for the use of such assets in a
manner satisfactory to the Board of Supervisors. All Partnership assets shall be
recorded as the property of the Partnership in its books and records,
irrespective of the name in which record title to such Partnership assets is
held.
ARTICLE III
RIGHTS OF THE LIMITED PARTNERS
3.1 Limitation of Liability.
The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement or the Delaware Act.
3.2 Management of Business.
No Limited Partner (other than the General Partner, or any of its
Affiliates or any member, officer, director, employee, partner, agent or trustee
of the General Partner or any of its Affiliates, or any officer, member of the
board of supervisors or directors, employee or agent of a Group Member, in its
capacity as such, if such Person shall also be a Limited Partner) shall
participate in the operation, management or control (within the meaning of
Section 17-303(a) of the Delaware Act) of the Partnership's business, transact
any business in the Partnership's name or have the power to sign documents for
or otherwise bind the Partnership. Any action taken by any Affiliate of the
General Partner or any member, officer, director, employee, partner, agent or
trustee of the General Partner or any of its Affiliates, or any officer, member
of the board of supervisors or directors, member, partner, employee or agent of
a Group Member, the MLP or any Subsidiary of the MLP, in its capacity as such,
shall not be deemed to be participation in the control of the business of the
Partnership by a limited partner of the Partnership (within the meaning of
Section 17-303(a) of the Delaware Act) and shall not affect, impair or eliminate
the limitations on the liability of the Limited Partners under this Agreement.
3.3 Rights of Limited Partners Relating to the Partnership.
(a) In addition to other rights provided by this Agreement or by
applicable law, and except as limited by Section 3.3(b), each of the Limited
Partners shall have the right, for
14
a purpose reasonably related to such Limited Partner's interest as a limited
partner in the Partnership, upon reasonable demand and at the Limited Partner's
own expense:
(i) to obtain true and full information regarding the status of the
business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of the
Partnership's federal, state and local tax returns for each year, ,
provided, however, that only the requesting Limited Partner's Schedule K-1
will be included therewith;
(iii) to have furnished to it, upon notification to the Partnership, a
current list of the name and last known business, residence or mailing
address of each Partner;
(iv) to have furnished to it, upon notification to the Partnership, a
copy of this Agreement and the Certificate of Limited Partnership and all
amendments thereto, together with a copy of the executed copies of all
powers of attorney pursuant to which this Agreement, the Certificate of
Limited Partnership and all amendments thereto have been executed;
(v) to obtain true and full information regarding the amount of cash
and a description and statement of the Net Agreed Value of any other
Capital Contribution by each Partner and which each Partner has agreed to
contribute in the future, and the date on which each became a Partner; and
(vi) to obtain such other information regarding the affairs of the
Partnership as is just and reasonable.
(b) The Board of Supervisors may keep confidential from the Limited
Partners, for such period of time as the Board of Supervisors deems reasonable,
(i) any information that the Board of Supervisors reasonably believes to be in
the nature of trade secrets or (ii) other information the disclosure of which
the Board of Supervisors in good faith believes (A) is not in the best interests
of the Partnership Group, (B) could damage the Partnership Group or (C) that any
Group Member is required by law or by agreements with third parties to keep
confidential (other than agreements with Affiliates the primary purpose of which
is to circumvent the obligations set forth in this Section 3.3).
3.4 Outside Activities of the Limited Partners.
Subject to the provisions of Section 7.11, which shall continue to be
applicable to the Persons referred to therein, regardless of whether such Person
shall also be a Limited Partner, any Limited Partner shall be entitled to and
may have business interests and engage in business activities in addition to
those relating to the Partnership, including business interests and activities
in direct competition with the Partnership Group.
15
ARTICLE IV
TRANSFER OF PARTNERSHIP INTERESTS
4.1 Transfer Generally.
(a) The term "transfer," when used in this Agreement with respect to a
Partnership Interest, shall be deemed to refer to a transaction by which a
Partner assigns its Partnership Interest to another Person, and includes a sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or any
other disposition by law or otherwise, in whole or in part.
(b) No Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article IV.
Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article IV shall be null and void.
(c) Nothing contained in this Agreement shall be construed to prevent
a disposition by any securityholder of the General Partner of any or all of the
issued and outstanding equity interests in the General Partner.
4.2 Transfer of the General Partner's Partnership Interest.
If the General Partner transfers its partnership interest as the
general partner of the MLP to any Person in accordance with the provisions of
the MLP Agreement, upon the request of the Board of Supervisors, the General
Partner shall contemporaneously therewith, transfer all, but not less than all,
of its Partnership Interest as the general partner of the Partnership to such
Person for consideration of $10, and the Limited Partner hereby expressly
consents to such transfer. Except as set forth in the immediately preceding
sentence, the General Partner may not transfer all or any part of its
Partnership Interest as the general partner of the Partnership. Any transferee
of the Partnership Interests of the General Partner pursuant to this Section 4.2
shall be deemed to be a successor to the General Partner for purposes of this
Agreement.
4.3 Transfer of the Limited Partners' Partnership Interests.
Any Limited Partner may transfer all, but not less than all, of its
Partnership Interest as a limited partner of the Partnership in connection with
the merger, consolidation or other combination of any of the Limited Partners
with or into any other Person or the transfer by any of the Limited Partners of
all or substantially all of its assets to another Person, and following any such
transfer such Person may become a Substituted Limited Partner pursuant to
Article X. Except as set forth in the immediately preceding sentence or pursuant
to the Exchange Agreement, or in connection with any pledge of (or any related
foreclosure on) the Limited Partner's Partnership Interest as a limited partner
of the Partnership solely for the purpose of securing, directly or indirectly,
indebtedness of the Partnership or the MLP, a Limited Partner may not transfer
all or any part of its Partnership Interest or withdraw from the Partnership.
16
4.4 Restrictions on Transfers.
(a) Notwithstanding the other provisions of this Article IV, no
transfer of any Partnership Interest shall be made if such transfer would (i)
violate the then applicable federal or state securities laws or rules and
regulations of the Commission, any state securities commission or any other
governmental authorities with jurisdiction over such transfer, (ii) terminate
the existence or qualification of the Partnership or the MLP under the laws of
the jurisdiction of its formation or (iii) cause the Partnership or the MLP to
be treated as an association taxable as a corporation or otherwise to be taxed
as an entity for federal income tax purposes (to the extent not already so
treated or taxed).
(b) The Board of Supervisors may impose restrictions on the transfer
of Partnership Interests if a subsequent Opinion of Counsel determines that such
restrictions are necessary to avoid a significant risk of the Partnership or the
MLP becoming taxable as a corporation or otherwise to be taxed as an entity for
federal income tax purposes. The restrictions may be imposed by making such
amendments to this Agreement as the Board of Supervisors may determine to be
necessary or appropriate to impose such restrictions.
ARTICLE V
CONTRIBUTIONS AND INITIAL TRANSFERS
5.1 Organizational Contributions.
In connection with the formation of the Partnership under the Delaware
Act, the Initial General Partner made an initial Capital Contribution to the
Partnership and was admitted as the general partner of the Partnership, and the
MLP made an initial Capital Contribution to the Partnership and was admitted as
a limited partner of the Partnership.
5.2 [Intentionally Deleted.]
5.3 Additional Capital Contributions.
With the consent of the Board of Supervisors, any Limited Partner may,
but shall not be obliged to, make additional Capital Contributions to the
Partnership. Except as provided in Section 12.8, the General Partner shall not
be obligated, nor permitted, to make any additional Capital Contributions to the
Partnership in its capacity as the General Partner of the Partnership.
5.4 Interest and Withdrawal.
No interest shall be paid by the Partnership on Capital Contributions,
and no Partner shall be entitled to withdraw or return of any part of its
Capital Contributions or to receive any distribution from the Partnership,
except as provided in Articles VI, XI and XII.
17
5.5 Capital Accounts.
(a) The Partnership shall maintain for each Partner owning a
Partnership Interest a separate Capital Account with respect to such Partnership
Interest in accordance with the rules of Treasury Regulation Section
1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i) the amount of
all Capital Contributions made to the Partnership with respect to such
Partnership Interest pursuant to this Agreement (or any previous partnership
agreement of the Partnership) and (ii) all items of Partnership income and gain
(including, without limitation, income and gain exempt from tax) computed in
accordance with Section 5.5(b) and allocated with respect to such Partnership
Interest pursuant to Section 6.1, and decreased by (x) the amount of cash or the
Net Agreed Value of all actual and deemed distributions of cash or property made
with respect to such Partnership Interest pursuant to this Agreement (or any
previous partnership agreement of the Partnership) and (y) all items of
Partnership deduction and loss computed in accordance with Section 5.5(b) and
allocated with respect to such Partnership Interest pursuant to Section 6.1.
Immediately following the consummation of the transactions contemplated in the
Exchange Agreement, the General Partner's initial Capital Account shall be zero.
(b) For purposes of computing the amount of any item of income, gain,
loss or deduction which is to be allocated pursuant to Article VI and is to be
reflected in the Partners' Capital Accounts, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes (including,
without limitation, any method of depreciation, cost recovery or amortization
used for that purpose), provided, that:
(i) Solely for purposes of this Section 5.5, the Partnership shall be
treated as owning directly its proportionate share (as determined by the
Board of Supervisors) of all property owned by any OLP Subsidiary that is
classified as a partnership for federal income tax purposes.
(ii) All fees and other expenses incurred by the Partnership to
promote the sale of (or to sell) a Partnership Interest that can neither be
deducted nor amortized under Section 709 of the Code, if any, shall, for
purposes of Capital Account maintenance, be treated as an item of deduction
at the time such fees and other expenses are incurred and shall be
allocated among the Partners pursuant to Section 6.1.
(iii) Except as otherwise provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss
and deduction shall be made without regard to any election under Section
754 of the Code which may be made by the Partnership and, as to those items
described in Section 705(a)(1)(B) or 705(a)(2)(B) of the Code, without
regard to the fact that such items are not includable in gross income or
are neither currently deductible nor capitalized for federal income tax
purposes. To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Section 734(b) or 743(b) of the Code is
required, pursuant to Treasury Regulation Section 1.704-2(b)(2)(iv)(m) to
be taken into
18
account in determining Capital Accounts, the amount of such adjustment in
the Capital Accounts shall be treated as an item of gain or loss.
(iv) Any income, gain or loss attributable to the taxable disposition
of any Partnership property shall be determined as if the adjusted basis of
such property as of such date of disposition were equal in amount to the
Partnership's Carrying Value with respect to such property as of such date.
(v) In accordance with the requirements of Section 704(b) of the Code,
any deductions for depreciation, cost recovery or amortization attributable
to any Contributed Property shall be determined as if the adjusted basis of
such property on the date it was acquired by the Partnership were equal to
the Agreed Value of such property. Upon an adjustment pursuant to Section
5.5(d) to the Carrying Value of any Partnership property subject to
depreciation, cost recovery or amortization, any further deductions for
such depreciation, cost recovery or amortization attributable to such
property shall be determined (A) as if the adjusted basis of such property
were equal to the Carrying Value of such property immediately following
such adjustment and (B) using a rate of depreciation, cost recovery or
amortization derived from the same method and useful life (or, if
applicable, the remaining useful life) as is applied for federal income tax
purposes; provided, however, that, if the asset has a zero adjusted basis
for federal income tax purposes, depreciation, cost recovery or
amortization deductions shall be determined using any reasonable method
that the Board of Supervisors may adopt.
(vi) If the Partnership's adjusted basis in a depreciable or cost
recovery property is reduced for federal income tax purposes pursuant to
Section 48(q)(1) or 48(q)(3) of the Code, the amount of such reduction
shall, solely for purposes hereof, be deemed to be an additional
depreciation or cost recovery deduction in the year such property is placed
in service and shall be allocated among the Partners pursuant to Section
6.1. Any restoration of such basis pursuant to Section 48(q)(2) of the Code
shall, to the extent possible, be allocated in the same manner to the
Partners to whom such deemed deduction was allocated.
(c) A transferee of a Partnership Interest shall succeed to a pro rata
portion of the Capital Account of the transferor relating to the Partnership
Interest so transferred.
(d) (i) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), on an issuance of additional Partnership Interests
for cash or Contributed Property, the Capital Account of all Partners and
the Carrying Value of each Partnership property immediately prior to such
issuance shall be adjusted upward or downward to reflect any Unrealized
Gain or Unrealized Loss attributable to such Partnership property, as if
such Unrealized Gain or Unrealized Loss had been recognized on an actual
sale of each such property immediately prior to such issuance and had been
allocated to the Partners at such time pursuant to Section 6.1. In
determining such Unrealized Gain or Unrealized Loss, the aggregate cash
amount and fair market value of all Partnership assets (including, without
limitation, cash or cash equivalents) immediately prior to the issuance of
additional Partnership Interests shall be determined by the Board of
Supervisors using
19
such reasonable method of valuation as it may adopt; provided, however,
that the Board of Supervisors, in arriving at such valuation, must take
fully into account the fair market value of the Partnership Interests of
all Partners at such time. The Board of Supervisors shall allocate such
aggregate value among the assets of the Partnership (in such manner as it
determines in its discretion to be reasonable) to arrive at a fair market
value for individual properties.
(ii) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), immediately prior to any actual or deemed
distribution to a Partner of any Partnership property (other than a
distribution of cash that is not in redemption or retirement of a
Partnership Interest), the Capital Accounts of all Partners and the
Carrying Value of all Partnership property shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss attributable to
such Partnership property, as if such Unrealized Gain or Unrealized Loss
had been recognized in a sale of such property immediately prior to such
distribution for an amount equal to its fair market value, and had been
allocated to the Partners, at such time, pursuant to Section 6.1. In
determining such Unrealized Gain or Unrealized Loss the aggregate cash
amount and fair market value of all Partnership assets (including, without
limitation, cash or cash equivalents) immediately prior to a distribution
shall (A) in the case of an actual distribution which is not made pursuant
to Section 12.4, be determined and allocated in the same manner as that
provided in Section 5.5(d)(i) or (B) in the case of a liquidating
distribution pursuant to Section 12.4, be determined and allocated by the
Liquidator using such reasonable method of valuation as it may adopt.
5.6 Loans from Partners.
Loans by a Partner to the Partnership shall not constitute Capital
Contributions. If any Partner shall advance funds to the Partnership in excess
of the amounts required hereunder to be contributed by it to the capital of the
Partnership, the making of such excess advances shall not result in any increase
in the amount of the Capital Account of such Partner. The amount of any such
excess advances shall be a debt obligation of the Partnership to such Partner
and shall be payable or collectible only out of the Partnership assets in
accordance with the terms and conditions upon which such advances are made.
5.7 No Preemptive Rights.
No Person shall have any preemptive, preferential or other similar
rights with respect to (a) additional Capital Contributions; (b) issuance or
sale of any class or series of Partnership Interests, whether unissued, held in
treasury by the Partnership or hereafter created; (c) issuance of any
obligations, evidences of indebtedness or other securities of the Partnership
convertible into or exchangeable for, or carrying or accompanied by any rights
to receive, purchase or subscribe to, any such Partnership Interests; (d)
issuance of any right of subscription to or right to receive, or any warrant or
option for the purchase of, any such Partnership Interests; or (e) issuance or
sale of any other securities that may be issued or sold by the Partnership.
20
5.8 Fully Paid and Non-Assessable Nature of Limited Partner Partnership
Interests.
All Limited Partner Partnership Interests issued pursuant to, and in
accordance with the requirements of, this Article V shall be fully paid and
non-assessable Partnership Interests in the Partnership, except as such
non-assessability may be affected by Sections 17-607 and 17-804 of the Delaware
Act.
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
6.1 Allocations for Capital Account Purposes.
(a) General. In maintaining the Capital Accounts that determine the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Section 5.5(b)), shall be
allocated among the Partners in accordance with their relative Percentage
Interests, except as otherwise provided below.
(b) Limitation on Losses. Any deduction otherwise allocable to a
Limited Partner that would create or add to a deficit in its Adjusted Capital
Account shall instead be allocated to the General Partner. Thereafter, any
income that would otherwise be allocable to such Limited Partner shall be
allocated to the General Partner until the aggregate amount so allocated under
this sentence equals the aggregate deductions previously allocated to the
General Partner under the preceding sentence.
(c) Special Allocations. Notwithstanding any other provision of this
Section 6.1, the following special allocations shall be made for such taxable
period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding any other
provision of this Section 6.1, if there is a net decrease in Partnership
Minimum Gain during any Partnership taxable period, each Partner shall be
allocated items of Partnership income and gain for such period (and, if
necessary, subsequent periods) in the manner and amounts provided in
Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and
1.704-2(j)(2)(i), or any successor provision. For purposes of this Section
6.1(c), each Partner's Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required hereunder shall
be effected, prior to the application of any other allocations pursuant to
this Section 6.1(c) with respect to such taxable period (other than an
allocation pursuant to Sections 6.1(c)(v) and 6.1(c)(vi)). This Section
6.1(c)(i) is intended to comply with the Partnership Minimum Gain
chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall
be interpreted consistently therewith.
(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain.
Notwithstanding the other provisions of this Section 6.1 (other than
Section 6.l(c)(i)), except as provided in Treasury Regulation Section
1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain during any Partnership taxable period, any
21
Partner with a share of Partner Nonrecourse Debt Minimum Gain at the
beginning of such taxable period shall be allocated items of Partnership
income and gain for such period (and, if necessary, subsequent periods) in
the manner and amounts provided in Treasury Regulation Sections
1.704-2(i)(4) and 1.704-2(j)(2)(ii), or any successor provisions. For
purposes of this Section 6.1(c), each Partner's Adjusted Capital Account
balance shall be determined, and the allocation of income or gain required
hereunder shall be effected, prior to the application of any other
allocations pursuant to this Section 6.1(c), other than Section 6.1(c)(i)
and other than an allocation pursuant to Sections 6.1(c)(v) and 6.1(c)(vi),
with respect to such taxable period. This Section 6.1(c)(ii) is intended to
comply with the chargeback of items of income and gain requirement in
Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.
(iii) Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in
Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Partnership
income and gain shall be specially allocated to such Partner in an amount
and manner sufficient to eliminate, to the extent required by the Treasury
Regulations promulgated under Section 704(b) of the Code, the deficit
balance, if any, in its Adjusted Capital Account created by such
adjustments, allocations or distributions as quickly as possible unless
such deficit balance is otherwise eliminated pursuant to Section 6.1(c)(i)
or (ii).
(iv) Gross Income Allocations. In the event any Partner has a deficit
balance in its Capital Account at the end of any Partnership taxable period
in excess of the sum of (A) the amount such Partner is required to restore
pursuant to the provisions of this Agreement and (B) the amount such
Partner is deemed obligated to restore pursuant to Treasury Regulation
Sections 1.704-2(g) and 1.704-2(i)(5), such Partner shall be specially
allocated items of Partnership gross income and gain in the amount of such
excess as quickly as possible; provided, that an allocation pursuant to
this Section 6.1(c)(iv) shall be made only if and to the extent that such
Partner would have a deficit balance in its Capital Account as adjusted
after all other allocations provided for in this Section 6.1 have been
tentatively made as if this Section 6.1(c)(iv) were not in this Agreement.
(v) Nonrecourse Deductions. Nonrecourse Deductions for any taxable
period shall be allocated to the Partners in accordance with their
respective Percentage Interests. If the Board of Supervisors determines in
its good faith discretion that the Partnership's Nonrecourse Deductions
must be allocated in a different ratio to satisfy the safe harbor
requirements of the Treasury Regulations promulgated under Section 704(b)
of the Code, the Board of Supervisors is authorized, upon notice to the
Limited Partners, to revise the prescribed ratio to the numerically closest
ratio that does satisfy such requirements.
(vi) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions
for any taxable period shall be allocated 100% to the Partner that bears
the Economic Risk of Loss with respect to the Partner Nonrecourse Debt to
which such Partner Nonrecourse
22
Deductions are attributable in accordance with Treasury Regulation Section
1.704-2(i). If more than one Partner bears the Economic Risk of Loss with
respect to a Partner Nonrecourse Debt, such Partner Nonrecourse Deductions
attributable thereto shall be allocated between or among such Partners in
accordance with the ratios in which they share such Economic Risk of Loss.
(vii) Nonrecourse Liabilities. For purposes of Treasury Regulation
Section 1.752-3(a)(3), the Partners agree that Nonrecourse Liabilities of
the Partnership in excess of the sum of (A) the amount of Partnership
Minimum Gain and (B) the total amount of Nonrecourse Built-in Gain shall be
allocated among the Partners in accordance with their respective Percentage
Interests.
(viii) Code Section 754 Adjustments. To the extent an adjustment to
the adjusted tax basis of any Partnership asset pursuant to Section 734(b)
or 743(c) of the Code is required, pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis), and such item of
gain or loss shall be specially allocated to the Partners in a manner
consistent with the manner in which their Capital Accounts are required to
be adjusted pursuant to such Section of the Treasury Regulations.
(ix) Curative Allocation.
(A) Notwithstanding any other provision of this Section 6.1,
other than the Required Allocations, the Required Allocations shall be
taken into account in making the Agreed Allocations so that, to the
extent possible, the net amount of items of income, gain, loss and
deduction allocated to each Partner pursuant to the Required
Allocations and the Agreed Allocations, together, shall be equal to
the net amount of such items that would have been allocated to each
such Partner under the Agreed Allocations had the Required Allocations
and the related Curative Allocation not otherwise been provided in
this Section 6.1. Notwithstanding the preceding sentence, Required
Allocations relating to (1) Nonrecourse Deductions shall not be taken
into account except to the extent that there has been a decrease in
Partnership Minimum Gain and (2) Partner Nonrecourse Deductions shall
not be taken into account except to the extent that there has been a
decrease in Partner Nonrecourse Debt Minimum Gain. Allocations
pursuant to this Section 6.1(c)(ix)(A) shall only be made with respect
to Required Allocations to the extent the Board of Supervisors
reasonably determines that such allocations will otherwise be
inconsistent with the economic agreement among the Partners. Further,
allocations pursuant to this Section 6.1(c)(ix)(A) shall be deferred
with respect to allocations pursuant to clauses (1) and (2) hereof to
the extent the Board of Supervisors reasonably determines that such
allocations are likely to be offset by subsequent Required
Allocations.
23
(B) The Board of Supervisors shall have reasonable discretion,
with respect to each taxable period, to (1) apply the provisions of
Section 6.1(c)(ix)(A) in whatever order is most likely to minimize the
economic distortions that might otherwise result from the Required
Allocations, and (2) divide all allocations pursuant to Section
6.1(c)(ix)(A) among the Partners in a manner that is likely to
minimize such economic distortions.
6.2 Allocations for Tax Purposes.
(a) General. Except as otherwise provided herein, for federal income
tax purposes, each item of income, gain, loss and deduction shall be allocated
among the Partners in the same manner as its correlative item of "book" income,
gain, loss or deduction is allocated pursuant to Section 6.1.
(b) Contributed Property. In an attempt to eliminate Book-Tax
Disparities attributable to a Contributed Property or Adjusted Property, items
of income, gain, loss, depreciation, amortization and cost recovery deductions
shall be allocated for federal income tax purposes among the Partners as
follows:
(i) (A) In the case of a Contributed Property, such items attributable
thereto shall be allocated among the Partners in the manner provided under
Section 704(c) of the Code that takes into account the variation between
the Agreed Value of such property and its adjusted basis at the time of
contribution; and (B) any item of Residual Gain or Residual Loss
attributable to a Contributed Property shall be allocated among the
Partners in the same manner as its correlative item of "book" gain or loss
is allocated pursuant to Section 6.1.
(ii) (A) In the case of an Adjusted Property, such items shall (1)
first, be allocated among the Partners in a manner consistent with the
principles of Section 704(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to such property and the
allocations thereof pursuant to Section 5.5(d)(i) or (ii), and (2) second,
in the event such property was originally a Contributed Property, be
allocated among the Partners in a manner consistent with Section
6.2(b)(i)(A); and (B) any item of Residual Gain or Residual Loss
attributable to an Adjusted Property shall be allocated among the Partners
in the same manner as its correlative item of "book" gain or loss is
allocated pursuant to Section 6.1.
(iii) The Board of Supervisors shall apply the principles of Treasury
Regulation Section 1.704-3(d) to eliminate Book-Tax Disparities.
(c) Discretionary Allocation Authority. For the proper administration
of the Partnership and for the preservation of uniformity of the Units of the
MLP (or any class or classes thereof), the Board of Supervisors shall have sole
discretion to (i) adopt such conventions as it deems appropriate in determining
the amount of depreciation, amortization and cost recovery deductions; (ii) make
special allocations for federal income tax purposes of income (including,
without limitation, gross income) or deductions; and (iii) amend the provisions
of this
24
Agreement as appropriate (x) to reflect the proposal or promulgation of Treasury
Regulations under Section 704(b) or Section 704(c) of the Code or (y) otherwise
to preserve or achieve uniformity of the Units of the MLP (or any class or
classes thereof). The Board of Supervisors may adopt such conventions, make such
allocations and make such amendments to this Agreement as provided in this
Section 6.2(c) only if such conventions, allocations or amendments would not
have a material adverse effect on the Partners, the holders of any class or
classes of Units issued and outstanding or the Partnership, and if such
allocations are consistent with the principles of Section 704 of the Code.
(d) Discretionary Amortization Authority. The Board of Supervisors in
its discretion may determine to depreciate or amortize the portion of an
adjustment under Section 743(b) of the Code attributable to unrealized
appreciation in any Adjusted Property (to the extent of the unamortized Book-Tax
Disparity) using a predetermined rate derived from the depreciation or
amortization method and useful life applied to the Partnership's common basis of
such property, despite any inconsistency of such approach with Treasury
Regulation Section 1.167(c)-1(a)(6). If the Board of Supervisors determines that
such reporting position cannot reasonably be taken, the Board of Supervisors may
adopt depreciation and amortization conventions under which all purchasers
acquiring Units of the MLP in the same month would receive depreciation and
amortization deductions, based upon the same applicable rate as if they had
purchased a direct interest in the Partnership's property. If the Board of
Supervisors chooses not to utilize such aggregate method, the Board of
Supervisors may use any other reasonable depreciation and amortization
conventions to preserve the uniformity of the intrinsic tax characteristics of
any Units that would not have a material adverse effect on any Limited Partner
or the holders of any class or classes of Units.
(e) Recapture Income. Any gain allocated to the Partners upon the sale
or other taxable disposition of any Partnership asset shall, to the extent
possible, after taking into account other required allocations of gain pursuant
to this Section 6.2, be characterized as Recapture Income in the same
proportions and to the same extent as such Partners (or their predecessors in
interest) have been allocated any deductions directly or indirectly giving rise
to the treatment of such gains as Recapture Income.
(f) Effect of Section 754 Election. All items of income, gain, loss,
deduction and credit recognized by the Partnership for federal income tax
purposes and allocated to the Partners in accordance with the provisions hereof
shall be determined without regard to any election under Section 754 of the Code
which may be made by the Partnership; provided, however, that such allocations,
once made, shall be adjusted as necessary or appropriate to take into account
those adjustments permitted or required by Sections 734 and 743 of the Code.
(g) Proration. The Board of Supervisors may adopt such methods of
allocation of income, gain, loss or deduction between a transferor and a
transferee of a Partnership Interest as it determines necessary, to the extent
permitted or required by Section 706 of the Code and the regulations or rulings
promulgated thereunder.
6.3 [Intentionally Deleted.]
25
6.4 General Distributions.
(a) Within 45 days following the end of each Quarter commencing with
the Quarter ending on June 29, 1996, an amount equal to 100% of Available Cash
with respect to such Quarter shall be distributed in accordance with this
Article VI by the Partnership to the Partners in accordance with their
respective Percentage Interests. The immediately preceding sentence shall not
require any distribution of cash if and to the extent such distribution would be
prohibited by applicable law or by any loan agreement, security agreement,
mortgage, debt instrument or other agreement or obligation to which the
Partnership is a party or by which it is bound or its assets are subject. All
distributions required to be made under this Agreement shall be made subject to
Sections 17-607 or 17-804 of the Delaware Act.
(b) In the event of the dissolution and liquidation of the
Partnership, all receipts received during or after the Quarter in which the
Liquidation Date occurs, except as otherwise provided in (a)(ii) of the
definition of Available Cash, shall be applied and distributed solely in
accordance with, and subject to the terms and conditions of, Section 12.4.
(c) The Board of Supervisors shall have the discretion to treat taxes
paid by the Partnership on behalf of, or amounts withheld with respect to, all
or less than all of the Partners, as a distribution of Available Cash to such
Partners.
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
7.1 Management.
(a) Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership shall be
vested exclusively in the Board of Supervisors, and subject to the direction of
the Board of Supervisors and in accordance with the provisions of Section 7.7,
the Officers. Neither the General Partner (except as otherwise expressly
provided in this Agreement) nor any Limited Partner shall have any management
power or control over the business and affairs of the Partnership. Thus, except
as otherwise expressly provided in this Agreement, the business and affairs of
the Partnership shall be managed by or under the direction of the Board of
Supervisors, and the day-to-day activities of the Partnership shall be conducted
on the Partnership's behalf by the Officers, who shall be agents of the
Partnership. In order to enable the Board of Supervisors to manage the business
and affairs of the Partnership, the General Partner, except as otherwise
expressly provided in this Agreement, hereby irrevocably delegates to the Board
of Supervisors all management powers over the business and affairs of the
Partnership that it may now or hereafter possess under applicable law. The
General Partner further agrees to take any and all action necessary and
appropriate, in the sole discretion of the Board of Supervisors, to effect any
duly authorized actions by the Board of Supervisors or any Officer, including
executing or filing any agreements, instruments or certificates, delivering all
documents, providing all information and taking or refraining from taking action
as may be necessary or appropriate to achieve the effective delegation of power
described in this Section 7.1(a). Each of the Partners and each Person who
26
may acquire an interest in a Partnership Interest hereby approves, consents to,
ratifies and confirms such delegation. The delegation by the General Partner to
the Board of Supervisors of management powers over the business and affairs of
the Partnership pursuant to the provisions of this Agreement shall not cause the
General Partner to cease to be a general partner of the Partnership nor shall it
cause the Board of Supervisors or any member thereof to be a general partner of
the Partnership or to have or be subject to the liabilities of a general partner
of the Partnership. Except as otherwise specifically provided in Sections 7.13,
7.14, 7.15 and 7.16, the authority, functions, duties and responsibilities of
the Board of Supervisors and of the Officers shall be identical to the
authority, functions, duties and responsibilities of the board of directors and
officers, respectively, of a corporation organized under the Delaware General
Corporation Law.
(b) Consistent with the management powers delegated to the Board of
Supervisors pursuant to the provisions of this Agreement, the Board of
Supervisors shall have the powers now or hereafter granted a general partner of
a limited partnership under the Delaware Act or any other applicable law and,
except as otherwise expressly provided in this Agreement, shall have full power
and authority to do all things and on such terms as it may deem necessary or
appropriate to conduct the business of the Partnership, to exercise all powers
set forth in Section 2.5 and to effectuate the purposes set forth in Section
2.4, including the following:
(i) the making of any expenditures, the lending or borrowing of
money, the assumption or guarantee of, or other contracting for,
indebtedness and other liabilities, the issuance of evidences of
indebtedness and the incurring of any other obligations;
(ii) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other agencies
having jurisdiction over the business or assets of the Partnership;
(iii) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the assets of the
Partnership or the merger or other combination of the Partnership with or
into another Person;
(iv) the use of the assets of the Partnership (including cash on
hand) for any purpose consistent with the terms of this Agreement,
including the financing of the conduct of the operations of any Group
Member, the lending of funds to other Persons (including the MLP or any
Subsidiary of the MLP), the repayment of obligations of any Group Member,
the MLP or any Subsidiary of the MLP and the making of capital
contributions to any Group Member, the MLP or any Subsidiary of the MLP.
(v) the negotiation, execution and performance of any contracts,
conveyances or other instruments (including instruments that limit the
liability of the Partnership under contractual arrangements to all or
particular assets of the Partnership, with the other party to the contract
to have no recourse against the General Partner or its
27
assets other than its interest in the Partnership, even if same results in
the terms of the transaction being less favorable to the Partnership than
would otherwise be the case);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees (including
employees who are Officers) and agents, outside attorneys, accountants,
consultants and contractors and the determination of their compensation and
other terms of employment or hiring;
(viii) the maintenance of such insurance for the benefit of the
Partnership Group and the Partners (including the assets of the
Partnership) as it deems necessary or appropriate,
(ix) the formation of, or acquisition of an interest in, and the
contribution of property and the making of loans to, any further limited or
general partnerships, joint ventures, corporations, limited liability
companies or other relationships;
(x) the control of any matters affecting the rights and
obligations of the Partnership, including the bringing and defending of
actions at law or in equity and otherwise engaging in the conduct of
litigation and the incurring of legal expense and the settlement of claims
and litigation; and
(xi) the indemnification of any Person against liabilities and
contingencies to the extent permitted by law.
(c) Notwithstanding any other provision of this Agreement and the MLP
Agreement, and to the fullest extent permitted by applicable law, each of the
Partners hereby (i) approves, consents to, ratifies and confirms the General
Partner's delegation of management powers to the Board of Supervisors pursuant
to paragraph (a) of this Section 7.1; (ii) approves, consents to, ratifies and
confirms the execution, delivery and performance by the parties thereto of the
Exchange Agreement and the other agreements executed in connection therewith
relating to the Partnership; (iii) agrees that the Partnership (through any duly
authorized Officer of the Partnership) is authorized to execute, deliver and
perform the agreements referred to in clause (ii) of this sentence and the other
agreements, acts, transactions and matters described in or contemplated by the
Proxy Statement without any further act, approval or vote of the Partners; and
(iv) agrees that the execution, delivery or performance by the General Partner,
the MLP, the Board of Supervisors or any member thereof, any duly authorized
Officer of the Partnership, any Group Member or any Affiliate of any of them, of
this Agreement or any agreement authorized or permitted under this Agreement,
shall not constitute a breach by any such Person of any duty that any of such
Persons may owe the Partnership, a Limited Partner or any other Persons under
this Agreement (or any other agreements) or of any duty stated or implied by law
or equity.
28
7.2 The Board of Supervisors; Appointment; Manner of Acting.
(a) The Board of Supervisors shall consist of those individuals who
serve as members of the board of supervisors of the MLP.
(b) Each member of the Board of Supervisors shall have one vote. The
vote of the majority of the members of the Board of Supervisors present at a
meeting at which a quorum is present shall be the act of the Board of
Supervisors. A majority of the number of members of the Board of Supervisors
then in office shall constitute a quorum for the transaction of business at any
meeting of the Board of Supervisors, but if less than a quorum is present at a
meeting, a majority of the members of the Board of Supervisors present at such
meeting may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
7.3 Removal of Members of the Board of Supervisors.
Any member of the Board of Supervisors may be removed with or without
Cause, by the affirmative vote of the majority of the members of the Board of
Supervisors of the MLP, but only if such person is also removed as a member of
the MLP's Board of Supervisors; provided that his or her successor on the MLP's
board of supervisors is elected in the manner set forth in the MLP Agreement. If
an individual who is a member of the board of supervisors of the MLP is removed
from such board, such individual will automatically be removed from the Board of
Supervisors.
7.4 Resignations of Members of the Board of Supervisors.
Any member of the Board of Supervisors may resign at any time by
giving written notice to the Board of Supervisors. Such resignation shall take
effect at the time specified therein, but only if such person also resigns from
the MLP's board of supervisors. If an individual who is a member of the board of
supervisors of the MLP resigns from such board, such individual will
automatically be deemed to have resigned from the Board of Supervisors.
7.5 Vacancies on the Board of Supervisors.
If any Supervisor is removed, resigns or is otherwise unable to serve
as a member of the Board of Supervisors, or if the size of the Board of
Supervisors is increased, thereby creating a vacancy, the Board of Supervisors
of the MLP shall in its sole discretion, appoint an individual to fill the
vacancy for the unexpired term of such Supervisor's predecessor in office, or,
in connection with an increase in the size of the Board of Supervisors, for the
term of such individual on the Board of Supervisors of the MLP, who is the same
individual appointed to fill the corresponding vacancy on the MLP's board of
supervisors,
7.6 Meetings; Committees; Chairman.
(a) Regular meetings of the Board of Supervisors shall be held at such
times and places as shall be designated from time to time by resolution of the
Board of Supervisors.
29
Notice of such regular meetings shall not be required. Special meetings of the
Board of Supervisors may be called by written request of a majority of the
members of the Board of Supervisors, on at least 48 hours prior written notice
to the other members (which written notice may take the form of e-mail or other
electronic communication). Any such notice, or waiver thereof, need not state
the purpose of such meeting except as may otherwise be required by law.
Attendance of a member of the Board of Supervisors at a meeting (including
pursuant to the penultimate sentence of this Section 7.6(a)) shall constitute a
waiver of notice of such meeting, except where such member attends the meeting
for the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened. Any action required
or permitted to be taken at a meeting of the Board of Supervisors may be taken
without a meeting, without prior notice and without a vote if a consent or
consents in writing, setting forth the action so taken, is signed by all the
members of the Board of Supervisors. Members of the Board of Supervisors may
participate in and hold meetings by means of conference telephone,
videoconference or similar communications equipment by means of which all
Persons participating in the meeting can hear each other, and participation in
such meetings shall constitute presence in person at the meeting. The Board of
Supervisors may establish any additional rules governing the conduct of its
meetings that are not inconsistent with the provisions of this Agreement.
(b) The Board of Supervisors shall appoint the Audit Committee to
consist solely of the individuals who serve as the audit committee of the MLP.
The Audit Committee shall perform the functions delegated to it pursuant to the
terms of this Agreement and its charter and such other matters as may be
delegated to it from time to time by resolution of the Board of Supervisors. The
Board of Supervisors, by a majority of the whole Board of Supervisors, may
appoint one or more additional committees of the Board of Supervisors to consist
of one or more members of the Board of Supervisors, which committee(s) shall
have and may exercise such of the powers and authority of the Board of
Supervisors (including in respect of Section 7.1) with respect to the management
of the business and affairs of the Partnership as may be provided in a
resolution of the Board of Supervisors. Any committee designated pursuant to
this Section 7.6(b) shall choose its own chairman, shall keep regular minutes of
its proceedings and report the same to the Board of Supervisors when requested,
shall fix its own rules or procedures and shall meet at such times and at such
place or places as may be provided by such rules or by resolution of such
committee or resolution of the Board of Supervisors. At every meeting of any
such committee, the presence of a majority of all the members thereof shall
constitute a quorum and the affirmative vote of a majority of the members
present shall be necessary for the taking of any action. Subject to the first
sentence of this Section 7.6(b), the Board of Supervisors may designate one or
more members of the Board of Supervisors as alternate members of any committee
who may replace any absent or disqualified member at any meeting of such
committee. Subject to the first sentence of this Section 7.6(b), in the absence
or disqualification of a member of a committee, the member or members present at
any meeting and not disqualified from voting, whether or not constituting a
quorum, may unanimously appoint another member of the Board of Supervisors to
act at the meeting in the place of the absent or disqualified member.
(c) The Board of Supervisors may elect one of its members as Chairman
or Vice Chairman of the Board of Supervisors. The Chairman of the Board of
Supervisors, if any,
30
and if present and acting, shall preside at all meetings of the Board of
Supervisors. In the absence of the Chairman of the Board of Supervisors, the
Vice Chairman of the Board of Supervisors, if any, and if present and acting,
shall preside at all meetings of the Board of Supervisors. In the absence of the
Chairman of the Board of Supervisors and the Vice Chairman of the Board of
Supervisors, the Chief Executive Officer, if present, or if not present, the
President, if present, acting and a member of the Board of Supervisors, or any
other member of the Board of Supervisors chosen by the Board of Supervisors
shall preside.
7.7 Officers.
(a) Generally. The Board of Supervisors, as set forth below, shall
appoint agents of the Partnership, referred to as 'Officers' of the Partnership
as described in this Section 7.7. Unless provided otherwise by resolution of the
Board of Supervisors, (i) the officers of the MLP shall hold the same position
as Officers of the Partnership and (ii) the Officers shall have the titles,
power, authority and duties described below in this Section 7.7.
(b) Titles and Number. The Officers shall be the Chief Executive
Officer, the President, any and all Vice Presidents, the Secretary and any and
all Assistant Secretaries and the Treasurer and any and all Assistant Treasurers
and any other Officers appointed pursuant to Section 7.7(j). Any person may hold
two or more offices.
(c) Appointment and Term of Office. The Officers shall be appointed by
the Board of Supervisors at such time and for such terms as the Board of
Supervisors shall determine. Any Officer may be removed, with or without Cause,
only by the Board of Supervisors. Vacancies in any office may be filled only by
the Board of Supervisors.
(d) Chairman and Vice Chairman of the Board of Supervisors. The Board
of Supervisors may elect one of its members as the Chairman or Vice Chairman of
the Board of Supervisors, provided, however, the Chairman and Vice-Chairman
shall not be "Officers" of the Partnership unless determined otherwise by the
Board of Supervisors.
(e) Chief Executive Officer. The Board of Supervisors may elect a
Chief Executive Officer of the Partnership. The Chief Executive Officer shall be
responsible for the general and active management and direction of the
Partnership and shall see that all orders and resolutions of the Board of
Supervisors are carried into effect. He shall have the power and authority to
sign all contracts, certificates and other instruments of the Partnership, which
may be authorized by the Board of Supervisors. He shall have such powers, duties
and authority as from time to time may be assigned to him/her by this Agreement
or by the Board of Supervisors.
(f) President. The Board of Supervisors may elect a President of the
Partnership. Subject to the limitations imposed by this Agreement, any
employment agreement, any employee plan or any determination of the Board of
Supervisors, the President, subject to the direction of the Board of Supervisors
and the Chief Executive Officer shall be responsible for the management and
direction of the day-to-day business and affairs of the Partnership, its other
Officers, employees and agents, shall supervise generally the affairs of the
Partnership and shall have full authority to execute all documents and take all
actions that the Partnership may legally
31
take. The President shall exercise such other powers and perform such other
duties as may be assigned to him by this Agreement, the Board of Supervisors or
the Chief Executive Officer, including any duties and powers stated in any
employment agreement approved by the Board of Supervisors.
(g) Vice Presidents. Each Vice President shall perform such duties and
may exercise such powers as may from time to time be assigned to him by the
Board of Supervisors, the Chief Executive Officer or the President, including
the power to execute documents on behalf of the Partnership, within the
authorization limits established from time to time by the Board of Supervisors,
the Chief Executive Officer or the President.
(h) Secretary and Assistant Secretaries. The Secretary shall record or
cause to be recorded in books provided for that purpose the minutes of the
meetings or actions of the Board of Supervisors and Partners, shall see that all
notices are duly given in accordance with the provisions of this Agreement and
as required by law, shall be custodian of all records (other than financial),
shall see that the books, reports, statements, certificates and all other
documents and records required by law are properly kept and filed, and, in
general, shall perform all duties incident to the office of Secretary and such
other duties as may, from time to time, be assigned to him by this Agreement,
the Board of Supervisors, the Chief Executive Officer or the President. The
Assistant Secretaries shall exercise the powers of the Secretary during that
Officer's absence or inability or refusal to act.
(i) Treasurer and Assistant Treasurers. The Treasurer shall keep or
cause to be kept the books of account of the Partnership and shall render
statements of the financial affairs of the Partnership in such form and as often
as required by this Agreement, the Board of Supervisors, the Chief Executive
Officer or the President. The Treasurer, subject to the order of the Board of
Supervisors, shall have the custody of all funds and securities of the
Partnership. The Treasurer shall perform all other duties commonly incident to
his office and shall perform such other duties and have such other powers as
this Agreement, the Board of Supervisors, the Chief Executive Officer or the
President, shall designate from time to time. The Assistant Treasurers shall
exercise the power of the Treasurer during that Officer's absence or inability
or refusal to act. Each of the Assistant Treasurers shall possess the same power
as the Treasurer to sign all certificates, contracts, obligations and other
instruments of the Partnership. If no Treasurer or Assistant Treasurer is
appointed and serving or in the absence of the appointed Treasurer and Assistant
Treasurer, the Vice President and Chief Financial Officer, or such other Officer
as the Board of Supervisors shall select, shall have the powers and duties
conferred upon the Treasurer.
(j) Other Officers and Agents. The Board of Supervisors may appoint
such other Officers and agents as may from time to time appear to be necessary
or advisable in the conduct of the affairs of the Partnership, who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board of Supervisors.
32
(k) Powers of Attorney. The Board of Supervisors may ▇▇▇▇▇ ▇▇▇▇▇▇ of
attorney or other authority as appropriate to establish and evidence the
authority of the Officers and other Persons.
(l) Officers' Delegation of Authority. Unless otherwise provided by
resolution of the Board of Supervisors, no Officer shall have the power or
authority to delegate to any Person such Officer's rights and powers as an
Officer to manage the business and affairs of the Partnership.
7.8 Compensation.
The Officers shall receive such compensation for their services as may
be designated by the Board of Supervisors or a committee thereof. In addition,
the Officers shall be entitled to be reimbursed for out-of-pocket costs and
expenses incurred in the course of their service hereunder. The members of the
Board of Supervisors who are not employees of the Partnership or its Affiliates
shall receive such compensation for their services as members of the Board of
Supervisors or members of a committee of the Board of Supervisors as the Board
of Supervisors shall determine. In addition, the members of the Board of
Supervisors shall be entitled to be reimbursed for out-of-pocket costs and
expenses incurred in the course of their service hereunder.
7.9 Restrictions on General Partner's and Board of Supervisors' Authority.
(a) Except as provided in Articles XII and XIV, neither the General
Partner nor the Board of Supervisors may sell, exchange or otherwise dispose of
all or substantially all of the Partnership's assets in a single transaction or
a series of related transactions without written approval of the specific act by
the Limited Partners or by other written instrument executed and delivered by
the Limited Partners subsequent to the date of this Agreement; provided, however
that this provision shall not preclude or limit either the General Partner's or
the Board of Supervisors' ability to mortgage, pledge, hypothecate or grant a
security interest in all or substantially all of the assets of the Partnership
Group and shall not apply to any forced sale of any or all of the Partnership's
assets pursuant to the foreclosure of, or other realization upon, any such
encumbrance.
(b) The Board of Supervisors may not cause the Partnership to incur
any Indebtedness that is recourse to the General Partner or any of its
Affiliates without the approval of the General Partner, which approval may be
given or withheld in the General Partner's sole discretion.
7.10 Reimbursement of the General Partner; Employee Benefit Plans.
(a) Except as provided in this Section 7.10 and elsewhere in this
Agreement or in the MLP Agreement, the General Partner shall not be compensated
for its services as general partner of any Group Member.
33
(b) The General Partner shall be reimbursed on a monthly basis, or
such other basis as the Board of Supervisors may determine, for (i) all direct
and indirect expenses it incurs or payments it makes on behalf of the
Partnership (including salary, bonus, incentive compensation and other amounts
paid to any Person to perform services for the Partnership or for the General
Partner or the Board of Supervisors in the discharge of its duties to the
Partnership) and (ii) all other necessary or appropriate expenses allocable to
the Partnership or otherwise reasonably incurred by the General Partner in
connection with operating the Partnership's business (including expenses
allocated to the General Partner by its Affiliates). Reimbursements pursuant to
this Section 7.10 shall be in addition to any reimbursement to the General
Partner as a result of indemnification pursuant to Section 7.13.
(c) The Board of Supervisors, in its sole discretion and without the
approval of the Limited Partners (who shall have no right to vote in respect
thereof), may propose and adopt on behalf of the Partnership employee benefit
plans, employee programs and employee practices for the benefit of the members
of the Board of Supervisors, employees of the Partnership, any Group Member or
any Affiliate, or any of them, in respect of services performed, directly or
indirectly, for the benefit of the Partnership Group.
7.11 Outside Activities of the General Partner.
(a) The General Partner, for so long as it is the general partner of
the Partnership, (i) agrees that its sole business will be to act as a general
partner of the Partnership and the MLP, and any other partnership of which the
Partnership or the MLP is, directly or indirectly, a partner and to undertake
activities that are ancillary or related thereto (including being a limited
partner in the MLP), and (ii) shall not enter into or conduct any business or
incur any debts or liabilities except in connection with or incidental to (A)
its performance of the activities required or authorized by this Agreement or
the MLP Agreement and (B) the acquisition, ownership or disposition of
Partnership Interests or partnership interests in the MLP or any other
partnership of which the Partnership or the MLP is, directly or indirectly, a
partner; provided, however, that notwithstanding the foregoing, employees of the
General Partner may perform limited services for other Affiliates of the General
Partner in addition to the Partnership and the MLP (it being understood that
full time employees of the General Partner shall devote substantially all their
employment services to the Partnership and the MLP).
(b) Except as described in Section 7.11(a), each Indemnitee (other
than the General Partner) shall have the right to engage in businesses of every
type and description and other activities for profit and to engage in and
possess an interest in other business ventures of any and every type or
description, independently or with others, whether in the businesses engaged in
by or anticipated to be engaged in by the Partnership, the MLP, any Subsidiary
of the MLP, any Group Member or otherwise, including, without limitation, in the
case of any Affiliates of the General Partner, business interests and activities
in direct competition with the business and activities of the MLP, any
Subsidiary of the MLP or any Group Member, and none of the same shall constitute
a breach of this Agreement or the MLP Agreement or any duty to the MLP, any
Subsidiary of the MLP, any Group Member or any Partner existing hereunder, under
the MLP Agreement, at law, in equity or otherwise. Neither the MLP, any
Subsidiary of the MLP, any Group Member, any Limited Partner nor any other
Person shall have any rights by
34
virtue of this Agreement, the MLP Agreement or the partnership relationship
established hereby or thereby in any business ventures of any Indemnitee and
such Indemnitees shall have no obligation to offer any interest in any such
business ventures to the MLP, any Subsidiary of the MLP, any Group Member, any
Limited Partner or any other Person. The General Partner and any Affiliates of
the General Partner may acquire Partnership Interests, and except as otherwise
provided in this Agreement, shall be entitled to exercise all rights of a
Limited Partner relating to such Partnership Interests.
(c) Subject to the terms of Sections 7.11(a) and (b) but otherwise
notwithstanding anything to the contrary in this Agreement, (i) the engaging in
competitive activities by any of the Indemnitees (other than the General
Partner) in accordance with Section 7.11(b) is hereby approved by the
Partnership and all Partners and (ii) it shall be deemed not to be a breach of
the General Partner's fiduciary duties or any other obligation of any type
whatsoever of the General Partner for the General Partner to permit its
Affiliates to engage, or for any such Affiliate to engage, in business interests
and activities in preference to or to the exclusion of the Partnership.
(d) The term "Affiliates" when used in this Section 7.11 with respect
to the General Partner shall not include the MLP, any Subsidiary of the MLP, or
any Group Member.
7.12 Loans from the General Partner; Contracts with Affiliates; Certain
Restrictions on the General Partner.
(a) The General Partner or any Affiliate of the General Partner may
lend to any Group Member, and any Group Member may borrow from the General
Partner and any Affiliate of the General Partner, funds needed or desired by the
Group Member, for such periods of time and in such amounts as the General
Partner may determine; provided, however, that in any such case the lending
party may not charge the borrowing party interest at a rate greater than the
rate that would be charged the borrowing party or impose terms less favorable on
the borrowing party than would be charged or imposed on the borrowing party by
unrelated lenders on comparable loans made on an arms-length basis (without
reference to the lending party's financial abilities or guarantees). The
borrowing party shall reimburse the lending party for any costs (other than any
additional interest costs) incurred by the lending party in connection with the
borrowing of such funds. For purposes of this Section 7.12(a) and Section
7.12(b), the term "Group Member" shall include any Affiliate of the Group Member
that is controlled by the Group Member. No Group Member may lend funds to the
General Partner or any of its Affiliates; provided, however, that
notwithstanding the foregoing, any Group Member may lend funds to the MLP, any
Subsidiary of the MLP or another Group Member.
(b) The Partnership may lend or contribute to the MLP, any Subsidiary
of the MLP, or any Group Member, and any Group Member may borrow from the MLP,
any Subsidiary of the MLP or the Partnership, funds on terms and conditions
established by the Board of Supervisors; provided, however, that the Partnership
may not charge the MLP, any Subsidiary of the MLP or a Group Member interest at
a rate greater than the rate that would be charged to the MLP, any Subsidiary of
the MLP or such Group Member (without reference to the General Partner's
financial abilities or guarantees), by unrelated lenders on comparable loans.
35
The foregoing authority shall be exercised by the Board of Supervisors and shall
not create any right or benefit in favor of the MLP, any Subsidiary of the MLP,
any Group Member or any other Person.
(c) The General Partner may itself, or may enter into an agreement
with any of its Affiliates to, render services to a Group Member. Any services
rendered to a Group Member by the General Partner or any of its Affiliates shall
be on terms that are fair and reasonable to the Partnership; provided, however,
that the requirements of this Section 7.12(c) shall be deemed satisfied as to
(i) any transaction approved by Special Approval, (ii) any transaction, the
terms of which are no less favorable to the Partnership Group than those
generally being provided to or available from unrelated third parties or (iii)
any transaction that, taking into account the totality of the relationships
between the parties involved (including other transactions that may be
particularly favorable or advantageous to the Partnership Group), is equitable
to the Partnership Group. The provisions of Section 7.10 shall apply to the
rendering of services described in this Section 7.12(c).
(d) The Partnership may transfer assets to joint ventures, other
partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.
(e) Neither the General Partner nor any of its Affiliates shall sell,
transfer or convey any property to, or purchase any property from, the
Partnership, directly or indirectly, except pursuant to transactions that are
fair and reasonable to the Partnership; provided, however, that the requirements
of this Section 7.12(e) shall be deemed to be satisfied as to (i) the
transactions effected pursuant to the Exchange Agreement, (ii) any transaction
approved by Special Approval, (iii) any transaction, the terms of which are no
less favorable to the Partnership than those generally being provided to or
available from unrelated third parties, or (iv) any transaction that, taking
into account the totality of the relationships between the parties involved
(including other transactions that may be particularly favorable or advantageous
to the Partnership), is equitable to the Partnership.
(f) The General Partner and its Affiliates will have no obligation to
permit any Group Member to use any facilities or assets of the General Partner
and its Affiliates, except as may be provided in contracts entered into from
time to time specifically dealing with such use, nor shall there be any
obligation on the part of the General Partner or its Affiliates to enter into
such contracts.
7.13 Indemnification.
(a) To the fullest extent permitted by law but subject to the
limitations expressly provided in this Agreement, all Indemnitees shall be
indemnified and held harmless by the Partnership from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including
legal fees, expenses and other disbursements), judgments, fines, penalties,
interest, settlements and other amounts arising from any and all claims,
demands, actions, suits or proceedings, whether civil, criminal, administrative
or investigative, in which any Indemnitee
36
may be involved, or is threatened to be involved, as a party or otherwise, by
reason of its status as an Indemnitee, provided, that in each case the
Indemnitee acted in good faith and in a manner that such Indemnitee reasonably
believed to be in, or not opposed to, the best interests of the Partnership and,
with respect to any criminal proceeding, had no reasonable cause to believe its
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere, or
its equivalent, shall not create a presumption that the Indemnitee acted in a
manner contrary to that specified above. Any indemnification pursuant to this
Section 7.13 shall be made only out of the assets of the Partnership, it being
agreed that the General Partner shall not be personally liable for such
indemnification and shall have no obligation to contribute or loan any monies or
property to the Partnership to enable it to effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including legal
fees, expenses and other disbursements) incurred by an Indemnitee who is
indemnified pursuant to Section 7.13(a) in defending any claim, demand, action,
suit or proceeding shall, from time to time, be advanced by the Partnership
prior to the final disposition of such claim, demand, action, suit or proceeding
upon receipt by the Partnership of any undertaking by or on behalf of the
Indemnitee to repay such amount if it shall be determined by a final,
non-appealable order of a court of competent jurisdiction that the Indemnitee is
not entitled to be indemnified as authorized in this Section 7.13.
(c) The indemnification provided by this Section 7.13 shall be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, both as to actions in the Indemnitee's capacity as an Indemnitee and
as to actions in any other capacity, and shall continue as to an Indemnitee who
has ceased to serve in such capacity and shall inure to the benefit of the
heirs, successors, assigns and administrators of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the
members of the Board of Supervisors, the General Partner or its Affiliates for
the cost of) insurance, on behalf of the General Partner and the members of the
Board of Supervisors and such other Persons as the Board of Supervisors shall
determine, against any liability that may be asserted against or expense that
may be incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
(e) For purposes of this Section 7.13, the Partnership shall be deemed
to have requested an Indemnitee to serve as fiduciary of an employee benefit
plan whenever the performance by it of its duties to the Partnership also
imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute "fines" within the meaning of Section 7.13(a); and action taken
or omitted by it with respect to any employee benefit plan in the performance of
its duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is in, or not opposed to, the best interests of the Partnership.
37
(f) In no event may an Indemnitee subject any Limited Partner to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.13 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 7.13 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 7.13 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 7.13 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
7.14 Liability of Indemnitees.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, no Indemnitee shall be liable for monetary damages to the
Partnership, any Limited Partner or any other Persons who have acquired
interests in the Partnership, for losses sustained or liabilities incurred as a
result of errors in judgment or any act or omission if such Indemnitee acted in
good faith pursuant to authority granted in this Agreement.
(b) To the maximum extent permitted by law, the General Partner and
its Affiliates shall not be responsible for any act or omission by the Board of
Supervisors, any member of the Board of Supervisors, or any Officers of the
Partnership.
(c) To the maximum extent permitted by law, the members of the Board
of Supervisors and the Officers of the Partnership shall not be responsible for
any act or omission by the General Partner and its Affiliates.
(d) Subject to its obligations and duties set forth in Section 7.1(a),
the Board of Supervisors 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 the Officers or other agents of the Partnership, and,
to the maximum extent permitted by law, the Board of Supervisors shall not be
responsible for any misconduct or negligence on the part of any such Officer or
agent appointed by the Board of Supervisors in good faith.
(e) It will not constitute a breach of fiduciary or other duty for an
Officer or member of the Board of Supervisors to engage attorneys, accountants,
engineers and other advisors on behalf of the Partnership, its Board of
Supervisors, or any committee thereof, even
38
though such persons may also be retained from time to time by the General
Partner or any of its Affiliates, and such persons may be engaged with respect
to any matter in which the interests of the Partnership and the General Partner
or any of its Affiliates may differ, or may be engaged by both the Partnership
and the General Partner or any of its Affiliates with respect to a matter, as
long as such Officer or member of the Board of Supervisors reasonably believes
that any conflict between the Partnership and the General Partner or any of its
Affiliates with respect to such matter is not material; and
(f) Any amendment, modification or repeal of this Section 7.14 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability to the Partnership and the Limited Partner, of the
General Partner, its directors, officers and employees and any other Indemnitees
under this Section 7.14 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or relating to
matters occurring, in whole or in part, prior to such amendment, modification or
repeal, regardless of when such claims may arise or be asserted.
7.15 Resolution of Conflicts of Interest.
(a) Unless otherwise expressly provided in this Agreement or the MLP
Agreement, whenever a potential conflict of interest exists or arises between
the General Partner or any of its Affiliates, or any Officer or member of the
Board of Supervisors, on the one hand, and the Partnership, the MLP, or any
Partner, on the other, any resolution or course of action in respect of such
conflict of interest shall be permitted and deemed approved by the Limited
Partners, and shall not constitute a breach of this Agreement, of the MLP
Agreement, or of any agreement contemplated herein or therein, or of any duty
stated or implied by law or equity, if the resolution or course of action is, or
by operation of this Agreement is deemed to be, fair and reasonable to the
Partnership. The Board of Supervisors shall be authorized but not required in
connection with its resolution of such conflict of interest to seek Special
Approval of a resolution of such conflict or course of action. Any conflict of
interest and any resolution of such conflict of interest shall be conclusively
deemed fair and reasonable to the Partnership if such conflict of interest or
resolution is (i) approved by Special Approval (as long as the material facts
known to the General Partner or any of its Affiliates or such Officer or member
of the Board of Supervisors regarding any proposed transaction were disclosed to
the Audit Committee at the time it gave its approval), (ii) on terms no less
favorable to the Partnership than those generally being provided to or available
from unrelated third parties or (iii) fair to the Partnership, taking into
account the totality of the relationships between the parties involved
(including other transactions that may be particularly favorable or advantageous
to the Partnership). The Board of Supervisors may also adopt a resolution or
course of action that has not received Special Approval. The Board of
Supervisors (including the Audit Committee in connection with Special Approval)
shall be authorized in connection with its determination of what is "fair and
reasonable" to the Partnership and in connection with its resolution of any
conflict of interest to consider (A) the relative interests of any party to such
conflict, agreement, transaction or situation and the benefits and burdens
relating to such interest; (B) any customary or accepted industry practices and
any customary or historical dealings with a particular Person; (C) any
applicable generally accepted accounting practices or principles; and (D) such
additional factors as the Board of Supervisors (including the Audit Committee)
determines in its discretion to be
39
relevant, reasonable or appropriate under the circumstances. Nothing contained
in this Agreement, however, is intended to nor shall it be construed to require
the Board of Supervisors (including the Audit Committee) to consider the
interests of any Person other than the Partnership. In the absence of bad faith
by the Board of Supervisors, the resolution, action or terms so made, taken or
provided by the Board of Supervisors with respect to such matter shall not
constitute a breach of this Agreement, the MLP Agreement or any other agreement
contemplated herein or therein or a breach of any standard of care or duty
imposed herein or therein or, to the extent permitted by law, under the Delaware
Act or any other law, rule or regulation or existing in equity or otherwise.
(b) Whenever this Agreement or any other agreement contemplated hereby
provides that the Board of Supervisors is permitted or required to make a
decision (i) in its "sole discretion," or "discretion" or that it deems
"necessary or appropriate" or "necessary or advisable" or under a grant of
similar authority or latitude, except as otherwise provided herein, the Board of
Supervisors shall make such decision in its sole discretion (regardless of
whether there is a reference to "sole discretion" or "discretion") unless
another express standard is provided for or (ii) in "good faith" or under
another express standard, the Board of Supervisors shall act under such express
standard and shall not be subject to any other or different standards imposed by
this Agreement, the MLP Agreement, any other agreement contemplated hereby or
under the Delaware Act or any other law, rule or regulation or in equity or
otherwise. In addition, any actions taken by the Board of Supervisors consistent
with the standards of "reasonable discretion" set forth in the definition of
Available Cash shall not constitute a breach of any duty of the Board of
Supervisors to the Partnership, the Limited Partners or any partner of the MLP.
The Board of Supervisors shall have no duty, express or implied, to sell or
otherwise dispose of any asset of the Partnership Group.
(c) Whenever a particular transaction, arrangement or resolution of a
conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transactions.
(d) The Limited Partners hereby authorize the Board of Supervisors on
behalf of the Partnership as a partner of a Group Member, to approve of actions
by the General Partner or the board of supervisors of such Group Member similar
to those actions permitted to be taken by the Board of Supervisors pursuant to
this Section 7.15.
7.16 Other Matters Concerning the General Partner and the Board of
Supervisors.
(a) The General Partner and the Board of Supervisors may rely and
shall be protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties.
(b) The General Partner and the Board of Supervisors may consult with
legal counsel, accountants, appraisers, management consultants, investment
bankers and other
40
consultants and advisers selected by either of them, and any act taken or
omitted to be taken in reliance upon the opinion (including an Opinion of
Counsel) of such Persons as to matters that the General Partner or the Board of
Supervisors reasonably believes to be within such Person's professional or
expert competence shall be conclusively presumed to have been done or omitted in
good faith and in accordance with such opinion.
(c) The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers, a duly appointed attorney or attorneys-in-fact or the duly authorized
Officers of the Partnership.
(d) The Board of Supervisors shall have the right, in respect of any
of its powers or obligations hereunder, to act through any of the duly
authorized Officers of the Partnership or a duly appointed attorney or
attorneys-in-fact.
(e) Any standard of care and duty imposed by this Agreement or under
the Delaware Act or any applicable law, rule or regulation, or in equity or
otherwise shall be modified, waived or limited, to the maximum extent permitted
by law, as required to permit the General Partner and the Board of Supervisors
to act under this Agreement or any other agreement contemplated by this
Agreement and to make any decision pursuant to the authority prescribed in this
Agreement, so long as such action is reasonably believed by the General Partner
or the Board of Supervisors to be in, or not inconsistent with, the best
interests of the Partnership.
7.17 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 Board of
Supervisors and any Officer of the Partnership authorized by the Board of
Supervisors to act on behalf of and in the name of the Partnership (including
the General Partner, acting pursuant to the direction of the Board of
Supervisors in accordance with Section 7.1(a)) 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 Board of Supervisors or any such
Officer (including the General Partner, acting pursuant to the direction of the
Board of Supervisors in accordance with Section 7.1(a)) as if it were the
Partnership's sole party in interest, both legally and beneficially. The Limited
Partner hereby waives, to the maximum extent permitted by law, any and all
defenses or other remedies that may be available against such Person to contest,
negate or disaffirm any action of the Board of Supervisors or any such Officer
(including the General Partner, acting pursuant to the direction of the Board of
Supervisors in accordance with Section 7.1(a)) in connection with any such
dealing. In no event shall any Person dealing with the Board of Supervisors or
its representatives or any such Officer (including the General Partner, acting
pursuant to the direction of the Board of Supervisors in accordance with Section
7.1(a)) be obligated to ascertain that the terms of the Agreement have been
complied with or to inquire into the necessity or expedience of any act or
action of the Board of Supervisors or its representatives or any such Officer
(including the General Partner, acting pursuant to the direction of the Board of
Supervisors in accordance with Section 7.1(a)). Each and every certificate,
document or other instrument executed on behalf of the Partnership
41
by the Board of Supervisors or its representatives or any such Officer
(including the General Partner, acting pursuant to the direction of the Board of
Supervisors in accordance with Section 7.1 (a)) or shall be conclusive evidence
in favor of any and every Person relying thereon or claiming thereunder that (a)
at the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (b) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership and (c)
such certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is binding upon
the Partnership.
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 Records and Accounting.
The Partnership shall keep or cause to be kept at the principal office
of the Partnership appropriate books and records with respect to the
Partnership's business, including all books and records necessary to provide to
the Limited Partners any information required to be provided pursuant to Section
3.3(a). Any books and records maintained by or on behalf of the Partnership in
the regular course of its business, including books of account and records of
Partnership proceedings, may be kept on, or be in the form of, computer disks,
hard drives, punch cards, magnetic tape, photographs, micrographics or any other
information storage device, provided, that the books and records so maintained
are convertible into clearly legible written form within a reasonable period of
time. The books of the Partnership shall be maintained, for financial reporting
purposes, on an accrual basis in accordance with U.S. GAAP.
8.2 Fiscal Year.
The fiscal year of the Partnership shall be a 52-53 week fiscal year
concluding on the last Saturday in September.
ARTICLE IX
TAX MATTERS
9.1 Tax Returns and Information.
The Partnership shall timely file all returns of the Partnership that
are required for federal, state and local income tax purposes on the basis of
the accrual method and a taxable year ending on December 31. The tax information
reasonably required by the Partners for federal and state income tax reporting
purposes with respect to a taxable year shall be furnished to them within 90
days of the close of the calendar year in which the Partnership's taxable year
ends. The classification, realization and recognition of income, gain, losses
and deductions and other items shall be on the accrual method of accounting for
federal income tax purposes.
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9.2 Tax Elections.
(a) The Partnership has made the election under Section 754 of the
Code in accordance with applicable regulations thereunder, subject to the
reservation of the right to seek to revoke such election upon the Board of
Supervisors' determination that such revocation is in the best interests of the
Limited Partners.
(b) The Partnership has elected to deduct expenses incurred in
organizing the Partnership ratably over a sixty-month period as provided in
Section 709 of the Code.
(c) Except as otherwise provided herein, the Board of Supervisors
shall determine whether the Partnership should make any other elections
permitted by the Code.
9.3 Tax Controversies.
Subject to the provisions hereof, the General Partner is designated as
the Tax Matters Partner (as defined in Section 6231(a)(7) 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 Partner agrees to cooperate with the General Partner and to do
or refrain from doing any or all things reasonably required by the General
Partner to conduct such proceedings.
9.4 Withholding.
Notwithstanding any other provision of this Agreement, the Board of
Supervisors is authorized to take any action that it determines in its
discretion to be necessary or appropriate to cause the Partnership to comply
with any withholding requirements established under the Code or any other
federal, state or local law including, without limitation, pursuant to Sections
1441, 1442, 1445 and 1446 of the Code. To the extent that the Partnership is
required or elects to withhold and pay over to any taxing authority any amount
resulting from the allocation or distribution of income to any Partner
(including, without limitation, by reason of Section 1446 of the Code), the
amount withheld may be treated as a distribution of cash pursuant to Section 6.4
in the amount of such withholding from such Partner.
ARTICLE X
ADMISSION OF PARTNERS
10.1 Current Partners.
(a) The General Partner and the MLP and Suburban LP, each as a Limited
Partner, are the current Partners of the Partnership as of the date of this
Agreement.
10.2 Admission of Substituted Limited Partners.
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Any Person that is the successor in interest to a Limited Partner as
described in Section 4.3 shall be admitted to the Partnership as a Limited
Partner upon (a) furnishing to the Board of Supervisors (i) acceptance in form
satisfactory to the Board of Supervisors of all of the terms and conditions of
this Agreement and (ii) such other documents or instruments as may be required
to effect its admission as a Limited Partner in the Partnership and (b)
obtaining the consent of the Board of Supervisors, which consent may be given or
withheld in the Board of Supervisors' sole discretion. Such Person shall be
admitted to the Partnership as a Limited Partner effective immediately prior to
the transfer of the Partnership Interest, and the business of the Partnership
shall continue without dissolution.
10.3 Admission of Successor General Partner.
A successor General Partner approved pursuant to Section 11.1 or 11.2
or the transferee of or successor to all of the General Partner's Partnership
Interest as a general partner in the Partnership pursuant to Section 4.2 who is
proposed to be admitted as a successor General Partner shall, subject to
compliance with the terms of Section 11.3, if applicable, be admitted to the
Partnership as the General Partner, effective immediately prior to the
withdrawal or removal of the General Partner pursuant to Section 11.1 or 11.2 or
the transfer of the General Partner's Partnership Interest as a general partner
in the Partnership pursuant to Section 4.2; provided, however, that no such
successor shall be admitted to the Partnership until compliance with the terms
of Section 4.2 has occurred and such successor has executed and delivered such
other documents or instruments as may be required to effect such admission. Any
such successor is hereby authorized to and shall, subject to the terms hereof,
carry on the business of the Partnership without dissolution. The admission of a
successor General Partner shall not be deemed to have affected in any manner the
irrevocable delegation of all management powers over the business and affairs of
the Partnership to the Board of Supervisors pursuant to Section 7.1(a).
10.4 Admission of Additional Limited Partners.
(a) A Person (other than the General Partner, the MLP or a Substituted
Limited Partner) who makes a Capital Contribution to the Partnership in
accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the Board of Supervisors (i)
evidence of acceptance in form satisfactory to the Board of Supervisors of all
of the terms and conditions of this Agreement, including the granting of the
power of attorney granted in Section 2.6, and (ii) such other documents or
instruments as may be required in the discretion of the Board of Supervisors to
effect such Person's admission as an Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section 10.4, no
Person shall be admitted as an Additional Limited Partner without the consent of
the Board of Supervisors, which consent may be given or withheld in the Board of
Supervisors' discretion. The admission of any Person as an Additional Limited
Partner shall become effective on the date upon which the name of such Person is
recorded as such in the books and records of the Partnership, following the
consent of the Board of Supervisors to such admission.
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10.5 Amendment of Agreement and Certificate of Limited Partnership.
To effect the admission to the Partnership of any Partner, the Board
of Supervisors shall take all steps necessary and appropriate under the Delaware
Act to amend the records of the Partnership to reflect such admission and, if
necessary, to prepare as soon as practicable an amendment to this Agreement and,
if required by law, the General Partner shall prepare and file an amendment to
the Certificate of Limited Partnership, and the Chief Executive Officer and
President may for this purpose, among others, exercise the power of attorney
granted pursuant to Section 2.6.
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
11.1 Withdrawal of the General Partner.
(a) The General Partner shall be deemed to have withdrawn from the
Partnership upon the occurrence of any one of the following events (each such
event herein referred to as an "Event of Withdrawal"):
(i) the General Partner voluntarily withdraws from the Partnership (of
which event the General Partner shall give written notice to the Limited
Partners);
(ii) the General Partner transfers all of its rights as General
Partner pursuant to Section 4.2;
(iii) the General Partner is removed pursuant to Section 11.2;
(iv) the general partner of the MLP withdraws from, or is removed as
the general partner of, the MLP;
(v) the General Partner (A) makes a general assignment for the benefit
of creditors; (B) files a voluntary bankruptcy petition for relief under
Chapter 7 of the United States Bankruptcy Code; (C) files a petition or
answer seeking for itself a liquidation, dissolution or similar relief (but
not a reorganization) under any law; (D) files an answer or other pleading
admitting or failing to contest the material allegations of a petition
filed against the General Partner in a proceeding of the type described in
clauses (A)-(C) of this Section 11.1(a)(v); or (E) seeks, consents to or
acquiesces in the appointment of a trustee (but not a debtor in
possession), receiver or liquidator of the General Partner or of all or any
substantial part of its properties;
(vi) a final and non-appealable order of relief under Chapter 7 of the
United States Bankruptcy Code is entered by a court with appropriate
jurisdiction pursuant to a voluntary or involuntary petition by or against
the General Partner;
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(vii) a certificate of dissolution or its equivalent is filed for the
General Partner, or 90 days expire after the date of notice to the General
Partner of revocation of its charter without a reinstatement of its
charter, under the laws of its state of incorporation or formation; or
(viii) (A) in the event the General Partner is a corporation, a
certificate of dissolution or its equivalent is filed for the General
Partner, or 90 days expire after the date of notice to the General Partner
of revocation of its charter without a reinstatement of its charter, under
the laws of its state of incorporation; (B) in the event the General
Partner is a partnership or a limited liability company, the dissolution
and commencement of winding up of the General Partner; (C) in the event the
General Partner is acting in such capacity by virtue of being a trustee of
a trust, the termination of the trust; (D) in the event the General Partner
is a natural person, his death or adjudication of incompetency; and (E)
otherwise in the event of the termination of the General Partner.
If an Event of Withdrawal specified in Section 11.1(a)(iv) (with respect to
withdrawal), (v), (vi), (vii) or (viii) (A), (B), (C) or (E) occurs, the
withdrawing General Partner shall give notice to the Limited Partners within 30
days after such occurrence. The Partners hereby agree that only the Events of
Withdrawal described in this Section 11.1 shall result in the withdrawal of the
General Partner from the Partnership.
(b) Withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal shall not constitute a breach of this
Agreement under the following circumstances: (i) at any time during the period
beginning on March 5, 1996 and ending at 12:00 midnight, Eastern Standard Time,
on September 30, 2006, the General Partner voluntarily withdraws by giving at
least 90 days advance notice of its intention to withdraw to the Limited
Partners; provided that prior to the effective date of such withdrawal, the
Limited Partners approve such withdrawal and the General Partner delivers to the
Partnership an Opinion of Counsel ("Withdrawal Opinion of Counsel") that such
withdrawal (following the selection of the successor General Partner) would not
result in the loss of the limited liability of any Limited Partner or of any
limited partner of the MLP, limited partner of any Group Member or cause the MLP
or the Partnership to be treated as an association taxable as a corporation or
otherwise to be taxed as an entity for federal income tax purposes; (ii) at any
time after 12:00 midnight, Eastern Standard Time, on September 30, 2006, the
General Partner voluntarily withdraws by giving at least 90 days' advance notice
to the Limited Partners, such withdrawal to take effect on the date specified in
such notice; or (iii) at any time that the General Partner ceases to be the
General Partner pursuant to Section 11.1 (a)(ii), (iii) or (iv). If the General
Partner gives a notice of withdrawal pursuant to Section 11.1 (a)(i) or Section
11.1 (a)(i) of the MLP Agreement, the Limited Partners may, prior to the
effective date of such withdrawal or removal, elect a successor General Partner
that is hereby authorized to and shall continue the business of the Partnership
without dissolution; provided, however, that such successor shall be the same
Person, if any, that is elected by the limited partners of the MLP pursuant to
Section 11.1 of the MLP Agreement as the successor to the General Partner in its
capacity as general partner of the MLP. If, prior to the effective date of the
General Partner's withdrawal, a successor is not selected by the Limited
Partners as provided herein or the Partnership does not receive a Withdrawal
Opinion of
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Counsel, the Partnership shall be dissolved in accordance with Section 12.1. Any
successor General Partner elected in accordance with the terms of this Section
11.1 shall be subject to the provisions of Section 10.3.
11.2 Removal of the General Partner.
The General Partner shall be removed if such General Partner is
removed as a general partner of the MLP pursuant to Section 11.2 of the MLP
Agreement. Such removal shall be effective concurrently with the effectiveness
of the removal of such General Partner as the general partner of the MLP
pursuant to the terms of the MLP Agreement. If a successor General Partner is
elected in connection with the removal of such General Partner as a general
partner of the MLP, such successor General Partner shall, upon admission
pursuant to Article X, automatically become a successor General Partner of the
Partnership and is hereby authorized to and shall continue the business of the
Partnership without dissolution. The admission of any such successor General
Partner to the Partnership shall be subject to the provisions of Section 10.3.
11.3 Interest of Departing Partner and Successor General Partner;
Delegation of Authority to the Board of Supervisors by Successor General
Partner.
(a) The Partnership Interest of a Departing Partner departing as a
result of withdrawal or removal pursuant to Section 11.1 or 11.2 shall (unless
it is otherwise required to be converted into Common Units pursuant to Section
11.3(b) of the MLP Agreement) be purchased by the successor to the Departing
Partner for cash in the manner specified in the MLP Agreement for consideration
of $10. Such purchase (or conversion into Common Units, as applicable) shall be
a condition to the admission to the Partnership of the successor as the General
Partner. Any successor General Partner shall indemnify the Departing General
Partner as to all debts and liabilities of the Partnership arising on or after
the effective date of the withdrawal or removal of the Departing Partner.
(b) The Departing Partner shall be entitled to receive all
reimbursements due such Departing Partner pursuant to Section 7.10, including
any employee-related liabilities (including severance liabilities), incurred in
connection with the termination of any employees employed by such Departing
Partner for the benefit of the Partnership or the other Group Members.
(c) Any successor General Partner will be deemed to have delegated
irrevocably to the Board of Supervisors all management powers over the business
and affairs of the Partnership to the same extent that the General Partner
delegated such management powers to the Board of Supervisors pursuant to Section
7.1 of this Agreement.
11.4 Withdrawal of the Limited Partner.
Without the prior written consent of the General Partner, which may be
granted or withheld in its sole discretion, and except as provided in Section
10.1, no Limited Partner shall have the right to withdraw from the Partnership.
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ARTICLE XII
DISSOLUTION AND LIQUIDATION
12.1 Dissolution.
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the removal or withdrawal of the General Partner, if a successor General Partner
is elected pursuant to Section 10.3, 11.1 or 11.2 or this Section 12.1, the
Partnership shall not be dissolved and such successor General Partner is hereby
authorized to and shall continue the business of the Partnership. The
Partnership shall dissolve, and its affairs shall be wound up, upon:
(a) the expiration of its term as provided in Section 2.7;
(b) an Event of Withdrawal of the General Partner as provided in
Section 11.1(a) (other than Section 11.1(a)(ii)), unless a successor is elected
and an Opinion of Counsel is received as provided in Section 11.1(b) or 11.2 and
such successor is admitted to the Partnership pursuant to Section 10.3; or for
Events of Withdrawal of the General Partner for which the appointment of a
successor General Partner is not provided for hereunder, unless the Partnership
is continued without dissolution in accordance with the Delaware Act;
(c) an election to dissolve the Partnership by the General Partner
that is approved by the Limited Partners;
(d) the entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Delaware Act;
(e) the sale of all or substantially all of the assets and properties
of the Partnership Group;
(f) the dissolution of the MLP; or
(g) at any time that there are no limited partners of the Partnership,
unless the Partnership is continued without dissolution pursuant to the Delaware
Act.
12.2 [Intentionally omitted].
12.3 Liquidator.
Upon dissolution of the Partnership, the Board of Supervisors shall
select one or more Persons to act as Liquidator. The Liquidator shall be
entitled to receive such compensation for its services as may be approved by the
Limited Partners. The Liquidator shall agree not to resign at any time without
15 days' prior notice and may be removed at any time, with or without
48
cause, by notice of removal approved by the Limited Partners. Upon dissolution,
removal or resignation of the Liquidator, a successor and substitute Liquidator
(who shall have and succeed to all rights, powers and duties of the original
Liquidator) shall within 30 days thereafter be approved by the Limited Partners.
The right to approve a successor or substitute Liquidator in the manner provided
herein shall be deemed to refer also to any such successor or substitute
Liquidator approved in the manner herein provided. Except as expressly provided
in this Article XII, the Liquidator approved in the manner provided herein shall
have and may exercise, without further authorization or consent of any of the
parties hereto, all of the powers conferred upon the Board of Supervisors under
the terms of this Agreement (but subject to all of the applicable limitations,
contractual and otherwise, upon the exercise of such powers, other than the
limitation on sale set forth in Section 7.9(a)) to the extent necessary or
desirable in the good faith judgment of the Liquidator to carry out the duties
and functions of the Liquidator hereunder for and during such period of time as
shall be reasonably required in the good faith judgment of the Liquidator to
complete the winding up and liquidation of the Partnership as provided for
herein.
12.4 Liquidation.
The Liquidator shall proceed to dispose of the assets of the
Partnership, discharge its liabilities, and otherwise wind up its affairs in
such manner and over such period as the Liquidator determines to be in the best
interest of the Partners, subject to Section 17-804 of the Delaware Act and the
following:
(a) Disposition of Assets. The assets may be disposed of by public or
private sale or by distribution in kind to one or more Partners on such terms as
the Liquidator and such Partner or Partners may agree. If any property is
distributed in kind, the Partner receiving the property shall be deemed for
purposes of Section 12.4(c) to have received cash equal to its fair market
value; and contemporaneously therewith, appropriate cash distributions must be
made to the other Partners. Under certain circumstances and subject to certain
limitations, the Liquidator may defer liquidation or distribution of the
Partnership's assets for a reasonable time or distribute assets to the Partners
in kind if it determines that a sale would be impractical or would cause undue
loss to the Partners.
(b) Discharge of Liabilities. Liabilities of the Partnership include
amounts owed to Partners otherwise than in respect of their distribution rights
under Article VI. With respect to any liability that is contingent or is
otherwise not yet due and payable, the Liquidator shall either settle such claim
for such amount as it thinks appropriate or establish a reserve of cash or other
assets to provide for its payment. When paid, any unused portion of the reserve
shall be distributed as additional liquidation proceeds.
(c) Liquidation Distributions. All property and all cash in excess of
that required to discharge liabilities as provided in Section 12.4(b) shall be
distributed to the Partners in accordance with, and to the extent of, the
positive balances in their respective Capital Accounts, as determined after
taking into account all Capital Account adjustments (other than those made by
reason of distributions pursuant to this Section 12.4(c)) for the taxable year
of the Partnership during which the liquidation of the Partnership occurs (with
such date of occurrence being determined pursuant to Treasury Regulation,
Section 1.704-1(b)(2)(ii)(g)), and such
49
distribution shall be made by the end of such taxable year (or, if later, within
90 days after said date of such occurrence).
12.5 Cancellation of Certificate of Limited Partnership.
Upon the completion of the distribution of Partnership cash and
property as provided in Section 12.4 in connection with the liquidation of the
Partnership, the Certificate of Limited Partnership and all qualifications of
the Partnership as a foreign limited partnership in jurisdictions other than the
State of Delaware shall be canceled and such other actions as may be necessary
to terminate the Partnership shall be taken.
12.6 Return of Capital Contributions.
The General Partner shall not be personally liable for, and shall have
no obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate, the return of the Capital Contributions of any Limited
Partner, or any portion thereof, it being expressly understood that any such
return shall be made solely from Partnership assets.
12.7 Waiver of Partition.
To the maximum extent permitted by law, each Partner hereby waives any
right to partition of the Partnership property.
12.8 Capital Account Restoration.
No Limited Partner shall have any obligation to restore any negative
balance in its Capital Account upon liquidation of the Partnership. The General
Partner shall be obligated to restore any negative balance in its Capital
Account upon liquidation of its interest in the Partnership by the end of the
taxable year of the Partnership during which such liquidation occurs, or, if
later, within 90 days after the date of such liquidation.
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT
13.1 Amendment to be Adopted Solely by the Board of Supervisors.
The Limited Partners agree that the Board of Supervisors, without the
approval of any Partner, may amend any provision of this Agreement, and may
authorize any Officer (pursuant to the powers of attorney granted in Section
2.6) to execute, swear to, acknowledge, deliver, file and record whatever
documents may be required in connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the
principal place of business of the Partnership, the registered agent of the
Partnership or the registered office of the Partnership;
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(b) admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement;
(c) a change that, in the discretion of the Board of Supervisors, is
necessary or advisable to qualify or continue the qualification of the
Partnership as a limited partnership or a partnership in which the Limited
Partners have limited liability under the laws of any state or to ensure that
neither the Partnership nor the MLP will be treated as an association taxable as
a corporation or otherwise be taxed as an entity for federal income tax
purposes;
(d) a change that, in the discretion of the Board of Supervisors, (i)
does not adversely affect the Limited Partners in any material respect, (ii) is
necessary or advisable to satisfy any requirements, conditions or guidelines
contained in any opinion, directive, order, ruling or regulation of any federal
or state agency or judicial authority or contained in any federal or state
statute (including the Delaware Act), compliance with any of which the Board of
Supervisors determines in its discretion to be in the best interests of the
Partnership and the Limited Partners, (iii) is required to effect the intent of
the provisions of this Agreement or is otherwise contemplated by this Agreement
or (iv) is required to conform the provisions of this Agreement with the
provisions of the MLP Agreement as the provisions of the MLP Agreement may be
amended, supplemented or restated from time to time.
(e) a change in the fiscal year or taxable year of the Partnership and
any changes that, in the discretion of the Board of Supervisors, are necessary
or advisable as a result of a change in the fiscal year or taxable year of the
Partnership including, if the Board of Supervisors shall so determine, a change
in the definition of "Quarter" and the dates on which distributions are to be
made by the Partnership;
(f) an amendment that is necessary, in the Opinion of Counsel, to
prevent the Partnership or the members of the Board of Supervisors or the
Officers, or the General Partner or its directors, officers, trustees or agents
from in any manner being subjected to the provisions of the Investment Company
Act of 1940, as amended, the Investment Advisers Act of 1940, as amended, or
"plan asset" regulations adopted under the Employee Retirement Income Security
Act of 1974, as amended, regardless of whether such are substantially similar to
plan asset regulations currently applied or proposed by the United States
Department of Labor;
(g) any amendment expressly permitted in this Agreement to be made by
the Board of Supervisors acting alone;
(h) an amendment effected, necessitated or contemplated by a Merger
Agreement approved in accordance with Section 14.3;
(i) an amendment that, in the discretion of the Board of Supervisors,
is necessary or advisable to reflect, account for and deal with appropriately
the formation by the Partnership of, or investment by the Partnership in, any
corporation, partnership, joint venture, limited liability company or other
entity in connection with the conduct by the Partnership of activities permitted
by the terms of Section 2.4;
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(j) an amendment that, in the discretion of the Board of Supervisors,
is necessary or advisable to effect or continue the irrevocable delegation by
the General Partner to the Board of Supervisors of all management powers over
the business and affairs of the Partnership; or
(k) any other amendments substantially similar to the foregoing.
13.2 Amendment Procedures.
Except with respect to amendments of the type described in Section
13.1, all amendments to this Agreement shall be made in accordance with the
following requirements. Amendments to this Agreement may be proposed only by or
with the consent of the Board of Supervisors. A proposed amendment shall be
effective upon its approval by all of the Limited Partners.
ARTICLE XIV
MERGER
14.1 Authority.
The Partnership may merge or consolidate with one or more
corporations, statutory trusts, business trusts or associations, real estate
investment trusts, common law trusts or unincorporated businesses, including a
general partnership, limited partnership, limited liability limited partnership,
limited liability company or limited liability partnership formed under the laws
of the State of Delaware or any other state of the United States of America,
pursuant to a written agreement of merger or consolidation ("Merger Agreement")
in accordance with this Article XIV.
14.2 Procedure for Merger or Consolidation.
Merger or consolidation of the Partnership pursuant to this Article
XIV requires the prior approval of the Board of Supervisors. If the Board of
Supervisors shall determine, in the exercise of its discretion, to consent to
the merger or consolidation, the Board of Supervisors shall approve the Merger
Agreement, which shall set forth:
(a) The names and jurisdictions of formation or organization of each
of the business entities proposing to merge or consolidate;
(b) The name and jurisdictions of formation or organization of the
business entity that is to survive the proposed merger or consolidation (the
"Surviving Business Entity");
(c) The terms and conditions of the proposed merger or consolidation;
(d) The manner and basis of exchanging or converting the equity
securities of each constituent business entity for, or into, cash, property or
general or limited partner interests,
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rights, securities or obligations of the Surviving Business Entity; and (i) if
any general or limited partner interests, securities or rights of any
constituent business entity are not to be exchanged or converted solely for, or
into, cash, property or general or limited partner interests, rights, securities
or obligations of the Surviving Business Entity, the cash, property or general
or limited partner interests, rights, securities or obligations of any limited
partnership, corporation, trust or other entity (other than the Surviving
Business Entity) which the holders of such general or limited partner interests,
securities or rights are to receive in exchange for, or upon conversion of their
general or limited partner interests, securities or rights, and (ii) in the case
of securities represented by certificates, upon the surrender of such
certificates, which cash, property or general or limited partner interests,
rights, securities or obligations of the Surviving Business Entity or any
general or limited partnership, corporation, trust or other entity (other than
the Surviving Business Entity), or evidences thereof, are to be delivered;
(e) A statement of any changes in the constituent documents or the
adoption of new constituent documents (the articles or certificate of
incorporation, articles of trust, declaration of trust, certificate or agreement
of limited partnership, certificate of formation or agreement of limited
liability company or other similar charter or governing document) of the
Surviving Business Entity to be effected by such merger or consolidation;
(f) The effective time of the merger, which may be the date of the
filing of the certificate of merger pursuant to Section 14.4 or a later date
specified in or determinable in accordance with the Merger Agreement (provided,
that if the effective time of the merger is to be later than the date of the
filing of the certificate of merger, the effective time shall be filed no later
than the time of the filing of the certificate of merger and stated therein);
and
(g) Such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or appropriate by the Board of
Supervisors.
14.3 Approval by Limited Partners of Mergers or Consolidations.
(a) The Board of Supervisors, upon its approval of the Merger
Agreement, shall direct that the Merger Agreement and the merger or
consolidation contemplated thereby be submitted to the Limited Partners for
their approval.
(b) The Merger Agreement and the merger or consolidation contemplated
thereby shall be approved upon receiving the approval of all of the Limited
Partners.
(c) After such approval by the Limited Partners, and at any time prior
to the filing of the certificate of merger pursuant to Section 14.4, the merger
or consolidation may be abandoned pursuant to provisions therefor, if any, set
forth in the Merger Agreement.
14.4 Certificate of Merger.
Upon the required approval by the Board of Supervisors and the Limited
Partners of a Merger Agreement, a certificate of merger shall be executed and
filed with the Secretary of State of the State of Delaware in conformity with
the requirements of the Delaware Act.
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14.5 Effect of Merger.
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the
business entities that has merged or consolidated, and all property, real,
personal and mixed, and all debts due to any of those business entities and
all other things and causes of action belonging to each of those business
entities shall be vested in the Surviving Business Entity and after the
merger or consolidation shall be the property of the Surviving Business
Entity to the extent they were of each constituent business entity;
(ii) the title to any real property vested by deed or otherwise
in any of those constituent business entities shall not revert and is not
in any way impaired because of the merger or consolidation;
(iii) all rights of creditors and all liens on or security
interests in property of any of those constituent business entities shall
be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent
business entities shall attach to the Surviving Business Entity, and may be
enforced against it to the same extent as if the debts, liabilities and
duties had been incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this Article XIV
shall not be deemed to result in a transfer or assignment of assets or
liabilities from one entity to another.
ARTICLE XV
GENERAL PROVISIONS
15.1 Addresses and Notices.
Any notice, demand, request, report or proxy materials required or
permitted to be given or made to a Partner under this Agreement shall be in
writing and shall be deemed given or made when received by it at the principal
office of the Partnership referred to in Section 2.3.
15.2 References.
Except as specifically provided as otherwise, references to "Articles"
and "Sections" are to Articles and Sections of this Agreement.
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15.3 Further Action.
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
15.4 Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
15.5 Integration.
This Agreement constitutes the entire agreement among the parties
hereto pertaining to the subject matter hereof and supersedes all prior
agreements and understandings pertaining thereto.
15.6 Creditors.
None of the provisions of this Agreement shall be for the benefit of,
or shall be enforceable by, any creditor of the Partnership.
15.7 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 waiver of any
such breach of any other covenant, duty, agreement or condition.
15.8 Counterparts.
This Agreement may be executed in counterparts, all of which together
shall constitute an agreement binding on all the parties hereto, notwithstanding
that all such parties are not signatories to the original or the same
counterpart. Each party shall become bound by this Agreement immediately upon
affixing its signature hereto, independently of the signature of any other
party.
15.9 Applicable Law.
This Agreement shall be construed in accordance with and governed by
the laws of the State of Delaware, without regard to the principles of conflicts
of law.
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15.10 Invalidity of Provisions.
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
LIMITED PARTNERS:
SUBURBAN PROPANE PARTNERS, L.P.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
SUBURBAN LP HOLDING, LLC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
GENERAL PARTNER:
SUBURBAN ENERGY SERVICES GROUP LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Member