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EXHIBIT 3.8
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AMENDED AND RESTATED AGREEMENT
OF
LIMITED PARTNERSHIP
OF
EOTT ENERGY PIPELINE LIMITED PARTNERSHIP
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TABLE OF CONTENTS
ARTICLE I-ORGANIZATIONAL MATTERS.................................................................. 1
1.1 Formation and Continuation...................................................... 1
1.2 Name............................................................................ 1
1.3 Registered Office; Principal Office............................................. 2
1.4 Power of Attorney............................................................... 2
1.5 Term............................................................................ 3
1.6 Possible Restrictions on Transfer............................................... 3
ARTICLE II-DEFINITIONS............................................................................ 3
"Additional Limited Partner"............................................................ 4
"Adjusted Capital Account".............................................................. 4
"Adjusted Property"..................................................................... 4
"Affiliate"............................................................................. 4
"Agreed Allocation"..................................................................... 4
"Agreed Value".......................................................................... 4
"Agreement"............................................................................. 5
"API" ................................................................................ 5
"Audit Committee"....................................................................... 5
"Available Cash"........................................................................ 5
"Book-Tax Disparity".................................................................... 6
"Business Day".......................................................................... 6
"Canada OLP"............................................................................ 6
"Capital Account"....................................................................... 6
"Capital Contribution".................................................................. 6
"Carrying Value"........................................................................ 6
"Certificate of Limited Partnership".................................................... 6
"Closing Date".......................................................................... 6
"Code" ................................................................................ 7
"Common Unit"........................................................................... 7
"Contributed Property".................................................................. 7
"Contribution Agreement"................................................................ 7
"Curative Allocation"................................................................... 7
"Delaware Act".......................................................................... 7
"Departing Partner"..................................................................... 7
"Economic Risk of Loss"................................................................. 7
"Enron"................................................................................. 7
"EOTT" ................................................................................ 7
"Event of Withdrawal"................................................................... 7
"Exchange Act".......................................................................... 7
"General Partner"....................................................................... 7
"Indemnitee"............................................................................ 7
"Initial Limited Partner"............................................................... 8
"Initial Offering"...................................................................... 8
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"Limited Partner"........................................................................ 8
"Liquidation Date"....................................................................... 8
"Liquidator"............................................................................. 8
"Merger Agreement"....................................................................... 8
"MLP" .................................................................................. 8
"MLP Agreement".......................................................................... 8
"National Securities Exchange"........................................................... 8
"Net Agreed Value"....................................................................... 8
"Net Income"............................................................................. 9
"Net Loss"............................................................................... 9
"Net Termination Gain"................................................................... 9
"Net Termination Loss"................................................................... 9
"Nonrecourse Built-in Gain".............................................................. 9
"Nonrecourse Deductions"................................................................. 10
"Nonrecourse Liability".................................................................. 10
"Operating OLP".......................................................................... 10
"Operating OLP Agreement"................................................................ 10
"Opinion of Counsel"..................................................................... 10
"Organizational Limited Partner"......................................................... 10
"Other Partnerships"..................................................................... 10
"Other Partnership Agreements"........................................................... 10
"Partners"............................................................................... 10
"Partner Nonrecourse Debt"............................................................... 10
"Partner Nonrecourse Debt Minimum Gain" ................................................. 10
"Partner Nonrecourse Deductions"......................................................... 10
"Partnership"............................................................................ 10
"Partnership Interest"................................................................... 11
"Partnership Minimum Gain"............................................................... 11
"Percentage Interest".................................................................... 11
"Person"................................................................................. 11
"Recapture Income"....................................................................... 11
"Registration Statement"................................................................. 11
"Required Allocations"................................................................... 11
"Residual Gain".......................................................................... 11
"Residual Loss".......................................................................... 11
"Restricted Opportunity"................................................................. 11
"Securities Act"......................................................................... 12
"Special Approval"....................................................................... 12
"Substituted Limited Partner"............................................................ 12
"Surviving Business Entity".............................................................. 12
"Termination Capital Transactions"....................................................... 12
"Underwriter"............................................................................ 12
"Underwriting Agreement"................................................................. 12
"Unrealized Gain"........................................................................ 12
"Unrealized Loss"........................................................................ 12
"Withdrawal Opinion of Counsel".......................................................... 13
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ARTICLE III-PURPOSE............................................................................... 13
3.1 Purpose and Business............................................................ 13
3.2 Powers.......................................................................... 13
ARTICLE IV-CAPITAL CONTRIBUTIONS.................................................................. 13
4.1 Initial Contributions........................................................... 13
4.2 Return of Initial Contributions................................................. 13
4.3 Contribution by the General Partner and the Initial Limited Partner............. 14
4.4 Additional Capital Contributions................................................ 14
4.5 No Preemptive Rights............................................................ 14
4.6 Capital Accounts................................................................ 14
4.7 Interest........................................................................ 17
4.8 No Withdrawal................................................................... 17
4.9 Loans from Partners............................................................. 17
ARTICLE V-ALLOCATIONS AND DISTRIBUTIONS........................................................... 17
5.1 Allocations for Capital Account Purposes........................................ 17
(a) Net Income............................................................. 17
(b) Net Losses............................................................. 17
(c) Net Termination Gains and Losses....................................... 18
(d) Special Allocations.................................................... 19
(i) Partnership Minimum Gain Chargeback........................... 19
(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain........... 19
(iii) Qualified Income Offset....................................... 19
(iv) Gross Income Allocations...................................... 19
(v) Nonrecourse Deductions........................................ 20
(vi) Partner Nonrecourse Deductions................................ 20
(vii) Nonrecourse Liabilities....................................... 20
(viii) Code Section 754 Adjustments.................................. 20
(ix) Curative Allocation........................................... 20
5.2 Allocations for Tax Purposes.................................................... 21
5.3 Requirement of Distributions.................................................... 23
ARTICLE VI-MANAGEMENT AND OPERATION OF BUSINESS................................................... 24
6.1 Management...................................................................... 24
6.2 Certificate of Limited Partnership.............................................. 25
6.3 Restrictions on General Partner's Authority..................................... 25
6.4 Reimbursement of the General Partner............................................ 26
6.5 Outside Activities.............................................................. 26
6.6 Loans to and from the General Partner; Contracts with Affiliates................ 27
6.7 Indemnification................................................................. 29
6.8 Liability of Indemnitees........................................................ 30
6.9 Resolution of Conflicts of Interest............................................. 31
6.10 Other Matters Concerning the General Partner.................................... 32
6.11 Title to Partnership Assets..................................................... 33
6.12 Reliance by Third Parties....................................................... 33
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ARTICLE VII-RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER......................................... 34
7.1 Limitation of Liability......................................................... 34
7.2 Management of Business.......................................................... 34
7.3 Return of Capital............................................................... 34
7.4 Rights of the Limited Partner Relating to the Partnership....................... 34
ARTICLE VIII-BOOKS, RECORDS, ACCOUNTING AND REPORTS............................................... 35
8.1 Records and Accounting.......................................................... 35
8.2 Fiscal Year..................................................................... 35
ARTICLE IX-TAX MATTERS............................................................................ 35
9.1 Preparation of Tax Returns...................................................... 35
9.2 Tax Elections................................................................... 35
9.3 Tax Controversies............................................................... 36
9.4 Organizational Expenses......................................................... 36
9.5 Withholding..................................................................... 36
9.6 Opinions of Counsel............................................................. 36
ARTICLE X-TRANSFER OF INTERESTS................................................................... 36
10.1 Transfer........................................................................ 36
10.2 Transfer of the General Partner's Partnership Interest.......................... 37
10.3 Transfer of the Limited Partner's Partnership Interest.......................... 37
ARTICLE XI-ADMISSION OF PARTNERS.................................................................. 37
11.1 Admission of Initial Limited Partner. .......................................... 37
11.2 Admission of Substituted Limited Partners....................................... 37
11.3 Admission of Successor General Partner.......................................... 37
11.4 Amendment of Agreement and Certificate of Limited Partnership................... 38
11.5 Admission of Additional Limited Partners........................................ 38
ARTICLE XII-WITHDRAWAL OR REMOVAL OF PARTNERS..................................................... 38
12.1 Withdrawal of the General Partner............................................... 38
12.2 Removal of a General Partner.................................................... 40
12.3 Interest of Departing Partner and Successor General Partner..................... 40
12.4 Reimbursement of Departing Partner.............................................. 40
12.5 Withdrawal of the Limited Partner............................................... 40
ARTICLE XIII-DISSOLUTION AND LIQUIDATION.......................................................... 40
13.1 Dissolution..................................................................... 40
13.2 Continuation of the Business of the Partnership after Dissolution............... 41
13.3 Liquidation..................................................................... 42
13.4 Distributions in Kind........................................................... 42
13.5 Cancellation of Certificate of Limited Partnership.............................. 43
13.6 Reasonable Time for Winding Up.................................................. 43
13.7 Return of Capital............................................................... 43
13.8 No Capital Account Restoration.................................................. 43
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13.9 Waiver of Partition............................................................. 43
ARTICLE XIV-AMENDMENT OF PARTNERSHIP AGREEMENT.................................................... 44
14.1 Amendment to be Adopted Solely by General Partner............................... 44
14.2 Amendment Procedures............................................................ 45
ARTICLE XV-MERGER................................................................................. 45
15.1 Authority....................................................................... 45
15.2 Procedure for Merger or Consolidation........................................... 45
15.3 Approval by Limited Partner of Merger or Consolidation.......................... 46
15.4 Certificate of Merger........................................................... 46
15.5 Effect of Merger................................................................ 46
ARTICLE XVI-GENERAL PROVISIONS.................................................................... 47
16.1 Addresses and Notices........................................................... 47
16.2 References...................................................................... 47
16.3 Pronouns and Plurals............................................................ 47
16.4 Further Action.................................................................. 47
16.5 Binding Effect.................................................................. 47
16.6 Integration..................................................................... 47
16.7 Creditors....................................................................... 47
16.8 Waiver.......................................................................... 47
16.9 Counterparts.................................................................... 48
16.10 Applicable Law.................................................................. 48
16.11 Invalidity of Provisions........................................................ 48
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AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
EOTT ENERGY PIPELINE LIMITED PARTNERSHIP
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF EOTT
ENERGY PIPELINE LIMITED PARTNERSHIP, dated as of March 24, 1994, is entered into
by and among EOTT Energy Corp., a Delaware corporation, as the General Partner,
Organizational Partner, Inc., a Delaware corporation, in its capacity as the
Organizational Limited Partner, and EOTT Energy Operating Limited Partnership, a
Delaware limited partnership, as the Initial Limited Partner, together with any
other Persons who become Partners in the Partnership as provided herein. In
consideration of the covenants, conditions and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 FORMATION AND CONTINUATION. (a) The General Partner and the
Organizational Limited Partner have previously formed the Partnership as a
limited partnership pursuant to the provisions of the Delaware Act and, together
with the Initial Limited Partner, hereby amend and restate the original
Agreement of Limited Partnership of EOTT Energy Pipeline Limited Partnership in
its entirety. Subject to the provisions of this Agreement, the General Partner,
the Organizational Limited Partner and the Initial Limited Partner hereby
continue the Partnership as a limited partnership pursuant to the provisions of
the Delaware Act. 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.
(b) In connection with the formation of the Partnership, EOTT has been
admitted as a general partner of the Partnership, and the Organizational Limited
Partner has been admitted as a limited partner of the Partnership. As of the
Closing Date, after giving effect to the transactions contemplated by Section
4.3, the limited partner interest in the Partnership of the Organizational
Limited Partner shall be terminated and the Organizational Limited Partner shall
withdraw as a Limited Partner of the Partnership.
1.2 NAME. The name of the Partnership shall be, and the business of the
Partnership shall be conducted under the name of, "EOTT Energy Pipeline Limited
Partnership." The Partnership's business may be conducted under any other name
or names deemed necessary or appropriate by the General Partner, including,
without limitation, the name of the General Partner or any Affiliate thereof.
The words "Limited Partnership," "L.P.," "Ltd." or similar words or letters
shall be included in the Partnership's name where necessary for the purposes of
complying with the laws of any jurisdiction that so requires. The General
Partner in its sole discretion may change the name of the Partnership at any
time and from time to time and shall notify the Limited Partner of such change
in the next regular communication to the Limited Partner.
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1.3 REGISTERED OFFICE; PRINCIPAL OFFICE. Unless and until changed by
the General Partner, the registered office of the Partnership in the State of
Delaware shall be located at The 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 and 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 Partner. The Partnership may
maintain offices at such other place or places within or outside the State of
Delaware as the General Partner deems necessary or appropriate.
1.4 POWER OF ATTORNEY. (a) The Limited Partner hereby constitutes and
appoints each of the General Partner and, if a Liquidator shall have been
selected pursuant to Section 13.3, the Liquidator severally (and any successor
to either thereof by merger, transfer, assignment, election or otherwise) and
each of their authorized officers and attorneys-in-fact, with full power of
substitution, as its true and lawful agent and attorney-in-fact, with full power
and authority in its name, place and stead, to:
(i) execute, swear to, acknowledge, deliver, file and record
in the appropriate public offices (A) all certificates, documents and
other instruments (including, without limitation, this Agreement and
the Certificate of Limited Partnership and all amendments or
restatements thereof) that the General Partner or the Liquidator deems
necessary or appropriate to form, qualify or continue the existence or
qualification of the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) in
the State of Delaware and in all other jurisdictions in which the
Partnership may conduct business or own property; (B) all certificates,
documents and other instruments that the General Partner or the
Liquidator deems necessary or appropriate to reflect, in accordance
with its terms, any amendment, change, modification or restatement of
this Agreement; (C) all certificates, documents and other instruments
(including, without limitation, conveyances and a certificate of
cancellation) that the General Partner or the Liquidator deems
necessary or appropriate to reflect the dissolution and liquidation of
the Partnership pursuant to the terms of this Agreement; (D) all
certificates, documents and other instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant
to, or other events described in, Article X, XI, XII or XIII or the
Capital Contribution of any Partner; (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, without limitation, agreements and a certificate of merger)
relating to a merger or consolidation of the Partnership pursuant to
Article XV; and
(ii) execute, swear to, acknowledge, deliver, file and record
all ballots, consents, approvals, waivers, certificates, documents and
other instruments necessary or appropriate, in the sole discretion of
the General Partner or the Liquidator, to make, evidence, give, confirm
or ratify any vote, consent, approval, agreement or other action that
is made or given by the Partners hereunder or is consistent with the
terms of this Agreement or is necessary or appropriate, in the sole
discretion of the General Partner or the Liquidator, to effectuate the
terms or intent of this Agreement; provided, that when the consent or
approval of the Limited Partner is required by any provision of this
Agreement, the General Partner or the Liquidator
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may exercise the power of attorney made in this Section 1.4(a)(ii) only
after the necessary consent or approval of the Limited Partner is
obtained.
Nothing contained in this Section 1.4(a) shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article XIV 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 not
be affected by the subsequent death, incompetency, disability, incapacity,
dissolution, bankruptcy or termination of the Limited Partner 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 Partner hereby agrees to be bound by any
representation made by the General Partner or the Liquidator acting in good
faith pursuant to such power of attorney; and the Limited Partner hereby waives
any and all defenses that may be available to contest, negate or disaffirm the
action of the General Partner or the Liquidator taken in good faith under such
power of attorney. The Limited Partner shall execute and deliver to the General
Partner or the Liquidator, within 15 days after receipt of the General Partner's
or the Liquidator's request therefor, such further designation, powers of
attorney and other instruments as the General Partner or the Liquidator deems
necessary to effectuate this Agreement and the purposes of the Partnership.
1.5 TERM. The Partnership commenced upon the filing of the Certificate
of Limited Partnership in accordance with the Delaware Act and shall continue in
existence until the close of Partnership business on March 31, 2084, or until
the earlier termination of the Partnership in accordance with the provisions of
Article XIII.
1.6 POSSIBLE RESTRICTIONS ON TRANSFER. Notwithstanding anything to the
contrary contained in this Agreement, in the event of (a) the enactment (or
imminent enactment) of any legislation, (b) the publication of any temporary or
final regulation by the Treasury Department, (c) any ruling by the Internal
Revenue Service or (d) any judicial decision, that, in any such case, in the
Opinion of Counsel, would result in the taxation of the Partnership as an
association taxable as a corporation or would otherwise result in the
Partnership being taxed as an entity for federal income tax purposes, then, the
General Partner may impose such restrictions on the transfer of Partnership
Interests as may be required, in the Opinion of Counsel, to prevent the
Partnership from being taxed as an association taxable as a corporation or
otherwise as an entity for federal income tax purposes, including, without
limitation, making any amendments to this Agreement as the General Partner in
its sole discretion may determine to be necessary or appropriate to impose such
restrictions.
ARTICLE II
DEFINITIONS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
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"ADDITIONAL LIMITED PARTNER" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 11.5 and who is
shown as such on the books and records of the Partnership.
"ADJUSTED CAPITAL ACCOUNT" means the Capital Account
maintained for each Partner as of the end of each fiscal year of the
Partnership, (a) increased by any amounts that such Partner is
obligated to restore under the standards set by Treasury Regulation
Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to restore under
Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)), and (b)
decreased by (i) the amount of all losses and deductions that, as of
the end of such fiscal year, are reasonably expected to be allocated to
such Partner in subsequent years under Sections 704(e)(2) and 706(d) of
the Code and Treasury Regulation Section 1.751-1(b)(2)(ii), and (ii)
the amount of all distributions that, as of the end of such fiscal
year, are reasonably expected to be made to such Partner in subsequent
years in accordance with the terms of this Agreement or otherwise to
the extent they exceed offsetting increases to such Partner's Capital
Account that are reasonably expected to occur during (or prior to) the
year in which such distributions are reasonably expected to be made
(other than increases as a result of a minimum gain chargeback pursuant
to Section 5.1(d)(i) or 5.1(d)(ii)). The foregoing definition of
Adjusted Capital Account is intended to comply with the provisions of
Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"ADJUSTED PROPERTY" means any property the Carrying Value of
which has been adjusted pursuant to Section 4.6(d)(i) or 4.6(d)(ii).
Once an Adjusted Property is deemed distributed by, and recontributed
to, the Partnership for federal income tax purposes upon a termination
thereof pursuant to Section 708 of the Code, such property shall
thereafter constitute a Contributed Property until the Carrying Value
of such property is subsequently adjusted pursuant to Section 4.6(d)(i)
or 4.6(d)(ii).
"AFFILIATE" means, with respect to any Person, any other
Person that directly or indirectly controls, is controlled by or is
under common control with, the Person in question. As used herein, the
term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies
of a Person, whether through ownership of voting securities, by
contract or otherwise.
"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 5.1, including, without
limitation, a Curative Allocation (if appropriate to the context in
which the term "Agreed Allocation" is used).
"AGREED VALUE" of any Contributed Property means the fair
market value of such property or other consideration at the time of
contribution as determined by the General Partner using such reasonable
method of valuation as it may adopt; provided, however, that the Agreed
Value of any property deemed contributed to the Partnership for federal
income tax purposes upon termination and reconstitution thereof
pursuant to Section 708 of the Code shall be determined in accordance
with Section 4.6(c). Subject to Section 4.6(c), the General Partner
shall, in its sole discretion, use such method as it deems reasonable
and appropriate to allocate
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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 Amended and Restated Agreement of
Limited Partnership of EOTT Energy Pipeline Limited Partnership, as it
may be amended, supplemented or restated from time to time.
"API" has the meaning assigned to such term in the MLP
Agreement.
"AUDIT COMMITTEE" means a committee of the Board of Directors
of the General Partner composed entirely of one or more directors who
are neither officers nor employees of Enron or any of its Affiliates.
"AVAILABLE CASH" means with respect to any calendar quarter
and without duplication:
(a) the sum of:
(i) all cash receipts of the Partnership
during such quarter from all sources plus, in the
case of the calendar quarter ending June 30, 1994,
the cash balance of the Partnership as of the close
of business on the Closing Date; and
(ii) any reduction in a reserve with respect
to such quarter from the level of such reserve at the
end of the prior quarter;
(b) less the sum of:
(i) all cash disbursements of the
Partnership during such quarter, including, without
limitation, disbursements for operating expenses,
taxes, if any, debt service (including, without
limitation, the payment of principal, premium and
interest) and capital expenditures (but excluding all
cash distributions to Partners and any cash
disbursements with respect to which, and to the
extent that, a reserve was established in a prior
quarter); and
(ii) any reserves established with respect
to such quarter, and any increase in reserves
established with respect to prior quarters, in such
amounts as the General Partner determines in its
reasonable discretion to be necessary or appropriate
(A) to provide for the proper conduct of the business
of the Partnership (including, without limitation,
reserves for future capital expenditures) or (B)
because the distribution of such amounts 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.
Notwithstanding the foregoing, "Available Cash" with respect to any
calendar quarter (x) shall not include any cash receipts or reductions
in reserves or take into account any
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disbursements made or reserves established after the Liquidation Date
and (y) shall include cash proceeds from borrowings received by the
Partnership after the end of such quarter but on or before the date on
which the Partnership makes its distribution of Available Cash in
respect of such quarter pursuant to Section 5.3.
"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 4.6 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 or the states of New York or Texas shall not be regarded
as a Business Day.
"CANADA OLP" means EOTT Energy Canada Limited Partnership, a
Delaware limited partnership.
"CAPITAL ACCOUNT" means the capital account maintained for a
Partner pursuant to Section 4.6.
"CAPITAL CONTRIBUTION" means any cash, cash equivalents or the
Net Agreed Value of Contributed Property that a Partner contributes to
the Partnership pursuant to Section 4.1, 4.3 or 4.4.
"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 4.6(d)(i) and 4.6(d)(ii) and to reflect changes, additions or
other adjustments to the Carrying Value for dispositions and
acquisitions of Partnership properties, as deemed appropriate by the
General Partner.
"CERTIFICATE OF LIMITED PARTNERSHIP" means the Certificate of
Limited Partnership filed with the Secretary of State of the State of
Delaware as referenced in Section 6.2, as such Certificate of Limited
Partnership may be amended, supplemented or restated from time to time.
"CLOSING DATE" means the first date on which Common Units are
sold by the General Partner to the Underwriters pursuant to the
provisions of the Underwriting Agreement.
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"CODE" means the Internal Revenue Code of 1986, as amended and
in effect from time to time, as interpreted by the applicable
regulations thereunder. 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.
"COMMON UNIT" has the meaning assigned to such term in the MLP
Agreement.
"CONTRIBUTED PROPERTY" means each property or other asset, in
such form as may be permitted by the Delaware Act, but excluding cash,
contributed to the Partnership (or deemed contributed to the
Partnership on termination and reconstitution thereof pursuant to
Section 708 of the Code). Once the Carrying Value of a Contributed
Property is adjusted pursuant to Section 4.6(d)(i), such property shall
no longer constitute a Contributed Property, but shall be deemed an
Adjusted Property.
"CONTRIBUTION AGREEMENT" has the meaning assigned to such term
in the MLP Agreement.
"CURATIVE ALLOCATION" means any allocation of an item of
income, gain, deduction, loss or credit pursuant to the provisions of
Section 5.1(d)(ix).
"DELAWARE ACT" means the Delaware Revised Uniform Limited
Partnership Act, 6 Del C. Section 17-101, et seq., as amended,
supplemented or restated from time to time, and any successor to such
statute.
"DEPARTING PARTNER" means a General Partner with respect to
which an Event of Withdrawal of the type described in Section 12.1 has
occurred.
"ECONOMIC RISK OF LOSS" has the meaning set forth in Treasury
Regulation Section 1.752-2(a).
"ENRON" means Enron Corp., a Delaware corporation.
"EOTT" means EOTT Energy Corp., a Delaware corporation.
"EVENT OF WITHDRAWAL" has the meaning assigned to such term in
Section 12.1(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, supplemented or restated from time to time, and any successor
to such statute.
"GENERAL PARTNER" means EOTT and its successors as general
partner of the Partnership, unless the context otherwise requires.
"INDEMNITEE" means the General Partner, any Departing Partner,
any Person who is or was an Affiliate of the General Partner or any
Departing Partner, any Person who is or was an officer, director,
employee, partner, agent or trustee of the General Partner or any
Departing Partner or any such Affiliate, or any Person who is or was
serving at the request of
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the General Partner or any Departing Partner or any such Affiliate as a
director, officer, employee, partner, agent or trustee of another
Person.
"INITIAL LIMITED PARTNER" means Operating OLP, upon being
admitted to the Partnership as a limited partner in accordance with
Section 11.1.
"INITIAL OFFERING" means the initial offering of Common Units
to the public, as described in the Registration Statement.
"LIMITED PARTNER" means the Organizational Limited Partner,
the Initial Limited Partner, each Substituted Limited Partner, if any,
each Additional Limited Partner and any Departing Partner upon the
change of its status from General Partner to Limited Partner pursuant
to Section 12.3, but excluding any such Person from and after the time
it withdraws from the Partnership.
"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 13.2, 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 the General Partner or other Person
approved pursuant to Section 13.3 who performs the functions described
therein.
"MERGER AGREEMENT" has the meaning assigned to such term in
Section 15.1.
"MLP" means EOTT Energy Partners, L.P., a Delaware limited
partnership.
"MLP AGREEMENT" means the Amended and Restated Agreement of
Limited Partnership of EOTT Energy Partners, L.P., as it may be
amended, supplemented or restated from time to time.
"NATIONAL SECURITIES EXCHANGE" means an exchange registered
with the Securities and Exchange Commission under Section 6(a) of the
Exchange Act.
"NET AGREED VALUE" means, (a) in the case of any Contributed
Property, the Agreed Value of such 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
4.6(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.
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"NET INCOME" means, for any taxable period, the excess, if
any, of the Partnership's items of income and gain (other than those
items attributable to dispositions constituting Termination Capital
Transactions) for such taxable period over the Partnership's items of
loss and deduction (other than those items attributable to dispositions
constituting Termination Capital Transactions) for such taxable period.
The items included in the calculation of Net Income shall be determined
in accordance with Section 4.6(b) and shall not include any items
specially allocated under Section 5.1(d). Once an item of income, gain,
loss or deduction that has been included in the initial computation of
Net Income is subjected to a Required Allocation or a Curative
Allocation, Net Income or Net Loss, whichever the case may be, shall be
recomputed without regard to such item.
"NET LOSS" means, for any taxable period, the excess, if any,
of the Partnership's items of loss and deduction (other than those
items attributable to dispositions constituting Termination Capital
Transactions) for such taxable period over the Partnership's items of
income and gain (other than those items attributable to dispositions
constituting Termination Capital Transactions) for such taxable period.
The items included in the calculation of Net Loss shall be determined
in accordance with Section 4.6(b) and shall not include any items
specially allocated under Section 5.1(d). Once an item of income, gain,
loss or deduction that has been included in the initial computation of
Net Loss is subjected to a Required Allocation or a Curative
Allocation, Net Income, or Net Loss, whichever the case may be, shall
be recomputed without regard to such item.
"NET TERMINATION GAIN" means, for any taxable period, the sum,
if positive, of all items of income, gain, loss or deduction recognized
by the Partnership from Termination Capital Transactions occurring in
such taxable period. The items included in the determination of Net
Termination Gain shall be determined in accordance with Section 4.6(b)
and shall not include any items of income, gain or loss specially
allocated under Section 5.1(d). Once an item of income, gain or loss
that has been included in the initial computation of Net Termination
Gain is subjected to a Required Allocation or a Curative Allocation,
Net Termination Gain or Net Termination Loss, whichever the case may
be, shall be recomputed without regard to such item;
"NET TERMINATION LOSS" means, for any taxable period, the sum,
if negative, of all items of income, gain, loss or deduction recognized
by the Partnership from Termination Capital Transactions occurring in
such taxable period. The items included in the determination of Net
Termination Loss shall be determined in accordance with Section 4.6(b)
and shall not include any items of income, gain or loss specially
allocated under Section 5.1(d). Once an item of gain or loss that has
been included in the initial computation of Net Termination Loss is
subjected to a Required Allocation or a Curative Allocation, Net
Termination Gain or Net Termination Loss, whichever the case may be,
shall be recomputed without regard to such item;
"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
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Sections 5.2(b)(i)(A), 5.2(b)(ii)(A) or 5.2(b)(iv) if such properties
were disposed of in a taxable transaction in full satisfaction of such
liabilities and for no other consideration.
"NONRECOURSE DEDUCTIONS" means any and all items of loss,
deduction or expenditures (described in Section 705(a)(2)(B) of the
Code) that, in accordance with the principles of Treasury Regulation
Section 1.704-(2)(b), are attributable to a Nonrecourse Liability.
"NONRECOURSE LIABILITY" has the meaning set forth in Treasury
Regulation Section 1.752-1(a)(2).
"OPERATING OLP" means EOTT Energy Operating Limited
Partnership, a Delaware limited partnership.
"OPERATING OLP AGREEMENT" means the Amended and Restated
Agreement of Limited Partnership for Operating OLP, as same may be
amended from time to time.
"OPINION OF COUNSEL" means a written opinion of counsel (who
may be regular counsel to Enron, any Affiliate of Enron, the
Partnership or the General Partner) acceptable to the General Partner.
"ORGANIZATIONAL LIMITED PARTNER" means Organizational Partner,
Inc., a Delaware corporation, in its capacity as the organizational
limited partner of the Partnership.
"OTHER PARTNERSHIPS" means Canada OLP and Operating OLP.
"OTHER PARTNERSHIP AGREEMENTS" means the Amended and Restated
Agreement of Limited Partnership for each of the Other Partnerships, as
same may be amended from time to time.
"PARTNERS" means the General Partner and the Limited Partner.
"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.
"PARTNERSHIP" means the limited partnership heretofore formed
pursuant to this Agreement.
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"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 such, 1% and (b) as to the Limited Partner, 99%.
"PERSON" means an individual or a corporation, partnership,
trust, unincorporated organization, association or other entity.
"RECAPTURE INCOME" means any gain recognized by the
Partnership (computed without regard to any adjustment required by
Sections 734 or 743 of the Code) upon the disposition of any property
or asset of the Partnership, which gain is characterized as ordinary
income because it represents the recapture of deductions previously
taken with respect to such property or asset.
"REGISTRATION STATEMENT" means the Registration Statement on
Form S-1 (Registration No. 33-73984), as it has been or as it may be
amended or supplemented from time to time, filed by the Partnership
with the Securities and Exchange Commission under the Securities Act to
register the offering and sale of the Common Units in the Initial
Offering.
"REQUIRED ALLOCATIONS" means any allocation (or limitation
imposed on any allocation) of an item of income, gain, deduction or
loss pursuant to (a) Section 5.1(b)(i) or (b) Sections 5.1(d)(i)-(vi)
and (viii), such allocations (or limitations thereon) being directly or
indirectly required by the Treasury regulations promulgated under
Section 704(b) of the Code.
"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 Sections
5.2(b)(i)(A) or 5.2(b)(ii)(A), respectively, to eliminate Book-Tax
Disparities.
"RESTRICTED OPPORTUNITY" means a discrete business opportunity
that satisfies each of the following criteria:
(a) such business opportunity involves an activity of
the type engaged in by EOTT immediately prior to the Closing
Date;
(b) such business opportunity was identified by or
presented to the General Partner for the benefit of the
Partnership, and a business opportunity shall be deemed not to
have been "identified by or presented to the General Partner
for the benefit of the Partnership" if it was identified by or
presented to Enron or its Affiliates (other than the General
Partner or any Affiliate of the General Partner controlled by
it) (i) prior to its identification by or presentation to the
General Partner, (ii) without their prior knowledge of the
fact that it had been previously identified by or presented to
the
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General Partner or (iii) with their prior knowledge of the
fact that it had been previously identified by or presented to
the General Partner but not as a result of such knowledge; and
(c) from and after the date on which such business
opportunity was "identified by or presented to the General
Partner for the benefit of the Partnership" as provided in
clause (b) immediately above, such business opportunity was
pursued by the General Partner for the benefit of the
Partnership in good faith and with reasonable diligence under
the circumstances (it being agreed that the criteria set forth
in this clause (c) shall be deemed not to be satisfied from
and after the time at which such business opportunity ceases
to be pursued by the General Partner in accordance with such
standard).
"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 the Audit Committee.
"SUBSTITUTED LIMITED PARTNER" means a Person who is admitted
as a Limited Partner to the Partnership pursuant to Section 11.2 in
place of and with all the rights of a Limited Partner and who is shown
as a Limited Partner on the books and records of the Partnership.
"SURVIVING BUSINESS ENTITY" has the meaning assigned to such
term in Section 15.2(b).
"TERMINATION CAPITAL TRANSACTIONS" means any sale, transfer or
other disposition of property of the Partnership occurring upon or
incident to the liquidation and winding up of the Partnership pursuant
to Article XIII.
"UNDERWRITER" means each Person named as an underwriter in
Schedule I to the Underwriting Agreement who purchases Common Units
pursuant thereto.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement
dated March 18, 1994, among the Underwriters, the MLP, the General
Partner, the Partnership and Enron providing for the purchase of Common
Units by such Underwriters.
"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 4.6(d)) over (b) the Carrying Value of such
property as of such date (prior to any adjustment to be made pursuant
to Section 4.6(d) as of such date).
"UNREALIZED LOSS" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any, of
(a) the Carrying Value of such property as of such date (prior to any
adjustment to be made pursuant to Section 4.6(d) as of such date) over
(b) the fair market value of such property as of such date (as
determined under Section 4.6(d)).
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"WITHDRAWAL OPINION OF COUNSEL" has the meaning assigned to
such term in Section 12.1(b).
ARTICLE III
PURPOSE
3.1 PURPOSE AND BUSINESS. The purpose and nature of the business to be
conducted by the Partnership shall be (a) to acquire, manage, and operate the
assets described in the Contribution Agreement as being transferred to the
Partnership and the Other Partnerships on the day before the Closing Date and
any similar assets or properties and to engage directly in, or to enter into or
form any corporation, limited liability company, partnership, joint venture or
other arrangement to engage indirectly in, any type of business or activity
engaged in by EOTT immediately prior to the Closing Date and, in connection
therewith, to exercise all of the rights and powers conferred upon the
Partnership pursuant to the agreements relating to such assets, (b) to engage
directly in, or enter into or form any corporation, limited liability company,
partnership, joint venture or other arrangement to engage indirectly in, any
business activity that is approved by the General Partner 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) to do anything necessary or appropriate to the foregoing,
including, without limitation, the making of loans to the MLP or the Other
Partnerships (including, without limitation, those loans that may be required in
connection with its involvement in the activities referred to in clause (a) of
this sentence). The General Partner has no obligation or duty to the Partnership
or the Limited Partner to propose or approve, and in its sole discretion may
decline to propose or approve, the conduct by the Partnership of any business.
3.2 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 3.1 and for the protection and benefit of the Partnership.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 INITIAL CONTRIBUTIONS. In connection with the formation of the
Partnership under the Delaware Act, the General Partner has made an initial
Capital Contribution to the Partnership in the amount of $10 for an interest in
the Partnership and has been admitted as the general partner of the Partnership,
and the Organizational Limited Partner has made a Capital Contribution to the
Partnership in the amount of $990 for an interest in the Partnership and has
been admitted as a limited partner of the Partnership.
4.2 RETURN OF INITIAL CONTRIBUTIONS. As of the Closing Date, after
giving effect to the transactions contemplated by Section 4.3, the $10 Capital
Contribution by the General Partner and the $990 Capital Contribution by the
Organizational Limited Partner as initial Capital Contributions shall be
refunded. Ninety-nine percent of any interest or other profit that may have
resulted from the
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investment or other use of such initial Capital Contributions shall be allocated
and distributed to the Organizational Limited Partner, and the balance thereof
shall be allocated and distributed to the General Partner.
4.3 CONTRIBUTION BY THE GENERAL PARTNER AND THE INITIAL LIMITED
PARTNER. On the day before the Closing Date, the General Partner shall, as a
Capital Contribution, cause the Pre-Closing Transactions (as such term is
defined in the Contribution Agreement) to occur and in connection therewith, (a)
the General Partner's general partner interest in the Partnership consisting of
a Partnership Interest representing a 1% Percentage Interest shall be continued
and (b) the Initial Limited Partner shall be deemed to have made a Capital
Contribution equal to 99% of the Capital Contributions of all Partners through
such date and shall receive a limited partner interest in the Partnership
representing a 99% Percentage Interest in the Partnership.
4.4 ADDITIONAL CAPITAL CONTRIBUTIONS. With the consent of the General
Partner, the Limited Partner may, but shall not be obligated to, make additional
Capital Contributions to the Partnership. Contemporaneously with the making of
any such additional Capital Contributions by the Limited Partner, the General
Partner shall be obligated to make an additional Capital Contribution to the
Partnership such that the General Partner shall at all times have at least a 1%
interest in each item of Partnership income, gain, loss, deduction and credit.
Except as set forth in the immediately preceding sentence and Section 5.3(b),
the General Partner shall not be obligated to make any additional Capital
Contributions to the Partnership.
4.5 NO PREEMPTIVE RIGHTS. Except as provided in Section 4.4, no Person
shall have any preemptive, preferential or other similar right with respect to
(a) additional Capital Contributions; (b) issuance or sale of any class or
series of Partnership Interests, whether unissued, held in the treasury or
hereafter created; (c) issuance of any obligations, evidences of indebtedness or
other securities of the Partnership convertible into or exchangeable for, or
carrying or accompanied by any rights to receive, purchase or subscribe to, any
such Partnership Interests; (d) issuance of any right of subscription to or
right to receive, or any warrant or option for the purchase of, any such
Partnership Interests; or (e) issuance or sale of any other securities that may
be issued or sold by the Partnership.
4.6 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 and (ii) all items of
Partnership income and gain (including, without limitation, income and gain
exempt from tax) computed in accordance with Section 4.6(b) and allocated with
respect to such Partnership Interest pursuant to Sections 4.2 and 5.1, 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 and (y) all items of Partnership deduction
and loss computed in accordance with Section 4.6(b) and allocated with respect
to such Partnership Interest pursuant to Section 5.1.
(b) For purposes of computing the amount of any item of income, gain,
loss or deduction 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
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tax purposes (including, without limitation, any method of depreciation, cost
recovery or amortization used for that purpose), provided, that:
(i) 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
5.1.
(ii) 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.
(iii) 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.
(iv) 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 4.6(d) to the Carrying
Value of any Partnership property subject to depreciation, cost
recovery or amortization, any further deductions for such depreciation,
cost recovery or amortization attributable to such property shall be
determined (A) as if the adjusted basis of such property were equal to
the Carrying Value of such property immediately following such
adjustment and (B) using a rate of depreciation, cost recovery or
amortization derived from the same method and useful life (or, if
applicable, the remaining useful life) as is applied for federal income
tax purposes; provided, however, that, if the asset has a zero adjusted
basis for federal income tax purposes, depreciation, cost recovery or
amortization deductions shall be determined using any reasonable method
that the General Partner may adopt.
(v) 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 5.1. 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; provided, however, that,
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if the transfer causes a termination of the Partnership under Section
708(b)(1)(B) of the Code, the Partnership's properties shall be deemed to have
been distributed in liquidation of the Partnership to the Partners (including
any transferee of a Partnership Interest that is a party to the transfer causing
such termination) pursuant to Sections 13.3 and 13.4 and recontributed by such
Partners in reconstitution of the Partnership. Any such deemed distribution
shall be treated as an actual distribution for purposes of this Section 4.6. In
such event, the Carrying Values of the Partnership properties shall be adjusted
immediately prior to such deemed distribution pursuant to Section 4.6(d)(ii) and
such Carrying Values shall then constitute the Agreed Values of such properties
upon such deemed contribution to the reconstituted Partnership. The Capital
Accounts of such reconstituted Partnership shall be maintained in accordance
with the principles of this Section 4.6.
(d) (i) Consistent with the provisions of 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 5.1. 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 General Partner using
such reasonable method of valuation as it may adopt; provided, however,
the General Partner, in arriving at such valuation, must take fully
into account the fair market value of the Partnership Interests of all
Partners at such time. The General Partner shall allocate such
aggregate value among the assets of the Partnership (in such manner as
it determines in its sole 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 such 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
5.1. Any Unrealized Gain or Unrealized Loss attributable to such
property shall be allocated in the same manner as Net Termination Gain
or Net Termination Loss pursuant to Section 5.1(c); provided, however,
that, in making any such allocation, Net Termination Gain or Net
Termination Loss actually realized shall be allocated first. 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 a deemed distribution occurring
as a result of a termination of the Partnership pursuant to Section 708
of the Code, be determined and allocated in the same manner as that
provided in Section 4.6(d)(i) or (B) in the case of a
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liquidating distribution pursuant to Section 14.3 or 14.4, be
determined and allocated by the Liquidator using such reasonable method
of valuation as it may adopt.
4.7 INTEREST. No interest shall be paid by the Partnership on Capital
Contributions or on balances in Partners' Capital Accounts.
4.8 NO WITHDRAWAL. No Partner shall be entitled to withdraw any part of
its Capital Contributions or its Capital Account or to receive any distribution
from the Partnership, except as provided in Section 4.2 and in Articles V, VII,
XII and XIII.
4.9 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.
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
5.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES. For purposes of
maintaining the Capital Accounts and in determining the rights of the Partners
among themselves, the Partnership's items of income, gain, loss and deduction
(computed in accordance with Section 4.6(b)) shall be allocated among the
Partners in each taxable year (or portion thereof) as provided hereinbelow.
(a) Net Income. After giving effect to the allocations in
Section 4.2 and the special allocations set forth in Section 5.1(d),
Net Income for each taxable period and all items of income, gain, loss
and deduction taken into account in computing Net Income for such
taxable period shall be allocated as follows:
(i) First, 100% to the General Partner until the
aggregate Net Income allocated to the General Partner pursuant
to this Section 5.1(a)(i) for the current taxable year and all
previous taxable years is equal to the aggregate Net Losses
allocated to the General Partner pursuant to Section
5.1(b)(ii) for all previous taxable years; and
(ii) Second, the balance, if any, 100% to the General
Partner and the Limited Partner in accordance with their
respective Percentage Interests.
(b) Net Losses. After giving effect to the special allocations
set forth in Section 5.1(d), Net Losses for each taxable period and all
items of income, gain, loss and deduction taken into account in
computing Net Losses for such taxable period shall be allocated as
follows:
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(i) First, 100% to the General Partner and the
Limited Partner in accordance with their respective Percentage
Interests; provided, that Net Losses shall not be allocated
pursuant to this Section 5.1(b)(i) to the extent that such
allocation would cause any Partner to have a deficit balance
in its Adjusted Capital Account at the end of such taxable
year (or increase any existing deficit balance in its Adjusted
Capital Account); and
(ii) Second, the balance, if any, 100% to the General
Partner.
(c) Net Termination Gains and Losses. After giving effect to
the allocations in Section 4.2 and the special allocations set forth in
Section 5.1(d), all items of income, gain, loss and deduction taken
into account in computing Net Termination Gain or Net Termination Loss
for such taxable period shall be allocated in the same manner as such
Net Termination Gain or Net Termination Loss is allocated hereunder.
All allocations under this Section 5.1(c) shall be made after Capital
Account balances have been adjusted by all other allocations provided
under this Section 5.1 and after all distributions of Available Cash
provided under Section 5.3 have been made with respect to the taxable
period ending on the date of the Partnership's liquidation pursuant to
Section 13.3.
(i) If a Net Termination Gain is recognized (or
deemed recognized pursuant to Section 4.6(d)) from Termination
Capital Transactions, such Net Termination Gain shall be
allocated between the General Partner and the Limited Partner
in the following manner (and the Adjusted Capital Accounts of
the Partners shall be increased by the amount so allocated in
each of the following subclauses, and the order listed, before
an allocation is made pursuant to the next succeeding
subclause):
(A) First, to each Partner having a deficit
balance in its Adjusted Capital Account, in the
proportion that such deficit balance bears to the
total deficit balances in the Adjusted Capital
Accounts of all Partners, until each such Partner has
been allocated Net Termination Gain equal to any such
deficit balance in its Adjusted Capital Account; and
(B) Second, 100% to the General Partner and
the Limited Partner in accordance with their
respective Percentage Interests.
(ii) If a Net Termination Loss is recognized (or
deemed recognized pursuant to Section 4.6(d)) from Termination
Capital Transactions, such Net Termination Loss shall be
allocated to the Partners in the following manner:
(A) First, 100% to the General Partner and
the Limited Partner in proportion to, and to the
extent of, the positive balances in their respective
Adjusted Capital Accounts; and
(B) Second, the balance, if any, 100% to the
General Partner.
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(d) Special Allocations. Notwithstanding any other provision
of this Section 5.1, the following special allocations shall be made
for such taxable period:
(i) Partnership Minimum Gain Chargeback.
Notwithstanding any other provision of this Section 5.1, 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 5.1(d), each Partner's
Adjusted Capital Account balance shall be determined, and the
allocation of income or gain required hereunder shall be
effected, prior to the application of any other allocations
pursuant to this Section 5.1(d) with respect to such taxable
period (other than an allocation pursuant to Sections
5.1(d)(v) and (vi)). This Section 5.1(d)(i) is intended to
comply with the Partnership Minimum Gain chargeback
requirement in Treasury Regulation Section 1.704-2(f) and
shall be interpreted consistently therewith.
(ii) Chargeback of Partner Nonrecourse Debt Minimum
Gain. Notwithstanding the other provisions of this Section
5.1 (other than Section 5.1(d)(i)), except as provided in
Treasury Regulation Section 1.704-2(i)(4), if there is a net
decrease in Partner Nonrecourse Debt Minimum Gain during any
Partnership taxable period, any Partner with a share of
Partner Nonrecourse Debt Minimum Gain at the beginning of such
taxable period shall be allocated items of Partnership income
and gain for such period (and, if necessary, subsequent
periods) in the manner and amounts provided in Treasury
Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii), or
any successor provisions. For purposes of this Section 5.1(d),
each Partner's Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required
hereunder shall be effected, prior to the application of any
other allocations pursuant to this Section 5.1(d), other than
Section 5.1(d)(i) and other than an allocation pursuant to
Sections 5.1(d)(v) and (vi), with respect to such taxable
period. This Section 5.1(d)(ii) is intended to comply with the
chargeback of items of income and gain requirement in Treasury
Regulation Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.
(iii) Qualified Income Offset. In the event any
Partner unexpectedly receives any adjustments, allocations or
distributions described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6) items of Partnership income and gain
shall be specifically 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 5.1(d)(i)
or (ii).
(iv) Gross Income Allocations. In the event any
Partner has a deficit balance in its Adjusted Capital Account
at the end of any Partnership taxable period
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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 5.1(d)(iv) shall be made only if and to the extent
that such Partner would have a deficit balance in its Adjusted
Capital Account after all other allocations provided in this
Section 5.1 have been tentatively made as if this Section
5.1(d)(iv) were not in this Agreement.
(v) Nonrecourse Deductions. Nonrecourse Deductions
for any taxable period shall be allocated to the Partners in
accordance with their respective Percentage Interests. If the
General Partner determines in its good faith discretion that
the Partnership's Nonrecourse Deductions must be allocated in
a different ratio to satisfy the safe harbor requirements of
the Treasury Regulations promulgated under Section 704(b) of
the Code, the General Partner is authorized, upon notice to
the Limited Partner, to revise the prescribed ratio to the
numerically closest ratio that does satisfy such requirements.
(vi) Partner Nonrecourse Deductions. Partner
Nonrecourse Deductions for any taxable period shall be
allocated 100% to the Partner that bears the Economic Risk of
Loss with respect to the Partner Nonrecourse Debt to which
such Partner Nonrecourse Deductions are attributable in
accordance with Treasury Regulation Section 1.704-2(i). If
more than one Partner bears the Economic Risk of Loss with
respect to a Partner Nonrecourse Debt, such Partner
Nonrecourse Deductions attributable thereto shall be allocated
between or among such Partners in accordance with the ratios
in which they share such Economic Risk of Loss.
(vii) Nonrecourse Liabilities. For purposes of
Treasury Regulation Section 1.752-3(a)(3), the Partners agree
that Nonrecourse Liabilities of the Partnership in excess of
the sum of (A) the amount of Partnership Minimum Gain and (B)
the total amount of Nonrecourse Built-in Gain shall be
allocated among the Partners in accordance with their
respective Percentage Interests.
(viii) Code Section 754 Adjustments. To the extent an
adjustment to the adjusted tax basis of any Partnership asset
pursuant to Section 734(b) or 743(b) of the Code is required,
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the
amount of such adjustment 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 5.1, 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
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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 5.1. 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 5.1(d)(ix)(A)
shall only be made with respect to Required
Allocations to the extent the General Partner
reasonably determines that such allocations will
otherwise be inconsistent with the economic agreement
among the Partners. Further, allocations pursuant to
this Section 5.1(d)(ix)(A) shall be deferred with
respect to allocations pursuant to clauses (1) and
(2) hereof to the extent the General Partner
reasonably determines that such allocations are
likely to be offset by subsequent Required
Allocations.
(B) The General Partner shall have
reasonable discretion, with respect to each taxable
period, to (1) apply the provisions of Section
5.1(d)(ix)(A) in whatever order is most likely to
minimize the economic distortions that might
otherwise result from the Required Allocations, and
(2) divide all allocations pursuant to Section
5.1(d)(ix)(A) among the Partners in a manner that is
likely to minimize such economic distortions.
5.2 ALLOCATIONS FOR TAX PURPOSES. (a) Except as otherwise provided
herein, for federal income tax purposes, each item of income, gain, loss and
deduction shall be allocated among the Partners in the same manner as its
correlative item of "book" income, gain, loss or deduction is allocated pursuant
to Section 5.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated for
federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in the
manner provided under Section 704(c) of the Code that takes into
account the variation between the Agreed Value of such property and its
adjusted basis at the time of contribution; and (B) except as otherwise
provided in Section 5.2(b)(iv), 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 5.1.
(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
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the allocations thereof pursuant to Section 4.6(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 5.2(b)(i)(A); and (B) except as otherwise provided in Section
5.2(b)(iv), 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 5.1.
(iii) Except as otherwise provided in Section 5.2(b)(iv), all
other items of income, gain, loss and deduction shall be allocated
among the Partners in the same manner as their correlative item of
"book" gain or loss is allocated pursuant to Section 5.1. Such
allocations are intended to comply with, and shall be effected by the
General Partner in accordance with the principles of Treasury
Regulation Section 1.704-3(c) and Temporary Treasury Regulation Section
1.704-3T(d).
(iv) Any items of income, gain, loss or deduction otherwise
allocable under Section 5.2(b)(i)(B), 5.2(b)(ii)(B) or 5.2(b)(iii)
shall be subject to allocation by the General Partner in a manner
designed to eliminate, to the maximum extent possible, Book-Tax
Disparities in a Contributed Property or Adjusted Property otherwise
resulting from the application of the "ceiling" limitation (under
Section 704(c) of the Code or Section 704(c) principles) to the
allocations provided under Section 5.2(b)(i)(A) or 5.2(b)(ii)(A).
(c) For the proper administration of the Partnership and for the
preservation of uniformity of any class or classes of Partnership Interests),
the General Partner shall have sole discretion to (i) adopt such conventions as
it deems appropriate in determining the amount of depreciation, amortization and
cost recovery deductions; (ii) make special allocations for federal income tax
purposes of income (including, without limitation, gross income) or deductions;
and (iii) amend the provisions of this Agreement as appropriate (x) to reflect
the proposal or promulgation of Treasury regulations under Section 704(b) or
Section 704(c) of the Code or (y) otherwise to preserve or achieve uniformity of
any class or classes of Partnership Interests). The General Partner may adopt
such conventions, make such allocations and make such amendments to this
Agreement as provided in this Section 5.2(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 Partnership Interests or the
Partnership, and if such allocations are consistent with the principles of
Section 704 of the Code.
(d) The General Partner in its sole 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 the inconsistency of such
approach with Proposed Treasury Regulation Section 1.168-2(n), Treasury
Regulation Section 1.167(c)-1(a)(6) or the legislative history of Section 197 of
the Code. If the General Partner determines that such reporting position cannot
reasonably be taken, the General Partner may adopt depreciation and amortization
conventions under which all purchasers acquiring Partnership Interests in the
same month would receive depreciation and amortization deductions, based upon
the same applicable rate as if they had purchased a direct interest in the
Partnership's property. If the General Partner chooses not to utilize such
aggregate method, the General Partner may use any other reasonable depreciation
and amortization conventions to preserve
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the uniformity of the intrinsic tax characteristics of any class or classes of
Partnership Interests that would not have a material adverse effect on the
Limited Partner or the holders of any class or classes of Partnership Interests.
(e) Any gain allocated to the Partners upon the sale or other taxable
disposition of any Partnership asset shall, to the extent possible, after taking
into account other required allocations of gain pursuant to this Section 5.2, be
characterized as Recapture Income in the same proportions and to the same extent
as such Partners (or their predecessors in interest) have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.
(f) All items of income, gain, loss, deduction and credit recognized by
the Partnership for federal income tax purposes and allocated to the Partners in
accordance with the provisions hereof shall be determined without regard to any
election under Section 754 of the Code which may be made by the Partnership;
provided, however, that such allocations, once made, shall be adjusted as
necessary or appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
(g) The General Partner may adopt such methods of allocation of income,
gain, loss or deduction between a transferor and a transferee of a Partnership
Interest as it determines necessary, to the extent permitted or required by
Section 706 of the Code and the regulations or rulings promulgated thereunder.
5.3 REQUIREMENT OF DISTRIBUTIONS. (a) Within 45 days following the end
of each calendar quarter (or following the period from the Closing Date to June
30, 1994) an amount equal to 100% of Available Cash with respect to such quarter
(or period) shall be distributed in accordance with this Article V by the
Partnership to the Partners in accordance with their respective Percentage
Interests. The immediately preceding sentence shall not modify in any respect
the provisions of Section 4.2 regarding the distribution of any interest or
other profit on the initial contributions referred to therein or 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.
(b) Notwithstanding the definition of Available Cash contained herein,
disbursements made or reserves established after the end of any quarter shall be
deemed to have been made or established, for purposes of determining Available
Cash, within such quarter if the General Partner so determines. Notwithstanding
the foregoing, in the event of the dissolution and liquidation of the
Partnership, all proceeds of such liquidation shall be applied and distributed
in accordance with, and subject to the terms and conditions of, Sections 13.3
and 13.4
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ARTICLE VI
MANAGEMENT AND OPERATION OF BUSINESS
6.1 MANAGEMENT. (a) The General Partner shall conduct, direct and
manage all activities of the Partnership. Except as otherwise expressly provided
in this Agreement, all management powers over the business and affairs of the
Partnership shall be exclusively vested in the General Partner, and the Limited
Partner shall have no right of control or management power over the business and
affairs of the Partnership. In addition to the powers now or hereafter granted a
general partner of a limited partnership under applicable law or which are
granted to the General Partner under any other provision of this Agreement, the
General Partner, subject to Section 6.3, shall have full power and authority to
do all things and on such terms as it, in its sole discretion, may deem
necessary or appropriate to conduct the business of the Partnership, to exercise
all powers set forth in Section 3.2 and to effectuate the purposes set forth in
Section 3.1, including, without limitation, (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 (the matters described in this clause (3) being subject, however,
to any prior approval that may be required by Section 6.3); (iv) the use of the
assets of the Partnership (including, without limitation, cash on hand) for any
purpose consistent with the terms of this Agreement, including, without
limitation, the financing of the conduct of the operations of the Partnership,
the lending of funds to other Persons (including, without limitation, the Other
Partnerships), the repayment of obligations of the Partnership; (v) the
negotiation, execution and performance of any contracts, conveyances or other
instruments (including, without limitation, instruments that limit the liability
of the Partnership under contractual arrangements to all or particular assets of
the Partnership, with the other party to the contract to have no recourse
against the General Partner or its assets other than its interest in the
Partnership, even if same results in the terms of the transaction being less
favorable to the Partnership than would otherwise be the case); (vi) the
distribution of Partnership cash; (vii) the selection and dismissal of employees
and agents (including, without limitation, employees having titles such as
"president," "vice president," "secretary" and "treasurer") and agents, outside
attorneys, accountants, consultants and contractors and the determination of
their compensation and other terms of employment or hiring; (viii) the
maintenance of such insurance for the benefit of the Partnership and the
Partners (including, without limitation, 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 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, without limitation, 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.
(b) Notwithstanding any other provision of this Agreement, the MLP
Agreement, the Other Partnership Agreements, the Delaware Act or any applicable
law, rule or regulation, each of the Partners hereby (i) approves, ratifies and
confirms the execution, delivery and performance by the
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parties thereto of the MLP Agreement, the Underwriting Agreement, the Other
Partnership Agreements, the Contribution Agreement, the Ancillary Agreement, the
Corporate Services Agreement, the agreements filed as Exhibits 10.01-10.11 to
the Registration Statement, and the other agreements described in or filed as a
part of the Registration Statement, and the engaging by any Affiliate of the
General Partner (other than Affiliates controlled by the General Partner) in
business and activities (other than Restricted Opportunities) that are in direct
competition with the business and activities of the MLP, the Partnership and the
Other Partnerships; (ii) agrees that the General Partner (on its own or through
any officer of the Partnership) is authorized to execute, deliver and perform
the agreements referred to in clause (i) of this sentence and the other
agreements, acts, transactions and matters described in the Registration
Statement on behalf of the Partnership without any further act, approval or vote
of the Partners; and (iii) agrees that the execution, delivery or performance by
the General Partner, the MLP, the Partnership, the Other Partnerships or any
Affiliate of any of them of this Agreement or any agreement authorized or
permitted under this Agreement, or the engaging by any Affiliate of the General
Partner (other than Affiliates controlled by the General Partner) in any
business and activities (other than Restricted Opportunities) that are in direct
competition with the business and activities of the MLP, the Partnership and the
Other Partnerships, shall not constitute a breach by the General Partner of any
duty that the General Partner may owe the Partnership or the Limited Partners or
the Assignees or any other Persons under this Agreement (or any other
agreements) or of any duty stated or implied by law or equity.
6.2 CERTIFICATE OF LIMITED PARTNERSHIP. The General Partner has caused
the Certificate of Limited Partnership to be filed with the Secretary of State
of the State of Delaware as required by the Delaware Act and shall use all
reasonable efforts to cause to be filed such other certificates or documents as
may be determined by the General Partner in its sole discretion to be reasonable
and necessary or appropriate for the formation, continuation, qualification and
operation of a limited partnership (or a partnership in which the Limited
Partner has limited liability) in the State of Delaware or any other state in
which the Partnership may elect to do business or own property. To the extent
that such action is determined by the General Partner in its sole discretion to
be reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate of Limited Partnership and do
all things to maintain the Partnership as a limited partnership (or a
partnership in which the Limited Partner has limited liability) under the laws
of the State of Delaware or of any other state in which the Partnership may
elect to do business or own property. Subject to the terms of Section 7.4(a),
the General Partner shall not be required, before or after filing, to deliver or
mail a copy of the Certificate of Limited Partnership, any qualification
document or any amendment thereto to the Limited Partner.
6.3 RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY. (a) The General
Partner may not, without written approval of the specific act by the Limited
Partner or by other written instrument executed and delivered by the Limited
Partner subsequent to the date of this Agreement, take any action in
contravention of this Agreement, including, without limitation, (i) any act that
would make it impossible to carry on the ordinary business of the Partnership,
except as otherwise provided in this Agreement; (ii) possess Partnership
property, or assign any rights in specific Partnership property, for other than
a Partnership purpose; (iii) admit a Person as a Partner, except as otherwise
provided in this Agreement; (iv) amend this Agreement in any manner, except as
otherwise provided in this Agreement; or (v) transfer its interest as general
partner of the Partnership, except as otherwise provided in this Agreement.
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(b) Except as provided in Articles XIII and XV, the General Partner may
not sell, exchange or otherwise dispose of all or substantially all of the
Partnership's assets in a single transaction or a series of related transactions
without the approval of the Limited Partner; provided, however, that this
provision shall not preclude or limit the General Partner's ability to mortgage,
pledge, hypothecate or grant a security interest in all or substantially all of
the Partnership's assets 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.
(c) Unless approved by the Limited Partner, the General Partner shall
not take any action or refuse to take any reasonable action the effect of which,
if taken or not taken, as the case may be, would be to cause 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; provided that this Section 6.3(c)
shall not be construed to apply to amendments to this Agreement (which are
governed by Article XIV) or mergers or consolidations of the Partnership with
any Person (which are governed by Article XV).
(d) At all times while serving as the general partner of the
Partnership, the General Partner shall not make any dividend or distribution on,
or repurchase any shares of, its stock or take any other action within its
control if the effect of such dividend, distribution, repurchase or other action
would be to reduce its net worth below an amount necessary to receive an Opinion
of Counsel that the Partnership will be treated as a partnership for federal
income tax purposes.
6.4 REIMBURSEMENT OF THE GENERAL PARTNER. (a) Except as provided in
this Section 6.4 and elsewhere in this Agreement, the General Partner shall not
be compensated for its services as general partner of the Partnership.
(b) The General Partner shall be reimbursed on a monthly basis, or such
other basis as the General Partner may determine in its sole discretion, for (i)
all direct and indirect expenses it incurs or payments it makes on behalf of the
Partnership (including, without limitation, salary, bonus, incentive
compensation and other amounts paid to any Person to perform services for the
Partnership or for the General Partner in the discharge of its duties to the
Partnership) and (ii) all other necessary or appropriate expenses allocable to
the Partnership or otherwise reasonably incurred by the General Partner in
connection with operating the Partnership's business (including, without
limitation, expenses allocated to the General Partner by its Affiliates). The
General Partner shall determine the fees and expenses that are allocable to the
Partnership in any reasonable manner determined by the General Partner in its
sole discretion. Reimbursements pursuant to this Section 6.4 shall be in
addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 6.7.
6.5 OUTSIDE ACTIVITIES. (a) After the Closing Date, the General
Partner, for so long as it is the general partner of the Partnership, (i) agrees
that its sole business will be to act as the general partner of the Partnership,
the MLP and the Other Partnerships and to undertake activities that are
ancillary or related thereto (including being a limited partner in the MLP),
(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, the Other Partnership
Agreements or the MLP Agreement or described in or contemplated by the
Registration Statement and (B) the acquisition, ownership or disposition of
partnership interests in the Partnership, the Other Partnerships and the MLP,
except that, notwithstanding the foregoing, employees of the General
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Partner may perform services for Enron and its Affiliates and (iii) shall cause
its Affiliates not to engage in any Restricted Opportunities.
(b) Except as described or provided for in the MLP Agreement, the Other
Partnership Agreements, the Registration Statement or Section 6.5(a), no
Indemnitee shall be expressly or implicitly restricted or proscribed pursuant to
the MLP Agreement, this Agreement, the Other Partnership Agreements or the
partnership relationship established hereby or thereby from engaging in other
activities for profit, whether in the businesses engaged in by the Partnership,
the Other Partnerships or the MLP or anticipated to be engaged in by the
Partnership, the Other Partnerships, the MLP or otherwise, including, without
limitation, in the case of any Affiliates of the General Partner those
businesses and activities (other than Restricted Opportunities) in direct
competition with the business and activities of the Partnership, the MLP or the
Other Partnerships or otherwise described in or contemplated by the Registration
Statement. Without limitation of and subject to the foregoing each Indemnitee
(other than the General Partner) shall have the right to engage in businesses of
every type and description and to engage in and possess an interest in other
business ventures of any and every type or description, independently or with
others, including, without limitation, in the case of any Affiliates of the
General Partner business interests and activities (other than Restricted
Opportunities) in direct competition with the business and activities of the
Partnership, the MLP or the Other Partnerships, and none of the same shall
constitute a breach of this Agreement or any duty to the Partnership, the Other
Partnerships, the MLP or any Partners. Neither the Partnership, the Other
Partnerships, the MLP, any Limited Partner nor any other Person shall have any
rights by virtue of this Agreement, the Other Partnership Agreements, the MLP
Agreement or the partnership relationship established hereby or thereby in any
business ventures of any Indemnitee (subject, in the case of the General
Partner, to compliance with Section 6.5(c)) and such Indemnitees shall have no
obligation to offer any interest in any such business ventures to the
Partnership, the Other Partnerships, the MLP, any Limited Partner or any other
Person.
(c) Subject to the terms of Sections 6.5(a) and (b) but otherwise
notwithstanding anything to the contrary in this Agreement, (i) the competitive
activities of any Indemnitees (other than the General Partner) are 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 duty or any other obligation of
any type whatsoever of the General Partner for the General Partner to permit an
Affiliate of the General Partner to engage, or for any such Affiliate to engage,
in a business opportunity in preference to or to the exclusion of the
Partnership (other than the Restricted Opportunities).
(d) The term "Affiliates" when used in this Section 6.5 with respect to
the General Partner shall not include the Partnership, the MLP, the Other
Partnerships or any other Persons controlled by the General Partner.
6.6 LOANS TO AND FROM THE GENERAL PARTNER; CONTRACTS WITH AFFILIATES.
(a) (i) The General Partner, the Limited Partner, the Other Partnerships or any
of their Affiliates may lend to the Partnership, and the Partnership may borrow,
funds needed or desired by the Partnership for such periods of time as the
General Partner may determine and (ii) the General Partner, the Limited Partner,
the Other Partnerships or any Affiliate thereof may borrow from the Partnership,
and the Partnership may lend to such Persons, excess funds of the Partnership
for such periods of time and in such amounts as the General Partner may
determine; provided, however, that in either such case the lending party
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may not charge the borrowing party interest at a rate greater than the rate that
would be charged the borrowing party (without reference to the lending party's
financial abilities or guarantees) by unrelated lenders on comparable loans. 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 6.6(a) and Section 6.6(b),
the term "Partnership" shall include any Affiliate of the Partnership that is
controlled by the Partnership.
(b) The General Partner may itself, or may enter into an agreement with
any of its Affiliates to, render services to the Partnership or to the General
Partner in the discharge of its duties as general partner of the Partnership.
Any service rendered to the Partnership 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 6.6(b) 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 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), is equitable
to the Partnership. The provisions of Section 6.4 shall apply to the rendering
of services described in this Section 6.6(b).
(c) 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.
(d) 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 6.6(d) shall be deemed to be satisfied as to (i) the
transactions effected pursuant to Sections 4.2 and 4.3, the Contribution
Agreement and any other transactions described in or contemplated by the
Registration Statement, (ii) any transaction approved by Special Approval, (iii)
any transaction the terms of which are no less favorable to the Partnership than
those generally being provided to or available from unrelated third parties or
(iv) any transaction that, taking into account the totality of the relationships
between the parties involved (including other transactions that may be
particularly favorable or advantageous to the Partnership), is equitable to the
Partnership.
(e) The General Partner and its Affiliates will have no obligation to
permit the Partnership, the Other Partnerships or the MLP 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.
(f) Without limitation of Sections 6.6(a) through 6.6(e), and
notwithstanding anything to the contrary in this Agreement, the existence of the
conflicts of interest described in the Registration Statement are hereby
approved by all Partners.
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6.7 INDEMNIFICATION. (a) To the fullest extent permitted by law but
subject to the limitations expressly provided in this Agreement, the General
Partner, any Departing Partner, any Person who is or was an officer or director
of the Partnership, the General Partner or any Departing Partner and all other
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, without limitation, legal fees and expenses), judgments,
fines, penalties, interest, settlements and other amounts arising from any and
all claims, demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, in which any Indemnitee may be involved, or is
threatened to be involved, as a party or otherwise, by reason of its status as
(i) the General Partner, a Departing Partner or any of their Affiliates, (ii) an
officer, director, employee, partner, agent or trustee of the Partnership, the
General Partner, any Departing Partner or any of their Affiliates or (iii) a
Person serving at the request of the Partnership in another entity in a similar
capacity, provided, that in each case the Indemnitee acted in good faith and in
a manner which such Indemnitee believed to be in, or not opposed to, the best
interests of the Partnership and, with respect to any criminal proceeding, had
no reasonable cause to believe its conduct was unlawful; provided, further, no
indemnification pursuant to this Section 6.7 shall be available to the General
Partner with respect to its obligations incurred pursuant to the Underwriting
Agreement or the Contribution Agreement (other than obligations incurred by the
General Partner on behalf of the Partnership, the MLP or the Other
Partnerships). 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
6.7 shall be made only out of the assets of the Partnership, it being agreed
that the General Partner shall not be personally liable for such indemnification
and shall have no obligation to contribute or loan any monies or property to the
Partnership to enable it to effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including,
without limitation, legal fees and expenses) incurred by an Indemnitee who is
indemnified pursuant to Section 6.7(a) in defending any claim, demand, action,
suit or proceeding shall, from time to time, be advanced by the Partnership
prior to the final disposition of such claim, demand, action, suit or proceeding
upon receipt by the Partnership of an undertaking by or on behalf of the
Indemnitee to repay such amount if it shall be determined that the Indemnitee is
not entitled to be indemnified as authorized in this Section 6.7.
(c) The indemnification provided by this Section 6.7 shall be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, both as to actions in the Indemnitee's capacity as (i) the General
Partner, a Departing Partner or an Affiliate thereof, (ii) an officer, director,
employee, partner, agent or trustee of the Partnership, the General Partner, any
Departing Partner or an Affiliate thereof or (iii) a Person serving at the
request of the Partnership in another entity in a similar capacity, and as to
actions in any other capacity (including, without limitation, any capacity under
the Underwriting Agreement), and shall continue as to an Indemnitee who has
ceased to serve in such capacity and shall inure to the benefit of the heirs,
successors, assigns and administrators of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the General
Partner or its Affiliates for the cost of) insurance, on behalf of the General
Partner and such other Persons as the General Partner shall determine, against
any liability that may be asserted against or expense that may be incurred by
such Person in connection with the Partnership's activities, regardless of
whether the
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Partnership would have the power to indemnify such Person against such liability
under the provisions of this Agreement.
(e) For purposes of this Section 6.7, the Partnership shall be deemed
to have requested an Indemnitee to serve as fiduciary of an employee benefit
plan whenever the performance by it of its duties to the Partnership also
imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute "fines" within the meaning of Section 6.7(a); and action taken
or omitted by it with respect to an employee benefit plan in the performance of
its duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is in, or not opposed to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited 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 6.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 6.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 6.7 or any
provision hereof shall in any manner terminate, reduce or impair the right of
any past, present or future Indemnitee to be indemnified by the Partnership, nor
the obligation of the Partnership to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 6.7 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
6.8 LIABILITY OF INDEMNITEES. (a) Notwithstanding anything to the
contrary set forth in this Agreement, no Indemnitee shall be liable for monetary
damages to the Partnership, the Limited Partner, or any other Persons who have
acquired interests in the Partnership, for losses sustained or liabilities
incurred as a result of any act or omission if such Indemnitee acted in good
faith.
(b) Subject to its obligations and duties as General Partner set forth
in Section 6.1(a), the General Partner may exercise any of the powers granted to
it by this Agreement and perform any of the duties imposed upon it hereunder
either directly or by or through its agents, and the General Partner shall not
be responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.
(c) Any amendment, modification or repeal of this Section 6.8 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 under this Section 6.8
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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.
6.9 RESOLUTION OF CONFLICTS OF INTEREST. (a) Unless otherwise expressly
provided in this Agreement, the MLP Agreement or the Other Partnership
Agreements, whenever a potential conflict of interest exists or arises between
the General Partner or any of its Affiliates, on the one hand, and the
Partnership, the MLP, the Other Partnerships or the Limited Partner, on the
other hand, any resolution or course of action in respect of such conflict of
interest shall be permitted and deemed approved by the Limited Partner, and
shall not constitute a breach of this Agreement, of the MLP Agreement, of the
Other Partnership Agreements 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 General Partner 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, (ii) on terms no
less favorable to the Partnership than those generally being provided to or
available from unrelated third parties or (iii) fair to the Partnership, taking
into account the totality of the relationships between the parties involved
(including other transactions that may be particularly favorable or advantageous
to the Partnership). The General Partner may also adopt a resolution or course
of action that has not received Special Approval. The General Partner (including
the 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 or engineering practices or principles; and (D) such additional
factors as the General Partner (including such Audit Committee) determines in
its sole discretion to be relevant, reasonable or appropriate under the
circumstances. Nothing contained in this Agreement, however, is intended to nor
shall it be construed to require the General Partner (including such Audit
Committee) to consider the interests of any Person other than the Partnership.
In the absence of bad faith by the General Partner, the resolution, action or
terms so made, taken or provided by the General Partner with respect to such
matter shall not constitute a breach of this Agreement or any other agreement
contemplated herein or a breach of any standard of care or duty imposed herein
or therein or under the Delaware Act or any other law, rule or regulation.
(b) Whenever this Agreement or any other agreement contemplated hereby
provides that the General Partner or any of its Affiliates is permitted or
required to make a decision (i) in its "sole discretion" or "discretion," that
it deems "necessary or appropriate" or under a grant of similar authority or
latitude, the General Partner or such Affiliate shall be entitled to consider
only such interests and factors as it desires and shall have no duty or
obligation to give any consideration to any interest of, or factors affecting,
the Partnership, the MLP, the Other Partnerships, the Limited Partner or any
limited partner in the MLP, (ii) it may make such decision in its sole
discretion (regardless of whether there is a reference to "sole discretion" or
"discretion") unless another express standard is provided for, or (iii) in "good
faith" or under another express standard, the General Partner or
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such Affiliate shall act under such express standard and shall not be subject to
any other or different standards imposed by this Agreement, the MLP Agreement,
the Other Partnership Agreements any other agreement contemplated hereby or
under the Delaware Act or any other law, rule or regulation. In addition, any
actions taken by the General Partner or such Affiliate consistent with the
standards of "reasonable discretion" set forth in the definition of Available
Cash shall not constitute a breach of any duty of the General Partner to the
Partnership or the Limited Partner. The General Partner shall have no duty,
express or implied, to sell or otherwise dispose of any asset of the Partnership
or of the Other Partnerships, other than in the ordinary course of business. No
borrowing by the Partnership or the approval thereof by the General Partner
shall be deemed to constitute a breach of any duty of the General Partner to the
Partnership or the Limited Partner by reason of the fact that the purpose or
effect of such borrowing is directly or indirectly to (A) enable the General
Partner of the MLP to receive or increase the amount of "Incentive
Distributions" under the MLP Agreement, (B) reduce or eliminate the obligation
of Enron or any of its Affiliates to purchase APIs under the Ancillary
Agreement, (C) permit redemption of APIs by the MLP, (D) shorten the
"Subordination Period" under the MLP Agreement or (E) reduce the "Cumulative
Common Unit Arrearage" under the MLP Agreement in order to hasten the conversion
of the "Subordinated Units" in the MLP into Common Units.
(c) Whenever a particular transaction, arrangement or resolution of a
conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transactions.
6.10 OTHER MATTERS CONCERNING THE GENERAL PARTNER. (a) The General
Partner may rely and shall be protected in acting or refraining from acting upon
any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, or other paper or document believed by
it to be genuine and to have been signed or presented by the proper party or
parties.
(b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion (including, without limitation, an Opinion of Counsel) of such
Persons as to matters that such General Partner reasonably believes to be within
such Person's professional or expert competence shall be conclusively presumed
to have been done or omitted in good faith and in accordance with such opinion.
(c) The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers and a duly appointed attorney or attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform each and every act and duty that
is permitted or required to be done by the General Partner hereunder.
(d) Any standard of care and duty imposed by this Agreement or under
the Delaware Act or any applicable law, rule or regulation shall be modified,
waived or limited as required to permit the General Partner to act under this
Agreement or any other agreement contemplated by this Agreement and to make any
decision pursuant to the authority prescribed in this Agreement so long as such
action
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is not reasonably believed by the General Partner to be in, or not inconsistent
with, the best interests of the Partnership.
6.11 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 portion thereof. Title to any or all of the Partnership assets may be held
in the name of the Partnership, the General Partner, one or more of its
Affiliates or one or more nominees, as the General Partner may determine. The
General Partner hereby declares and warrants that any Partnership assets for
which record title is held in the name of the General Partner or one or more of
its Affiliates or one or more nominees shall be held by the General Partner or
such Affiliate or nominee for the use and benefit of the Partnership in
accordance with the provisions of this Agreement; provided, however, that the
General Partner shall use its reasonable efforts to cause record title to such
assets (other than those assets in respect of which the General Partner
determines that the expense and difficulty of conveyancing makes transfer of
record title to the Partnership impracticable) to be vested in the Partnership
as soon as reasonably practicable; provided that, prior to the withdrawal or
removal of the General Partner or as soon thereafter as practicable, the General
Partner shall use reasonable efforts to effect the transfer of record title to
the Partnership and, prior to any such transfer, will provide for the use of
such assets in a manner satisfactory to the Partnership. 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.
6.12 RELIANCE BY THIRD PARTIES. Notwithstanding anything to the
contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of the
Partnership and to enter into any contracts on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if it were the
Partnership's sole party in interest, both legally and beneficially. The Limited
Partner hereby waives any and all defenses or other remedies that may be
available against such Person to contest, negate or disaffirm any action of the
General Partner in connection with any such dealing. In no event shall any
Person dealing with the General Partner or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to inquire
into the necessity or expedience of any act or action of the General Partner or
its representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (a) at the time of the execution and
delivery of such certificate, document or instrument, this Agreement was in full
force and effect, (b) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on
behalf of the Partnership and (c) such certificate, document or instrument was
duly executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.
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ARTICLE VII
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER
7.1 LIMITATION OF LIABILITY. The Limited Partner shall have no
liability under this Agreement except as expressly provided in this Agreement or
the Delaware Act.
7.2 MANAGEMENT OF BUSINESS. The Limited Partner, in its capacity as
such, shall not participate in the operation, management or control (within the
meaning of the Delaware Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
Partnership, the General Partner, any of its Affiliates or any officer,
director, employee, partner, agent or trustee of the General Partner or any of
its Affiliates, in its capacity as such, shall not affect, impair or eliminate
the limitations on the liability of the Limited Partners or Assignees under this
Agreement.
7.3 RETURN OF CAPITAL. The Limited Partner shall not be entitled to the
withdrawal or return of its Capital Contribution, except to the extent, if any,
that distributions made pursuant to this Agreement or upon termination of the
Partnership may be considered as such by law and then only to the extent
provided for in this Agreement.
7.4 RIGHTS OF THE LIMITED PARTNER RELATING TO THE PARTNERSHIP. (a) In
addition to other rights provided by this Agreement or by applicable law, and
except as limited by Section 7.4(b), the Limited Partner shall have the right,
for a purpose reasonably related to the 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;
(iii) to have furnished to it, upon notification to the
General Partner, 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 General
Partner, 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 description and statement of the 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.
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(b) Notwithstanding any other provision of this Agreement, the General
Partner may keep confidential from the Limited Partner for such period of time
as the General Partner deems reasonable, any information that the General
Partner reasonably believes to be in the nature of trade secrets or other
information the disclosure of which the General Partner in good faith believes
is not in the best interests of the Partnership or could damage the Partnership
or that the Partnership is required by law or by agreements with third parties
to keep confidential (other than agreements with Affiliates of the General
Partner the primary purpose of which is to circumvent the obligations set forth
in this Section 7.4).
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 RECORDS AND ACCOUNTING. The General Partner shall keep or cause to
be kept at the principal office of the Partnership appropriate books and records
with respect to the Partnership's business, including, without limitation, all
books and records necessary to provide to the Limited Partner any information,
lists and copies of documents required to be provided pursuant to Section
7.4(a). Any books and records maintained by or on behalf of the Partnership in
the regular course of its business, including, without limitation, 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 generally accepted accounting principles.
8.2 FISCAL YEAR. The fiscal year of the Partnership shall be the
calendar year.
ARTICLE IX
TAX MATTERS
9.1 PREPARATION OF TAX RETURNS. The General Partner shall arrange for
the preparation and timely filing of all returns of Partnership income, gains,
deductions, losses and other items required of the Partnership for federal and
state income tax purposes and shall use all reasonable efforts to furnish,
within 90 days of the close of each taxable year of the Partnership, the tax
information reasonably required by the Partners for federal and state income tax
reporting purposes. 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. The taxable year of the Partnership
shall be the calendar year.
9.2 TAX ELECTIONS. Except as otherwise provided herein, the General
Partner shall, in its sole discretion, determine whether to make any available
election pursuant to the Code; provided, however, that the General Partner shall
make the election under Section 754 of the Code in accordance with applicable
regulations thereunder. The General Partner shall have the right to seek to
revoke any such election (including, without limitation, the election under
Section 754 of the Code) upon the General Partner's determination in its sole
discretion that such revocation is in the best interests of the Limited Partner.
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9.3 TAX CONTROVERSIES. Subject to the provisions hereof, the General
Partner is designated the Tax Matters Partner (as defined in Section 6231 of the
Code), and is authorized and required to represent the Partnership (at the
Partnership's expense) in connection with all examinations of the Partnership's
affairs by tax authorities, including, without limitation, resulting
administrative and judicial proceedings, and to expend Partnership funds for
professional services and costs associated therewith. The Limited 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 ORGANIZATIONAL EXPENSES. The Partnership shall elect to deduct
expenses, if any, incurred by it in organizing the Partnership ratably over a
60-month period as provided in Section 709 of the Code.
9.5 WITHHOLDING. Notwithstanding any other provision of this Agreement,
the General Partner is authorized to take any action that it determines in its
sole discretion to be necessary or appropriate to cause the Partnership and the
Other Partnerships 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 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 shall be treated as a distribution of cash pursuant to Section
5.3 in the amount of such withholding from such Partner.
9.6 OPINIONS OF COUNSEL. Notwithstanding any other provision of this
Agreement, if the Partnership is treated as an association taxable as a
corporation at any time or is otherwise taxable for federal income tax purposes
as an entity at any time and, pursuant to the provisions of this Agreement, an
Opinion of Counsel would otherwise be required to the effect that an action will
not cause the Partnership or any of the Other Partnerships to become so treated
as an association taxable as a corporation or otherwise taxable as an entity for
federal income tax purposes, such requirement for an Opinion of Counsel shall be
deemed automatically waived.
ARTICLE X
TRANSFER OF INTERESTS
10.1 TRANSFER. (a) The term "transfer," when used in this Article X
with respect to a Partnership Interest, shall be deemed to refer to a
transaction by which a Partner disposes of 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.
(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 X.
Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article X shall be null and void.
(c) Nothing contained in this Article X shall be construed to prevent a
disposition by the parent entity of the General Partner of all of the issued and
outstanding capital stock of the General Partner.
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10.2 TRANSFER OF THE GENERAL PARTNER'S PARTNERSHIP INTEREST. If the
general partner of the MLP transfers its partnership interest as a general
partner therein to any Person in accordance with the provisions of the MLP
Agreement, the General Partner shall contemporaneously therewith transfer its
Partnership Interest as the general partner of the Partnership to such Person,
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 a General Partner in the
Partnership.
10.3 TRANSFER OF THE LIMITED PARTNER'S PARTNERSHIP INTEREST. If the
Limited Partner merges, consolidates or otherwise combines into any other Person
or transfers all or substantially all of its assets to another Person, such
Person may become a Substituted Limited Partner pursuant to Article XI. Except
as set forth in the immediately preceding sentence, the Limited Partner may not
transfer all or any part of its Partnership Interest or withdraw from the
Partnership.
ARTICLE XI
ADMISSION OF PARTNERS
11.1 ADMISSION OF INITIAL LIMITED PARTNER. Upon the making by the
Initial Limited Partner of the deemed Capital Contribution described in Section
4.3 and the issuance by the Partnership to the Initial Limited Partner of the
Partnership Interest described in Section 4.3 as being issued to such party, the
General Partner shall be deemed to have admitted Operating OLP to the
Partnership as the Initial Limited Partner in respect of such Partnership
Interest.
11.2 ADMISSION OF SUBSTITUTED LIMITED PARTNERS. Any person that is the
successor in interest to a Limited Partner as described in Section 10.3 shall be
admitted to the Partnership as a limited partner upon (a) furnishing to the
General Partner (i) acceptance in form satisfactory to the General Partner 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 General Partner, which
consent may be withheld or granted in the sole discretion of the General
Partner. Such Person shall be admitted to the Partnership as a limited partner
immediately prior to the transfer of the Partnership Interest, and the business
of the Partnership shall continue without dissolution.
11.3 ADMISSION OF SUCCESSOR GENERAL PARTNER. A successor General
Partner approved pursuant to Section 12.1 or 12.2 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 10.2 who is proposed to be
admitted as a successor General Partner shall, subject to compliance with the
terms of Section 12.3, 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 12.1 or 12.2 or the transfer of the General
Partner's Partnership Interest as a General Partner in the Partnership pursuant
to Section 10.2. Any such successor shall, subject to the terms hereof, carry on
the business of the Partnership without dissolution. In each case, the admission
of such successor General Partner to the Partnership shall, subject to the terms
hereof, be subject to the successor General Partner executing and delivering to
the Partnership an acceptance of all of the terms and conditions of this
Agreement and such other documents or instruments as may be required to effect
such admission.
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11.4 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP. To
effect the admission to the Partnership of any Partner, the General Partner
shall take all steps necessary and appropriate under the Delaware Act to amend
the records of the Partnership to reflect such admission and, if necessary, to
prepare as soon as practical an amendment of this Agreement and, if required by
law, to prepare and file an amendment to the Certificate of Limited Partnership
and may for this purpose, among others, exercise the power of attorney granted
pursuant to Section 1.4.
11.5 ADMISSION OF ADDITIONAL LIMITED PARTNERS. (a) A Person (other than
the General Partner or a Substituted Limited Partner) who makes a Capital
Contribution to the Partnership in accordance with this Agreement shall be
admitted to the Partnership as an Additional Limited Partner only upon
furnishing to the General Partner (i) evidence of acceptance in form
satisfactory to the General Partner of all of the terms and conditions of this
Agreement, including, without limitation, the power of attorney granted in
Section 1.4, and (ii) such other documents or instruments as may be required in
the discretion of the General Partner to effect such Person's admission as an
Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section 11.5, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's sole discretion. The admission of any Person as an Additional Limited
Partner shall become effective on the date upon which the name of such Person is
recorded as such in the books and records of the Partnership, following the
consent of the General Partner to such admission.
ARTICLE XII
WITHDRAWAL OR REMOVAL OF PARTNERS
12.1 WITHDRAWAL OF THE GENERAL PARTNER. (a) The General Partner shall
be deemed to have withdrawn from the Partnership upon the occurrence of any one
of the following events (each such event herein referred to as an "EVENT OF
WITHDRAWAL");
(i) the General Partner voluntarily withdraws from the
Partnership by giving written notice to the Limited Partner;
(ii) the General Partner transfers all of its rights as
General Partner pursuant to Section 10.2;
(iii) the General Partner is removed pursuant to Section 12.2;
(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; (C)
files a petition or answer seeking for itself a reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief 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
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described in clauses (A)-(C) of this Section 12.1(a)(v); or (E) seeks,
consents to or acquiesces in the appointment of a trustee, receiver or
liquidator of the General Partner or of all or any substantial part of
its properties;
(vi) a final and non-appealable judgment is entered by a court
with appropriate jurisdiction ruling that the General Partner is
bankrupt or insolvent, or a final and non-appealable order for relief
is entered by a court with appropriate jurisdiction against the General
Partner, in each case under any federal or state bankruptcy or
insolvency laws as now or hereafter in effect; or
(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.
If an Event of Withdrawal specified in Section 12.1(a)(v), (vi) or (vii) occurs,
the withdrawing General Partner shall give notice to the Limited Partner within
30 days after such occurrence. The Partners hereby agree that only the Events of
Withdrawal described in this Section 12.1 shall result in the withdrawal of the
General Partner from the Partnership.
(b) Withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal shall not constitute a breach of this
Agreement under the following circumstances:
(i) at any time during the period beginning on the Closing
Date and ending at 12:00 Midnight, Central Standard Time, on March 31,
2004 the General Partner voluntarily withdraws by giving at least 90
days' advance notice of its intention to withdraw to the Limited
Partner, provided, that prior to the effective date of such withdrawal
the Limited Partner approves 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 the Limited Partner or cause 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 on or after 12:00 Midnight, Central Standard
Time, on March 31, 2004, the General Partner voluntarily withdraws by
giving at least 90 days' advance notice to the Limited Partner, 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 12.1(a)(ii), (iii) or (iv). If the
General Partner gives a notice of withdrawal pursuant to Section
12.1(a)(i), the Limited Partner may, prior to the effective date of
such withdrawal or removal, elect a successor General Partner,
provided, that such successor shall be the same Person, if any, that is
elected by the limited partners of the MLP pursuant to Section 13.1 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 Partner as provided herein or the Partnership does not receive
a Withdrawal Opinion of Counsel, the Partnership shall be dissolved in
accordance with
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Section 13.1. Any successor General Partner elected in accordance with
the terms of this Section 12.1 shall be subject to the provisions of
Section 11.3.
12.2 REMOVAL OF A GENERAL PARTNER. A General Partner shall be removed
if such General Partner is removed as a general partner of the MLP pursuant to
Section 13.2 of the MLP Agreement. Such removal shall be effective concurrently
with the effectiveness of the removal of such General Partner as a 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 XI, automatically become a successor General
Partner of the Partnership. The admission of any such successor General Partner
to the Partnership shall be subject to the provisions of Section 11.3.
12.3 INTEREST OF DEPARTING PARTNER AND SUCCESSOR GENERAL PARTNER. The
Partnership Interest of a Departing Partner departing as a result of withdrawal
or removal pursuant to Section 12.1 or 12.2 shall (unless it is otherwise
required to be converted into Common Units pursuant to Section 13.3(b) of the
MLP Agreement) be purchased by the successor to the Departing Partner for cash
in the manner specified in the MLP Agreement. Such purchase (or conversion into
Common Units, as applicable) shall be a condition to the admission to the
Partnership of the successor as a General Partner.
12.4 REIMBURSEMENT OF DEPARTING PARTNER. The Departing Partner shall be
entitled to receive all reimbursements due such Departing Partner pursuant to
Section 6.4, including, without limitation, any employee-related liabilities
(including, without limitation, severance liabilities), incurred in connection
with the termination of any employees employed by such departing Partner for the
benefit of the Partnership.
12.5 WITHDRAWAL OF THE LIMITED PARTNER. Without the prior consent of
the General Partner, which may be granted or withheld in its sole discretion,
the Limited Partner shall not have the right to withdraw from the Partnership.
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
13.1 DISSOLUTION. The Partnership shall not be dissolved by the
admission of the Initial Limited Partner, 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 any successor General Partner shall continue the business
of the Partnership. The Partnership shall dissolve and, subject to Section 13.2,
its affairs should be wound up, upon:
(a) the expiration of its term as provided in Section 1.5;
(b) an Event of Withdrawal of the General Partner as provided
in Section 12.1(a) (other than Section 12.1(a)(ii)), unless a successor
is elected and an Opinion of Counsel is
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received as provided in Section 12.1(b) or 12.2 and such successor is
admitted to the Partnership pursuant to Section 11.3;
(c) an election to dissolve the Partnership by the General
Partner that is approved by the Limited Partner;
(d) 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; or
(f) the dissolution of Operating OLP.
13.2 CONTINUATION OF THE BUSINESS OF THE PARTNERSHIP AFTER DISSOLUTION.
Upon (a) dissolution of the Partnership following an Event of Withdrawal caused
by the withdrawal or removal of the General Partner as provided in Section
12.1(a)(i) or (iii) and following a failure of the Limited Partner to appoint a
successor General Partner as provided in Section 12.1 or 12.2, then within 90
days thereafter or (b) dissolution of the Partnership upon an event constituting
an Event of Withdrawal as defined in Section 12.1(a)(v), (vi) or (vii), then
within 180 days thereafter, the Limited Partner may elect to reconstitute the
Partnership and continue its business on the same terms and conditions set forth
in this Agreement by forming a new limited partnership on terms identical to
those set forth in this Agreement and having as a general partner a Person
approved by the Limited Partner. In addition, upon dissolution of the
Partnership pursuant to Section 13.1(f), if Operating OLP is reconstituted
pursuant to Section 13.2 of the Operating OLP Agreement, the reconstituted
Operating OLP may, within 180 days after such event of dissolution, as the
Limited Partner, elect to reconstitute the Partnership in accordance with the
immediately preceding sentence. Upon any such election by the Limited Partner,
all Partners shall be bound thereby and shall be deemed to have approved same.
Unless such an election is made within the applicable time period as set forth
above, the Partnership shall conduct only activities necessary to wind up its
affairs. If such an election is so made, then:
(i) the reconstituted Partnership shall continue until the end
of the term set forth in Section 1.5 unless earlier dissolved in
accordance with this Article XIII;
(ii) if the successor General Partner is not the former
General Partner, then the interest of the former General Partner shall
be purchased by the successor General Partner or converted into Common
Units of the MLP as provided in the MLP Agreement; and
(iii) all necessary steps shall be taken to cancel this
Agreement and the Certificate of Limited Partnership and to enter into
and, as necessary, to file a new partnership agreement and certificate
of limited partnership, and the successor General Partner may for this
purpose exercise the powers of attorney granted the General Partner
pursuant to Section 1.4; provided, that the right to approve a
successor General Partner and to reconstitute and to continue the
business of the Partnership shall not exist and may not be exercised
unless the Partnership has received an Opinion of Counsel that (x) the
exercise of the right would not result in the loss of limited liability
of the Limited Partner and (y) neither the Partnership nor the
reconstituted
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limited partnership would be treated as an association taxable as a
corporation or otherwise be taxable as an entity for federal income tax
purposes upon the exercise of such right to continue.
13.3 LIQUIDATION. Upon dissolution of the Partnership, unless the
Partnership is continued under an election to reconstitute and continue the
Partnership pursuant to Section 13.2, the General Partner, or in the event the
General Partner has been dissolved or removed, become bankrupt as set forth in
Section 12.1 or withdrawn from the Partnership, a liquidator or liquidating
committee approved by the Limited Partner, shall be the Liquidator. The
Liquidator (if other than the General Partner) shall be entitled to receive such
compensation for its services as may be approved by the Limited Partner. The
Liquidator shall agree not to resign at any time without 15 days' prior notice
and (if other than the General Partner) may be removed at any time, with or
without cause, by notice of removal approved by the Limited Partner. 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 Partner. 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 XIII, the Liquidator approved in
the manner provided herein shall have and may exercise, without further
authorization or consent of any of the parties hereto, all of the powers
conferred upon the General Partner under the terms of this Agreement (but
subject to all of the applicable limitations, contractual and otherwise, upon
the exercise of such powers, other than the limitation on sale set forth in
Section 6.3(b)) to the extent necessary or desirable in the good faith judgment
of the Liquidator to carry out the duties and functions of the Liquidator
hereunder for and during such period of time as shall be reasonably required in
the good faith judgment of the Liquidator to complete the winding-up and
liquidation of the Partnership as provided for herein. The Liquidator shall
liquidate the assets of the Partnership, and apply and distribute the proceeds
of such liquidation in the following order of priority, unless otherwise
required by mandatory provisions of applicable law:
(a) the payment to creditors of the Partnership, including,
without limitation, Partners who are creditors, in the order of
priority provided by law; and the creation of a reserve of cash or
other assets of the Partnership for contingent liabilities in an
amount, if any, determined by the Liquidator to be appropriate for such
purposes; and
(b) to all Partners in accordance with 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 this clause) for the taxable year of the Partnership during
which the liquidation of the Partnership occurs (with the date of such
occurrence being determined pursuant to Treasury Regulation Section
1.704-1(b)(2)(ii)(g)); and such distribution shall be made by the end
of such taxable year (or, if later, within 90 days after said date of
such occurrence).
13.4 DISTRIBUTIONS IN KIND. (a) Notwithstanding the provisions of
Section 13.3, which require the liquidation of the assets of the Partnership,
but subject to the order of priorities set forth therein, if prior to or upon
dissolution of the Partnership the Liquidator determines that an immediate sale
of part or all of the Partnership's assets would be impractical or would cause
undue loss to the Partners, the Liquidator may, in its absolute discretion,
defer for a reasonable time the liquidation of any assets except those necessary
to satisfy liabilities of the Partnership (including, without limitation,
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those to Partners as creditors) and/or distribute to the Partners or to specific
classes of Partners, in lieu of cash, as tenants in common and in accordance
with the provisions of Section 13.3, undivided interests in such Partnership
assets as the Liquidator deems not suitable for liquidation. Any such
distributions in kind shall be made only if, in the good faith judgment of the
Liquidator, such distributions in kind are in the best interest of the Limited
Partner, and shall be subject to such conditions relating to the disposition and
management of such properties as the Liquidator deems reasonable and equitable
and to any agreements governing the operation of such properties at such time.
The Liquidator shall determine the fair market value of any property distributed
in kind using such reasonable method of valuation as it may adopt.
(b) In accordance with Section 704(c)(1)(B) of the Code, in the case of
any deemed distribution occurring as a result of a termination of the
Partnership pursuant to Section 708(b)(1)(B) of the Code, to the maximum extent
possible consistent with the priorities of Section 13.3, the General Partner
shall have sole discretion to treat the deemed distribution of Partnership
assets to Partners as occurring in a manner that will not cause a shift of the
Book-Tax Disparity attributable to a Partnership asset existing immediately
prior to the deemed distribution to another asset upon the deemed contribution
of assets to the reconstituted Partnership, including, without limitation,
deeming the distribution of any Partnership assets to be made either to the
Partner who contributed such assets or to the transferee of such Partner.
13.5 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP. Upon the
completion of the distribution of Partnership cash and property as provided in
Sections 13.3 and 13.4 in connection with the liquidation of the Partnership,
the Partnership shall be terminated and the Certificate of Limited Partnership
and all qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware shall be cancelled and such other
actions as may be necessary to terminate the Partnership shall be taken.
13.6 REASONABLE TIME FOR WINDING UP. A reasonable time shall be allowed
for the orderly winding up of business and affairs of the Partnership and the
liquidation of its assets pursuant to Section 13.3 in order to minimize any
losses otherwise attendant upon such winding up, and the provisions of this
Agreement shall remain in effect between the Partners during the period of
liquidation.
13.7 RETURN OF CAPITAL. The General Partner shall not be personally
liable for, and shall have no obligation to contribute or loan any monies or
property to the Partnership to enable it to effectuate, the return of the
Capital Contributions of the Limited Partner, or any portion thereof, it being
expressly understood that any such return shall be made solely from Partnership
assets.
13.8 NO CAPITAL ACCOUNT RESTORATION. No Partner shall have any
obligation to restore any negative balance in its Capital Account upon
liquidation of the Partnership.
13.9 WAIVER OF PARTITION. Each Partner hereby waives any right to
partition of the Partnership property.
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ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT
14.1 AMENDMENT TO BE ADOPTED SOLELY BY GENERAL PARTNER. The Limited
Partner agrees that the General Partner (pursuant to its powers of attorney from
the Limited Partner), without the approval of the Limited Partner, may amend any
provision of this Agreement, and execute, swear to, acknowledge, deliver, file
and record whatever documents may be required in connection therewith, to
reflect:
(a) a change in the name of the Partnership, the location of
the principal place of business of the Partnership, the registered
agent of the Partnership or the registered office of the Partnership;
(b) admission, substitution, withdrawal or removal of Partners
in accordance with this Agreement;
(c) a change that, in the sole discretion of the General
Partner, is reasonable and necessary or appropriate 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 that is necessary or advisable in the
opinion of the General Partner to ensure that the Partnership will not
be treated as an association taxable as a corporation or otherwise
taxed as an entity for federal income tax purposes;
(d) a change (i) that, in the sole discretion of the General
Partner, does not adversely affect the Limited Partner in any material
respect, (ii) that is necessary or desirable 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, without limitation, the Delaware Act), compliance with any
of which the General Partner determines in its sole discretion to be in
the best interests of the Partnership and the Limited Partner or (iii)
that is required to effect the intent of the provisions of this
Agreement or is otherwise contemplated by this Agreement;
(e) an amendment that is necessary, in the Opinion of Counsel,
to prevent the Partnership or the General Partner or its directors or
officers from in any manner being subjected to the provisions of the
Investment Company Act of 1940, as amended, the Investment Advisers Act
of 1940, as amended, or "plan asset" regulations adopted under the
Employee Retirement Income Security Act of 1974, as amended, whether or
not substantially similar to plan asset regulations currently applied
or proposed by the United States Department of Labor;
(f) any amendment expressly permitted in this Agreement to be
made by the General Partner acting alone;
(g) an amendment effected, necessitated or contemplated by a
Merger Agreement approved in accordance with Section 15.3;
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(h) an amendment that, in the sole discretion of the General
Partner, is necessary or desirable 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 other than the Other
Partnerships, in connection with the conduct by the Partnership of
activities permitted by the terms of Section 3.1; or
(i) any other amendments substantially similar to the
foregoing.
14.2 AMENDMENT PROCEDURES. Except with respect to amendments of the
type described in Section 14.1, all amendments to this Agreement shall be made
in accordance with the following requirements. Amendments to this Agreement may
be proposed only by or with the consent of the General Partner. Each such
proposal shall contain the text of the proposed amendment. A proposed amendment
shall be effective upon its approval by the Limited Partner.
ARTICLE XV
MERGER
15.1 AUTHORITY. The Partnership may merge or consolidate with one or
more corporations, business trusts or associations, real estate investment
trusts, common law trusts or unincorporated businesses, including, without
limitation, a general partnership or limited partnership, formed under the laws
of the State of Delaware or any other state of the United States of America,
pursuant to a written agreement of merger or consolidation ("MERGER AGREEMENT")
in accordance with this Article.
15.2 PROCEDURE FOR MERGER OR CONSOLIDATION. Merger or consolidation of
the Partnership pursuant to this Article requires the prior approval of the
General Partner. If the General Partner shall determine, in the exercise of its
sole discretion, to consent to the merger or consolidation, the General Partner
shall approve the Merger Agreement, which shall set forth:
(a) The names and jurisdictions of formation or organization
of each of the business entities proposing to merge or consolidate;
(b) The name and 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 partnership interests, rights,
securities or obligations of the Surviving Business Entity; and (i) if
any general or limited partnership 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 partnership
interests, rights, securities or obligations of the Surviving Business
Entity, the cash, property or general or limited partnership 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 partnership
interest are to receive in exchange for,
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or upon conversion of, their 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 partnership
interests, rights, securities or obligations of the Surviving Business
Entity or any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity), or evidences thereof, are
to be delivered;
(e) A statement of any changes in the constituent documents or
the adoption of new constituent documents (the articles or certificate
of incorporation, articles of trust, declaration of trust, certificate
or agreement of limited partnership or other similar charter or
governing document) of the Surviving Business Entity to be effected by
such merger or consolidation;
(f) The effective time of the merger, which may be the date of
the filing of the certificate of merger pursuant to Section 15.4 or a
later date specified in or determinable in accordance with the Merger
Agreement (provided, that if the effective time of the merger is to be
later than the date of the filing of the certificate of merger, the
effective time shall be fixed no later than the time of the filing of
the certificate of merger and stated therein); and
(g) Such other provisions with respect to the proposed merger
or consolidation as are deemed necessary or appropriate by the General
Partner.
15.3 APPROVAL BY LIMITED PARTNER OF MERGER OR CONSOLIDATION. (a) The
General Partner of the Partnership, upon its approval of the Merger Agreement,
shall direct that a copy or a summary of the Merger Agreement be submitted to
the Limited Partner for its approval.
(b) The Merger Agreement shall be approved upon receiving the consent
of the Limited Partner. After such approval by the Limited Partner, and at any
time prior to the filing of the certificate of merger pursuant to Section 15.4,
the merger or consolidation may be abandoned pursuant to provisions therefor, if
any, set forth in the Merger Agreement.
15.4 CERTIFICATE OF MERGER. Upon the required approval by the General
Partner and the Limited Partner 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.
15.5 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;
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(iii) all rights of creditors and all liens on or security
interest in property of any of those constituent business entities
shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent
business entities shall attach to the Surviving Business Entity, and
may be enforced against it to the same extent as if the debts,
liabilities and duties had been incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this Article shall
not be deemed to result in a transfer or assignment of assets or liabilities
from one entity to another having occurred.
ARTICLE XVI
GENERAL PROVISIONS
16.1 ADDRESSES AND NOTICES. Any notice, demand, request or report
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 1.3.
16.2 REFERENCES. Except as specifically provided otherwise, references
to "Articles" and "Sections" are to Articles and Sections of this Agreement.
16.3 PRONOUNS AND PLURALS. Whenever the context may require, 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.
16.4 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.
16.5 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.
16.6 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.
16.7 CREDITORS. None of the provisions of this Agreement shall be for
the benefit of, or shall be enforceable by, any creditor of the Partnership.
16.8 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 or any other covenant, duty, agreement or
condition.
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16.9 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.
16.10 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.
16.11 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
EOTT ENERGY CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President and General Counsel
ORGANIZATIONAL LIMITED PARTNER
ORGANIZATIONAL PARTNER, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
INITIAL LIMITED PARTNER:
EOTT ENERGY OPERATING LIMITED
PARTNERSHIP
BY: EOTT ENERGY CORP.,
GENERAL PARTNER
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President and General Counsel
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