EXHIBIT 3.4
================================================================================
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
HEP OPERATING COMPANY, L.P.
================================================================================
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.................................................................................... 1
Section 1.2. Construction................................................................................... 9
ARTICLE II
ORGANIZATION
Section 2.1. Formation...................................................................................... 9
Section 2.2. Name........................................................................................... 10
Section 2.3. Registered Office; Registered Agent; Principal Office; Other Offices........................... 10
Section 2.4. Purpose and Business........................................................................... 10
Section 2.5. Powers......................................................................................... 11
Section 2.6. Power of Attorney.............................................................................. 11
Section 2.7. Term........................................................................................... 12
Section 2.8. Title to Partnership Assets.................................................................... 12
ARTICLE III
RIGHTS OF LIMITED PARTNERS
Section 3.1. Limitation of Liability........................................................................ 13
Section 3.2. Management of Business......................................................................... 13
Section 3.3. Outside Activities of the Limited Partners..................................................... 13
Section 3.4. Access to Information.......................................................................... 14
ARTICLE IV
TRANSFERS OF PARTNERSHIP INTERESTS
Section 4.1. Transfer Generally............................................................................. 15
Section 4.2. Transfer of General Partner's General Partner Interest......................................... 15
Section 4.3. Transfer of a Limited Partner's Partnership Interest........................................... 16
Section 4.4. Restrictions on Transfers...................................................................... 16
ARTICLE V
CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
Section 5.1. Initial Contributions.......................................................................... 16
Section 5.2. Contributions Pursuant to the Contribution Agreement........................................... 17
Section 5.3. Additional Capital Contributions............................................................... 17
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
i
Section 5.4. Interest and Withdrawal........................................................................ 17
Section 5.5. Capital Accounts............................................................................... 18
Section 5.6. Loans from Partners............................................................................ 18
Section 5.7. Issuances of Additional Partnership Securities................................................. 18
Section 5.8. Limited Preemptive Rights...................................................................... 19
Section 5.9. Fully Paid and Non-Assessable Nature of Limited Partner Interests.............................. 20
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
Section 6.1. Allocations.................................................................................... 20
Section 6.2. Distributions.................................................................................. 20
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
Section 7.1. Management..................................................................................... 20
Section 7.2. Certificate of Limited Partnership............................................................. 22
Section 7.3. Restrictions on the General Partner's Authority................................................ 23
Section 7.4. Reimbursement of the General Partner........................................................... 23
Section 7.5. Outside Activities............................................................................. 24
Section 7.6. Loans from the General Partner; Loans or Contributions from the Partnership or Group Members... 25
Section 7.7. Indemnification................................................................................ 26
Section 7.8. Liability of Indemnitees....................................................................... 28
Section 7.9. Resolution of Conflicts of Interest; Standards of Conduct and Modification of Duties........... 29
Section 7.10. Other Matters Concerning the General Partner................................................... 30
Section 7.11. Reliance by Third Parties...................................................................... 31
ARTICLE VIII
BOOKS, RECORDS AND ACCOUNTING
Section 8.1. Records and Accounting......................................................................... 31
Section 8.2. Fiscal Year.................................................................................... 32
ARTICLE IX
TAX MATTERS
Section 9.1. Tax Returns and Information.................................................................... 32
Section 9.2. Tax Elections.................................................................................. 32
Section 9.3. Tax Controversies.............................................................................. 32
Section 9.4. Withholding.................................................................................... 33
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
ii
ARTICLE X
ADMISSION OF PARTNERS
Section 10.1. Admission of Partners.......................................................................... 33
Section 10.2. Admission of Substituted Limited Partners...................................................... 33
Section 10.3. Admission of Additional Limited Partners....................................................... 34
Section 10.4. Admission of Successor or Transferee General Partner........................................... 34
Section 10.5. Amendment of Agreement and Certificate of Limited Partnership.................................. 34
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
Section 11.1. Withdrawal of the General Partner.............................................................. 35
Section 11.2. Removal of the General Partner................................................................. 36
Section 11.3. Interest of Departing Partner.................................................................. 36
Section 11.4. Withdrawal of a Limited Partner................................................................ 37
ARTICLE XII
DISSOLUTION AND LIQUIDATION
Section 12.1. Dissolution.................................................................................... 37
Section 12.2. Continuation of the Business of the Partnership After Dissolution.............................. 38
Section 12.3. Liquidator..................................................................................... 39
Section 12.4. Liquidation.................................................................................... 39
Section 12.5. Cancellation of Certificate of Limited Partnership............................................. 40
Section 12.6. Return of Contributions........................................................................ 40
Section 12.7. Waiver of Partition............................................................................ 40
Section 12.8. Capital Account Restoration.................................................................... 41
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT
Section 13.1. Amendment to be Adopted Solely by the General Partner.......................................... 41
Section 13.2. Amendment Procedures........................................................................... 42
ARTICLE XIV
MERGER
Section 14.1. Authority...................................................................................... 43
Section 14.2. Procedure for Merger or Consolidation.......................................................... 43
Section 14.3. Approval by Limited Partners of Merger or Consolidation........................................ 44
Section 14.4. Certificate of Merger.......................................................................... 45
Section 14.5. Effect of Merger............................................................................... 45
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
iii
ARTICLE XV
GENERAL PROVISIONS
Section 15.1. Addresses and Notices.......................................................................... 45
Section 15.2. Further Action................................................................................. 46
Section 15.3. Binding Effect................................................................................. 46
Section 15.4. Integration.................................................................................... 46
Section 15.5. Creditors...................................................................................... 46
Section 15.6. Waiver......................................................................................... 46
Section 15.7. Counterparts................................................................................... 46
Section 15.8. Applicable Law................................................................................. 46
Section 15.9. Invalidity of Provisions....................................................................... 47
Section 15.10. Consent of Partners............................................................................ 47
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
iv
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
HEP OPERATING COMPANY, L.P.
THIS FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of HEP
Operating Company, L.P., dated as of [________,] 2004, is entered into by and
between HEP Logistics GP, L.L.C., a Delaware limited liability company, as the
General Partner, and ▇▇▇▇▇ Energy Partners, L.P., a Delaware limited
partnership, as the Limited Partner, together with any other Persons who
hereafter become Partners in the Partnership or parties hereto as provided
herein.
RECITALS:
WHEREAS, HEP Logistics GP, L.L.C. and ▇▇▇▇▇ Energy Partners, L.P. formed
the Partnership pursuant to the Agreement of Limited Partnership of HEP
Operating Company, L.P. dated as of April 16, 2004 (the "Prior Agreement") and a
Certificate of Limited Partnership dated April 16, 2004, which was filed with
the Secretary of State of the State of Delaware on April 19, 2004; and
WHEREAS, the Partners of the Partnership now desire to amend the Prior
Agreement to reflect additional capital contributions by the Partners and
certain other matters.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements contained herein, the parties hereto hereby amend the Prior Agreement
and, as so amended, restate it in its entirety as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.
"Additional Limited Partner" means a Person admitted to the Partnership as
a Limited Partner pursuant to Section 10.3 and who is shown as such on the books
and records of the Partnership.
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question. For
purposes of this definition, the term "control" means the possession, directly
or indirectly through one or more intermediaries, of the power to direct or
cause the
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
▇
▇▇▇▇▇▇▇▇▇ of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
"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. The General Partner shall use such method as it
determines to be appropriate to allocate the aggregate Agreed Value of
Contributed Properties contributed to the Partnership in a single or integrated
transaction among each separate property on a basis proportional to the fair
market value of each Contributed Property.
"Agreement" means this First Amended and Restated Agreement of Limited
Partnership of HEP Operating Company, L.P., as it may be amended, supplemented
or restated from time to time.
"Assets" means all assets conveyed, contributed or otherwise transferred
to the Partnership Group prior to or on the Closing Date pursuant to the
Contribution Agreement and any assets acquired by the Partnership Group pursuant
to the exercise of the purchase options granted pursuant to the Omnibus
Agreement.
"Assignee" means a Person to whom one or more Limited Partner Interests
have been transferred in a manner permitted under this Agreement, but who has
not been admitted as a Substituted Limited Partner.
"Associate" means, when used to indicate a relationship with any Person,
(a) any corporation or organization of which such Person is a director, officer
or partner or is, directly or indirectly through one or more intermediaries, the
owner of 20% or more of any class of voting stock or other voting interest; (b)
any trust or other estate in which such Person has at least a 20% beneficial
interest or as to which such Person serves as trustee or in a similar fiduciary
capacity; and (c) any relative or spouse of such Person, or any relative of such
spouse, who has the same principal residence as such Person.
"Available Cash" means, with respect to any Quarter ending prior to the
Liquidation Date:
(a) the sum of (i) all cash and cash equivalents of the
Partnership on hand at the end of such Quarter, and (ii) all additional
cash and cash equivalents of the Partnership on hand on the date of
determination of Available Cash with respect to such Quarter resulting
from Working Capital Borrowings made subsequent to the end of such
Quarter, less
(b) the amount of any cash reserves established by the General
Partner to (i) provide for the proper conduct of the business of the
Partnership (including reserves for future capital expenditures and for
anticipated future credit needs of the Partnership) subsequent to such
Quarter, (ii) comply with applicable law or any loan agreement,
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
2
security agreement, mortgage, debt instrument or other agreement or
obligation to which any Group Member is a party or by which it is bound or
its assets are subject or (iii) provide funds for distributions under
Section 6.4 or 6.5 of the MLP Agreement in respect of any one or more of
the next four Quarters; provided, however, that the General Partner may
not establish cash reserves pursuant to (iii) above if the effect of such
reserves would be that the MLP is unable to distribute the Minimum
Quarterly Distribution on all Common Units, plus any Cumulative Common
Unit Arrearage (as defined in the MLP Agreement) on all Common Units, with
respect to such Quarter; and, provided further, that disbursements made by
a Group Member or cash reserves established, increased or reduced after
the end of such Quarter but on or before the date of determination of
Available Cash with respect to such Quarter shall be deemed to have been
made, established, increased or reduced, for purposes of determining
Available Cash, within such Quarter if the General Partner so determines.
Notwithstanding the foregoing, "Available Cash" with respect to the
Quarter in which the Liquidation Date occurs and any subsequent Quarter shall
equal zero.
"Board of Directors" means, with respect to the Board of Directors of the
General Partner, for so long as the General Partner is a wholly owned subsidiary
of the MLP, the board of directors of GP LLC (and its successors and permitted
assigns), acting for and on behalf of the MLP General Partner, and on behalf of
the MLP General Partner in its capacity as general partner of the MLP, and on
behalf of the MLP, in its capacity as sole member of the General Partner, and on
behalf of the General Partner in its capacity as general partner of the
Partnership.
"Book-Tax Disparity" means with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Section 5.5 and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
"Capital Account" means the capital account maintained for a Partner
pursuant to Section 5.5. The "Capital Account" of a Partner in respect of a
General Partner Interest or any other Partnership Interest shall be the amount
that such Capital Account would be if such General Partner Interest or other
specified interest in the Partnership were the only interest in the Partnership
held by such Partner from and after the date on which such General Partner
Interest or other interest in the Partnership was first issued.
"Capital Contribution" means any cash, cash equivalents or the Net Agreed
Value of Contributed Property that a Partner contributes to the Partnership.
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
3
"Carrying Value" means (a) with respect to a Contributed Property, the
Agreed Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions charged to the Partners' and
Assignees' Capital Accounts in respect of such Contributed Property; and (b)
with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
The Carrying Value of any property shall be adjusted from time to time to
reflect changes, additions or other adjustments to the Carrying Value for
dispositions and acquisitions of Partnership properties, as deemed appropriate
by the General Partner.
"Certificate of Limited Partnership" means the Certificate of Limited
Partnership of the Partnership filed with the Secretary of State of the State of
Delaware as referenced in Section 7.2, as such Certificate of Limited
Partnership may be amended, supplemented or restated from time to time.
"Closing Date" means the first date on which Common Units are sold by the
MLP to the Underwriters pursuant to the provisions of the Underwriting
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time. Any reference herein to a specific section or sections of the
Code shall be deemed to include a reference to any corresponding provision of
any successor law.
"Commission" means the United States Securities and Exchange Commission.
"Common Unit" has the meaning assigned to such term in the MLP Agreement.
"Conflicts Committee" has the meaning assigned to such term in the MLP
Agreement.
"Contributed Property" means each property or other asset, in such form as
may be permitted by the Delaware LP Act, but excluding cash, contributed to the
Partnership.
"Contribution Agreement" means that certain Contribution, Conveyance and
Assumption Agreement, dated as of the Closing Date, among ▇▇▇▇▇ Corporation, the
Partnership, the General Partner, the MLP General Partner, the MLP, GP LLC, and
certain other parties, together with the additional conveyance documents and
instruments contemplated or referenced thereunder.
"Delaware LP Act" means the Delaware Revised Uniform Limited Partnership
Act, 6 Del. C. Section 17-101, et seq., as amended, supplemented or restated
from time to time, and any successor to such statute.
"Departing Partner" means a former General Partner from and after the
effective date of any withdrawal or removal of such former General Partner
pursuant to Section 11.1 or Section 11.2.
"Event of Withdrawal" has the meaning assigned to such term in Section
11.1(a).
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
4
"General Partner" means HEP Logistics GP, L.L.C. and its successors and
permitted assigns as general partner of the Partnership.
"General Partner Interest" means the ownership interest of the General
Partner in the Partnership (in its capacity as a general partner without
reference to any Limited Partner Interest held by it) and includes any and all
benefits to which the General Partner is entitled as provided in this Agreement,
together with all obligations of the General Partner to comply with the terms
and provisions of this Agreement.
"GP LLC" means ▇▇▇▇▇ Logistic Services, L.L.C., a Delaware limited
liability company and the general partner of the MLP General Partner.
"Group Member" means a member of the Partnership Group.
"Group Member Agreement" has the meaning assigned to such term in the MLP
Agreement.
"Indemnitee" means (a) the General Partner; (b) any Departing Partner; (c)
any Person who is or was an Affiliate of the General Partner or any Departing
Partner; (d) any Person who is or was a member, partner, director, officer,
employee, agent or trustee of any Group Member, the General Partner or any
Departing Partner or any Affiliate of any Group Member, the General Partner or
any Departing Partner; and (e) any Person who is or was serving at the request
of the General Partner or any Departing Partner or any Affiliate of the General
Partner or any Departing Partner as an director, officer, employee, member,
partner, agent, fiduciary or trustee of another Person; provided, however, that
a Person shall not be an Indemnitee by reason of providing, on a
fee-for-services basis, trustee, fiduciary or custodial services.
"Limited Partner" means any Person that is admitted to the Partnership as
a limited partner pursuant to the terms and conditions of this Agreement; but
the term "Limited Partner" shall not include any Person from and after the time
such Person withdraws as a Limited Partner from the Partnership.
"Limited Partner Interest" means the ownership interest of a Limited
Partner or Assignee in the Partnership and includes any and all benefits to
which such Limited Partner or Assignee is entitled as provided in this
Agreement, together with all obligations of such Limited Partner or Assignee to
comply with the terms and provisions of this Agreement.
"Liquidation Date" means (a) in the case of an event giving rise to the
dissolution of the Partnership of the type described in clauses (a) and (b) of
the first sentence of Section 12.2, the date on which the applicable time period
during which the Partners have the right to elect to reconstitute the
Partnership and continue its business has expired without such an election being
made; and (b) in the case of any other event giving rise to the dissolution of
the Partnership, the date on which such event occurs.
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
5
"Liquidator" means one or more Persons selected by the General Partner to
perform the functions described in Section 12.3 as liquidating trustee of the
Partnership within the meaning of the Delaware LP Act.
"Merger Agreement" has the meaning assigned to such term in Section 14.1.
"Minimum Quarterly Distribution" has the meaning assigned to such term in
the MLP Agreement.
"MLP" means ▇▇▇▇▇ Energy Partners, L.P.
"MLP Agreement" means the First Amended and Restated Agreement of Limited
Partnership of ▇▇▇▇▇ Energy Partners, L.P., as it may be amended, supplemented
or restated from time to time.
"MLP General Partner" means HEP Logistics Holdings, L.P., a Delaware
limited partnership and the general partner of the MLP.
"MLP Security" has the meaning assigned to the term "Partnership Security"
in the MLP Agreement.
"Net Agreed Value" means, (a) in the case of any Contributed Property, the
Agreed Value of such property reduced by any liabilities either assumed by the
Partnership upon such contribution or to which such property is subject when
contributed; and (b) in the case of any property distributed to a Partner or
Assignee by the Partnership, the Partnership's Carrying Value of such property
at the time such property is distributed, reduced by any indebtedness either
assumed by such Partner or Assignee upon such distribution or to which such
property is subject at the time of distribution, in either case, as determined
under Section 752 of the Code.
"OLP Subsidiary" means a Subsidiary of the Partnership.
"Omnibus Agreement" means that Omnibus Agreement, dated as of the Closing
Date, among the Partnership, the General Partner, ▇▇▇▇▇ Corporation, Navajo
Pipeline Co., L.P., GP LLC, the MLP General Partner and the MLP.
"Opinion of Counsel" means a written opinion of counsel (who may be
regular counsel to the Partnership or the General Partner or any of its
Affiliates) acceptable to the General Partner.
"Partners" means the General Partner and the Limited Partners.
"Partnership" means HEP Operating Company, L.P., a Delaware limited
partnership, and any successors thereto.
"Partnership Group" means the Partnership and all OLP Subsidiaries,
treated as a single consolidated entity.
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
6
"Partnership Interest" means an ownership interest of a Partner in the
Partnership, which shall include the General Partner Interest and the Limited
Partner Interests.
"Partnership Security" means any class or series of equity interest in the
Partnership (but excluding any options, rights, warrants and appreciation rights
relating to an equity interest in the Partnership).
"Percentage Interest" means the percentage interest in the Partnership
owned by each Partner upon completion of the transactions in Section 5.2 and
shall mean, (a) as to the General Partner, 0.001% and (b) as to the MLP,
99.999%.
"Person" means an individual, firm, partnership, corporation, limited
liability company, association, joint stock company, unincorporated
organization, joint venture, trust, governmental agency or any department or
political subdivision thereof or other entity.
"Pipelines and Terminals Agreement" means that certain Pipelines and
Terminals Agreement, dated as of the Closing Date, among the Partnership, the
General Partner, ▇▇▇▇▇ Corporation, Navajo Refining Company, L.P., ▇▇▇▇▇
Refining and Marketing Company, GP LLC, the MLP General Partner, and the MLP.
"Prior Agreement" is defined in the Recitals.
"Quarter" means, unless the context requires otherwise, a fiscal quarter
(or, with respect to the fiscal quarter during which the Closing Date occurs,
the portion of such fiscal quarter remaining after the Closing Date) of the
Partnership.
"Registration Statement" means the Registration Statement on Form S-1
(Registration No. 333-113588) as it has been or as it may be amended or
supplemented from time to time, filed by the MLP with the Commission under the
Securities Act to register the offering and sale of the Common Units in the
Initial Offering.
"Restricted Businesses" has the meaning assigned to such term in the
Omnibus Agreement.
"Securities Act" means the Securities Act of 1933, as amended, and any
successor to such statute.
"Special Approval" has the meaning assigned to such term in the MLP
Agreement.
"Subordinated Unit" has the meaning assigned to such term in the MLP
Agreement.
"Subordination Period" has the meaning assigned to such term in the MLP
Agreement.
"Subsidiary" means, with respect to any Person, (a) a corporation of which
more than 50% of the voting power of shares entitled (without regard to the
occurrence of any contingency)
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
7
to vote in the election of directors or other governing body of such corporation
is owned, directly or indirectly through one or more intermediaries, at the date
of determination by such person, by one or more Subsidiaries of such Person or a
combination thereof; (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the
partnership interests of such partnership (considering all of the partnership
interests of the partnership as a single class) is owned, directly or
indirectly, at the date of determination, by such Person by one or more
Subsidiaries of such Person or a combination thereof; or (c) any other Person
(other than a corporation or a partnership) in which such Person, one or more
Subsidiaries of such Person, or a combination thereof, directly or indirectly
through one or more intermediaries, at the date of determination, has (i) at
least a majority ownership interest or (ii) the power to elect or direct the
election of a majority of the directors or other governing body of such Person.
"Substituted Limited Partner" means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 10.2 in place of and with all the
rights of a Limited Partner and who is shown as a Limited Partner on the books
and records of the Partnership.
"Surviving Business Entity" has the meaning assigned to such term in
Section 14.2(b).
"Underwriter" means each Person named as an underwriter in Schedule I to
the Underwriting Agreement who purchases Common Units pursuant thereto.
"Underwriting Agreement" means the Underwriting Agreement, dated
[___________], 2004, among the Partnership, the General Partner, the MLP, the
MLP General Partner, GP LLC, ▇▇▇▇▇ Corporation, Navajo Pipeline Co., L.P. and
the Underwriters, providing for the purchase of Common Units by such
Underwriters.
"Unit" has the meaning assigned to such term in the MLP Agreement.
"Unitholders" has the meaning assigned to such term in the MLP Agreement.
"Unit Majority" has the meaning assigned to such term in the MLP
Agreement.
"Unrealized 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 over (b) the fair market value of such property
as of such date.
"U.S. GAAP" means United States generally accepted accounting principles
consistently applied.
"Withdrawal Opinion of Counsel" has the meaning assigned to such term in
Section 11.1(b).
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
8
"Working Capital Borrowings" means borrowings used solely for working
capital purposes or to pay distributions to Partners made pursuant to a credit
facility or other arrangement to the extent such borrowings are required to be
reduced to a relatively small amount each year (or for the year in which the
Initial Offering is consummated, the 12-month period beginning on the Closing
Date) for an economically meaningful period of time.
Section 1.2. Construction.
(a) Unless the context otherwise requires, as used in this Agreement:
(i) a term defined in Section 1.1 has the meaning ascribed to it in Section 1.1;
(ii) capitalized terms used herein but not otherwise defined shall have the
meanings assigned to such terms in the MLP Agreement; (iii) an accounting term
not otherwise defined herein has the meaning ascribed to it in accordance with
U.S. GAAP; (iv) "including" means "including, without limitation;" (v) words in
the singular include the plural and vice versa; (vi) words applicable to one
gender apply to each gender; (vii) the terms "hereof," "herein," "hereby,"
"hereto" and derivative or similar words refer to this entire Agreement; (viii)
the terms "Article" and "Section" refer to the specified Article or Section of
this Agreement; (ix) the phrases "pursuant to," "as described in" and "subject
to the terms of," when used with reference to a particular Section of this
Agreement, or words of similar import, shall refer to such Section referenced
therein; and (x) for so long as the General Partner is a wholly owned subsidiary
of the MLP, references to directors, officers and employees of the General
Partner shall mean the directors, officers and employees of GP LLC (and its
successors and permitted assigns) acting for and on behalf of the MLP General
Partner, and on behalf of the MLP General Partner in its capacity as general
partner of the MLP, and on behalf of the MLP, in its capacity as sole member of
the General Partner, and on behalf of the General Partner in its capacity as
general partner of the Partnership.
(b) A reference to any Person includes such Person's successors and
permitted assigns.
ARTICLE II
ORGANIZATION
Section 2.1. Formation.
The General Partner and the MLP previously formed the Partnership as a
limited partnership pursuant to the provisions of the Delaware LP Act, and
hereby amend and restate the Prior Agreement in its entirety. This amendment and
restatement shall become effective on the date of this Agreement. Except as
expressly provided to the contrary in this Agreement, the rights, duties
(including fiduciary duties), liabilities and obligations of the Partners and
the administration, dissolution and termination of the Partnership shall be
governed by the Delaware LP Act. All Partnership Interests shall constitute
personal property of the owner thereof for all purposes and a Partner has no
interest in specific Partnership property.
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
9
Section 2.2. Name.
The name of the Partnership shall be "HEP Operating Company, L.P." The
Partnership's business may be conducted under any other name or names as
determined by the General Partner, including the name of the General Partner.
The words "Limited Partnership," "L.P.," "Ltd." or similar words or letters
shall be included in the Partnership's name where necessary for the purpose of
complying with the laws of any jurisdiction that so requires. The General
Partner may change the name of the Partnership at any time and from time to time
and shall notify the Limited Partners of such change in the next regular
communication to the Limited Partners.
Section 2.3. Registered Office; Registered Agent; Principal Office; Other
Offices.
Unless and until changed by the General Partner, the registered office of
the Partnership in the State of Delaware shall be located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the registered agent for service of process on
the Partnership in the State of Delaware at such registered office shall be The
Corporation Trust Company. The principal office of the Partnership shall be
located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or such other
place as the General Partner may from time to time designate by notice to the
Limited Partners. The Partnership may maintain offices at such other place or
places within or outside the State of Delaware as the General Partner determines
to be necessary or appropriate. The address of the General Partner shall be ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or such other place as the
General Partner may from time to time designate by notice to the Limited
Partners.
Section 2.4. Purpose and Business.
The purpose and nature of the business to be conducted by the Partnership
shall be to (a) acquire, manage, operate and sell the Assets and any similar
assets or properties now or hereafter acquired by the Partnership; (b) engage
directly in, or enter into or form any corporation, partnership, joint venture,
limited liability company or other arrangement to engage indirectly in, any
business activity that the Partnership is permitted to engage in, or any type of
business or activity engaged in by the General Partner prior to the Closing Date
and, in connection therewith, to exercise all of the rights and powers conferred
upon the Partnership pursuant to the agreements relating to such business
activity; (c) engage directly in, or enter into or form any corporation,
partnership, joint venture, limited liability company or other arrangement to
engage indirectly in, any business activity that is approved by the General
Partner and that lawfully may be conducted by a limited partnership organized
pursuant to the Delaware LP Act and, in connection therewith, to exercise all of
the rights and powers conferred upon the Partnership pursuant to the agreements
relating to such business activity; provided, however, that the General Partner
reasonably determines, as of the date of the acquisition or commencement of such
activity, that such activity (i) generates "qualifying income" (as such term is
defined pursuant to Section 7704 of the Code) or (ii) enhances the operations of
an activity of the Partnership that generates qualifying income; and (d) do
anything necessary or appropriate to the foregoing, including the making of
capital contributions or loans to a Group Member, the MLP or any
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
10
Subsidiary of the MLP. The General Partner has no obligation or duty to the
Partnership, the Limited Partners or the Assignees to propose or approve, and
may decline to propose or approve, the conduct by the Partnership of any
business.
Section 2.5. Powers.
The Partnership shall be empowered to do, or cause to be done, any and all
acts and things necessary and appropriate for the furtherance and accomplishment
of the purposes and business described in Section 2.4 and for the protection and
benefit of the Partnership.
Section 2.6. Power of Attorney.
(a) Each Limited Partner and each Assignee hereby constitutes and
appoints the General Partner and, if a Liquidator shall have been selected
pursuant to Section 12.3, the Liquidator (and any successor to the Liquidator by
merger, transfer, assignment, election or otherwise) and each of their
authorized officers and attorneys-in-fact, as the case may be, with full power
of substitution, as its true and lawful agent and attorney-in-fact, with full
power and authority in his name, place and ▇▇▇▇▇, to:
(i) execute, swear to, acknowledge, deliver, file and record in
the appropriate public offices (A) all certificates, documents and other
instruments (including this Agreement and the Certificate of Limited
Partnership and all amendments or restatements hereof or thereof) that the
General Partner or the Liquidator determines to be 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 determines to be necessary or
appropriate to reflect, in accordance with its terms, any amendment,
change, modification or restatement of this Agreement; (C) all
certificates, documents and other instruments (including conveyances and a
certificate of cancellation) that the General Partner or the Liquidator
determines to be necessary or appropriate to reflect the dissolution and
liquidation of the Partnership pursuant to the terms of this Agreement;
(D) all certificates, documents and other instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant to,
or other events described in, Article IV, X, XI or XII; (E) all
certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of any class or
series of Partnership Interests issued pursuant hereto; and (F) all
certificates, documents and other instruments (including agreements and a
certificate of merger) relating to a merger, consolidation or conversion
of the Partnership pursuant to Article XIV; and
(ii) execute, swear to, acknowledge, deliver, file and record all
ballots, consents, approvals, waivers, certificates, documents and other
instruments that the General Partner or the Liquidator determines to be
necessary or appropriate to (A) make,
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
11
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 (B) effectuate the terms or
intent of this Agreement; provided, that when required by any provision of
this Agreement that establishes a percentage of the Limited Partners or of
the Limited Partners of any class or series required to take any action,
the General Partner and the Liquidator may exercise the power of attorney
made in this Section 2.6(a)(ii) only after the necessary vote, consent or
approval of the Limited Partners or of the Limited Partners of such class
or series, as applicable.
Nothing contained in this Section 2.6(a) shall be construed as authorizing
the General Partner to amend this Agreement except in accordance with Article
XIII or as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be irrevocable
and a power coupled with an interest, and it shall survive and, to the maximum
extent permitted by law, not be affected by the subsequent death, incompetency,
disability, incapacity, dissolution, bankruptcy or termination of any Limited
Partner or Assignee and the transfer of all or any portion of such Limited
Partner's or Assignee's Partnership Interest and shall extend to such Limited
Partner's or Assignee's heirs, successors, assigns and personal representatives.
Each such Limited Partner or Assignee hereby agrees to be bound by any
representation made by the General Partner or the Liquidator acting in good
faith pursuant to such power of attorney; and each such Limited Partner or
Assignee, to the maximum extent permitted by law, hereby waives any and all
defenses that may be available to contest, negate or disaffirm the action of the
General Partner or the Liquidator taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver to the
General Partner or the Liquidator, within 15 days after receipt of the request
therefor, such further designation, powers of attorney and other instruments as
the General Partner or the Liquidator determines to be necessary or appropriate
to effectuate this Agreement and the purposes of the Partnership.
Section 2.7. Term.
The term of the Partnership commenced upon the filing of the Certificate
of Limited Partnership in accordance with the Delaware LP Act and shall continue
in existence until the dissolution of the Partnership in accordance with the
provisions of Article XII. The existence of the Partnership as a separate legal
entity shall continue until the cancellation of the Certificate of Limited
Partnership as provided in the Delaware LP Act.
Section 2.8. Title to Partnership Assets.
Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partner or Assignee, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner, one or more of its Affiliates or one or more
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
12
nominees, as the General Partner may determine. The General Partner hereby
declares and warrants that any Partnership assets for which record title is held
in the name of the General Partner or one or more of its Affiliates or one or
more nominees shall be held by the General Partner or such Affiliate or nominee
for the use and benefit of the Partnership in accordance with the provisions of
this Agreement; provided, however, that the General Partner shall use reasonable
efforts to cause record title to such assets (other than those assets in respect
of which the General Partner determines that the expense and difficulty of
conveyancing makes transfer of record title to the Partnership impracticable) to
be vested in the Partnership as soon as reasonably practicable; provided,
further, that, prior to any withdrawal or removal of the General Partner or as
soon thereafter as practicable, the General Partner shall use reasonable efforts
to effect the transfer of record title to the Partnership and, prior to any such
transfer, will provide for the use of such assets in a manner satisfactory to
the General Partner. All Partnership assets shall be recorded as the property of
the Partnership in its books and records, irrespective of the name in which
record title to such Partnership assets is held.
ARTICLE III
RIGHTS OF LIMITED PARTNERS
Section 3.1. Limitation of Liability.
The Limited Partners and the Assignees shall have no liability under this
Agreement except as expressly provided in this Agreement or the Delaware LP Act.
Section 3.2. Management of Business.
No Limited Partner or Assignee, in its capacity as such, shall participate
in the operation, management or control (within the meaning of the Delaware LP
Act) of the Partnership's business, transact any business in the Partnership's
name or have the power to sign documents for or otherwise bind the Partnership.
Any action taken by any Affiliate of the General Partner or any director,
officer, employee, manager, member, general partner, agent or trustee of the
General Partner or any of its Affiliates, or any officer, director, employee,
manager, member, general partner, agent or trustee of a Group Member, in its
capacity as such, shall not be deemed to be participation in the control of the
business of the Partnership by a limited partner of the Partnership (within the
meaning of Section 17-303(a) of the Delaware LP Act) and shall not affect,
impair or eliminate the limitations on the liability of the Limited Partners or
Assignees under this Agreement.
Section 3.3. Outside Activities of the Limited Partners.
Subject to the provisions of Section 7.5 and the Omnibus Agreement, which
shall continue to be applicable to the Persons referred to therein, regardless
of whether such Persons shall also be Limited Partners or Assignees, any Limited
Partner or Assignee shall be entitled to and may have business interests and
engage in business activities in addition to those relating to the Partnership,
including business interests and activities in direct competition with the
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
13
Partnership Group. Neither the Partnership nor any of the other Partners or
Assignees shall have any rights by virtue of this Agreement in any business
ventures of any Limited Partner or Assignee.
Section 3.4. Access to Information.
(a) In addition to other rights provided by this Agreement or by
applicable law, and except as limited by Section 3.4(b), each Limited Partner
has the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon reasonable written demand
and at such Limited Partner's own expense:
(i) to obtain true and full information regarding the status of
the business and financial condition of the Partnership;
(ii) to obtain a copy of the Partnership's federal, state and local
income tax returns for each year promptly after they become available;
(iii) to have furnished to him a current list of the name and last
known business, residence or mailing address of each Partner;
(iv) to have furnished to him a copy of this Agreement and the
Certificate of Limited Partnership and all amendments thereto, together
with a copy of the executed copies of all powers of attorney pursuant to
which this Agreement, the Certificate of Limited Partnership and all
amendments thereto have been executed;
(v) to obtain true and full information regarding the amount of
cash and a description and statement of the Net Agreed Value of any other
Capital Contribution by each Partner and that each Partner has agreed to
contribute in the future, and the date on which each became a Partner; and
(vi) to obtain such other information regarding the affairs of the
Partnership as is just and reasonable.
(b) The General Partner may keep confidential from the Limited Partners
and Assignees, for such period of time as the General Partner deems reasonable,
(i) any information that the General Partner reasonably believes to be in the
nature of trade secrets or (ii) other information the disclosure of which the
General Partner in good faith believes (A) is not in the best interests of the
MLP or the Partnership Group, (B) could damage the MLP or the Partnership Group
or (C) that any Group Member is required by law or by agreement with any third
party to keep confidential (other than agreements with Affiliates of the
Partnership the primary purpose of which is to circumvent the obligations set
forth in this Section 3.4).
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
14
ARTICLE IV
TRANSFERS OF PARTNERSHIP INTERESTS
Section 4.1. Transfer Generally.
(a) The term "transfer," when used in this Agreement with respect to a
Partnership Interest, shall be deemed to refer to a transaction (i) by which a
General Partner assigns its General Partner Interest to another Person, and
includes a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage,
exchange or any other disposition by law or otherwise or (ii) by which the
holder of a Limited Partner Interest assigns such Limited Partner Interest to
another Person who is or becomes a Limited Partner (or an Assignee), and
includes a sale, assignment, gift, exchange or any other disposition by law or
otherwise, including any transfer upon foreclosure of any pledge, encumbrance,
hypothecation or mortgage.
(b) No Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article IV.
Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article IV shall be null and void.
(c) Nothing contained in this Agreement shall be construed to prevent a
disposition by any member of the General Partner of any or all of the issued and
outstanding member interests of the General Partner.
Section 4.2. Transfer of General Partner's General Partner Interest.
No provision of this Agreement shall be construed to prevent (and the
Limited Partners do hereby expressly consent to) (a) the transfer by the General
Partner of all or a portion of its General Partner Interest to one or more
Affiliates, which transferred General Partner Interest, to the extent not
transferred to a successor General Partner, shall constitute a Limited Partner
Interest or (b) the transfer by the General Partner, in whole and not in part,
of its General Partner Interest upon (i) its merger, consolidation or other
combination into any other Person or the transfer by it of all or substantially
all of its assets to such other Person or (ii) sale of all or substantially all
of the membership interests of the General Partner by its members if, in the
case of a transfer described in either clause (i) or (ii) of this sentence, the
rights and duties of the General Partner with respect to the General Partner
Interest so transferred are assumed by the transferee and the transferee agrees
to be bound by the provisions of this Agreement; provided, however, that in
either such case, the transferee is primarily controlled, directly or indirectly
through one or more intermediaries, by the MLP or the MLP General Partner or any
Person primarily controlling, directly or indirectly through one or more
intermediaries, the MLP or the MLP General Partner; provided, further, that in
either such case, such transferee furnishes to the Partnership an Opinion of
Counsel that such merger, consolidation, combination, transfer or assumption
will not result in a loss of limited liability of any Limited Partner or cause
the Partnership to be taxable as a corporation or otherwise to be taxed as an
entity for federal income tax purposes (to the extent not already so treated or
taxed). In the case of a transfer pursuant to
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
15
this Section 4.2 to a Person proposed as a successor general partner of the
Partnership, the transferee or successor (as the case may be) shall, subject to
compliance with the terms of Section 10.4, be admitted to the Partnership as the
General Partner immediately prior to the transfer of the Partnership Interest,
and the business of the Partnership shall continue without dissolution.
Section 4.3. Transfer of a Limited Partner's Partnership Interest.
A Limited Partner may transfer all, but not less than all, of its
Partnership Interest as a Limited Partner in connection with the merger,
consolidation or other combination of such Limited Partner with or into any
other Person or the transfer by such Limited Partner of all or substantially all
of its assets to another Person and, following any such transfer, such Person
may become a Substituted Limited Partner pursuant to Article X. Except as set
forth in the immediately preceding sentence, or in connection with any pledge of
(or any related foreclosure on) a Partnership Interest of a Limited Partner
solely for the purpose of securing, directly or indirectly, indebtedness of the
Partnership or the MLP, a Limited Partner may not transfer all or any part of
its Partnership Interest or withdraw from the Partnership.
Section 4.4. Restrictions on Transfers.
(a) Notwithstanding the other provisions of this Article IV, no transfer
of any Partnership Interest shall be made if such transfer would (i) violate the
then applicable federal or state securities laws or the rules and regulations of
the Commission, any state securities commission or any other governmental
authority with jurisdiction over such transfer; (ii) terminate the existence or
qualification of the Partnership or the MLP under the laws of the jurisdiction
of its formation; or (iii) cause the Partnership or the MLP to be treated as an
association taxable as a corporation or otherwise to be taxed as an entity for
federal income tax purposes (to the extent not already so treated or taxed).
(b) The General Partner may impose restrictions on the transfer of
Partnership Interests if a subsequent Opinion of Counsel determines that such
restrictions are necessary to avoid a significant risk of the Partnership or the
MLP becoming taxable as a corporation or otherwise to be taxed as an entity for
federal income tax purposes. The restrictions may be imposed by making such
amendments to this Agreement as the General Partner may determine to be
necessary or appropriate to impose such restrictions.
ARTICLE V
CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
Section 5.1. Initial Contributions.
In connection with the formation of the Partnership under the Delaware LP
Act, the General Partner made an initial Capital Contribution to the Partnership
in the amount of $0.10 in exchange for an interest in the Partnership and was
admitted as General Partner, and the MLP
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
16
made an initial Capital Contribution to the Partnership in the amount of $999.90
in exchange for an interest in the Partnership and was admitted as a Limited
Partner.
Section 5.2. Contributions Pursuant to the Contribution Agreement.
(a) Pursuant to the Contribution Agreement, GP LP contributed to the
MLP, as a Capital Contribution, all of its interests in HEP Navajo Southern,
L.P., HEP Pipeline Assets, Limited Partnership, HEP Pipeline GP, L.L.C., HEP
Pipeline, L.L.C., HEP Mountain Home, L.L.C., HEP Refining Assets, L.P., HEP
Refining GP, L.L.C., HEP Refining, L.L.C. and HEP ▇▇▇▇▇ Cross, L.L.C. in
exchange for a continuation of its General Partner Interest.
(b) Pursuant to the Contribution Agreement, the MLP contributed to the
Partnership, as a Capital Contribution, (i) cash in the amount of $[___________]
and (ii) all of its interest in HEP Navajo Southern, L.P., HEP Pipeline Assets,
Limited Partnership, HEP Pipeline GP, L.L.C., HEP Pipeline, L.L.C., HEP Mountain
Home, L.L.C., HEP Refining Assets, L.P., HEP Refining GP, L.L.C., HEP Refining,
L.L.C. and HEP ▇▇▇▇▇ Cross, L.L.C. in exchange for a continuation of its Limited
Partner Interest.
(c) Following the foregoing transactions, the General Partner owns a
0.001% Partnership Interest as General Partner and the MLP owns a 99.999%
Partnership Interest as a Limited Partner.
Section 5.3. Additional Capital Contributions.
With the consent of the General Partner, any Limited Partner may, but
shall not be obligated to, make additional Capital Contributions to the
Partnership. Contemporaneously with the making of any Capital Contributions by a
Limited Partner, in addition to those provided in Section 5.1 and Section 5.2,
the General Partner shall be obligated to make an additional Capital
Contribution to the Partnership in an amount equal to the amount of the
additional Capital Contribution then made by such Limited Partner multiplied by
the quotient obtained by dividing 0.001 by 99.999. Except as set forth in the
immediately preceding sentence and in Article XII, the General Partner shall not
be obligated to make any additional Capital Contributions to the Partnership.
Section 5.4. Interest and Withdrawal.
No interest shall be paid by the Partnership on Capital Contributions. No
Partner or Assignee shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent, if any, that distributions made pursuant to
this Agreement or upon termination of the Partnership may be considered as such
by law and then only to the extent provided for in this Agreement. Except to the
extent expressly provided in this Agreement, no Partner or Assignee shall have
priority over any other Partner or Assignee either as to the return of Capital
Contributions or as to profits, losses or distributions. Any such return shall
be a compromise to
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
17
which all Partners and Assignees agree within the meaning of Section 17-502(b)
of the Delaware LP Act.
Section 5.5. Capital Accounts.
(a) The Partnership shall maintain for each Partner (or a beneficial
owner of Partnership Interests held by a nominee in any case in which the
nominee has furnished the identity of such owner to the Partnership in
accordance with Section 6031(c) of the Code or any other method acceptable to
the General Partner) 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 and (ii) all items of Partnership
income and gain (including, without limitation, income and gain exempt from tax)
computed in accordance with Section 5.5(b) and allocated with respect to such
Partnership Interest pursuant to Section 6.1, and decreased by (x) the amount of
cash or Net Agreed Value of all actual and deemed distributions of cash or
property made with respect to such Partnership Interest and (y) all items of
Partnership deduction and loss computed in accordance with Section 5.5(b) and
allocated with respect to such Partnership Interest pursuant to Section 6.1.
(b) For purposes of computing the amount of any item of income, gain,
loss or deduction that is to be allocated pursuant to Article VI and is to be
reflected in the Partners' Capital Accounts, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes (including,
without limitation, any method of depreciation, cost recovery or amortization
used for that purpose).
(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.
Section 5.6. Loans from Partners.
Loans by a Partner to the Partnership shall not constitute Capital
Contributions. If any Partner shall advance funds to the Partnership in excess
of the amounts required hereunder to be contributed by it to the capital of the
Partnership, the making of such excess advances shall not result in any increase
in the amount of the Capital Account of such Partner. The amount of any such
excess advances shall be a debt obligation of the Partnership to such Partner
and shall be payable or collectible only out of the Partnership assets in
accordance with the terms and conditions upon which such advances are made.
Section 5.7. Issuances of Additional Partnership Securities.
(a) The Partnership may issue (i) additional Partnership Securities;
(ii) options, rights, warrants and appreciation rights relating to the
Partnership Securities; and (iii) obligations,
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
18
evidences of indebtedness or other securities or economic interests convertible
into or exchangeable for Partnership Securities, for any Partnership purpose at
any time and from time to time to such Persons for such consideration and on
such terms and conditions as shall be established by the General Partner in its
sole discretion. The issuance by the Partnership of Partnership Securities or
rights, warrants or appreciation rights in respect thereof shall be deemed an
amendment to this Agreement.
(b) Each additional Partnership Security authorized to be issued by the
Partnership pursuant to Section 5.7(a) may be issued in one or more classes, or
one or more series of any such classes, with such designations, preferences,
rights, powers and duties (which may be senior to existing classes and series of
Partnership Securities), as shall be fixed by the General Partner, including (i)
the right to share Partnership profits and losses or items thereof; (ii) the
right to share in Partnership distributions; (iii) the rights upon dissolution
and liquidation of the Partnership; (iv) whether, and the terms and conditions
upon which, the Partnership may redeem such Partnership Security; (v) whether
such Partnership Security is issued with the privilege of conversion or exchange
and, if so, the terms and conditions of such conversion or exchange; (vi) the
terms and conditions upon which each Partnership Security will be issued,
evidenced by certificates and assigned or transferred; and (vii) the right, if
any, of the holder of each such Partnership Security to vote on Partnership
matters, including matters relating to the relative designations, preferences,
rights, powers and duties of such Partnership Security.
(c) The General Partner is hereby authorized and directed to take, or
cause to be taken, all actions that it determines to be necessary or appropriate
in connection with (i) each issuance of Partnership Securities and options,
rights, warrants and appreciation rights relating to Partnership Securities
pursuant to this Section 5.7, (ii) the admission of Additional Limited Partners
and (iii) all additional issuances of Partnership Securities. The General
Partner is further authorized and directed to specify the relative rights,
powers and duties of the holders of the Partnership Interests or other
Partnership Securities being so issued. The General Partner shall do all things
necessary to comply with the Delaware LP Act and is authorized and directed to
do all things it deems necessary or advisable in connection with any future
issuance of Partnership Securities, including compliance with any statute, rule,
regulation or guideline of any federal, state or other governmental agency.
Section 5.8. Limited Preemptive Rights.
Except as provided in Section 5.3, no Person shall have preemptive,
preferential or other similar rights with respect to (a) additional Capital
Contributions; (b) issuance or sale of any class or series of Partnership
Interests, whether unissued, held in the treasury or hereafter created; (c)
issuance of any obligations, evidences of indebtedness or other securities of
the Partnership convertible into or exchangeable for, or carrying or accompanied
by any rights to receive, purchase or subscribe to, any such Partnership
Interests; (d) issuance of any right of subscription to or right to receive, or
any warrant or option for the purchase of, any such Partnership Interests; or
(e) issuance or sale of any other securities that may be issued or sold by the
Partnership.
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
19
Section 5.9. Fully Paid and Non-Assessable Nature of Limited Partner Interests.
All Limited Partner Interests issued pursuant to, and in accordance with
the requirements of, this Article V shall be fully paid and non-assessable
Limited Partner Interests, except as such non-assessability may be affected by
Section 17-607 of the Delaware LP Act.
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
Section 6.1. Allocations.
(a) The items of income, gain, loss and deduction that are recognized by
the Partnership for federal, state, or local income tax purposes shall be
allocated among the Partners in proportion to their respective Percentage
Interests or as required by applicable law as determined by the General Partner.
Section 6.2. Distributions.
(a) Within 45 days following the end of each Quarter commencing with the
Quarter ending on [____________], 2004, an amount equal to 100% of Available
Cash with respect to such Quarter shall, subject to Section 17-607 of the
Delaware LP Act, be distributed in accordance with this Article VI by the
Partnership to the Partners in accordance with their respective Percentage
Interests. The immediately preceding sentence shall not require any distribution
of cash if and to the extent such distribution would be prohibited by applicable
law or by any loan agreement, security agreement, mortgage, debt instrument or
other agreement or obligation to which the Partnership is a party or by which it
is bound or its assets are subject. All distributions required to be made under
this Agreement shall be made subject to Section 17-607 of the Delaware LP Act.
(b) In the event of the dissolution and liquidation of the Partnership,
all receipts received during or after the Quarter in which the Liquidation Date
occurs, other than from borrowings described in (a)(ii) of the definition of
Available Cash, shall be applied and distributed solely in accordance with, and
subject to the terms and conditions of, Section 12.4.
(c) The General Partner shall have the discretion to treat taxes paid by
the Partnership on behalf of, or amounts withheld with respect to, all or less
than all of the Partners, as a distribution of Available Cash to such Partners.
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
Section 7.1. Management.
(a) The General Partner shall conduct, direct and manage all activities
of the Partnership. Except as otherwise expressly provided in this Agreement,
all management powers
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
20
over the business and affairs of the Partnership shall be exclusively vested in
the General Partner, and no Limited Partner or Assignee shall have any
management power over the business and affairs of the Partnership. In addition
to the powers now or hereafter granted a general partner of a limited
partnership under applicable law or that are granted to the General Partner
under any other provision of this Agreement, the General Partner, subject to
Section 7.3, shall have full power and authority to do, or cause to be done, all
things and on such terms as it determines to be necessary or appropriate to
conduct the business of the Partnership, to exercise all powers set forth in
Section 2.5 and to effectuate the purposes set forth in Section 2.4, including
the following:
(i) the making of any expenditures, the lending or borrowing of
money, the assumption or guarantee of, or other contracting for,
indebtedness and other liabilities, the issuance of evidences of
indebtedness, including indebtedness that is convertible into a
Partnership Interest, and the incurring of any other obligations;
(ii) the making of tax, regulatory and other filings, or rendering
of periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Partnership;
(iii) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any or all of the assets of the Partnership
or the merger or other combination of the Partnership with or into another
Person (the matters described in this clause (iii) being subject, however,
to any prior approval that may be required by Section 7.3);
(iv) the use of the assets of the Partnership (including cash on
hand) for any purpose consistent with the terms of this Agreement,
including the financing of the conduct of the operations of the
Partnership Group; subject to Section 7.6, the lending of funds to other
Persons (including the MLP and any member of the Partnership Group); the
repayment of obligations of the MLP or any member of the Partnership Group
and the making of capital contributions to any member of the Partnership
Group;
(v) the negotiation, execution and performance of any contracts,
conveyances or other instruments (including instruments that limit the
liability of the Partnership under contractual arrangements to all or
particular assets of the Partnership, with the other party to the contract
to have no recourse against the General Partner or its assets other than
its interest in the Partnership, even if same results in the terms of the
transaction being less favorable to the Partnership than would otherwise
be the case);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees (including employees
having titles such as "president," "vice president," "secretary" and
"treasurer") and agents,
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
21
outside attorneys, accountants, consultants and contractors and the
determination of their compensation and other terms of employment or
hiring;
(viii) the maintenance of insurance for the benefit of the
Partnership Group and the Partners;
(ix) the formation of, or acquisition of an interest in, and the
contribution of property and the making of loans to, any further limited
or general partnerships, joint ventures, corporations, limited liability
companies or other relationships subject to the restrictions set forth in
Section 2.4;
(x) the control of any matters affecting the rights and
obligations of the Partnership, including the bringing and defending of
actions at law or in equity and otherwise engaging in the conduct of
litigation and the incurring of legal expense and the settlement of claims
and litigation; and
(xi) the indemnification of any Person against liabilities and
contingencies to the extent permitted by law.
(b) Notwithstanding any other provision of this Agreement, the MLP
Agreement, the Delaware LP Act or any applicable law, rule or regulation, each
of the Partners and the Assignees and each other Person who may acquire an
interest in the Partnership hereby (i) approves, ratifies and confirms the
execution, delivery and performance by the parties thereto of this Agreement,
the Underwriting Agreement, the Omnibus Agreement, the Contribution Agreement,
the Pipelines and Terminals Agreement and the other agreements and documents
described in or filed as exhibits to the Registration Statement that are related
to the transactions contemplated by the Registration Statement; (ii) agrees that
the General Partner (on its own or through any officer of the Partnership) is
authorized to execute, deliver and perform the agreements referred to in clause
(i) of this sentence, as applicable, and the other agreements, acts,
transactions and matters described in or contemplated by the Registration
Statement on behalf of the Partnership without any further act, approval or vote
of the Partners or the Assignees or the other Persons who may acquire an
interest in the Partnership; and (iii) agrees that the execution, delivery or
performance by the General Partner, the MLP, any Group Member or any Affiliate
of any of them, of this Agreement or any agreement authorized or permitted under
this Agreement (including the exercise by the General Partner or any Affiliate
of the General Partner of the rights accorded pursuant to Article XV), shall not
constitute a breach by the General Partner of any duty that the General Partner
may owe the Partnership or the Limited Partners or any other Persons under this
Agreement (or any other agreements) or of any duty stated or implied by law or
equity.
Section 7.2. Certificate of Limited Partnership.
The General Partner has caused the Certificate of Limited Partnership to
be filed with the Secretary of State of the State of Delaware as required by the
Delaware LP Act. The General
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
22
Partner shall use all reasonable efforts to file or cause to be filed such other
certificates or documents that the General Partner determines to be necessary or
appropriate for the formation, continuation, qualification and operation of a
limited partnership (or a partnership in which the limited partners have limited
liability) in the State of Delaware or any other state in which the Partnership
may elect to do business or own property. To the extent the General Partner
determines such action to be necessary or appropriate, the General Partner shall
file, or cause to be filed, amendments to and restatements of the Certificate of
Limited Partnership and do, or cause to be done, all things to maintain the
Partnership as a limited partnership (or a partnership or other entity in which
the limited partners have limited liability) under the laws of the State of
Delaware or of any other state in which the Partnership may elect to do business
or own property. Subject to the terms of Section 3.4(a), the General Partner
shall not be required, before or after filing, to deliver or mail a copy of the
Certificate of Limited Partnership, any qualification document or any amendment
thereto to any Limited Partner or Assignee.
Section 7.3. Restrictions on the General Partner's Authority.
(a) The General Partner may not, without written approval of the
specific act by the Limited Partners or by other written instrument executed and
delivered by the Limited Partners subsequent to the date of this Agreement, take
any action in contravention of this Agreement, including, except as otherwise
provided in this Agreement, (i) committing any act that would make it impossible
to carry on the ordinary business of the Partnership; (ii) possessing
Partnership property, or assigning any rights in specific Partnership property,
for other than a Partnership purpose; (iii) admitting a Person as a Partner;
(iv) amending this Agreement in any manner; or (v) transferring its General
Partner Interest.
(b) Except as provided in Articles XII and XIV, the General Partner may
not sell, exchange or otherwise dispose of all or substantially all of the
Partnership's assets in a single transaction or a series of related transactions
(including by way of merger, consolidation or other combination) or approve on
behalf of the Partnership the sale, exchange or other disposition of all or
substantially all of the assets of the Partnership, without the approval of the
Limited Partners; provided, however, that this provision shall not preclude or
limit the General Partner's ability to mortgage, pledge, hypothecate or grant a
security interest in all or substantially all of the assets of the Partnership
and shall not apply to any forced sale of any or all of the assets of the
Partnership pursuant to the foreclosure of, or other realization upon, any such
encumbrance.
Section 7.4. Reimbursement of the General Partner.
(a) Except as provided in this Section 7.4 and elsewhere in this
Agreement or in the Omnibus Agreement, the General Partner shall not be
compensated for its services as General Partner or as general partner or
managing member of any Group Member.
(b) The General Partner shall be reimbursed on a monthly basis, or such
other basis as the General Partner may determine, for (i) all direct and
indirect expenses it incurs or payments it makes on behalf of the Partnership
(including salary, bonus, incentive compensation
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
23
and other amounts paid to any Person, including Affiliates of the General
Partner, to perform services for the Partnership or for the General Partner in
the discharge of its duties to the Partnership), and (ii) all other expenses
allocable to the Partnership or otherwise incurred by the General Partner in
connection with operating the Partnership's business (including expenses
allocated to the General Partner by its Affiliates). The General Partner shall
determine the expenses that are allocable to the Partnership. Reimbursements
pursuant to this Section 7.4 shall be in addition to any reimbursement to the
General Partner as a result of indemnification pursuant to Section 7.7.
(c) Subject to Section 5.8, the General Partner, without the approval of
the Limited Partners (who shall have no right to vote in respect thereof), may
propose and adopt on behalf of the Partnership employee benefit plans, employee
programs and employee practices, or cause the Partnership to issue Partnership
Interests in connection with or pursuant to any employee benefit plan, employee
program or employee practice maintained or sponsored by the General Partner or
any of its Affiliates, in each case for the benefit of employees of the General
Partner, any Group Member or any Affiliate, or any of them, in respect of
services performed, directly or indirectly, for the benefit of the Partnership
Group. Expenses incurred by the General Partner in connection with any such
plans, programs and practices shall be reimbursed in accordance with Section
7.4(b). Any and all obligations of the General Partner under any employee
benefit plans, employee programs or employee practices adopted by the General
Partner as permitted by this Section 7.4(c) shall constitute obligations of the
General Partner hereunder and shall be assumed by any successor General Partner
approved pursuant to Section 11.1 or Section 11.2 or the transferee of or
successor to all of the General Partner's General Partner Interest pursuant to
Section 4.2.
Section 7.5. Outside Activities.
(a) After the Closing Date, the General Partner, for so long as it is
the General Partner of the Partnership, (i) agrees that its sole business will
be to act as the General Partner of the Partnership and a general partner or
managing member, as the case may be, of any other partnership or limited
liability company of which the Partnership is, directly or indirectly, a partner
or member, and to undertake activities that are ancillary or related thereto,
(ii) except to the extent permitted in the Omnibus Agreement, shall not engage
in any business or activity or incur any debts or liabilities except in
connection with or incidental to (A) its performance as general partner of the
Partnership or one or more Group Members or as described in or contemplated by
the Registration Statement or (B) the acquiring, owning or disposing of debt or
equity securities in any Group Member and (iii) except to the extent permitted
in the Omnibus Agreement, shall not, and shall cause its Affiliates not to,
engage in any Restricted Businesses.
(b) ▇▇▇▇▇ Corporation and certain of its Affiliates have entered into
the Omnibus Agreement with the Partnership and the MLP, which agreement sets
forth certain restrictions on the ability of ▇▇▇▇▇ Corporation and its
Affiliates to engage in Restricted Businesses.
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
24
(c) Except as specifically restricted by Section 7.5(a) and the Omnibus
Agreement, each Indemnitee (other than the General Partner) shall have the right
to engage in businesses of every type and description and other activities for
profit and to engage in and possess an interest in other business ventures of
any and every type or description, whether in businesses engaged in or
anticipated to be engaged in by the MLP or any Group Member, independently or
with others, including business interests and activities in direct competition
with the business and activities of the MLP or any Group Member, and none of the
same shall constitute a breach of this Agreement or any duty expressed or
implied by law to the MLP or any Group Member or any Partner or Assignee. None
of the MLP nor any Group Member, any Limited Partner or any other Person shall
have any rights by virtue of this Agreement, the MLP Agreement or the
partnership relationship established hereby or thereby in any business ventures
of any Indemnitee.
(d) Subject to the terms of Section 7.5(a), Section 7.5(b), Section
7.5(c) and the Omnibus Agreement, but otherwise notwithstanding anything to the
contrary in this Agreement, (i) the engaging in competitive activities by any
Indemnitee (other than the General Partner) in accordance with the provisions of
this Section 7.5 is hereby approved by the Partnership and all Partners, (ii) it
shall be deemed not to be a breach of the General Partner's fiduciary duty or
any other obligation of any type whatsoever of the General Partner or of any
Indemnitee for the Indemnitees (other than the General Partner) to engage in
such business interests and activities in preference to or to the exclusion of
the Partnership and (iii) except as set forth in the Omnibus Agreement, the
General Partner and the Indemnitees shall have no obligation hereunder or as a
result of any duty expressed or implied by law to present business opportunities
to the Partnership.
(e) The term "Affiliates" when used in Section 7.5(a) and Section 7.5(e)
with respect to the General Partner shall not include any Group Member.
(f) Notwithstanding anything to the contrary in this Agreement, to the
extent that any provision of this Agreement purports or is interpreted to have
the effect of restricting the fiduciary duties that might otherwise, as a result
of Delaware or other applicable law, be owed by the General Partner to the
Partnership and its Limited Partners, or to constitute a waiver or consent by
the Limited Partners to any such restriction, such provisions shall be
inapplicable and have no effect in determining whether the General Partner has
complied with its fiduciary duties in connection with determinations made by it
under this Section 7.5.
Section 7.6. Loans from the General Partner; Loans or Contributions from the
Partnership or Group Members.
(a) The General Partner or any of its Affiliates may lend to the MLP or
any Group Member, and the MLP or any Group Member may borrow from the General
Partner or any of its Affiliates, funds needed or desired by the MLP or the
Group Member for such periods of time and in such amounts as the General Partner
may determine; provided, however, that in any such case the lending party may
not charge the borrowing party interest at a rate greater than the rate that
would be charged the borrowing party or impose terms less favorable to the
borrowing party
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
25
than would be charged or imposed on the borrowing party by unrelated lenders on
comparable loans made on an arm's-length basis (without reference to the lending
party's financial abilities or guarantees), all as determined by the General
Partner. The borrowing party shall reimburse the lending party for any costs
(other than any additional interest costs) incurred by the lending party in
connection with the borrowing of such funds. For purposes of this Section 7.6(a)
and Section 7.6(b), the term "Group Member" shall include any Affiliate of a
Group Member that is controlled by the Group Member.
(b) The Partnership may lend or contribute to any Group Member, and any
Group Member may borrow from the Partnership, funds on terms and conditions
determined by the General Partner. No Group Member may lend funds to the General
Partner or any of its Affiliates (other than another Group Member).
(c) No borrowing by any Group Member or the approval thereof by the
General Partner shall be deemed to constitute a breach of any duty, expressed or
implied, of the General Partner or its Affiliates to the Partnership or the
Limited Partners by reason of the fact that the purpose or effect of such
borrowing is directly or indirectly to (i) enable distributions to the General
Partner or its Affiliates (including in their capacities as Limited Partners) to
exceed the General Partner's Percentage Interest of the total amount distributed
to all partners or (ii) hasten the expiration of the Subordination Period or the
conversion of any Subordinated Units into Common Units.
Section 7.7. Indemnification.
(a) To the fullest extent permitted by law but subject to the
limitations expressly provided in this Agreement, all Indemnitees shall be
indemnified and held harmless by the Partnership from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest, settlements or
other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, in which
any Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, by reason of its status as an Indemnitee; provided, that the
Indemnitee shall not be indemnified and held harmless if there has been a final
and non-appealable judgment entered by a court of competent jurisdiction
determining that, in respect of the matter for which the Indemnitee is seeking
indemnification pursuant to this Section 7.7, the Indemnitee acted in bad faith
or engaged in fraud, willful misconduct or gross negligence or, in the case of a
criminal matter, acted with knowledge that the Indemnitee's conduct was
unlawful; provided, further, no indemnification pursuant to this Section 7.7
shall be available to the General Partner with respect to its obligations
incurred pursuant to the Underwriting Agreement, the Omnibus Agreement or the
Contribution Agreement (other than obligations incurred by the General Partner
on behalf of the Partnership). Any indemnification pursuant to this Section 7.7
shall be made only out of the assets of the Partnership, it being agreed that
the General Partner shall not be personally liable for such indemnification and
shall have no obligation to contribute or loan any monies or property to the
Partnership to enable it to effectuate such indemnification.
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
26
(b) To the fullest extent permitted by law, expenses (including legal
fees and expenses) incurred by an Indemnitee who is indemnified pursuant to
Section 7.7(a) in defending any claim, demand, action, suit or proceeding shall,
from time to time, be advanced by the Partnership prior to a determination that
the Indemnitee is not entitled to be Indemnified upon receipt by the Partnership
of any undertaking by or on behalf of the Indemnitee to repay such amount if it
shall be determined that the Indemnitee is not entitled to be indemnified as
authorized in this Section 7.7.
(c) The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, both as to actions in the Indemnitee's capacity as an Indemnitee and
as to actions in any other capacity (including any capacity under the
Underwriting Agreement), and shall continue as to an Indemnitee who has ceased
to serve in such capacity and shall inure to the benefit of the heirs,
successors, assigns and administrators of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the General
Partner or its Affiliates for the cost of) insurance, on behalf of the General
Partner, its Affiliates and such other Persons as the General Partner shall
determine, against any liability that may be asserted against or expense that
may be incurred by such Person in connection with the Partnership's activities
or such Person's activities on behalf of the Partnership, regardless of whether
the Partnership would have the power to indemnify such Person against such
liability under the provisions of this Agreement.
(e) For purposes of this Section 7.7, the Partnership shall be deemed to
have requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute "fines"
within the meaning of Section 7.7(a); and action taken or omitted by it with
respect to any employee benefit plan in the performance of its duties for a
purpose reasonably believed by it to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose that is in, or not
opposed to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
27
(h) The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 7.7 or any
provision hereof shall in any manner terminate, reduce or impair the right of
any past, present or future Indemnitee to be indemnified by the Partnership, nor
the obligations of the Partnership to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 7.7 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
Section 7.8. Liability of Indemnitees.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, no Indemnitee shall be liable for monetary damages to the
Partnership, the Limited Partners, the Assignees or any other Persons who have
acquired interests in the Units or other MLP Securities, for losses sustained or
liabilities incurred as a result of any act or omission of an Indemnitee unless
there has been a final and non-appealable judgment entered by a court of
competent jurisdiction determining that, in respect of the matter in question,
the Indemnitee acted in bad faith or engaged in fraud, willful misconduct or
gross negligence or, in the case of a criminal matter, acted with knowledge that
the Indemnitee's conduct was criminal.
(b) Subject to its obligations and duties as General Partner set forth
in Section 7.1(a), the General Partner may exercise any of the powers granted to
it by this Agreement and perform any of the duties imposed upon it hereunder
either directly or by or through its agents, and the General Partner shall not
be responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.
(c) To the extent that, at law or in equity, an Indemnitee has duties
(including fiduciary duties) and liabilities relating thereto to the Partnership
or to the Partners, the General Partner and any other Indemnitee acting in
connection with the Partnership's business or affairs shall not be liable to the
Partnership or to any Partner for its good faith reliance on the provisions of
this Agreement.
(d) Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability of the Indemnitees under this Section 7.8 as in
effect immediately prior to such amendment, modification or repeal with respect
to claims arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such claims
may arise or be asserted.
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
28
Section 7.9. Resolution of Conflicts of Interest; Standards of Conduct and
Modification of Duties.
(a) Unless otherwise expressly provided in this Agreement or the MLP
Agreement, whenever a potential conflict of interest exists or arises between
the General Partner or any of its Affiliates, on the one hand, and the
Partnership, the MLP, any Partner or any Assignee, on the other, any resolution
or course of action by the General Partner or its Affiliates in respect of such
conflict of interest shall be permitted and deemed approved by all Partners, and
shall not constitute a breach of this Agreement, of the MLP Agreement, of any
agreement contemplated herein or therein, or of any duty stated or implied by
law or equity, if the resolution or course of action in respect of such conflict
of interest is (i) approved by Special Approval, (ii) approved by the vote of a
majority of the Common Units (excluding Common Units owned by the MLP General
Partner and its Affiliates, (iii) on terms no less favorable to the Partnership
than those generally being provided to or available from unrelated third parties
or (iv) fair and reasonable 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 shall be authorized but not required in connection with its
resolution of such conflict of interest to seek Special Approval of such
resolution, and the General Partner may also adopt a resolution or course of
action that has not received Special Approval. If Special Approval is not sought
and the board of directors of the General Partner determines that the resolution
or course of action taken with respect to a conflict of interest is on terms no
less favorable to the Partnership than those generally being provided to or
available from unrelated third parties or that the resolution or course of
action taken with respect to a conflict of interest is fair and reasonable to
the Partnership, then such resolution or course of action shall be permitted and
deemed approved by all the Partners, and shall not constitute a breach of this
Agreement or any other agreement contemplated therein, or of any duty stated or
implied by law or equity. In connection with any such approval by the board of
directors of the General Partner, it shall be presumed that, in making its
decision, the board of directors acted in good faith, and in any proceeding
brought by any Limited Partner or Assignee or by or on behalf of such Limited
Partner or Assignee or any other Limited Partner or Assignee or the Partnership
challenging such approval, the Person bringing or prosecuting such proceeding
shall have the burden of overcoming such presumption. 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.
(b) Whenever the General Partner makes a determination or takes or
declines to take any other action, or any of its Affiliates causes it to do so,
in its capacity as the general partner of the Partnership as opposed to in its
individual capacity, whether under this Agreement, any Group Member Agreement or
any other agreement contemplated hereby or otherwise, then, unless another
express standard is provided for in this Agreement, the General Partner, or such
Affiliates causing it to do so, shall make such determination or take or decline
to take such other action in good faith and shall not be subject to any other or
different standards imposed by this Agreement, any other agreement contemplated
hereby or under the Delaware LP Act or any other law, rule or regulation. In
order for a determination or other action to be in "good faith"
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
29
for purposes of this Agreement, the Person or Persons making such determination
or taking or declining to take such other action must reasonably believe that
the determination or other action is in the best interests of the Partnership,
unless the context otherwise requires.
(c) Whenever the General Partner makes a determination or takes or
declines to take any other action, or any of its Affiliates causes it to do so,
in its individual capacity as opposed to in its capacity as the general partner
of the Partnership, whether under this Agreement, any Group Member Agreement or
any other agreement contemplated hereby or otherwise, then the General Partner,
or such Affiliates causing it to do so, is entitled to make such determination
or to take or decline to take such other action free of any fiduciary duty or
obligation whatsoever to the Partnership, any Limited Partner or Assignee, and
the General Partner, or such Affiliates causing it to do so, shall not be
required to act in good faith or pursuant to any other standard imposed by this
Agreement, any Group Member Agreement, any other agreement contemplated hereby
or under the Delaware LP Act or any other law, rule or regulation. By way of
illustration and not of limitation, whenever the phrase, "at the option of the
General Partner," or some variation of that phrase, is used in this Agreement,
it indicates that the General Partner is acting in its individual capacity.
(d) Notwithstanding anything to the contrary in this Agreement, the
General Partner and its Affiliates shall have no duty or obligation, express or
implied, to (i) sell or otherwise dispose of any asset of the Partnership Group
other than in the ordinary course of business or (ii) permit any Group Member to
use any facilities or assets of the General Partner and its Affiliates, except
as may be provided in contracts entered into from time to time specifically
dealing with such use. Any determination by the General Partner or any of its
Affiliates to enter into such contracts shall be at its option.
(e) The provisions of this Agreement, to the extent that they restrict
or otherwise modify the duties and liabilities, including fiduciary duties, of
the General Partner or any other Indemnitee otherwise existing at law or in
equity, are agreed by the Partners to replace such other duties and liabilities
of the General Partner or such other Indemnitee.
(f) The Limited Partner hereby authorizes the General Partner, on behalf
of the Partnership as a partner or member of a Group Member, to approve of
actions by the general partner or managing member of such Group Member similar
to those actions permitted to be taken by the General Partner pursuant to this
Section 7.9.
Section 7.10. Other Matters Concerning the General Partner.
(a) The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper party or parties.
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
30
(b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion (including an Opinion of Counsel) of such Persons as to matters
that the General Partner reasonably believes to be within such Person's
professional or expert competence shall be conclusively presumed to have been
done or omitted in good faith and in accordance with such opinion.
(c) The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers, a duly appointed attorney or attorneys-in-fact or the duly authorized
officers of the Partnership.
Section 7.11. Reliance by Third Parties.
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner and any officer of the General Partner authorized by the General Partner
to act on behalf of and in the name of the Partnership has full power and
authority to encumber, sell or otherwise use in any manner any and all assets of
the Partnership and to enter into any authorized contracts on behalf of the
Partnership, and such Person shall be entitled to deal with the General Partner
or any such officer as if it were the Partnership's sole party in interest, both
legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies that may be available against such Person to contest,
negate or disaffirm any action of the General Partner or any such officer in
connection with any such dealing. In no event shall any Person dealing with the
General Partner or any such officer or its representatives be obligated to
ascertain that the terms of the Agreement have been complied with or to inquire
into the necessity or expedience of any act or action of the General Partner or
any such officer or its representatives. Each and every certificate, document or
other instrument executed on behalf of the Partnership by the General Partner or
its representatives shall be conclusive evidence in favor of any and every
Person relying thereon or claiming thereunder that (a) at the time of the
execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (b) the Person executing and delivering
such certificate, document or instrument was duly authorized and empowered to do
so for and on behalf of the Partnership and (c) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
ARTICLE VIII
BOOKS, RECORDS AND ACCOUNTING
Section 8.1. Records and Accounting.
The General Partner shall keep or cause to be kept at the principal office
of the Partnership appropriate books and records with respect to the
Partnership's business, including all books and records necessary to provide to
the Limited Partners any information required to be provided pursuant to Section
3.4(a). Any books and records maintained by or on behalf of the
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
31
Partnership in the regular course of its business, including books of account
and records of Partnership proceedings, may be kept on, or be in the form of,
computer disks, hard drives, punch cards, magnetic tape, photographs,
micrographics or any other information storage device; provided, that the books
and records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial reporting purposes, on an accrual basis in accordance
with U.S. GAAP.
Section 8.2. Fiscal Year.
The fiscal year of the Partnership shall be a fiscal year ending December
31.
ARTICLE IX
TAX MATTERS
Section 9.1. Tax Returns and Information.
The Partnership shall timely file all returns of the Partnership that are
required for federal, state and local income tax purposes on the basis of the
accrual method and a taxable year ending on December 31. The tax information
reasonably required by the Partners for federal and state income tax reporting
purposes with respect to a taxable year shall be furnished to them within 90
days of the close of the calendar year in which the Partnership's taxable year
ends. The classification, realization and recognition of income, gain, losses
and deductions and other items shall be on the accrual method of accounting for
federal income tax purposes.
Section 9.2. Tax Elections.
(a) To the extent applicable for federal income tax purposes, the
Partnership shall make the election under Section 754 of the Code in accordance
with applicable regulations thereunder, subject to the reservation of the right
to seek to revoke any such election upon the General Partner's determination
that such revocation is in the best interests of the Limited Partners.
(b) To the extent applicable for federal income tax purposes, the
Partnership shall elect to deduct expenses incurred in organizing the
Partnership ratably over a sixty-month period as provided in Section 709 of the
Code.
(c) Except as otherwise provided herein, the General Partner shall
determine whether the Partnership should make any other elections permitted by
the Code.
Section 9.3. Tax Controversies.
Subject to the provisions hereof, the General Partner is designated as the
Tax Matters Partner (as defined in the Code) and is authorized and required to
represent the Partnership (at the Partnership's expense) in connection with all
examinations of the Partnership's affairs by tax authorities, including
resulting administrative and judicial proceedings, and to expend
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
32
Partnership funds for professional services and costs associated therewith. Each
Partner agrees to cooperate with the General Partner and to do or refrain from
doing any or all things reasonably required by the General Partner to conduct
such proceedings.
Section 9.4. Withholding.
Notwithstanding any other provision of this Agreement, the General Partner
is authorized to take any action that may be required to cause the Partnership
to comply with any withholding requirements established under the Code or any
other federal, state or local law including, without limitation, pursuant to
Sections 1441, 1442, 1445 and 1446 of the Code. To the extent that the
Partnership is required or elects to withhold and pay over to any taxing
authority any amount resulting from the allocation or distribution of income to
any Partner or Assignee (including, without limitation, by reason of Section
1446 of the Code), the General Partner may treat the amount withheld as a
distribution of cash pursuant to Section 6.2 in the amount of such withholding
from such Partner.
ARTICLE X
ADMISSION OF PARTNERS
Section 10.1. Admission of Partners.
Upon the consummation of the transfers and conveyances described in
Section 5.2, the General Partner shall be the sole general partner of the
Partnership and the MLP shall be the sole limited partner of the Partnership.
Section 10.2. Admission of Substituted Limited Partners.
By transfer of a Limited Partner Interest in accordance with Article IV,
the transferor shall be deemed to have given the transferee the right to seek
admission as a Substituted Limited Partner subject to the conditions of, and in
the manner permitted under, this Agreement. A transferor of a Limited Partner
Interest shall, however, only have the authority to convey to a purchaser or
other transferee (a) the right to negotiate such Limited Partner Interest to a
purchaser or other transferee and (b) the right to request admission as a
Substituted Limited Partner to such purchaser or other transferee in respect of
the transferred Limited Partner Interests. Each transferee of a Limited Partner
Interest shall be an Assignee and be deemed to have applied to become a
Substituted Limited Partner with respect to the Limited Partner Interests so
transferred to such Person. Such Assignee shall become a Substituted Limited
Partner (x) at such time as the General Partner determines to consent thereto,
and (y) when any such admission is shown on the books and records of the
Partnership. If such consent is withheld, such transferee shall remain an
Assignee. An Assignee shall have an interest in the Partnership equivalent to
that of a Limited Partner with respect to allocations and distributions,
including liquidating distributions, of the Partnership. With respect to voting
rights attributable to Limited Partner Interests that are held by Assignees, the
General Partner shall be deemed to be the Limited Partner with respect thereto
and shall, in exercising the voting rights in respect of
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
33
such Limited Partner Interests on any matter, vote such Limited Partner
Interests at the written direction of the Assignee. If no such written direction
is received, such Partnership Interests will not be voted. An Assignee shall
have no other rights of a Limited Partner.
Section 10.3. Admission of Additional Limited Partners.
(a) A Person (other than the General Partner, the MLP or a Substituted
Limited Partner) who makes a Capital Contribution to the Partnership in
accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the General Partner:
(i) evidence of acceptance in form satisfactory to the General
Partner of all of the terms and conditions of this Agreement, including
the power of attorney granted in Section 2.6, and
(ii) such other documents or instruments as may be required by the
General Partner to effect such Person's admission as an Additional Limited
Partner.
(b) Notwithstanding anything to the contrary in this Section 10.3, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner. The admission of any Person as an Additional Limited
Partner shall become effective on the date upon which the name of such Person is
recorded as such in the books and records of the Partnership, following the
consent of the General Partner to such admission.
Section 10.4. Admission of Successor or Transferee General Partner.
A successor General Partner approved pursuant to Section 11.1 or Section
11.2 or the transferee of or successor to all of the General Partner's
Partnership Interest pursuant to Section 4.2 who is proposed to be admitted as a
successor General Partner shall, subject to compliance with the terms of Section
11.3, if applicable, be admitted to the Partnership as the General Partner,
effective immediately prior to the withdrawal or removal of the predecessor or
transferring General Partner pursuant to Section 11.1 or Section 11.2 or the
transfer of the General Partner Interest pursuant to Section 4.2, provided,
however, that no such successor shall be admitted to the Partnership until
compliance with the terms of Section 4.2 has occurred and such successor has
executed and delivered such other documents or instruments as may be required to
effect such admission. Any such successor shall, subject to the terms hereof,
carry on the business of the members of the Partnership Group without
dissolution.
Section 10.5. Amendment of Agreement and Certificate of Limited Partnership.
To effect the admission to the Partnership of any Partner, the General
Partner shall take, or cause to be taken, all steps necessary or appropriate
under the Delaware LP Act to amend the records of the Partnership to reflect
such admission and, if necessary, to prepare as soon as practicable an amendment
to this Agreement and, if required by law, the General Partner shall prepare and
file, or cause to be prepared and filed, an amendment to the Certificate of
Limited
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
34
Partnership, and the General Partner may for this purpose, among others,
exercise the power of attorney granted pursuant to Section 2.6.
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
Section 11.1. Withdrawal of the General Partner.
(a) The General Partner shall be deemed to have withdrawn from the
Partnership upon the occurrence of any one of the following events (each such
event herein referred to as an "Event of Withdrawal");
(i) The General Partner voluntarily withdraws from the Partnership
by giving written notice to the other Partners;
(ii) The General Partner transfers all of its rights as General
Partner pursuant to Section 4.2;
(iii) The General Partner is removed pursuant to Section 11.2;
(iv) The General Partner (A) makes a general assignment for the
benefit of creditors; (B) files a voluntary bankruptcy petition for relief
under Chapter 7 of the United States Bankruptcy Code; (C) files a petition
or answer seeking for itself a liquidation, dissolution or similar relief
(but not a reorganization) under any law; (D) files an answer or other
pleading admitting or failing to contest the material allegations of a
petition filed against the General Partner in a proceeding of the type
described in clauses (A)-(C) of this Section 11.1(a)(iv); or (E) seeks,
consents to or acquiesces in the appointment of a trustee (but not a
debtor-in-possession), receiver or liquidator of the General Partner or of
all or any substantial part of its properties;
(v) A final and non-appealable order of relief under Chapter 7 of
the United States Bankruptcy Code is entered by a court with appropriate
jurisdiction pursuant to a voluntary or involuntary petition by or against
the General Partner; or
(vi) (A) in the event the General Partner is a corporation, a
certificate of dissolution or its equivalent is filed for the General
Partner, or 90 days expire after the date of notice to the General Partner
of revocation of its charter without a reinstatement of its charter, under
the laws of its state of incorporation; (B) in the event the General
Partner is a partnership or limited liability company, the dissolution and
commencement of winding up of the General Partner; (C) in the event the
General Partner is acting in such capacity by virtue of being a trustee of
a trust, the termination of the trust; (D) in the event the General
Partner is a natural person, his death or adjudication of incompetency;
and (E) otherwise in the event of the termination of the General Partner.
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
35
If an Event of Withdrawal specified in Section 11.1(a)(iv), (v) or
(vi)(A), (B), (C) or (E) occurs, the withdrawing General Partner shall give
notice to the Limited Partners within 30 days after such occurrence. The
Partners hereby agree that only the Events of Withdrawal described in this
Section 11.1 shall result in the withdrawal of the General Partner from the
Partnership.
(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 June 30, 2014, the General Partner voluntarily withdraws by giving at
least 90 days' advance notice of its intention to withdraw to the Limited
Partners; provided that prior to the effective date of such withdrawal, the
withdrawal is approved by the Limited Partners and the General Partner delivers
to the Partnership an Opinion of Counsel ("Withdrawal Opinion of Counsel") that
such withdrawal (following the selection of the successor General Partner) would
not result in the loss of the limited liability of any Limited Partner or of the
limited partners of the MLP or cause the Partnership or the MLP to be treated as
an association taxable as a corporation or otherwise to be taxed as an entity
for federal income tax purposes (to the extent not already so treated or taxed);
(ii) at any time after 12:00 midnight, Central Standard Time, on June 30, 2014,
the General Partner voluntarily withdraws by giving at least 90 days' advance
notice to the Limited Partners, such withdrawal to take effect on the date
specified in such notice; (iii) at any time that the General Partner ceases to
be the General Partner pursuant to Section 11.1(a)(ii) or (a)(iii). If the
General Partner gives a notice of withdrawal pursuant to Section 11.1(a)(i)
hereof, the Limited Partners may, prior to the effective date of such
withdrawal, elect a successor General Partner. If, prior to the effective date
of the General Partner's withdrawal, a successor is not selected by the Limited
Partners as provided herein or the Partnership does not receive a Withdrawal
Opinion of Counsel, the Partnership shall be dissolved in accordance with
Section 12.1. Any successor General Partner elected in accordance with the terms
of this Section 11.1 shall be subject to the provisions of Section 10.3.
Section 11.2. Removal of the General Partner.
The General Partner may be removed by the MLP. Upon the removal of the
General Partner by the MLP, the MLP shall elect a successor general partner for
the Partnership. The admission of any such successor General Partner to the
Partnership shall be subject to the provisions of Section 10.3.
Section 11.3. Interest of Departing Partner.
(a) The Partnership Interest of the Departing Partner departing as a
result of withdrawal or removal pursuant to Section 11.1 or Section 11.2 shall
be purchased by the successor to the Departing Partner for an amount in cash
equal to the fair market value of such Partnership Interest, such amount to be
determined and payable as of the effective date of the Departing Partner's
departure. Such purchase shall be a condition to the admission to the
Partnership of the successor as the General Partner. Any successor General
Partner shall
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
36
indemnify the Departing Partner as to all debts and liabilities of the
Partnership arising on or after the effective date of the withdrawal or removal
of the Departing Partner.
For purposes of this Section 11.3(a), the fair market value of the
Departing Partner's General Partner Interest shall be determined by agreement
between the Departing Partner and its successor or, failing agreement within 30
days after the effective date of such Departing Partner's departure, by an
independent investment banking firm or other independent expert selected by the
Departing Partner and its successor, which, in turn, may rely on other experts,
and the determination of which shall be conclusive as to such matter. If such
parties cannot agree upon one independent investment banking firm or other
independent expert within 45 days after the effective date of such departure,
then the Departing Partner shall designate an independent investment banking
firm or other independent expert, the Departing Partner's successor shall
designate an independent investment banking firm or other independent expert,
and such firms or experts shall mutually select a third independent investment
banking firm or independent expert, which third independent investment banking
firm or other independent expert shall determine the fair market value of the
General Partner Interest of the Departing Partner. In making its determination,
such third independent investment banking firm or other independent expert may
consider the value of the Partnership's assets, the rights and obligations of
the Departing Partner and other factors it may deem relevant.
(b) The Departing Partner shall be entitled to receive all
reimbursements due such Departing Partner pursuant to Section 7.4, including any
employee-related liabilities (including severance liabilities), incurred in
connection with the termination of any employees employed by such Departing
Partner for the benefit of the Partnership.
Section 11.4. Withdrawal of a Limited Partner.
Without the prior written consent of the General Partner, which may be
granted or withheld in its sole discretion, and except as provided in Section
10.1, no Limited Partner shall have the right to withdraw from the Partnership.
ARTICLE XII
DISSOLUTION AND LIQUIDATION
Section 12.1. Dissolution.
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the removal or withdrawal of the General Partner, if a successor General Partner
is elected pursuant to Section 11.1 or Section 11.2, the Partnership shall not
be dissolved and such successor General Partner shall continue the business of
the Partnership. The Partnership shall dissolve, and (subject to Section 12.2)
its affairs shall be wound up, upon:
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
37
(a) an Event of Withdrawal of the General Partner as provided in Section
11.1(a) (other than Section 11.1(a)(ii)), unless a successor is elected and an
Opinion of Counsel is received as provided in Section 11.1(b) or Section 11.2
and such successor is admitted to the Partnership pursuant to Section 10.4;
(b) an election to dissolve the Partnership by the General Partner that
is approved by all of the Limited Partners;
(c) the entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Delaware LP Act;
(d) the sale of all or substantially all of the assets and properties of
the Partnership Group; or
(e) the dissolution of the MLP.
Section 12.2. Continuation of the Business of the Partnership After Dissolution.
Upon dissolution of the Partnership following an Event of Withdrawal
caused by the withdrawal or removal of the General Partner as provided in
Section 11.1(a)(i) or Section 11.1(a)(iii) and the failure of the Partners to
select a successor to such Departing Partner pursuant to Section 11.1 or Section
11.2, then within 90 days thereafter, all of the Limited Partners may elect to
reconstitute the Partnership and continue its business on the same terms and
conditions set forth in this Agreement by forming a new limited partnership on
terms identical to those set forth in this Agreement and having as a General
Partner a Person approved by a majority in interest of the Limited Partners. In
addition, upon dissolution of the Partnership pursuant to Section 12.1(e), if
the MLP is reconstituted pursuant to Section 12.2 of the MLP Agreement, the
reconstituted MLP may, within 180 days after such event of dissolution, acting
alone, regardless of whether there are any other Limited Partners, elect to
reconstitute the Partnership in accordance with the immediately preceding
sentence. Upon any such election by the Limited Partners or the MLP, as the case
may be, all Partners shall be bound thereby and shall be deemed to have approved
same. Unless such an election is made within the applicable time period as set
forth above, the Partnership shall conduct only activities necessary to wind up
its affairs. If such an election is so made, then:
(a) the reconstituted Partnership shall continue unless earlier
dissolved in accordance with this Article XII;
(b) if the successor General Partner is not the former General Partner,
then the interest of the former General Partner shall be purchased by the
successor General Partner; and
(c) all necessary steps shall be taken to cancel this Agreement and the
Certificate of Limited Partnership and to enter into and, as necessary, to file,
a new partnership agreement and certificate of limited partnership, and the
successor General Partner may for this purpose exercise the powers of attorney
granted the General Partner pursuant to Section 2.6; provided, that the
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
38
right to approve a successor General Partner and to reconstitute and to continue
the business of the Partnership shall not exist and may not be exercised unless
the Partnership has received an Opinion of Counsel that (x) the exercise of the
right would not result in the loss of limited liability of the Limited Partners
or any limited partner of the MLP and (y) neither the Partnership, the
reconstituted limited partnership, the MLP nor any Group Member would be treated
as an association taxable as a corporation or otherwise be taxable as an entity
for federal income tax purposes upon the exercise of such right to continue (to
the extent not already so treated or taxed).
Section 12.3. Liquidator.
Upon dissolution of the Partnership, unless the Partnership is continued
under an election to reconstitute and continue the Partnership pursuant to
Section 12.2, the General Partner shall select one or more Persons to act as
Liquidator. The Liquidator (if other than the General Partner) shall be entitled
to receive such compensation for its services as may be approved by a majority
of the Limited Partners. The Liquidator (if other than the General Partner)
shall agree not to resign at any time without 15 days' prior notice and may be
removed at any time, with or without cause, by notice of removal approved by a
majority in interest of the Limited Partners. Upon dissolution, removal or
resignation of the Liquidator, a successor and substitute Liquidator (who shall
have and succeed to all rights, powers and duties of the original Liquidator)
shall within 30 days thereafter be approved by at least a majority in interest
of the Limited Partners. The right to approve a successor or substitute
Liquidator in the manner provided herein shall be deemed to refer also to any
such successor or substitute Liquidator approved in the manner herein provided.
Except as expressly provided in this Article XII, the Liquidator approved in the
manner provided herein shall have and may exercise, without further
authorization or consent of any of the parties hereto, all of the powers
conferred upon the General Partner under the terms of this Agreement (but
subject to all of the applicable limitations, contractual and otherwise, upon
the exercise of such powers, other than the limitation on sale set forth in
Section 7.3(b)) necessary or appropriate to carry out the duties and functions
of the Liquidator hereunder for and during the period of time required to
complete the winding up and liquidation of the Partnership as provided for
herein.
Section 12.4. Liquidation.
The Liquidator shall proceed to dispose of the assets of the Partnership,
discharge its liabilities, and otherwise wind up its affairs in such manner and
over such period as determined by the Liquidator, subject to Section 17-804 of
the Delaware LP Act and the following:
(a) Disposition of Assets. The assets may be disposed of by public or
private sale or by distribution in kind to one or more Partners on such terms as
the Liquidator and such Partner or Partners may agree. If any property is
distributed in kind, the Partner receiving the property shall be deemed for
purposes of Section 12.4(c) to have received cash equal to its fair market
value; and contemporaneously therewith, appropriate cash distributions must be
made to the other Partners. The Liquidator may defer liquidation or distribution
of the Partnership's assets
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
39
for a reasonable time if it determines that an immediate sale or distribution of
all or some of the Partnership's assets would be impractical or would cause
undue loss to the Partners. The Liquidator may distribute the Partnership's
assets, in whole or in part, in kind if it determines that a sale would be
impractical or would cause undue loss to the Partners.
(b) Discharge of Liabilities. Liabilities of the Partnership include
amounts owed to the Liquidator as compensation for serving in such capacity
(subject to the terms of Section 12.3) and amounts owed to Partners otherwise
than in respect of their distribution rights under Article VI. With respect to
any liability that is contingent, conditional or unmatured or is otherwise not
yet due and payable, the Liquidator shall either settle such claim for such
amount as it thinks appropriate or establish a reserve of cash or other assets
to provide for its payment. When paid, any unused portion of the reserve shall
be distributed as additional liquidation proceeds.
(c) Liquidation Distributions. All property and all cash in excess of
that required to discharge liabilities as provided in Section 12.4(b) shall be
distributed to the Partners in accordance with, and to the extent of, the
positive balances in their respective Capital Accounts, as determined after
taking into account all Capital Account adjustments (other than those made by
reason of distributions pursuant to this Section 12.4(c)) for the taxable year
of the Partnership during which the liquidation of the Partnership occurs (with
such date of occurrence being determined pursuant to Treasury Regulation Section
1.704-1(b)(2)(ii)(g)), and such distribution shall be made by the end of such
taxable year (or, if later, within 90 days after said date of such occurrence).
Section 12.5. Cancellation of Certificate of Limited Partnership.
Upon the completion of the distribution of Partnership cash and property
as provided in Section 12.4 in connection with the liquidation of the
Partnership, the Partnership shall be terminated and the Certificate of Limited
Partnership, and all qualifications of the Partnership as a foreign limited
partnership in jurisdictions other than the State of Delaware, shall be canceled
and such other actions as may be necessary to terminate the Partnership shall be
taken.
Section 12.6. Return of Contributions.
The General Partner shall not be personally liable for, and shall have no
obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate, the return of the Capital Contributions of the Limited
Partners, or any portion thereof, it being expressly understood that any such
return shall be made solely from Partnership assets.
Section 12.7. Waiver of Partition.
To the maximum extent permitted by law, each Partner hereby waives any
right to partition of the Partnership property.
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
40
Section 12.8. Capital Account Restoration.
No Limited Partner shall have any obligation to restore any negative
balance in its Capital Account upon liquidation of the Partnership. The General
Partner shall be obligated to restore any negative balance in its Capital
Account upon liquidation of its interest in the Partnership by the end of the
taxable year of the Partnership during which such liquidation occurs, or, if
later, within 90 days after the date of such liquidation.
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT
Section 13.1. Amendment to be Adopted Solely by the General Partner.
Each Partner agrees that the General Partner, without the approval of any
Partner or Assignee, may amend any provision of this Agreement and execute,
swear to, acknowledge, deliver, file and record whatever documents may be
required in connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the
principal place of business of the Partnership, the registered agent of the
Partnership or the registered office of the Partnership;
(b) admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement;
(c) a change that the General Partner determines to be 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 to ensure that no Group Member will be
treated as an association taxable as a corporation or otherwise taxed as an
entity for federal income tax purposes;
(d) a change that the General Partner determines, (i) does not adversely
affect the Limited Partners (including any particular class of Partnership
Interests as compared to other classes of Partnership Interests) in any material
respect, (ii) to be necessary or appropriate to (A) satisfy any requirements,
conditions or guidelines contained in any opinion, directive, order, ruling or
regulation of any federal or state agency or judicial authority or contained in
any federal or state statute (including the Delaware LP Act) or (B) facilitate
the trading of limited partner interests of the MLP (including the division of
any class or classes of outstanding limited partner interests of the MLP into
different classes to facilitate uniformity of tax consequences within such
classes of limited partner interests of the MLP) or comply with any rule,
regulation, guideline or requirement of any National Securities Exchange (as
defined in the MLP Agreement) on which such limited partner interests are or
will be listed for trading, , (iii) is required to effect the intent expressed
in the Registration Statement or the intent of the provisions of this Agreement
or is otherwise contemplated by this Agreement or (iv) is required
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
41
to conform the provisions of this Agreement with the provisions of the MLP
Agreement as the provisions of the MLP Agreement may be amended, supplemented or
restated from time to time;
(e) a change in the fiscal year or taxable year of the Partnership and
any other changes that the General Partner determines to be necessary or
appropriate as a result of a change in the fiscal year or taxable year of the
Partnership including, if the General Partner shall so determine, a change in
the definition of "Quarter" and the dates on which distributions are to be made
by the Partnership;
(f) an amendment that is necessary, in the Opinion of Counsel, to
prevent the Partnership, or the General Partner or its members, directors,
officers, trustees or agents from in any manner being subjected to the
provisions of the Investment Company Act of 1940, as amended, the Investment
Advisers Act of 1940, as amended, or "plan asset" regulations adopted under the
Employee Retirement Income Security Act of 1974, as amended, regardless of
whether such are substantially similar to plan asset regulations currently
applied or proposed by the United States Department of Labor;
(g) any amendment expressly permitted in this Agreement to be made by
the General Partner acting alone;
(h) an amendment effected, necessitated or contemplated by a Merger
Agreement approved in accordance with Section 14.3;
(i) an amendment that the General Partner determines to be necessary or
appropriate to reflect and account for the formation by the Partnership of, or
investment by the Partnership in, any corporation, partnership, joint venture,
limited liability company or other entity, in connection with the conduct by the
Partnership of activities permitted by the terms of Section 2.4;
(j) a merger or conveyance pursuant to Section 14.3(d); or
(k) any other amendments substantially similar to the foregoing.
Section 13.2. Amendment Procedures.
Except with respect to amendments of the type described in Section 13.1,
all amendments to this Agreement shall be made in accordance with the following
requirements: Amendments to this Agreement may be proposed only by or with the
consent of the General Partner. Any determination by the General Partner to
propose or consent to an amendment to this Agreement shall be at its option. A
proposed amendment shall be effective upon its approval by the Limited Partners.
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
42
ARTICLE XIV
MERGER
Section 14.1. Authority.
The Partnership may merge or consolidate with one or more corporations,
limited liability companies, business trusts or associations, real estate
investment trusts, common law trusts or unincorporated businesses, including a
general partnership or limited partnership, formed under the laws of the State
of Delaware or any other state of the United States of America, pursuant to a
written agreement of merger or consolidation ("Merger Agreement") in accordance
with this Article XIV.
Section 14.2. Procedure for Merger or Consolidation.
Merger or consolidation of the Partnership pursuant to this Article XIV
requires the prior approval of the General Partner. Any determination by the
General Partner to approve a merger or consolidation shall be at its option. If
the General Partner shall determine to consent to the merger or consolidation,
the General Partner shall approve the Merger Agreement, which shall set forth:
(a) the names and jurisdictions of formation or organization of each of
the business entities proposing to merge or consolidate;
(b) the name and jurisdiction of formation or organization of the
business entity that is to survive the proposed merger or consolidation (the
"Surviving Business Entity");
(c) the terms and conditions of the proposed merger or consolidation;
(d) the manner and basis of exchanging or converting the equity
securities of each constituent business entity for, or into, cash, property or
general or limited partner interests, rights, securities or obligations of the
Surviving Business Entity; and (i) if any general or limited partner interests,
securities or rights of any constituent business entity are not to be exchanged
or converted solely for, or into, cash, property or general or limited partner
interests, rights, securities or obligations of the Surviving Business Entity,
the cash, property or general or limited partner interests, rights, securities
or obligations of any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity) that the holders of such general or
limited partner interests, securities or rights are to receive in exchange for,
or upon conversion of their general or limited partner interests, securities or
rights, and (ii) in the case of securities represented by certificates, upon the
surrender of such certificates, which cash, property or general or limited
partner interests, rights, securities or obligations of the Surviving Business
Entity or any general or limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity), or evidences thereof, are to be
delivered;
(e) a statement of any changes in the constituent documents or the
adoption of new constituent documents (the articles or certificate of
incorporation, articles of trust, declaration of
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
43
trust, certificate or agreement of limited partnership or other similar charter
or governing document) of the Surviving Business Entity to be effected by such
merger or consolidation;
(f) the effective time of the merger, which may be the date of the
filing of the certificate of merger pursuant to Section 14.4 or a later date
specified in or determinable in accordance with the Merger Agreement (provided,
that if the effective time of the merger is to be later than the date of the
filing of the certificate of merger, the effective time shall be fixed no later
than the time of the filing of the certificate of merger and stated therein);
and
(g) such other provisions with respect to the proposed merger or
consolidation that the General Partner determines to be necessary or appropriate
by the General Partner.
Section 14.3. Approval by Limited Partners of Merger or Consolidation.
(a) Except as provided in Section 14.3(d), the General Partner, upon its
approval of the Merger Agreement, shall direct that the Merger Agreement be
submitted to a vote of the Limited Partners, whether at a special meeting or by
written consent, in either case in accordance with the requirements of Article
XIII. A copy or a summary of the Merger Agreement shall be included in or
enclosed with the notice of a special meeting or the written consent.
(b) Except as provided in Section 14.3(d), the Merger Agreement shall be
approved upon receiving the affirmative vote or consent of the Limited Partners.
(c) Except as provided in Section 14.3(d), after such approval by vote
or consent of the Limited Partners, and at any time prior to the filing of the
certificate of merger pursuant to Section 14.4, the merger or consolidation may
be abandoned pursuant to provisions therefor, if any, set forth in the Merger
Agreement.
(d) Notwithstanding anything else contained in this Article XIV or in
this Agreement, the General Partner is permitted without Limited Partner
approval, to convert the Partnership or any Group Member into a new limited
liability entity, to merge the Partnership or any Group Member into, or convey
all of the Partnership's assets to, another limited liability entity that shall
be newly formed and shall have no assets, liabilities or operations at the time
of such Merger other than those it receives from the Partnership or other Group
Member if (i) the General Partner has received an Opinion of Counsel that the
conversion, merger or conveyance, as the case may be, would not result in the
loss of the limited liability of any Limited Partner or any limited partner in
the MLP or cause the Partnership or the MLP to be treated as an association
taxable as a corporation or otherwise to be taxed as an entity for federal
income tax purposes (to the extent not previously treated as such), (ii) the
sole purpose of such conversion, merger or conveyance is to effect a mere change
in the legal form of the Partnership into another limited liability entity and
(iii) the governing instruments of the new entity provide the Limited Partners
and the General Partner with substantially the same rights and obligations as
are herein contained.
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
44
Section 14.4. Certificate of Merger.
Upon the required approval by the General Partner and the Limited Partners
of a Merger Agreement, a certificate of merger shall be executed and filed with
the Secretary of State of the State of Delaware in conformity with the
requirements of the Delaware LP Act.
Section 14.5. Effect of Merger.
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the
business entities that has merged or consolidated, and all property, real,
personal and mixed, and all debts due to any of those business entities
and all other things and causes of action belonging to each of those
business entities, shall be vested in the Surviving Business Entity and
after the merger or consolidation shall be the property of the Surviving
Business Entity to the extent they were of each constituent business
entity;
(ii) the title to any real property vested by deed or otherwise in
any of those constituent business entities shall not revert and is not in
any way impaired because of the merger or consolidation;
(iii) all rights of creditors and all liens on or security interests
in property of any of those constituent business entities shall be
preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent
business entities shall attach to the Surviving Business Entity and may be
enforced against it to the same extent as if the debts, liabilities and
duties had been incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this Article shall
not be deemed to result in a transfer or assignment of assets or liabilities
from one entity to another.
ARTICLE XV
GENERAL PROVISIONS
Section 15.1. Addresses and Notices.
Any notice, demand, request, report or proxy materials required or
permitted to be given or made to a Partner or Assignee under this Agreement
shall be in writing and shall be deemed given or made when delivered in person
or when sent by first class United States mail or by other means of written
communication to the Partner or Assignee at the address appearing on the books
and records of the Partnership. Any notice to the Partnership shall be deemed
given if received by the General Partner at the principal office of the
Partnership designated pursuant to Section 2.3. The General Partner may rely and
shall be protected in relying on any notice or other document from a Partner,
Assignee or other Person if believed by it to be genuine.
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
45
Section 15.2. Further Action.
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 15.3. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 15.4. Integration.
This Agreement constitutes the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto.
Section 15.5. Creditors.
None of the provisions of this Agreement shall be for the benefit of, or
shall be enforceable by, any creditor of the Partnership.
Section 15.6. Waiver.
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
breach of any other covenant, duty, agreement or condition.
Section 15.7. Counterparts.
This Agreement may be executed in counterparts, all of which together
shall constitute an agreement binding on all the parties hereto, notwithstanding
that all such parties are not signatories to the original or the same
counterpart. Each party shall become bound by this Agreement immediately upon
affixing its signature hereto, independently of the signature of any other
party.
Section 15.8. Applicable Law.
This Agreement shall be construed in accordance with and governed by the
laws of the State of Delaware, without regard to the principles of conflicts of
law.
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
46
Section 15.9. Invalidity of Provisions.
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
Section 15.10. Consent of Partners.
Each Partner hereby expressly consents and agrees that, whenever in this
Agreement it is specified that an action may be taken upon the affirmative vote
or consent of less than all of the Partners, such action may be so taken upon
the concurrence of less than all of the Partners and each Partner shall be bound
by the results of such action.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
47
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
GENERAL PARTNER:
HEP LOGISTICS GP, L.L.C.
By:______________________________________
Name:____________________________________
Title:___________________________________
LIMITED PARTNER:
▇▇▇▇▇ ENERGY PARTNERS, L.P.
By: HEP LOGISTICS HOLDINGS, L.P.
its General Partner
By: ▇▇▇▇▇ LOGISTIC SERVICES, L.L.C.
its General Partner
By:____________________________
Name:__________________________
Title:_________________________
SIGNATURE PAGE
HEP OPERATING COMPANY, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP