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EXHIBIT 10.2
LP AGREEMENT
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Limited Partnership Agreement of
▇▇▇▇▇▇▇▇▇▇▇ Global Compression Services, L.P.,
By and Among
Weatherford Global Compression Holding, L.L.C.,
a Delaware limited liability company, as the sole General Partner,
▇▇▇▇▇▇▇▇▇▇▇ Enterra Compression Company, L.P.,
a Delaware limited partnership, as a Limited Partner,
and
Global Compression Services, Inc.,
a Delaware corporation, as a Limited Partner
Dated as of February 2, 1999
THE LIMITED PARTNERSHIP INTERESTS OF THE PARTNERSHIP UNDER THIS PARTNERSHIP
AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR UNDER ANY APPLICABLE STATE SECURITIES LAWS. THESE INTERESTS MAY NOT BE SOLD,
ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF AT ANY TIME WITHOUT (i) EFFECTIVE
REGISTRATION UNDER SUCH ACT AND LAWS OR EXEMPTIONS THEREFROM AND (ii) IN
COMPLIANCE WITH THIS PARTNERSHIP AGREEMENT.
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS..........................................................................................1
Section 1.1. Definitions............................................................................1
ARTICLE II
FORMATION; PURPOSES; DURATION........................................................................2
Section 2.1. Formation and Name.....................................................................2
2.1.1. Formation........................................................................2
2.1.2. Name.............................................................................2
2.1.3. Governmental Filings.............................................................2
2.1.4. Registered Office and Registered Agent...........................................2
Section 2.2. Purpose of the Partnership.............................................................2
Section 2.3. Place of Business......................................................................2
Section 2.4. Designation of Partners................................................................2
Section 2.5. Term of Partnership....................................................................3
Section 2.6. Certain Restrictions...................................................................3
2.6.1. Resignation......................................................................3
2.6.2. Other Restrictions on Partners...................................................3
Section 3.1. Capital Contributions..................................................................3
(a) General Partner.....................................................................3
(b) By WECC.............................................................................3
(c) By Global...........................................................................3
(d) Partnership Expenses................................................................3
(e) Partner Capital Contribution and Return Schedule....................................3
Section 3.2. Return of Capital Contributions........................................................4
Section 3.3. Partnership Interests..................................................................4
Section 3.4. Liability of General Partner...........................................................4
ARTICLE IV
ALLOCATIONS AND DISTRIBUTIONS........................................................................5
Section 4.1. General Application....................................................................5
Section 4.2. General Allocations....................................................................5
(a) General Allocations.................................................................5
(b) Determination of Items Comprising Allocations.......................................5
(c) Loss Limitation.....................................................................5
Section 4.3. Special Allocations....................................................................6
Section 4.4. Allocation of Nonrecourse Liabilities..................................................6
Section 4.5. Transfer of Interest...................................................................7
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Section 4.6. Tax Allocations........................................................................7
(a) Section 704(b) Allocations..........................................................7
(b) Section 704(c) Allocations..........................................................7
(c) Tax Purposes........................................................................8
Section 4.7. Non-Liquidation Event Distributions on Partnership Interests...........................8
(a) Distributions of Cash...............................................................8
(b) Limitation..........................................................................8
(c) Demand for Distribution.............................................................9
Section 4.8. Interest on Depreciation Benefit Shortfall.............................................9
Section 4.9. Distribution of Lease Proceeds.........................................................9
ARTICLE V
OPERATION OF PARTNERSHIP............................................................................10
Section 5.1. Management of Partnership.............................................................10
Section 5.2. Restrictions on General Partner's Authority; Certain Duties of General
Partner.................................................................................10
(a) Restrictions on General Partner's Authority........................................10
(b) Void Action........................................................................10
Section 5.3. Finance Committee.....................................................................12
Section 5.4. Compensation of General Partner.......................................................13
Section 5.5. Specific Obligations of General Partner...............................................13
Section 5.6. Protection of Third Parties...........................................................13
Section 5.7. Outside Ventures of Partners..........................................................14
Section 5.8. Liability; Protection; Indemnity......................................................14
(a) General Partner....................................................................15
(b) Limited Partners...................................................................15
(c) Partnership........................................................................15
(d) Non-exclusive......................................................................16
Section 5.9. Contracts With Related Parties........................................................16
ARTICLE VI
CERTAIN COVENANTS OF THE PARTNERSHIP................................................................17
Section 6.1. Certain Affirmative Covenants.........................................................17
Section 6.2. Certain Negative Covenants............................................................17
Section 6.3. Employee Benefits and Employment Covenants............................................18
ARTICLE VII
ACCOUNTING AND FISCAL AFFAIRS; INSPECTIONS..........................................................18
Section 7.1. Accounting............................................................................21
Section 7.2. Audit.................................................................................21
Section 7.3. Annual Reports; Monthly Reports.......................................................21
Section 7.4. Tax Information and Elections.........................................................21
Section 7.5. Method of Accounting..................................................................22
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Section 7.6. Rights of Inspection; Audit...........................................................22
Section 7.7. General Partner's Books and Records...................................................22
Section 7.8. Bank Accounts.........................................................................22
Section 7.9. Withdrawals of Capital and Additional Contributions...................................22
ARTICLE VIII
TAX MATTERS.........................................................................................23
Section 8.1. Partnership for Tax Purposes..........................................................23
Section 8.2. Tax Elections.........................................................................23
Section 8.3. Notice of Tax Audit...................................................................23
ARTICLE IX
SALE, TRANSFER OR MORTGAGE..........................................................................23
Section 9.1. Transfer Restrictions and Procedures..................................................23
Section 9.2. Sale by WECC..........................................................................23
ARTICLE X
DEFAULT AND DISSOLUTION.............................................................................24
Section 10.1. Events of Default and Withdrawal.....................................................24
(a) LP Event of Default................................................................24
(b) Event of Withdrawal................................................................24
Section 10.2. Election of Nondefaulting or Nonwithdrawing Partner..................................25
(a) Purchase in LP Event of Withdrawal.................................................26
(b) Affiliated Purchaser...............................................................26
(c) Closing............................................................................26
(d) Election to Dissolve for LP Event of Default.......................................26
Section 10.3. Causes of Dissolution................................................................26
Section 10.4. Procedure in Dissolution and Liquidation.............................................27
(a) Winding Up.........................................................................27
(b) Management Rights During Winding Up................................................27
(c) Distributions in Liquidation.......................................................27
(d) Noncash Assets.....................................................................28
Section 10.5. Disposition of Documents and Records.................................................28
Section 10.6. Termination..........................................................................28
ARTICLE XI
PUBLIC OFFERING; PUT; CALL..........................................................................29
Section 11.1. Registration Right...................................................................29
Section 11.2. Put..................................................................................29
(a) Two-year Put.......................................................................29
(b) Put Closing........................................................................29
(c) Weatherford Put Obligation.........................................................30
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(d) Nonexclusive remedy on default.....................................................30
Section 11.3. Call.................................................................................30
11.3.1. Initial Price..................................................................30
11.3.2. Adjusted Price.................................................................30
ARTICLE XII
ARBITRATION.........................................................................................31
Section 12.1. Dispute Resolution; Arbitration......................................................32
ARTICLE XIII
DETERMINATION OF THE MARKET VALUE OF THE PARTNERSHIP................................................32
Section 13.1. Determination of Market Value of the Partnership.....................................32
(a) Negotiation Period.................................................................32
(b) Appraisal Process..................................................................32
(c) Definition of Market Value of the Partnership......................................32
ARTICLE XIV
GENERAL PROVISIONS..................................................................................33
Section 14.1. Complete Agreement; Amendment........................................................34
Section 14.2. Notices..............................................................................34
14.2.1. Addresses......................................................................34
14.2.2. Effective Date of Notices, etc.................................................34
14.2.3. Changes........................................................................35
Section 14.3. Validity.............................................................................35
Section 14.4. Survival of Rights...................................................................35
Section 14.5. Governing Law........................................................................35
Section 14.6. Waiver...............................................................................35
Section 14.7. Remedies in Equity...................................................................35
Section 14.8. No Member Liability..................................................................36
Section 14.9. Terminology..........................................................................36
Section 14.10. Counterparts........................................................................36
Section 14.11. Further Assurances..................................................................36
Annex
Annex I Glossary of Terms
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Exhibits
Exhibit A [Reserved]
Exhibit B 1999 Partnership Annual Business Plan
Exhibit C Ethics/Integrity Policy
Schedules
Schedule 3.1 Capital Contributions and Returns
Schedule 5.2(a)(iv) Same Line of Business
Schedule 7.1 Accounting Policies, Controls and Procedures
Schedule 10.4(d) Investment Banking Firms
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LIMITED PARTNERSHIP AGREEMENT
This Limited Partnership Agreement of ▇▇▇▇▇▇▇▇▇▇▇ Global
Compression Services, L.P., a Delaware limited partnership, dated as of February
2, 1999, is entered into by and among Weatherford Global Compression Holding,
L.L.C., a Delaware limited liability company, as sole General Partner ("General
Partner"), ▇▇▇▇▇▇▇▇▇▇▇ Enterra Compression Company, L.P., a Delaware limited
partnership, as a Limited Partner, and Global Compression Services, Inc., a
Delaware corporation, as a Limited Partner.
R E C I T A L S
WHEREAS, WECC, Global, Weatherford, and GE Capital are parties
to the Formation Agreement, regarding the formation of the Partnership, the
formation of the General Partner, and the acquisition by the Partnership, by
means of contribution, of certain gas compression assets of WECC and the other
Transferring Weatherford Entities and Global in exchange for Partnership
Interests;
WHEREAS, the Partnership and the General Partner have been
formed by filing the Certificate of Limited Partnership and the Certificate of
Formation, respectively, with the Secretary of State of the State of Delaware;
and
WHEREAS, it is a condition precedent to the consummation of
the transactions contemplated by the Formation Agreement that the General
Partner, WECC, as a Limited Partner, and Global, as a Limited Partner, enter
into this LP Agreement;
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. All capitalized or other defined terms used
but not defined in this LP Agreement are used in this LP Agreement with the
meanings assigned thereto in Annex I to this LP Agreement.
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ARTICLE II
FORMATION; PURPOSES; DURATION
Section 2.1. Formation and Name.
2.1.1. Formation. Effective as of the filing of the
Certificate of Limited Partnership under and pursuant to the Delaware Revised
Uniform Limited Partnership Act (as amended from time to time, the "DRULPA"),
Limited, WECC and Global have formed the Partnership as a Delaware limited
partnership for the purposes set forth in this LP Agreement. The Partnership
shall be governed by the DRULPA, except as expressly provided herein to the
contrary.
2.1.2. Name. The name of the Partnership shall be ▇▇▇▇▇▇▇▇▇▇▇
Global Compression Services, L.P.
2.1.3. Governmental Filings. The General Partner shall
promptly execute and acknowledge all certificates and other instruments
conforming with this LP Agreement that are necessary or appropriate to comply
with applicable laws of the State of Delaware and/or the jurisdictions in which
the Partnership conducts business.
2.1.4. Registered Office and Registered Agent. The registered
office of the Partnership in the State of Delaware shall be the initial
registered office designated in the Certificate of Limited Partnership or such
other office (which need not be a place of business of the Partnership) as the
General Partner may designate from time to time in the manner provided by law.
The registered agent of the Partnership in the State of Delaware shall be the
initial registered agent designated in the Certificate of Limited Partnership or
such other Person (as defined in the DRULPA) or Persons as the General Partner
may designate from time to time in the manner provided by law.
Section 2.2. Purpose of the Partnership. The purpose of the Partnership
is to engage, directly or indirectly through subsidiaries, in the Business and
in any activities incidental thereto.
Section 2.3. Place of Business. The principal place of business of the
Partnership shall be located in Dallas, Texas, or in such other location as may
be determined unanimously by the Partners. The Partnership may also conduct
business at such other places both within and without the State of Texas
(including without limitation outside of the United States) as determined by the
General Partner. In the event the Partnership changes the location of its
principal place of business (with the consent of all the Partners), the General
Partner will promptly notify all Limited Partners thereof.
Section 2.4. Designation of Partners. The term "Limited Partners" shall
mean, collectively, each of WECC and Global, and each of their respective
permitted successors and permitted assigns. The term "Partners" shall mean,
collectively, the General Partner and the Limited Partners.
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Section 2.5. Term of Partnership. The term of the Partnership shall be
perpetual unless sooner liquidated or dissolved in accordance with this LP
Agreement.
Section 2.6. Certain Restrictions.
2.6.1. Resignation. No Partner shall have the right, and each
Partner hereby agrees not, to resign from the Partnership; provided, however, a
Partner shall have the power to resign from the Partnership at any time in
violation of this LP Agreement. If a Partner exercises such power in violation
of this LP Agreement, such Partner shall be liable to the Partnership and the
other Partners for all monetary damages suffered by them as a result of such
resignation. In no event shall the Partnership or any Partner have the right,
through specific performance or otherwise, to prevent a Partner from resigning
in violation of this LP Agreement.
2.6.2. Other Restrictions on Partners. No Partner shall have
the right to dissolve, terminate or liquidate, or to petition a court for the
dissolution, termination or liquidation of, the Partnership, except as provided
in this LP Agreement; provided, however, that nothing in this Section 2.6.2
shall impair a Partner's power to resign from the Partnership pursuant to
Section 2.6.1. No Partner at any time shall have the right to petition or to
take any action to subject the Partnership assets or any part thereof to the
authority of any court or other governmental body in connection with any
bankruptcy, insolvency, receivership or similar proceeding.
ARTICLE III
CAPITAL CONTRIBUTIONS; PARTNERSHIP
INTERESTS; LIABILITY OF GENERAL PARTNER
Section 3.1. Capital Contributions.
(a) General Partner. The initial Capital Contribution of the
General Partner to the Partnership is the undivided one percent (1%) of the
Included Weatherford Assets and the undivided one percent (1%) of the Included
Global Assets contributed to Limited by WECC and Global, respectively.
(b) By WECC. The initial Capital Contribution of WECC as a
Limited Partner, to the Partnership, shall be as follows (and is set forth
opposite WECC's name on Schedule 3.1 hereto): an undivided ninety-nine percent
(99%) of the Included Weatherford Assets.
(c) By Global. The initial Capital Contribution of Global, as
a Limited Partner, to the Partnership, shall be as follows (and is set forth
opposite Global's name on Schedule 3.1 hereto):
an undivided ninety-nine percent (99%) of the Included Global Assets.
(d) Partnership Expenses. The Partnership shall be responsible
for the payment when due of all Partnership Expenses. In the event the
Partnership does not have sufficient cash to pay or discharge when due any of
the Partnership Expenses, the General Partner shall be entitled to (but shall
not be obligated to) request all (but not less than all) of the Limited Partners
to make
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additional Capital Contributions or to lend money to the Partnership in an
amount sufficient to enable the Partnership to pay or discharge such Partnership
Expenses, any of which Capital Contributions or loans shall be made only if all
Limited Partners unanimously agree to make such Capital Contributions or loans,
and in such case shall be made only on a pro rata basis as among all Limited
Partners (based upon such Limited Partners' respective Percentage Interests) and
on such other terms as are unanimously agreed to in writing by all Partners.
Notwithstanding the foregoing, no Limited Partner shall have any obligation or
personal liability to contribute money or property or any other assets in excess
of its initial contribution specified in Section 3.1(b) with respect to WECC and
Section 3.1(c) with respect to Global, to, or in respect of debts, liabilities,
Partnership Expenses or other obligations of, the Partnership, or to make loans
to the Partnership, or to guarantee any indebtedness of the Partnership or to
otherwise provide credit support for the Partnership.
(e) Partner Capital Contribution and Return Schedule. All
Capital Contributions by any Partner to the Partnership, less any amounts
returned to such Partners constituting a return of such Capital Contributions
(all such Capital Contributions, less such returned amounts, "Unreturned
Capital"), shall be set forth on Schedule 3.1 hereto, which schedule shall be
periodically revised by the General Partner as necessary.
Section 3.2. Return of Capital Contributions. Except as otherwise
expressly provided in this LP Agreement, no Partner shall (i) be entitled to any
interest or other fixed return with respect to its Capital Contributions, (ii)
be obligated to make any Capital Contribution to the Partnership or (iii) have
any right to demand a return of its Capital Contributions.
Section 3.3. Partnership Interests. On the date hereof, the Partnership
shall issue partnership interests ("Partnership Interests") in the Partnership
in the following percentages: (i) one percent (1%) of such Partnership Interests
shall be issued to the General Partner, (ii) sixty-three and 36/100 percent
(63.36%) of such Partnership Interests shall be issued to WECC, and (iii) thirty
five and 64/100 percent (35.64%) of such Partnership Interests shall be issued
to Global. Partnership Interests will not be certificated, and the General
Partner shall keep a ledger recording the ownership of Partnership Interests by
the Partners. The ledger shall be adjusted by the General Partner to record any
changes in ownership of Partnership Interests effected pursuant to and in
accordance with the terms and conditions set forth in this LP Agreement.
Ownership of their respective Partnership Interests shall entitle the Partners
to the following Percentage Interests in the Partnership and, subject to the
terms and provisions of this LP Agreement, the Partners shall share in the
profits or losses of the Partnership in such Percentage Interests:
WECC 63.36%
Global 35.64%
General Partner 1.00%
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100.00%
======
Unless otherwise agreed in writing by all Partners, no adjustment to the
Percentage Interest of any Partner shall be made except as a result of a
transfer of a Partner's Partnership Interest or a portion thereof pursuant to
Article IX or XI hereof.
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Section 3.4. Liability of General Partner. The General Partner shall
have such liability for the repayment, satisfaction and discharge of the debts,
liabilities and other obligations of the Partnership as is provided by the
DRULPA for the general partner of a limited partnership.
ARTICLE IV
ALLOCATIONS AND DISTRIBUTIONS
Section 4.1. General Application. The rules set forth in Section 4.1
through Section 4.7 of this LP Agreement shall apply for the purposes of
determining each Partner's general allocable share of the items of income, gain,
loss and expense of the Partnership comprising Net Profit or Net Loss of the
Partnership for each Partnership Fiscal Year, determining special allocations of
other items of income, gain, loss and expense, and adjusting the balance of each
Partner's Capital Account to reflect the aforementioned general and special
allocations. For each Partnership Fiscal Year, the special allocations in
Section 4.3 of this LP Agreement shall be made immediately prior to the general
allocations of Section 4.2 of this LP Agreement.
Section 4.2. General Allocations.
(a) General Allocations. The items of income, expense, gain
and loss of the Partnership comprising Net Profit or Net Loss for a Partnership
Fiscal Year shall be allocated among the Persons who were Partners during such
Partnership Fiscal Year in a manner that will, as nearly as possible, cause the
Capital Account balance of each Partner at the end of such Fiscal Year to equal
the excess (which may be negative) of:
(i) The hypothetical distribution (if any) that such
Partner would receive if, on the last day of the Fiscal Year, (x) all
Partnership assets, including cash, were sold for cash equal to their Gross
Asset Value, taking into account any adjustments thereto for such Fiscal Year,
(y) all Partnership liabilities were satisfied in cash according to their terms
limited, with respect to each Nonrecourse Liability, to Gross Asset Value of the
assets securing such liability) and (z) the net proceeds thereof (after
satisfaction of such liabilities) were distributed in full pursuant to Section
4.7 of this LP Agreement, over
(ii) The sum of (x) the amount, if any, which such Partner
is obligated to contribute to the capital of the Partnership, (y) such Partner's
share of the Partnership Minimum Gain determined pursuant to Regulations Section
1.704-2(g), and (z) such Partner's share of Partner Nonrecourse Debt Minimum
Gain determined pursuant to Regulations Section 1.704- 2(i)(5), all computed
immediately prior to the hypothetical sale described above in Section 4.2(a)(i)
of this LP Agreement.
(b) Determination of Items Comprising Allocations.
(i) In the event that the Partnership has Net Profit for a
Fiscal Year,
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(A) for any Partner as to whom the allocation
pursuant to Section 4.2(a) of this Agreement is negative, such allocation shall
be comprised of a proportionate share of each of the Partnership's items of
expense or loss entering into the computation of Net Profit for such Partnership
Fiscal Year; and
(B) the allocation pursuant to Section 4.2(a)
of this Agreement in respect of each Partner (other than a Partner referred to
in Section 4.2(b)(i)(A) of this Agreement) shall be comprised of a proportionate
share of each Partnership item of income, gain, expense and loss entering into
the computation of Net Profit for such Partnership Fiscal Year (other than the
portion of each Partnership item of expense and loss, if any, that is allocated
pursuant to Section 4.2(b)(i)(A) of this LP Agreement).
(ii) In the event that the Partnership has a Net Loss for
a Partnership Fiscal Year,
(A) for any Partner as to whom the allocation
pursuant to Section 4.2(a) of this LP Agreement is positive, such allocation
shall be comprised of a proportionate share of the Partnership's items of income
and gain entering into the computation of Net Loss for such Partnership Fiscal
Year; and
(B) the allocation pursuant to Section 4.2(a)
of this LP Agreement in respect of each Partner (other than a partner referred
to in Section 4.2(b)(ii)(A) of this LP Agreement) shall be comprised of a
proportionate share of each Partnership item of income, gain, expense and loss
entering into the computation of Net Loss and for such Partnership Fiscal Year
(other than the portion of each Partnership item of income and gain, if any,
that is allocated pursuant to Section 4.2(b)(ii)(A) of this LP Agreement).
(iii) For purposes of this Section 4.2, a gain recognized
by the Partnership upon the disposition of an item of Partnership property shall
be considered to be a single item of gain regardless of whether, for federal
income tax purposes, part of the gain is treated differently from the remainder.
(c) Loss Limitation. Notwithstanding anything to the contrary
in this Section 4.2, the amount of items of Partnership expense and loss
allocated pursuant to this Section 4.2 to any Partner shall not exceed the
maximum amount of such items that can be so allocated without causing such
Partner (other than a General Partner) to have an Adjusted Capital Account
Deficit at the end of any Partnership Fiscal Year. All such items in excess of
the limitation set forth in this Section 4.2(b) shall be allocated to the
General Partner.
Section 4.3. Special Allocations. The following special allocations
shall be made in the following order:
(a) In the event that there is a net decrease during a
Partnership Fiscal Year in either Partnership Minimum Gain or Partner
Nonrecourse Debt Minimum Gain, then notwithstanding any other provision of this
Article IV, each Partner shall receive such special allocations of items of
Partnership income and gain as are required in order to conform to
Regulations Section 1.704-2;
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(b) Subject to Section 4.3(a) of this LP Agreement, but
notwithstanding any other provision of this Article IV, items of income and gain
shall be specially allocated to the Partners in a manner that complies with the
"qualified income offset" requirement of Regulations Section
1.704-1(b)(2)(ii)(d)(3);
(c) In the event that a Partner has an deficit Capital Account
balance at the end of any Partnership Fiscal Year which is in excess of the sum
of (i) the amount such Partner is then obligated to restore pursuant to this LP
Agreement, and (ii) the amount such Partner is then deemed to be obligated to
restore pursuant to the penultimate sentences of Regulations Sections 1.704-
2(g)(1) and 1.704-2(i)(5), respectively, such Partner shall be specially
allocated items of Partnership income and gain in an amount of such excess as
quickly as possible, provided that any allocation under this Section 4.3(c)
shall be made only if and to the extent that a Partner would have a deficit
Capital Account balance in excess of such sum after all allocations provided for
in this Article IV have been tentatively made as if this Section 4.3(c) were not
in this Agreement;
(d) Any item of Partnership loss or expense that is
attributable to Partner Nonrecourse Debt shall be specially allocated to the
Partners in the manner in which they share the economic risk of loss (as defined
in Regulations Section 1.752-2) for such Partner Nonrecourse Debt. Each
Nonrecourse Deduction of the Partnership shall be specially allocated among the
Partners in proportion to their Percentage Interests.
The allocations pursuant to Section 4.3 (a), (b) and (c) shall
be comprised of a proportionate share of each of the Partnership's items of
income and gain.
Section 4.4. Allocation of Nonrecourse Liabilities. For purposes of
determining each Partner's share of Nonrecourse Liabilities, if any, of the
Partnership in accordance with Regulations Section 1.752-3(a)(3), the Partners'
interests in Partnership profits shall be determined in accordance with their
Percentage Interests.
Section 4.5. Transfer of Interest. In the event of a transfer of all or
part of a Partnership Interest (in accordance with the provisions of this LP
Agreement) at any time other than the end of a Partnership Fiscal Year, the
shares of items of Partnership Net Profit or Net Loss and specially allocated
items allocable to the interest transferred shall be allocated between the
transferor and the transferee in a manner determined by the General Partner in
its sole discretion that is not inconsistent with the applicable provisions of
the Code.
Section 4.6. Tax Allocations.
(a) Section 704(b) Allocations.
(i) Each item of income, gain, loss, deduction or credit
for federal income tax purposes which corresponds to an item of income, gain,
loss or expense that is either taken into account in computing Net Profit or Net
Loss or specially allocated pursuant to Section 4.3 (a "Book Item"), shall be
allocated among the Partners in the same proportion as the corresponding Book
Item is allocated among them pursuant to Section 4.2(a) or Section 4.3 of this
LP Agreement.
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(ii) (A) If the Partnership recognizes Depreciation
Recapture in respect of the sale of any Partnership asset,
(I) the portion of the gain on such sale which is
allocated to a Partner pursuant to Section 4.2 or Section 4.3 of this LP
Agreement shall be treated as consisting of a portion of the Partnership's
Depreciation Recapture on the sale and a portion of the balance of the
Partnership's gain on such sale under principles consistent with Regulations
Section 1.1245-1; and
(II) if, for federal income tax purposes, the
Partnership recognizes both "unrecaptured 1250 gain" (as defined in Section 1(h)
of the Code) and gain treated as ordinary income under Section 1250(a) of the
Code in respect of such sale, the amount treated as Depreciation Recapture under
Section 4.6(a)(ii)(A)(I) of this LP Agreement shall be comprised of a
proportionate share of both such types of gain.
(B) For purposes of this Section 4.6(a)(ii),
"Depreciation Recapture" shall mean the portion of any gain from the disposition
of an asset of the Partnership which, for federal income tax purposes: (i) is
treated as ordinary income under Section 1245 of the Code; (ii) is treated as
ordinary income under Section 1250 of the Code; or (iii) is "unrecaptured 1250
gain" as such term is defined in Section 1(h) of the Code.
(b) Section 704(c) Allocations. In the event any property of
the Partnership is credited to the Capital Account of a Partner at a value other
than its tax basis (whether as a result of a contribution of such property or a
revaluation of such property pursuant to subparagraph (b) of the definition of
"Gross Asset Value"), then allocations of taxable income, gain, loss and
deductions with respect to such property shall be made in a manner which will
comply with Section 704(c) of the Code and the Regulations thereunder. The
Partnership, in the sole discretion of tax matters partner, may make, or not
make, "curative" or "remedial" allocations (within the meaning of the Treasury
Regulations under Section 704(c) of the Code) including without limitation (i)
"curative" allocations which offset the effect of the "ceiling rule" for a prior
Partnership year (within the meaning of Treasury Regulation Section
1.704-3(c)(3)(ii)); and (ii) "curative" allocations from dispositions of
contributed property (within the meaning of Regulations Section 1.704-
3(c)(3)(iii)(B)). To the extent permitted by the Code and Regulations, the tax
matters partner, in the exercise of its discretion and with the consent of WECC,
may elect or not elect, with respect to amortization of all "section 197
intangibles" (as defined in the Code) contributed to the Partnership by WECC
(directly or indirectly through the General Partner) curative allocations if
such allocations are permissible, and if such curative allocations are not
permissible, then remedial allocations.
(c) Tax Purposes. The tax allocations made pursuant to this
Section 4.6 shall be solely for tax purposes and shall not affect any Partner's
Capital Account or share of non-tax allocations or distributions under this LP
Agreement.
Section 4.7. Non-Liquidation Event Distributions on Partnership
Interests.
(a) Distributions of Cash. On each Distribution Date the
General Partner shall cause the Partnership to distribute all Available Cash to
the Partners in accordance with their respective Percentage Interests on the
Distribution Date. The General Partner shall direct all such distributions
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to the Partners at the addresses specified on the signature pages of this
Agreement or such other address of which a Partner may notify the Partnership in
writing; provided, that, no distributions shall be made if the Partnership is
then insolvent or would thereby be made insolvent or rendered unable to carry on
its business purposes, or if the fair value of the Partnership's assets after
such distribution would be insufficient to meet its liabilities.
(b) Limitation. Notwithstanding the foregoing, except for the
Payment Obligation, the General Partner shall not be required at any time to
make any distribution of Available Cash to Partners if on the Distribution Date
such distribution would violate Section 17-607 of the Act or other applicable
law.
(c) Demand for Distribution. Except as otherwise provided in
this Section 4.7, no Partner shall be entitled to demand and receive a
distribution of Partnership property in return for its Capital Contributions to
the Partnership.
Section 4.8. Interest on Depreciation Benefit Shortfall.
Notwithstanding anything to the contrary in this LP Agreement, for so long as
Global is a Partner, WECC shall make an annual payment to Global equal to the
Depreciation Benefit Shortfall Amount (the "DBSA"), calculated as set forth
below. The payment for each Partnership Fiscal Year shall be paid to Global no
later than February 15 of the following year. The Partners and Partnership agree
to treat the DBSA as a guaranteed payment for the use of assets contributed by
Global to the Partnership under Section 707(c) of the Code, and to charge the
DBSA exclusively against the Capital Account of WECC.
The DBSA for any Partnership Fiscal Year shall mean the sum of:
(A) the product of (i) CFD (as defined below) as of
the end of the preceding Fiscal Year, and (ii) 2.1 percent (2.1%); plus
(B) the product of (i) the excess, if any, of CFD as
of the end of the current Partnership Fiscal Year over CFD as of the end of the
preceding Partnership Fiscal Year and (ii) 1.05 percent (1.05%).
(C) If any of Global's Partnership Interests is sold
or otherwise transferred or conveyed to a person who is not an Affiliate, the
DBSA shall be reduced by multiplying the DBSA as calculated above by a fraction
the numerator of which shall be the percentage owned by Global or its Affiliates
in the Partnership and the denominator of which shall be 36.0.
The following definitions shall apply for purposes of this Section 4.8:
"CFD" as of the end of a Partnership Fiscal Year
shall mean the excess, if any, of (A) over (B), where (A) is the dollar amount
of cumulative depreciation and amortization with respect to all assets
contributed by Global (directly or indirectly through the General Partner) upon
formation of the Partnership for all periods commencing with the Closing Date
and ending on the last day of such Partnership Fiscal Year that would have been
allowable to Global for federal income tax purposes with respect to the assets
it contributed to the Partnership if Global had not
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contributed such assets to the Partnership, and (B) is the dollar amount of
cumulative depreciation and amortization (or the equivalent amount of rental
deductions in the event that WECC or the Partnership is treated for federal
income tax purposes as the lessee of any of the assets it contributed to the
Partnership) with respect to all assets contributed by Global, WECC, and the
General Partner upon formation of the Partnership for all periods commencing
with the Closing Date and ending on the last day of such Partnership Fiscal Year
that was allocated to Global (directly or indirectly through the General
Partner) for federal income tax purposes pursuant to this Article IV (including
any remedial allocations of negative amounts to Global or curative allocations
of deduction items to Global (directly or indirectly through the General
Partner) or income items to WECC pursuant to Section 4.6(b)). Both clauses (A)
and (B) include depreciation and amortization on any assets acquired in a
nonrecognition transaction in exchange for any of the contributed assets to the
extent that such depreciation and amortization with respect to the acquired
asset is determined by reference to the adjusted tax basis of the contributed
asset that was exchanged therefor.
For purposes of clause (B) above of the definition of
DBSA, for the first Partnership Fiscal Year of the Partnership the quantity 1.05
percent (1.05%) in subclause (ii) shall instead be 0.9625 percent (0.9625%).
Section 4.9. Distribution of Lease Proceeds. The Partnership will make
a distribution in accordance with Section 6.1(d) of this LP Agreement.
ARTICLE V
OPERATION OF PARTNERSHIP
Section 5.1. Management of Partnership. Subject to the terms of this LP
Agreement, the business and affairs of the Partnership shall be managed and
conducted by the General Partner, which shall exercise full and exclusive
control over the affairs of the Partnership and shall have full authority to
take all actions necessary or appropriate to pursue the business and carry out
the purpose of the Partnership. The General Partner shall devote such time as it
considers necessary, in its commercially reasonable discretion, to conduct the
business of the Partnership. The Limited Partners shall have no authority to
manage or conduct the business of the Partnership, or to approve of any action
by the General Partner, except as hereinafter specifically provided.
Section 5.2. Restrictions on General Partner's Authority; Certain
Duties of General Partner. (a) Restrictions on General Partner's Authority.
Subject to any other restrictions on the following set forth in this LP
Agreement, a unanimous vote of all of the Partners and all of the members of the
Board of Directors of the General Partner, shall be necessary to approve, enter
into, effect or operate under:
(i) The taking of any Bankruptcy Action;
(ii) Any transfer, sale, assignment, conveyance or other
disposition, or any pledge, mortgage, hypothecation or other encumbrance, or any
lease, of any assets or properties of
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the Partnership or any subsidiary thereof, in one transaction or any combination
of transactions, Outside the Ordinary Course of Business;
(iii) Any acquisition of assets or properties by the
Partnership or any subsidiary thereof, or any capital expenditure by the
Partnership or any subsidiary thereof, in one transaction or any combination of
transactions, Outside the Ordinary Course of Business;
(iv) Any merger, consolidation or other combination of the
Partnership with or into any other business entity;
(v) Any change of the Partnership's purpose from that set
forth in Section 2.2 hereof, or any engagement by the Partnership in any
business activity not described in Section 2.2 hereof;
(vi) Any change of, or reorganization or restructure of,
the Partnership into any other legal form, except in accordance with Section
11.1 of this LP Agreement;
(vii) Any change in the Partnership's independent
auditors, or, except as required by GAAP, any material change in the
Partnership's accounting methodology, practices or policies;
(viii) Any Contractual Obligation or other transaction
between the Partnership or the General Partner, and any Affiliate of the
Partnership, any Partner or any Affiliate of any Partner, except for the
Preapproved Contracts;
(ix) Any dissolution, winding up or liquidation of the
Partnership or the General Partner, or any act or omission as a result of which
the Partnership or the General Partner would be dissolved, wound up or
liquidated, in any case in whole or in part, except as provided in Sections
10.2(d) and 10.3(i) hereof;
(x) (A) the Partnership's Annual Business Plan (including
without limitation the operating budget and capital expenditures thereunder) if
at the time such plan is presented for approval EBIT for the current year to
date plus projected EBIT through the end of the current year is less than
seventy percent (70%) of EBIT projected for the current year, or (B) an Annual
Business Plan of the Partnership (including without limitation the operating
budget and capital expenditures thereunder) approved in accordance with the
terms of this LP Agreement if, after such approval, EBIT for the Partnership
Fiscal Year immediately preceding the Partnership Fiscal Year covered by such
Annual Business Plan (as set forth in the Partnership's audited financial
statements for such preceding Partnership Fiscal Year) is less than seventy
percent (70%) of projected EBIT for such preceding Partnership Fiscal Year in
the Partnership's Annual Business Plan covering such preceding Partnership
Fiscal Year;
(xi) Any public announcement regarding Global, GE Capital
or any of their respective Affiliates, the formation of the Partnership or
Limited or any extraordinary event; except that, such a public announcement may
be made by any Partner to the extent such Partner reasonably believes such
announcement is required under applicable law or regulation; provided, however,
that,
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prior to making any such announcement, a Partner will consult on a reasonable
basis with all other Partners as to the need for and scope and substance of such
announcement;
(xii) Any distribution to the Partners of any property
other than cash, or any distribution to the Partners not prescribed by Section
4.7 of this LP Agreement;
(xiii) Any issuance of any Partnership Interests or any
other equity interests in the Partnership other than those issued to the General
Partner, WECC and Global on the date hereof, or any repurchase or redemption of
any Partnership Interests or other equity interests (including without
limitation those of the General Partner, WECC, and Global); or
(xiv) Any incurrence of Indebtedness by the Partnership
other than funded debt incurred to (A) meet budgeted working capital
requirements of the Partnership or (B) finance distributions to Partners
prescribed hereby.
(b) Void Action. Any action taken in violation of Section
5.2(a) shall be null and void.
(c) The General Partner shall cause the Partnership to (i)
maintain the Properties in a good and safe condition and repair, (ii) promptly
comply with all laws, orders and ordinances affecting the Properties, or the use
thereof, (iii) promptly repair, replace or rebuild any part of the Properties
that are destroyed by any casualty, or that become damaged, worn or dilapidated,
and (iv) complete and pay for any structure at any time in the process of
construction or repair on the Properties.
(d) The General Partner shall cause the Partnership to comply
with all laws and regulations applicable to the Partnership, or its Properties
or business. In furtherance but not in limitation of the foregoing, the General
Partner shall (i) cause the Partnership to comply with all Environmental Laws
applicable to the Partnership, or its Properties or business, (ii) cause the
Partnership to implement, or confirm implementation by ▇▇▇▇▇▇▇▇▇▇▇ or GE Capital
of, the actions required by Environmental Laws to correct the conditions
identified in the TRC Reports that violate Environmental Laws, including those
items set forth on Schedules 3.1(l) and 3.2(l) to the Formation Agreement, with
a goal of concluding such actions within six (6) months from the date of this LP
Agreement, or with respect to conditions that cannot be corrected within six (6)
months, as soon as is reasonably practicable, consistent with the requirements
of Environmental Laws, (iii) cause the Partnership to ensure that (x) all
equipment washing takes place on concrete pads, which prevent the discharge of
washwater to the environment without requisite permits or governmental
approvals, (y) secondary containment is provided for all hazardous materials
storage areas, and (z) where appropriate, bottled or municipal water is provided
to employees to prevent the consumption of water from on-site process ▇▇▇▇▇,
(iv) report in writing at least annually to the Limited Partners on the status
of the Partnership with respect to compliance with Environmental Laws and (v)
within 30 days after the Closing, cause the Partnership to retain an
environmental consulting firm to undertake limited sampling for RCRA metals and
volatile organic compounds at or in the vicinity of any ▇▇▇▇▇ field located on
property owned or leased, if allowed by applicable leases, by or for the
Partnership as of the Closing. In connection with such obligation, the General
Partner shall appoint and maintain a committee of its officers and/or employees
to provide semi-
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annual written reports to the General Partner (which reports shall also be
contemporaneously provided to each Limited Partner) as to such compliance. With
respect to costs incurred in connection with clause (ii) above, GE Capital shall
promptly pay or reimburse the Partnership for all reasonable out-of-pocket costs
associated with actions undertaken by the Partnership at the properties or
facilities contributed by Global to the Partnership, and ▇▇▇▇▇▇▇▇▇▇▇ shall
promptly pay or reimburse the Partnership for all reasonable out-of-pocket costs
associated with actions undertaken by the Partnership at properties or
facilities contributed to the Partnership by the Transferring ▇▇▇▇▇▇▇▇▇▇▇
Entities; provided that the Partnership shall not commence any of the actions
listed on Schedule 3.1(l) or 3.2(l) involving additional sampling or remediation
unless it has received notice from the responsible Partner, ▇▇▇▇▇▇▇▇▇▇▇, with
respect to Schedule 3.1(l), or GE Capital, with respect to Schedule 3.2(l)
requesting the Partnership to implement the action or the responsible Partner
fails to commence the required action within 30 days after the Closing Date. All
other costs shall be those of the Partnership.
(e) The Partnership shall at all times operate under an Annual
Business Plan (which shall include an operating and capital expenditure budget,
and projected EBIT for each fiscal quarter of the Partnership for the applicable
Partnership Fiscal Year, and for such Partnership Fiscal Year) approved by the
Board of Directors in advance of the Partnership Fiscal Year to be covered by
such Annual Business Plan, subject to the right of all of the Partners to
approve thereof under Section 5.2(a) of this LP Agreement, and provided that the
Partnership's Annual Business Plan for the 1999 Partnership Fiscal Year has been
approved by all Partners and is attached as Exhibit B to this LP Agreement.
Section 5.3. Finance Committee. The Partnership shall establish a
separate Finance Committee ("Finance Committee") which shall be composed of four
members, two of whom shall at all times be designated by WECC, and two of whom
shall at all times be designated by Global. The purpose of the Finance Committee
will be to report and make recommendations to the General Partner as to such
matters affecting the Partnership as such Finance Committee deems appropriate,
including without limitation the recommendation of Partnership budgets. The
Finance Committee shall meet no less frequently than quarterly.
Section 5.4. Compensation of General Partner. The General Partner shall
be reimbursed all reasonable expenses incurred in managing the Partnership and
acting as tax matters partner thereof, and on request of any Limited Partner
shall provide such Limited Partner with documentary evidence reflecting such
expenses.
Section 5.5. Specific Obligations of General Partner. The General
Partner shall, on behalf of and in the name of the Partnership and in addition
to the general management obligations provided for in Section 5.1 of this LP
Agreement and the obligations of the General Partner provided for elsewhere in
this LP Agreement or by law, have the following specific obligations:
(a) The General Partner shall deposit all of the Partnership's
funds in segregated bank accounts or other segregated investment accounts;
(b) The General Partner shall file certificates and do such
other acts as may be required to qualify and maintain the Partnership as a
limited partnership under the DRULPA and to
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qualify the Partnership to transact business in all such jurisdictions as may be
required under applicable provisions of law, and to maintain such qualification,
and shall do such other acts as the General Partner shall deem necessary or
appropriate to comply with all other applicable provisions of law;
(c) The General Partner shall serve as the "tax matters
partner" (as defined in Section 6231 of the Code) of the Partnership and, as
such, shall have all of the rights and obligations given to a tax matters
partner under the Code and the Regulations. The General Partner shall keep each
Partner informed in writing of any administrative and judicial proceedings. Each
Partner, by its execution of this LP Agreement, consents to the General Partner
serving as the tax matters partner and agrees to execute, acknowledge or verify,
and deliver, such written instruments as may be necessary or appropriate to
evidence such consent;
(d) The General Partner shall take all such action necessary
in order to preserve the treatment of the Partnership as a partnership for
federal tax purposes; and
(e) The General Partner shall use its reasonable best efforts
and take all necessary actions to ensure that the Partnership will be Year 2000
Compliant on or before September 1, 1999. By way of example and not by
limitation, the efforts to be taken by the General Partner shall include (a) the
commission of adequate resources (internal and, if required, in the best
business judgment of the General Partner, external), (b) the hiring of outside
consultants, if necessary, (c) the preparation of contingency plans, and (d)
assessments of customer and supplier viability. In addition, the General Partner
shall provide written quarterly reports to all Limited Partners as to the
progress made in becoming Year 2000 Compliant.
Section 5.6. Protection of Third Parties. Any Person doing any business
with or otherwise dealing in any transaction whatsoever with the General Partner
within the scope of its power and authority under this LP Agreement shall be
entitled to rely fully upon the General Partner's power and authority to bind
the Partnership in that business or transaction.
Section 5.7. Outside Ventures of Partners. Each of WECC and Global and
their respective Affiliates may engage in or possess any interest, whether
direct or indirect, in any other business activity, venture or undertaking of
any type or description, independently or with others, including without
limitation activities, ventures or undertakings involving the acquisition,
development and operation of compression businesses or any interest therein
(whether or not the same may be competitive with the Partnership business or any
business in which the Partnership may have an interest), and neither the
Partnership nor any other Partner will, by virtue of this LP Agreement, have any
right, title or interest in or to such outside activities, ventures or
undertakings, or the income or other benefits derived therefrom. The conduct of
the business of the Partnership may involve business dealings with such
activities, ventures or undertakings. The General Partner shall devote such time
as it considers necessary, in its reasonable discretion, to conduct the business
of the Partnership in a prudent and diligent manner, and shall comply with all
provisions of this LP Agreement, the General Partner's Certificate of Formation
and the LLC Agreement. In addition, WECC agrees to cause its Affiliates to
discuss and seek global alliances with the Partnership for the rental or sale of
compressors or compression services; provided, however, any such services or
alliances are effected on mutually agreeable terms and on an arms'-length basis.
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Section 5.8. Liability; Protection; Indemnity.
(a) General Partner. The General Partner shall have no
liability to the Partnership or any Partner as a result of any error of
judgment, mistake or other action or inaction by the General Partner so long as
the General Partner acted (or failed to act) in good faith and in material
compliance with this LP Agreement and in a manner not involving gross negligence
or reckless or willful misconduct, in a manner it reasonably believed to be
within the scope of the authority conferred upon it by this LP Agreement, and
in, or not opposed to, the best interests of the Partnership. The fact that the
General Partner has obtained the advice of legal counsel selected in good faith
not involving negligence or reckless or willful misconduct that any action or
inaction by it is within the scope of the authority conferred upon the General
Partner by this LP Agreement and in, or not opposed to, the best interests of
the Partnership, shall be conclusive evidence that the General Partner
reasonably believed in good faith that such action or inaction was within the
scope of the authority conferred upon it by this LP Agreement and was in, or not
opposed to, the best interests of the Partnership. The General Partner shall
not, however, be required to procure such advice of legal counsel in order to be
entitled to the benefit of the exculpation or indemnification provided
hereunder. The Partnership shall indemnify and hold harmless the General Partner
against and from any personal loss, liability, or damage incurred by it as a
result of any action or inaction by it in connection with the operation of the
business of the Partnership (excluding actions or inactions for which the
General Partner is not protected under the provisions of this Section 5.8(a)),
except that the General Partner shall not in any way be excused from bearing as
a Partner the same portion of any such indemnification payment by the
Partnership as it would bear of any other payment by the Partnership. The
indemnification of the General Partner hereunder shall be limited to and
recoverable only out of the assets of the Partnership. The indemnification
provided for in this Section 5.8(a), and any obligation of the Partnership to
indemnify a Partner under this LP Agreement or any applicable statute,
regulation or court decision, shall be subordinate to the obligations of the
Partnership to make distributions to the Partners hereunder.
(b) Limited Partners. Except to the extent expressly assumed
in writing by a Limited Partner, no Limited Partner shall be liable for any
debts, obligations or liabilities of the Partnership or any other Partner,
whether arising in tort, contract, or otherwise, solely by reason of being a
Limited Partner, or acting (or omitting to act) in such capacities, or
participating (as a contractor or otherwise) in the conduct of the business of
the Partnership; provided, however, that nothing in this Section 5.8(b) shall be
construed to relieve any Limited Partner of any obligation it may have pursuant
to the Formation Agreement. Except as otherwise specifically provided in this LP
Agreement, no Limited Partner shall have any authority to bind or act for, or
assume any obligations or responsibility on behalf of, the Partnership or the
other Limited Partner. The Partnership shall (i) pay, indemnify and hold the
Limited Partners, as such, and their directors, officers, employees,
shareholders, shareholders of shareholders, and partners, harmless from and
against any and all recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise and other taxes
(other than income and franchise taxes payable with respect to the revenues or
income of such Limited Partners), if any, which may be payable or determined to
be payable in connection with the execution and delivery of, or consummation of
any of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this LP
Agreement; and (ii) pay, indemnify, and hold the Limited Partners, as such, and
their directors, officers, employees,
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shareholders, shareholders of shareholders and partners, harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including attorney's fees),
disbursements, fines or amounts paid in settlement actually incurred, of any
kind or nature whatsoever, including without limitation any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative in nature, with respect to or arising from the
execution, delivery, enforcement, performance and administration of this LP
Agreement and any other related agreements (including without limitation the
Formation Agreement and the LLC Agreement) or the operation of the Partnership
(including, without limitation, liabilities or obligations arising under or
pursuant to Environmental Laws) (all the foregoing, collectively, the "Limited
Partners' Indemnified Liabilities"); provided that, the Partnership shall have
no obligation hereunder to such Limited Partners with respect to the Limited
Partners' Indemnified Liabilities arising from the willful misconduct or gross
negligence of such Limited Partners; and provided further that, such
indemnification shall in no way limit any indemnification or other obligation
that either Limited Partner may have to the other or to the Partnership or to
any Affiliate of the other or the Partnership under the Formation Agreement, all
of which shall be governed by the Formation Agreement. The agreements in this
Section 5.8 shall survive repayment of all amounts owed to the Partners, and
shall extend to the original such Partners and all transferees and subsequent
transferees thereof permitted hereunder.
(c) Partnership. Neither of the Limited Partners shall,
without the prior written consent of all other Partners, take any action on
behalf of or in the name of the Partnership, or enter into any commitment or
obligation binding upon the Partnership, except as expressly provided for in
this LP Agreement. Each Limited Partner shall pay, indemnify and hold harmless
the Partnership and the other Partners and each of their respective Affiliates,
directors, officers, employees, shareholders, shareholders of shareholders, and
partners, harmless from and against any and all claims, demands, losses,
damages, liabilities, suits and other proceedings, judgments and awards, and
costs and expenses (including but not limited to reasonable attorneys' fees)
arising directly or indirectly, in whole or in part, out of any breach of the
immediately preceding sentence by such Partner or its Affiliates, agents or
employees. Nothing in this Section 5.8(c) shall be construed to benefit any
Persons that are not parties to this LP Agreement, it being understood that no
Limited Partner has any personal liability for the liabilities and obligations
of the Partnership, and nothing in this Section 5.8(c) shall be construed to
create any such personal liability to third parties on the part of the Limited
Partners.
(d) Non-exclusive. The indemnification provided by this
Section 5.8 shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any agreement of the Partnership
or a Partner, both as to action in an official capacity and as to action in
another capacity while holding an office of a Person entitled to indemnification
hereunder, and shall continue as to a person who has ceased to hold such an
office and shall inure to the benefit of the heirs, executors and administrators
of such a person; provided, however, the indemnification provided in this
Section 5.8 shall be considered primary to any indemnification rights that an
officer may have against a Partner or its Affiliates and if a Partner or its
Affiliate is required to indemnify an officer for an action, omission or other
matter with respect to which the Partnership would otherwise be required to
indemnify such person hereunder, the Partnership will reimburse that Partner or
Affiliate for any amount so paid.
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Section 5.9. Contracts With Related Parties. Goods supplied and
services rendered, if any, to the Partnership by a Partner or an Affiliate
thereof shall not constitute a Capital Contribution to the capital of the
Partnership by such Partner and shall not be reimbursable by the Partnership
except as specifically provided in this Section 5.9, or as otherwise agreed by
all the Partners. Goods supplied and services rendered, if any, by the
Partnership to any Partner or its Affiliates shall not be deemed a return of
capital to such Partner. The Partnership will offer to either Partner (for the
Partner's own use or use in conjunction with other goods and/or services
provided by such Partner to third parties) its goods and/or services on an
arms'-length basis. It is contemplated that one or more Affiliates of WECC will
provide sales and related services for the Partnership from time to time. Such
services shall be on an arms'-length basis, on terms mutually agreeable between
the Partnership and WECC or such Affiliate of WECC, and on terms approved by all
other Partners. Preapproved Contracts need not be approved on a contract by
contract basis.
ARTICLE VI
CERTAIN COVENANTS OF THE PARTNERSHIP
Section 6.1. Certain Affirmative Covenants. The Partnership shall and
the General Partner shall cause the Partnership to:
(a) Not compensate any of its employees in an amount that is
in excess of that which the General Partner considers to be reasonable relative
to the compression service industry and the services to be provided. The
Partners acknowledge that the current compensation levels of the employees of
the ▇▇▇▇▇▇▇▇▇▇▇ Compression Business and the Global Compression Business are in
compliance with the preceding sentence.
(b) Procure and maintain, or cause to be procured and
maintained, insurance which the General Partner considers to be customary and
reasonable covering the operations of the Partnership, including without
limitation (i) workers' compensation and employers' liability insurance, (ii)
comprehensive general liability insurance, (iii) comprehensive automobile
liability insurance, (iv) protection and indemnity insurance, (v) product
liability insurance, and (vi) all risk property insurance. All insurance
coverages shall be in such amounts and forms as may be approved from time to
time by the General Partner. All such coverages shall provide that the Limited
Partners and their Affiliates be named as additional insureds and further
provide that the insurers waive subrogation rights in favor of the Limited
Partners and their Affiliates. The additional insured and waiver provisions
shall apply only with respect to and to the extent of liabilities of the
Partnership. It is agreed that the Partnership may self-insure any or all
exposures; provided that, any such self insurance may not be undertaken without
the unanimous, express, prior written approval of all Limited Partners. Any or
all of the Partnership's insurance coverages may be included within the
insurance policies maintained by a Limited Partner or its Affiliates; provided
that, (i) such insurance is approved in writing by all Limited Partners, (ii)
the Partnership shall be responsible for the payment of its allocated premiums
and all retentions, deductibles and other payments relating to any claims made
and (iii) such insurance may be terminated or modified at any time by such
Limited Partner or Affiliates upon ten Business Days' prior written notice to
the Partnership and the Limited Partners.
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(c) Adopt, implement and maintain a code of ethics/integrity
policy in form and substance attached as Exhibit C hereto.
(d) As soon as practical after the Closing Date, but in no
event later than sixty (60) days thereafter, the Partnership will sell and lease
back certain assets acquired from Global under the Master Lease and will pay the
Contributed Global Note and make the Payment Obligation.
Section 6.2. Certain Negative Covenants. The Partnership shall not:
(a) Incur any Indebtedness that purports to provide for any
recourse against any Partner or any property or asset of any Partner, except as
may be provided under the Master Lease with respect to one or more ▇▇▇▇▇▇▇▇▇▇▇
Entities. ▇▇▇▇▇▇▇▇▇▇▇ shall be subrogated to the rights of the Lessor against
the assets subject the Master Lease (but not against the Partnership) if there
is a default by the Partnership thereunder and ▇▇▇▇▇▇▇▇▇▇▇ makes payments
thereunder.
Section 6.3. Employee Benefits and Employment Covenants. (a) Offers of
Employment. As soon as practicable following the Closing Date (but in no event
later than April 1, 1999), the Partnership shall offer employment to all active
employees of the Global Compression Business (including employees on vacation)
as of the expiration of the Employee Lease Agreement (other than those employees
of the Global Compression Business listed on Schedule 6.3 (the "Global
Employees")). In addition, the Partnership shall offer employment to those
employees of the Global Compression Business listed on Schedule 6.3 who are
identified on the date of such employment offer as being inactive because of
approved leave of absence, long-term or short-term disability or maternity leave
(the "Leave Employees"), upon their return to active employment, subject to the
following conditions: (i) if on medical leave, such individual is released by
his or her physician to return to active employment; and (ii) such individual
actually reports for active employment with the Partnership immediately upon
such medical release or expiration of approved leave; provided, however, no
individual shall be offered employment under this provision after six (6) months
from the Closing Date or after the expiration of any applicable federal or state
law period, if later. Each such employee who accepts such offer of employment
shall be referred to herein as a "Transferred Employee" upon commencement of
employment with the Partnership. Notwithstanding the above, the Partnership
shall not be obligated to continue the employment of any Transferred Employee
for any period of time following his initial hire date. Global and each of its
Affiliates shall retain liability and responsibility for any benefits in
accordance with the Global Benefits Plans and Global Benefit Programs and
Agreements with respect to Leave Employees until, and if, any such employee
shall be employed by the Partnership.
(b) Terms and Conditions of Employment. The Partnership shall
be liable for severance benefits outlined in Section 6.3(f) below for any Global
Employee or Leave Employee (if such Leave Employee returns to active Employment
within the time frame in Section 6.3(a)) not offered a Comparable Job (as
hereinafter defined); provided, however, that the Partnership shall also be
liable for any costs under the Worker's Adjustment and Retraining Notification
Act, and any similar state or local law. Any Global Employee or Leave Employee
not provided with a Comparable Job will immediately be eligible for severance
benefits outlined in Section 6.3(f) below. The Partnership will provide each
Transferred Employee with employee benefit plans of the
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Partnership as applicable to similarly situated employees of the Partnership
effective as of their date of hire by the Partnership; provided, however, that
with respect to any Global Employee or Leave Employee employed outside of the
United States, the Partnership shall provide such employees with substantially
similar benefits in the aggregate to those they receive immediately prior to the
Closing Date in the event the Partnership does not employ other individuals in
such foreign country. For purposes hereof, "Comparable Job" means employment of
a Transferred Employee in another position with the Partnership that is similar
in respect to title, position and responsibility, is located within 50 miles of
the job site of the employee's current position and is at a total compensation
that is not less than ninety percent (90%) of that of the Transferred Employee's
current position.
(c) Credited Service and Waiver of Pre-Existing Conditions.
The Partnership shall recognize each Transferred Employee's service with Global
or any of its Affiliates (to the extent Global or any of its Affiliates
recognized such service) prior to the expiration of the Employee Lease Agreement
as service with the Partnership or any of its Affiliates in connection with
vacation and any employee benefit plan, including severance, for purposes of any
waiting period, eligibility to participate, vesting, level of benefit and
benefit entitlement (but not benefit accruals) only in which such Transferred
Employees elect to participate and which is available by the Partnership or any
of its Affiliates following the expiration of the Employee Lease Agreement. Any
group medical plan provided by the Partnership or one of its Affiliates for
Transferred Employees from and after the expiration of the Employee Lease
Agreement shall not contain any pre-existing condition limitation or exclusion
applicable to their participation therein and shall give each Transferred
Employee credit toward applicable deductibles and annual out-of-pocket limits
for expenses incurred prior to the expiration of the Employee Lease Agreement
during the applicable plan year.
(d) Vacation. Transferred Employees shall be eligible for
vacation in accordance with the Partnership vacation policy following the
expiration of the Employee Lease Agreement; provided, however, the Partnership
shall recognize the accrued vacation carried over, if any, by each Transferred
Employee and the Partnership will compensate the Transferred Employee for the
difference between the maximum accrual of the Transferred Employee under the
applicable Global vacation plan and the maximum accrual allowed by the
Partnership plan less sick pay benefits of 56 hours for non exempt personnel.
This "Excess" amount will be paid on the first pay period the Transferred
Employee is on the Partnership payroll.
(e) Bonus, Sales Commission and Retention Plans. The
Partnership shall be responsible for and shall pay all (i) sales commissions to
Global Employees which are earned prior to the expiration of the Employee Lease
Agreement but are payable on or following the expiration of the Employee Lease
Agreement in accordance with the terms of the Global Compression Services, Inc.
Sales Incentive Plan, which commissions shall be accrued on Global's Closing
Date Balance Sheet/Financial Statements, (ii) 1998 bonuses due to Global
Employees under the Global Compression Services, Inc. Manager Bonus Plan, which
bonuses shall be accrued on Global's Closing Date Balance Sheet/Financial
Statements and (iii) retention bonuses for those Global Employees set forth on
Schedule 6.3 in accordance with the terms of the Global Compression Services,
Inc. Retention Plan (except that with respect to any such employee who is paid
by GE Capital, the Partnership shall reimburse GE Capital for the amount of such
retention bonus), which retention bonuses shall be accrued on Global's Closing
Date Balance Sheet/Financial Statements.
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The Partnership shall be responsible for the payment of the retention and
severance payments set forth on Schedule 6.3 attached hereto.
(f) Severance. For a period of twelve (12) months following
the Closing Date, the Partnership shall provide benefits upon termination of
employment to any Transferred Employee who is terminated from the Partnership
within such period in such amounts as prescribed under the Global Compression
Services, Inc. Lack of Work Policy and, if applicable, the "Special Assignment
Period of Paid Time with Benefits" as set forth on Schedule 6.3. In addition,
the Partnership shall pay, or reimburse Global or GE Capital for, any severance
costs with respect to any Global Employee or Leave Employee not offered a
Comparable Job in accordance with Section 6.3(b) hereof.
(g) Benefit Plan Participation. Effective 12:00 a.m. on the
expiration of the Employee Lease Agreement, or the day that a Transferred
Employee commences employment with the Partnership, if later, and signed all
benefit plan participation forms that may be appropriate, as applicable, the
active participation of any Transferred Employee in any Global Benefit Plan will
terminate and no further benefits shall accrue under any Global Benefit Plans
with respect to any Transferred Employee or any beneficiary of any Transferred
Employee. Global and its Affiliates shall retain all liability and be
responsible for all claims of Global Employees and Leave Employees incurred on
and prior to the expiration of the Employee Lease Agreement in accordance with
each Global Benefit Plan which is a "group health plan" as defined in Section
5000(b)(1) of the Code (subject to the reimbursement provisions of the Employee
Lease Agreement) and the Partnership or any of its Affiliates shall be
responsible for all claims of Transferred Employees incurred after the
expiration of the Employee Lease Agreement in accordance with each Partnership
benefit plan which is a "group health plan" as defined in Section 5000(b)(1) of
the Code (or such later date a Leave Employee returns to active employment with
the Partnership).
(h) The Partnership shall not assume any Global Benefit Plan
and Global Benefit Programs and Agreements except for the Global Compression
Services, Inc. 401(k) Profit Sharing Plan.
(i) Global and GE Capital shall assume all obligations,
responsibilities and liabilities including severance liability and continuation
coverage under Code Section 4980B and Part 6 of Title 1 of ERISA for all Global
Employees, including Leave Employees who refuse or decline a Comparable Job or
Leave Employees who are not offered employment under Section 6.3(a) after six
(6) months from the Closing Date or after the expiration of any applicable
federal or state law period, if later.
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ARTICLE VII
ACCOUNTING AND FISCAL AFFAIRS; INSPECTIONS
Section 7.1. Accounting. The General Partner shall keep or cause to be
kept full, complete, proper and accurate records and books of account for the
Partnership. Such records and books of account shall be (i) prepared and
presented in accordance with generally accepted accounting principles,
consistently applied ("GAAP"), (ii) maintained on an accrual basis, (iii)
adequate to provide each Partner with all financial information that may be
needed by such Partner or any of its Affiliates for purposes of satisfying the
financial or tax reporting obligations of such Partner or Affiliate, (iv) kept
at the principal office of the Partnership, and (v) open for the inspection,
examination and copying by any Partner or that Partner's authorized
representative as often as may reasonably be desired. The General Partner shall
establish GAAP accounting policies and a system of internal controls and
procedures designed to ensure that the Partnership and any of its subsidiaries
keep and maintain records and books that, in sufficient and reasonable detail,
accurately and fairly reflect all transactions of the Partnership and such
subsidiaries, which policies, controls and procedures are described on Schedule
7.1 attached hereto. The General Partner shall retain such records and books of
account for six (6) years after the termination of the Partnership.
Section 7.2. Audit. The Partnership shall engage as independent
auditors ("Auditors") for the Partnership the firm of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or
such other firm of nationally recognized, independent certified public
accountants as the Partners shall unanimously agree. The Auditors shall at the
end of each Partnership Fiscal Year (i) audit the records and accounts of the
Partnership, and (ii) render their opinion on the statement of financial
condition of the Partnership as of the end of each Partnership Fiscal Year and
related statements of income and changes in financial condition for each
Partnership Fiscal Year.
Section 7.3. Annual Reports; Monthly Reports.
(a) The General Partner shall furnish to each of the Limited
Partners annually, within one hundred twenty (120) days following the end of
each Partnership Fiscal Year, a complete copy of the Partnership's annual
financial statements audited by the Auditors in accordance with GAAP, containing
statements of profit and loss and the balance sheet for the Partnership. Such
statements shall set forth the financial condition and income and expenses for
the Partnership for the immediately preceding Partnership Fiscal Year, including
without limitation, statements of annual net operating income. In addition, the
General Partner shall furnish to each of the Limited Partners, on or before
twenty (20) days after the end of each fiscal quarter, a quarterly report in a
form reasonably acceptable to the Limited Partners, certified by the General
Partner, containing the Partnership's quarterly and year-to-date unaudited
financials, prepared in accordance with GAAP. The General Partner will furnish
to the Limited Partners on a monthly basis the same monthly financial
information with respect to the Partnership as is furnished to senior management
of ▇▇▇▇▇▇▇▇▇▇▇.
(b) The General Partner will furnish to each of the Limited
Partners, promptly but within ten (10) Business Days after request (or if more
than ten (10) Business Days is reasonably necessary, as soon thereafter as may
be reasonably possible), such further detailed
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information with respect to the Partnership's financial condition, results of
operations and affairs as may be reasonably requested by any Limited Partner and
that is directly related to the Properties, business or operations of the
Partnership.
Section 7.4. Tax Information and Elections. The Partnership shall
engage the firm of PricewaterhouseCoopers LLP or such other firm of nationally
recognized, independent certified public accountants as the Partners shall
unanimously agree to prepare and deliver to each Partner, within one hundred
twenty (120) days following the end of each Partnership Fiscal Year, with
respect to such Partnership Fiscal Year the Partnership's return on Form 1065
(or similar form) and a statement showing such information concerning all items
of income, gain, loss, deduction, and credit of the Partnership for federal
income tax purposes, and each Partner's allocable share thereof, as shall be
necessary to permit each Partner to prepare its federal income tax return. A
written estimate of such information to be set forth in such statement shall be
provided by such firm not later than December 1 of the prior Partnership Fiscal
Year, with an updated written estimate to be provided on each of the following
February 15 and March 15, and the final such statement to be provided within
such one hundred twenty (120) day period. The General Partner shall cause all
tax returns and reports required to be filed by the Partnership to be prepared
and timely filed with the appropriate authorities and shall furnish to the
Partners copies of such tax returns and reports promptly after the filing of the
same. The General Partner shall retain such tax returns and reports for the
three most recent Partnership Fiscal Years.
Section 7.5. Method of Accounting. In addition to the financial
statements of the Partnership, all other statements and financial information
provided under this LP Agreement shall be prepared in accordance with GAAP.
Section 7.6. Rights of Inspection; Audit. Each Limited Partner shall
have the right to conduct financial and operational audits of the Partnership
and/or any of its subsidiaries, at its own expense, and the Partnership, such
subsidiaries, the General Partner, the management of the General Partner and the
Auditors shall cooperate fully with the auditors and representatives of the
Limited Partners in connection therewith, including without limitation
responding to any comments and suggestions made thereby. Copies of all internal
audits conducted by a Limited Partner pursuant to this Section 7.6, and all
responses of the General Partner and its management thereto, shall be furnished
to the Limited Partner. If in the course of any audit (or other review) of the
Partnership (including without limitation an audit of any of its subsidiaries),
problems are noted and the response or action of the General Partner made with
regard thereto is deemed by a Limited Partner not to be adequate, the Partners
shall attempt to agree upon a satisfactory resolution. If the Partners cannot
agree, the dispute shall be submitted to the Partnership's Auditors, who shall
attempt to propose a satisfactory resolution.
Section 7.7. General Partner's Books and Records. The General Partner
shall keep or cause to be kept full, complete, proper and accurate records and
books of account for itself.
Section 7.8. Bank Accounts. Funds of the Partnership shall be deposited
in an account or accounts of the Partnership of a type, in a form and in a bank
or banks approved by the General Partner. Withdrawals from Partnership bank
accounts shall be made by officers of the General Partner approved by the Board
of Directors of the General Partner.
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Section 7.9. Withdrawals of Capital and Additional Contributions.
Except as otherwise expressly provided herein, no portion of the capital of the
Partnership may be withdrawn at any time without the approval of all of the
Partners.
ARTICLE VIII
TAX MATTERS
Section 8.1. Partnership for Tax Purposes. The Partners agree that the
Partnership shall be treated as a partnership for tax purposes under the Code,
state and local income tax laws or other laws, and, except as required by law,
further agree not to take any action or to make any election, in a tax return or
otherwise, inconsistent therewith.
Section 8.2. Tax Elections. Subject to Section 4.6(b) of this LP
Agreement, the General Partner, by its Members holding a majority of the
Membership Interests, is authorized to make any and all elections for federal,
state and local tax purposes. In connection with any transfer of a Partnership
Interest pursuant to this LP Agreement, the General Partner shall cause the
Partnership, at the written request of the transferor or transferee, on behalf
of the Partnership and at the time and in the manner provided in Regulations
Section 1.754-1(b), to make an election to adjust the basis of the Partnership's
property in the manner provided in Section 743(b) of the Code, and such
transferee shall pay all costs incurred by the Partnership in connection
therewith, including, without limitation, reasonable attorneys' and accountants'
fees, provided, however, that the General Partner shall not be obligated to
cause the Partnership to make an election pursuant to this Section 8.2 if the
General Partner, in its reasonable discretion, determines that such election may
have a material adverse effect on any other Partner.
Section 8.3. Notice of Tax Audit. Prompt notice shall be given to all
Partners upon receipt of advice that the Internal Revenue Service or any other
taxing authority intends to examine Partnership tax returns for any period.
ARTICLE IX
SALE, TRANSFER OR MORTGAGE
Section 9.1. Transfer Restrictions and Procedures. Each of the Partners
agrees that it will not Transfer all or any part of its Partnership Interest,
except as provided in Article X, Article XI or Section 9.2 and except that any
Partner may Transfer all or any part of its Partnership Interest to any
Affiliate thereof (so long as such Partner directly and beneficially owns at
least 50% (on a fully-diluted basis) of the issued and outstanding equity
securities or other equity interests of such Affiliate), provided that (i)
notice of such Transfer is given by the Partner making such Transfer to all
other Partners, (ii) any such Affiliate to whom any Partnership Interest is to
be transferred pursuant to such Transfer enters into an agreement with all other
Partners, reasonably satisfactory in form and substance as to such other
Partners, pursuant to which such Affiliate agrees to be bound by all the terms
and provisions of this LP Agreement and (iii) any such Affiliate to whom any
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Partnership Interest is so transferred pursuant to such Transfer shall be deemed
to be subject to the same provisions of this LP Agreement as the Partner making
the Transfer. Any purported Transfer in violation of this Section 9.1 shall be
null and void.
Section 9.2. Sale by WECC. Beginning three years from the Closing Date,
so long as the Partnership or a successor entity has not effected an IPO of its
securities pursuant to Section 11.1 of LP Agreement, WECC may sell all (but not
less than all) of its Partnership Interests (including that percentage of the
General Partner's Partnership Interests attributable to WECC's position as a
Member of the General Partner) to a third party, provided that (i) the price
paid for such Partnership Interests is not less than the Net Book Value thereof
on the date of sale, (ii) such price shall be payable only in cash (or, if any
non-cash consideration is to be received, such consideration shall be valued by
a nationally recognized investment banking firm selected by Global), (iii)
Global has the option to sell all (but not less than all) its Partnership
Interests (including that percentage of the General Partner's Partnership
Interests attributable to Global's position as a Member of the General Partner)
on the same terms and conditions as WECC (which shall be reflected in a written
offer by the third party to Global) and (iv) if Global elects not to sell its
Partnership Interests or if such third-party sale is not consummated, Global's
put rights, and WECC's and ▇▇▇▇▇▇▇▇▇▇▇'▇ obligations under Section 11.2 hereof
shall remain in full force and effect (if any such third party sale in which
Global elects to participate is consummated, Global's put rights, and WECC's and
▇▇▇▇▇▇▇▇▇▇▇'▇ obligations, under Section 11.2 hereof shall continue in full
force and effect until the actual time of such consummation).
ARTICLE X
DEFAULT AND DISSOLUTION
Section 10.1. Events of Default and Withdrawal.
(a) LP Event of Default. The occurrence of any of the
following events shall constitute an "LP Event of Default" hereunder on the part
of the Partner with respect to whom such event occurs (the "Defaulting Partner")
if, within 30 days following notice of such default from any other Partner,
which notice shall be provided to all Partners (each Partner with respect to
whom such event does not occur, a "Nondefaulting Partner"), or ten days if the
default is due solely to the nonpayment of monies, such Defaulting Partner fails
to pay such monies, or in the case of non-monetary defaults, fails to commence
substantial efforts to cure such default or thereafter fails within a reasonable
time to prosecute to completion with diligence and continuity the curing of such
default:
(i)the attempted violation by a Partner of any of its
obligations under Article IX of this LP Agreement; or
(ii) material default in the performance of or failure to
comply with any other agreements, obligations or undertakings of a Partner
contained in this LP Agreement, other than the agreement not to resign from the
Partnership set forth in Section 2.6.1 of this LP Agreement.
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(b) Event of Withdrawal. The occurrence of any of the
following events shall constitute an "LP Event of Withdrawal" hereunder on the
part of the Partner with respect to whom such event occurs (the "Withdrawing
Partner") immediately upon such occurrence without any requirement of notice
from any other Partner (each such other Partner, a "Nonwithdrawing Partner") or
passage of time except as specifically set forth below:
(i) institution by a Partner of proceedings of any nature
under any laws of the United States or of any state, whether now existing or
subsequently enacted or amended, for the relief of debtors wherein such Partner
is seeking relief as debtor;
(ii) a general assignment by a Partner for the benefit of
its creditors;
(iii) the institution by a Partner of a case or other
proceeding under any section or chapter of the federal Bankruptcy Code, as now
existing or hereafter amended or becoming effective;
(iv) the institution against a Partner of a case or other
proceeding with respect to it under any section or chapter of the federal
Bankruptcy Code, as now existing or hereafter amended or becoming effective,
which proceeding is not dismissed, stayed or discharged within a period of 60
days after the filing thereof or if stayed, which stay is thereafter lifted
without a contemporaneous discharge or dismissal of such proceeding;
(v) a proposed plan of arrangement or other action by a
Partner's creditors taken as a result of a general meeting of the creditors of
such Partner;
(vi) the appointment of a receiver, custodian, trustee or
like officer, to take possession of assets having a value in excess of
$25,000,000 of a Partner if the pendency of said receivership would reasonably
tend to have a materially adverse effect upon the performance by said Partner of
its obligations under this LP Agreement, which receivership remains undischarged
or unstayed for a period of 60 days from the date of its imposition;
(vii) admission by a Partner in writing of its inability
to pay its debts as they mature;
(viii) attachment, execution or other judicial seizure of
all or any substantial part of a Partner's assets or of a Partner's Partnership
Interest, or any part thereof, such attachment, execution or seizure being with
respect to an amount not less than $25,000,000 and remaining undismissed,
unstayed or undischarged for a period of 60 days after the levy thereof, if the
occurrence of such attachment, execution or other judicial seizure would
reasonably tend to have a materially adverse effect upon the performance by said
Partner of its obligations under this LP Agreement; provided, however, that said
attachment, execution or seizure shall not constitute an LP Event of Withdrawal
hereunder if said Partner posts a bond sufficient to fully satisfy the amount of
such claim or judgment within 15 days after the levy thereof and the Partner's
assets are thereby released from the lien of such attachment;
(ix) the resignation or withdrawal of the Partner from the
Partnership; or
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(x) the dissolution of any Partner that is an entity (if
such dissolution is followed by the liquidation or winding up of such Partner).
Section 10.2. Election of Nondefaulting or Nonwithdrawing Partner.
(a) Purchase in LP Event of Withdrawal. Upon the occurrence of
any LP Event of Withdrawal by any Limited Partner, the Limited Partner that is a
Nonwithdrawing Partner shall have the right (but not the obligation) to purchase
all (but not less than all) of the Partnership Interests of the Withdrawing
Partner and that percentage of the General Partner's Partnership Interests
attributable to the Withdrawing Partner's position as a Member of the General
Partner, for cash at a price determined pursuant to the appraisal procedure set
forth in Article XIII of this LP Agreement by payment of 20% of such purchase
price at the closing of such purchase, the balance of the purchase price to be
payable in equal monthly installments over a period of five years, the unpaid
balance to bear interest at a rate of interest equal to the then prime rate at
Chase Bank, Texas, N.A., plus one-half percent, with the right of prepayment of
any amount at any time without premium or penalty. In furtherance of such right,
such Nonwithdrawing Partner may notify the Withdrawing Partner at any time
following an LP Event of Withdrawal of its election to institute the appraisal
procedure set forth in Article XIII of this LP Agreement. Upon receipt of notice
of determination of the net fair market value of such Withdrawing Partner's
Partnership Interests and that percentage of the General Partner's Partnership
Interests attributable to such Withdrawing Partner's position as a Member of the
General Partner, such Nonwithdrawing Partner may notify such Withdrawing Partner
of its election to purchase such Partnership Interests.
(b) Affiliated Purchaser. The Nonwithdrawing Partner may
assign to any Affiliate (the "Partner Affiliated Purchaser") its rights to
purchase the Partnership Interests of the Withdrawing Partner (and that
percentage of the General Partner's Partnership Interests attributable to its
position as a Member of the General Partner) pursuant to Section 10.2(a) of this
LP Agreement. If the Partner Affiliated Purchaser exercises such right and
purchases such Partnership Interests, the Partner Affiliated Purchaser shall
automatically be admitted to the Partnership as a Partner with the Percentage
Interests applicable to the Partnership Interests so purchased.
(c) Closing. The closing of any purchase pursuant to this
Section 10.2 shall take place at the principal office of the Partnership, unless
otherwise unanimously agreed by all the Partners, on a date specified by the
Nonwithdrawing Partner or Partner Affiliated Purchaser (as applicable) that is
not less than ten days following receipt of notice of determination of the net
fair market value of the Partnership Interests to be purchased pursuant to
Article XIII of this LP Agreement. Upon the closing of such purchase, the
Nonwithdrawing Partner or Partner Affiliated Purchaser (as applicable) may elect
to offset against the purchase price the amount of any loss, damage or injury,
the amount of which has been established by a final nonappealable judgment,
caused to it (or, in the case of an Partner Affiliated Purchaser, caused to the
Nondefaulting Partner or Nonwithdrawing Partner) by the LP Event of Withdrawal.
(d) Election to Dissolve for LP Event of Default. If an LP
Event of Default occurs and is continuing, the Nondefaulting Partner may elect
to dissolve and terminate the Partnership pursuant to Section 10.3(i) of this LP
Agreement by written notice to the Defaulting Partner.
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Section 10.3. Causes of Dissolution.
The Partnership shall be dissolved only in the event that:
(i) an LP Event of Default has occurred and is continuing
and the Nondefaulting Partner elects to dissolve the Partnership as provided in
Section 10.2(d) of this LP Agreement;
(ii) an LP Event of Withdrawal has occurred, or any other
event occurs that terminates the continued Partnership of a Partner in the
Partnership under Section 17-801(4) of the DRULPA , unless the business of the
Partnership is continued by the consent of all the remaining Partners (including
any Partner Affiliated Purchaser) within 90 days following the occurrence of
such LP Event of Withdrawal;
(iii) the Partners unanimously agree to terminate the
Partnership;
(iv) the Partnership ceases to maintain any interest
(which term shall include but not be limited to a security interest) in the
Business;
(v) at least one of the Partners elect to dissolve or
terminate the Partnership pursuant to any provision of this LP Agreement
permitting such election to be made;
(vi) the Partnership is dissolved pursuant to an express
provision of this LP Agreement; or
(vii) a decree of judicial dissolution is entered under
Section 17-802 of DRULPA.
Section 10.4. Procedure in Dissolution and Liquidation.
(a) Winding Up. Upon any dissolution of the Partnership
pursuant to Section 10.3 of this LP Agreement, unless the business of the
Partnership is continued in accordance with Section 10.3(ii) of this LP
Agreement, the Partnership shall immediately commence to wind up its affairs and
the Partners shall proceed with reasonable promptness to liquidate the business
of the Partnership.
(b) Management Rights During Winding Up. During the period of
the winding up of the affairs of the Partnership, the rights and obligations of
the Partners set forth in this LP Agreement with respect to the management of
the Partnership shall continue. For purposes of winding up, the Partners shall
continue to act as such and shall make all decisions relating to the conduct of
any business or operations during the winding up period and to the sale or other
disposition of Partnership assets; provided that, if the termination of the
Partnership results from an LP Event of Default or LP Event of Withdrawal, the
Defaulting Partner or Withdrawing Partner (as applicable) shall have no further
right to participate in the management or affairs of the Partnership or to
attend meetings of the Partners or vote on decisions, but shall nonetheless be
bound by all decisions made by the Nondefaulting Partner(s) or Nonwithdrawing
Partner(s) (as applicable) relating to matters with respect to the operations of
the Partnership or the winding up of the Partnership. Each Partner hereby waives
any claims it may have against the Nondefaulting
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Partner(s) or Nonwithdrawing Partner(s) (as applicable) that may arise out of
the management by the Nondefaulting Partner(s) or Nonwithdrawing Partner(s) of
the Partnership, so long as such Nondefaulting Partner(s) or Nonwithdrawing
Partner(s) acts in good faith.
(c) Distributions in Liquidation. The assets of the
Partnership shall be applied or distributed in liquidation in the following
order of priority:
(i) first, to the payment of the expenses of liquidation;
(ii) second, in payment of debts and obligations of the
Partnership owed to third parties or to Partners; and
(iii) third, any remaining assets shall be distributed to
the Partners in accordance with Section 4.7 of this LP Agreement, provided that
there shall be withheld from the amount otherwise distributable to a Defaulting
Partner or Withdrawing Partner, the amount of any loss, damage or injury to the
Nondefaulting Partner or Nonwithdrawing Partner, the amount of which has been
established by a final, nonappealable judgment, caused to the Nondefaulting
Partner or the Nonwithdrawing Partner by the LP Event of Default or the LP Event
of Withdrawal, and such amount shall be distributed to the Nondefaulting Partner
or the Nonwithdrawing Partner in addition to the amounts otherwise distributable
to such Nondefaulting Partner or such Nonwithdrawing Partner.
(d) Noncash Assets. Every reasonable effort shall be made to
dispose of the assets of the Partnership so that all distributions may be made
to the Partners in cash. Notwithstanding the foregoing, the Partners agree that,
in the event of liquidation, the Partner that or whose Affiliates contributed
particular patents, patent applications, trademarks and trade names to the
Partnership (or whose predecessor in interest made such contributions), if any,
shall be given the right of first refusal to reacquire such patents, patent
applications, trademarks or trade names as it so desires by payment to the
Partnership of an amount equal to the then current net asset value on the books
of the Partnership of such patents, patent applications, trademarks or trade
names. If the Partnership makes distributions in kind to the Partners in
connection with the liquidation of the Partnership, for purposes of determining
the Capital Account balances of the Partners, the Partnership shall be deemed to
have sold the assets to be distributed in kind to a third party for cash at the
fair market value thereof as determined (i) by an investment banking firm
(including any successor) listed on Schedule 10.4(d) hereto selected by the
Nondefaulting Partner or the Nonwithdrawing Partner, as the case may be, if the
termination and liquidation of the Partnership results from an LP Event of
Default or an LP Event of Withdrawal, and (ii) in all other cases, by unanimous
agreement of all Partners (or if such Partners cannot so agree, as determined by
a nationally recognized investment bank or appraiser unanimously selected by all
Partners). Any license or other agreement permitting the Partnership to use the
name "▇▇▇▇▇▇▇▇▇▇▇" shall terminate automatically upon dissolution of the
Partnership.
Section 10.5. Disposition of Documents and Records. All documents and
records of the Partnership, including without limitation all financial records,
vouchers, canceled checks and bank statements, shall be delivered to WECC upon
termination of the Partnership. Unless otherwise approved by Global, WECC shall
retain such documents and records for a period of not less than
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seven (7) years and shall make such documents and records available during
normal business hours to Global for inspection and copying at Global's cost and
expense. In the event either Partner ("Nonsurviving Partner") for any reason
ceases as provided herein to be a Partner at any time prior to termination of
the Partnership, and the Partnership is continued without the Nonsurviving
Partner, the other Partner ("Surviving Partner") agrees that said documents and
records of the Partnership up to the date of the termination of the Nonsurviving
Partner's Partnership Interest shall be maintained by the Surviving Partner, its
successors and assigns, for a period of not less than seven (7) years
thereafter; provided, however, that if there is an audit or threat of audit,
such documents and records shall be retained until the audit is completed and
any tax liability finally determined. Such documents and records shall be
available for inspection, examination and copying by the Nonsurviving Partner
upon reasonable notice during said seven-year period.
Section 10.6. Termination. The Partners shall comply with all
requirements of the Act or other applicable law pertaining to the winding-up of
the Partnership. On completion of the distribution of Partnership assets as
provided in this LP Agreement, the Partnership shall be terminated, and the
Partners shall file a certificate of cancellation with the Secretary of State of
Delaware and shall take such other actions as may be necessary to terminate the
Partnership.
ARTICLE XI
PUBLIC OFFERING; PUT; CALL
Section 11.1. Registration Right. Global, WECC and the Partnership have
executed and delivered and shall have the rights and obligations set forth in
the Registration Rights Agreement. If the IPO Notice contemplates a public
offering and sale of Partnership Interests or other equity interests by Global,
Global and each other Limited Partner will have the right to include their
Partnership Interests or such other entity interests on a pro rata basis
pursuant to and in accordance with the terms and conditions set forth in the
Registration Rights Agreement. WECC shall have the right for 90 days following
the date of the IPO Notice to exercise its call pursuant to Section 11.3. During
such 90-day period, the Partnership will draft a registration statement on an
appropriate form and file it with the Securities and Exchange Commission (the
"Commission"). Such registration statement shall be filed no earlier than 60
days following the date of the IPO Notice and is not to be declared effective
until a date following the earlier of (i) the last day of the 90 day period
following the date of the IPO Notice during which WECC may exercise its call
pursuant to Section 11.3 and (ii) the date of WECC's notice to Global that WECC
will not exercise such call. If WECC exercises such call within such 90 day
period, such registration statement will be withdrawn.
Section 11.2. Put.
(a) Two-year Put. At any time from and after twenty-four (24)
months following the Closing Date, so long as the Partnership or a successor
entity has not effected an initial public offering ("IPO") of its securities
pursuant to Section 11.1 of this LP Agreement, Global shall have the right to
require WECC to purchase all (but not less than all) its Partnership Interests
and that percentage of the General Partner's Partnership Interests attributable
to Global's position as a Member of the General Partner at a cash price equal to
the product of (i) Global's Percentage
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Interests plus the General Partner's Percentage Interests attributable to
Global's position as a Member of the General Partner multiplied by (ii) the
Market Value of the Partnership (as determined pursuant to Article XIII of this
LP Agreement) as of the date of Global's written notice of put to WECC.
(b) Put Closing. The closing of the purchase by WECC of
Global's Partnership Interests and that percentage of the General Partner's
Partnership Interests attributable to Global's position as a Member of the
General Partner shall occur on the later of (i) the 90th day following the
determination of the Market Value of the Partnership (as determined pursuant to
Article XIII of this LP Agreement), or such other date as may be mutually agreed
upon by WECC and Global, and (ii) the fifth Business Day following the receipt
of all material governmental approvals (if any) required for such purchase and
sale, including the expiration of any applicable waiting periods under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "Requisite
Approvals").
(c) ▇▇▇▇▇▇▇▇▇▇▇ Put Obligation. ▇▇▇▇▇▇▇▇▇▇▇ shall be jointly
and severally liable with WECC for the obligations of WECC under this Section
11.2.
(d) Nonexclusive remedy on default. If Global exercises its
put option pursuant to this Section 11.2, and WECC and ▇▇▇▇▇▇▇▇▇▇▇ default in
their obligation to purchase Global's Partnership Interests and that percentage
of the General Partner's Partnership Interests attributable to Global's position
as a Member of the General Partner, Global shall have the right to independently
seek a purchaser for the Partnership or its assets, and may select any
investment banking firm (including any successor thereto) listed on Schedule
10.4(d) hereto to conduct an auction of the Partnership or its assets. The fees
of such firm and all of Global's expenses in connection with such action
(including without limitation its attorneys' fees) shall be paid by WECC or
▇▇▇▇▇▇▇▇▇▇▇, or if WECC or Weatherford default in such payment obligation, by
the Partnership (and Weatherford, WECC and the General Partner shall fully
cooperate with Global and GE Capital in connection with such action, including
without limitation taking all actions and executing all agreements and
instruments as may be reasonably requested by Global or GE Capital to effect
such action). Any such auction shall be conducted in a commercially reasonable
manner acceptable to Global and GE Capital. The remedy provided for in this
Section 11.2(d) shall not be exclusive of any other remedy that Global may have,
whether at law or in equity, for any such defaults by WECC or ▇▇▇▇▇▇▇▇▇▇▇.
Section 11.3. Call.
11.3.1. Initial Price. At any time after the date hereof, WECC
shall have the right to purchase all (but not less than all) of Global's
Partnership Interests and that percentage of the General Partner's Partnership
Interests attributable to Global's position as a Member of the General Partner
at a cash price equal to the greater of (i) the product of (A) Global's
Percentage Interests plus the General Partner's Percentage Interests
attributable to Global's position as a Member of the General Partner multiplied
by (B) the Market Value of the Partnership (as determined pursuant to Article
XIII of this LP Agreement) as of the date of WECC's written notice of call to
Global and (ii) $219,950,000 (less any cash or other distributions from the
Partnership to Global or its Affiliates in respect of Global's Partnership
Interest or Global's interest in the General Partner, including the
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payment pursuant to the Payment Obligation) increased by the increase in the
Partnership's retained earnings during the first Partnership Fiscal Year
multiplied by the sum of Global Percentage Interests and the General Partner's
Partnership Percentage Interests attributable to Global's position as a Member
of the General Partner, an annual rate of five percent (5%) during the second
Partnership Fiscal Year and thereafter at a compound annual rate of six and 1/2
percent (6.5%). The closing of the purchase by WECC of Global's Partnership
Interests and that percentage of the General Partner's Partnership Interests
attributable to Global's position as a Member of the General Partner shall occur
on the later of (i) the tenth Business Day following the determination of the
Market Value of the Partnership (as determined pursuant to Article XIII of this
LP Agreement), or such other date as may be mutually agreed upon by Global and
WECC, and (ii) the fifth Business Day following receipt of all Requisite
Approvals (if any).
11.3.2. Adjusted Price. If WECC purchases Global's Partnership
Interests and that percentage of the General Partner's Partnership Interests
attributable to Global's position as a Member of the General Partner pursuant to
Section 11.3.1 within 12 months following the Closing Date and if a Significant
Transaction occurs within 12 months following the date of closing such purchase,
WECC will pay to Global (as additional consideration for Global's Partnership
Interests and that percentage of the General Partner's Partnership Interests
attributable to Global's position as a Member of the General Partner) an amount
in cash equal to the excess, if any, of the value of the consideration actually
received by WECC in the Significant Transaction multiplied by Global's
Percentage Interests plus the General Partner's Percentage Interests
attributable to Global's position as a Member of the General Partner at the time
of sale to WECC over the purchase price initially paid by WECC for Global's
Partnership Interests and that percentage of the General Partner's Partnership
Interests attributable to Global's position as a Member of the General Partner
(the "Adjustment Amount"). If WECC purchases Global's Partnership Interests and
that percentage of the General Partner's Partnership Interests attributable to
Global's position as a Member of the General Partner pursuant to Section 11.3.1
after 12 months following the Closing Date and before the expiration of 24
months following the Closing Date, and if a Significant Transaction occurs
within six months following the date of closing such purchase, WECC will pay to
Global the Adjustment Amount, if any, with respect to such Significant
Transaction. Any non-cash consideration received by WECC in connection with a
Significant Transaction shall be valued by a nationally recognized investment
banking firm selected by Global. For purposes of this Section 11.3.2, a
"Significant Transaction" shall mean the sale of more than 50% of the assets of
the Partnership or a merger, consolidation, share exchange, combination or other
fundamental business transaction with an entity not affiliated with WECC or an
initial public offering by the Partnership. A Significant Transaction shall not
include any pro rata distribution by or on behalf of ▇▇▇▇▇▇▇▇▇▇▇ of all (but not
less than all) the Partnership Interests or interests in a successor to the
Partnership owned by WECC (including the General Partner's Partnership Interests
or interests in a successor to the General Partner attributable to WECC's
position as a Member of the General Partner) to ▇▇▇▇▇▇▇▇▇▇▇'▇ shareholders (a
"Spin-Off") except to the extent WECC receives consideration from the entity
subject to the Spin-Off that is in excess of the amount paid to Global for its
interest, in which case the Adjustment Amount shall equal that amount of
consideration that was received by WECC in excess of the amount paid to Global
for its interest or any Transfer permitted under Section 9.1 hereof. In
addition, a Significant Transaction shall not include any merger, consolidation,
share exchange or change in control of ▇▇▇▇▇▇▇▇▇▇▇.
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ARTICLE XII
ARBITRATION
Section 12.1. Dispute Resolution; Arbitration. Any Claim arising out of
or related to this LP Agreement shall be governed by the dispute resolution,
arbitration, attorneys' fees and choice of forum provisions set forth in Section
9.2 of the Formation Agreement.
ARTICLE XIII
DETERMINATION OF THE MARKET VALUE OF THE PARTNERSHIP
Section 13.1. Determination of Market Value of the Partnership.
(a) Negotiation Period. Whenever any provision of this LP
Agreement provides for the valuation of a Partnership Interest to be purchased
or sold, the value of such Partnership Interest shall be determined as follows.
The Partners shall first attempt to agree upon the "Market Value of the
Partnership" (as defined in Section 13.1(c)) for a period of 60 days following
the event giving rise to the determination of the Market Value of the
Partnership.
(b) Appraisal Process. In the event WECC and Global are unable
to reach an agreement as to the Market Value of the Partnership within the
60-day period referred to in Section 13.1(a), then within five Business Days
after the expiration of such 60-day period (such fifth Business Day being
referred to herein as the "13.1 Appraisal Process Commencement Date"), WECC and
Global each shall select a nationally recognized investment banking firm who
shall (i) prepare a report which (A) sets forth such investment banking firm's
determination of the Market Value of the Partnership (which shall be a single
amount as opposed to a range) and (B) includes work papers which indicate the
basis for and calculation of the Market Value of the Partnership (a "13.1
Appraisal Report") and (ii) deliver to WECC or Global, as the case may be, an
oral and written opinion addressed to such party as to the Market Value of the
Partnership. The fees and expenses of each investment banking firm shall be paid
by the party selecting such investment banking firm. Each of WECC and Global
shall instruct its respective investment banking firm to (i) not consult with
the other investment banking firm with respect to its view as to the Market
Value of the Partnership prior to the time that both investment banking firms
have delivered their respective opinions to WECC or Global, as applicable, (ii)
determine the Market Value of the Partnership in accordance with Section
13.1(c), (iii) deliver their respective 13.1 Appraisal Reports, together with
their oral and written opinions as to the Market Value of the Partnership (the
"13.1 Initial Opinion Values"), within 30 days after the 13.1 Appraisal Process
Commencement Date, and (iv) deliver a copy of its written opinion and its 13.1
Appraisal Report to the Partnership, the other party and the other party's
investment banking firm at the time it delivers its oral and written opinion to
WECC or Global, as applicable. The opinions and reports of the two investment
banking firms shall be delivered at the same time.
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If the two 13.1 Initial Opinion Values differ and the lesser
13.1 Initial Opinion Value equals or exceeds 90% of the greater 13.1 Initial
Opinion Value, the Market Value of the Partnership shall be deemed to be an
amount equal to (i) the sum of the two 13.1 Initial Opinion Values divided by
(ii) two.
If the 13.1 Initial Opinion Values differ and the lesser 13.1
Initial Opinion Value is less than 90% of the greater 13.1 Initial Opinion
Value, then:
(i) within two Business Days after both investment banking
firms have delivered their respective opinions to WECC or Global, as applicable,
each investment banking firm shall, at a single meeting at which WECC, Global,
the Partnership and the other investment banking firm are present, make a
presentation with respect to its 13.1 Initial Opinion Value. At such
presentation, WECC, Global, the Partnership and the other investment banking
firm shall be entitled to ask questions as to the basis for and the calculation
of such investment banking firm's Initial Opinion Value; and
(ii) WECC and Global shall, within five Business Days
after the date WECC and Global receive the 13.1 Initial Opinion Values (such
fifth Business Day being referred to herein as the "13.1 Subsequent Appraisal
Process Commencement Date"), jointly select a third nationally recognized
investment banking firm to (A) prepare a 13.1 Appraisal Report and (B) deliver
an oral and written opinion addressed to WECC and Global as to the Market Value
of the Partnership. The fees and expenses of such third investment banking firm
shall be paid by the Partnership. During such five-Business Day period, WECC and
Global shall negotiate in good faith to independently reach an agreement as to
the Market Value of the Partnership. If WECC and Global reach such an agreement,
then the Market Value of the Partnership shall be deemed to be the amount so
agreed upon by WECC and Global. If WECC and Global are unable to reach such an
agreement, then WECC and Global shall instruct such third investment banking
firm to (A) determine the Market Value of the Partnership in accordance with
Section 13.1(c) and (B) deliver its 13.1 Appraisal Report, together with its
oral and written opinion (the "13.1 Third Opinion Value"), within 30 days after
the 13.1 Subsequent Appraisal Process Commencement Date. Such third investment
banking firm shall receive the 13.1 Appraisal Reports and meet with the other
two investment banking firms prior to delivering its 13.1 Appraisal Report. The
Market Value of the Partnership in such circumstances shall be deemed to be an
amount equal to (A) the sum of the two closest of the 13.1 Third Opinion Value
and the 13.1 Initial Opinion Values, divided by (B) two.
(c) Definition of Market Value of the Partnership. For
purposes of this LP Agreement, the Market Value of the Partnership (the "Market
Value of the Partnership") means the fair market value of 100% of common equity
of the Partnership as of the relevant date as determined by the applicable
investment banking firm. In determining the Market Value of the Partnership,
consideration should be given as to a range of analytical methodologies,
potentially including, but not limited to, the following: comparable trading
analysis, comparable transaction analysis and discounted cash flow analysis. In
the determination of the Market Value of the Partnership, the Partnership shall
be valued as a going concern on a stand-alone basis without regard to synergies
that might be achieved by a particular purchaser and without any liquidity
discount. In determining the Market Value of the Partnership, no consideration
should be given to the values that are initially assigned to assets of the
Partnership for purchase accounting or tax
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accounting purposes. The value of a Partnership Interest of a Partner shall be
equal to such Partner's Percentage Interest multiplied by the Market Value of
the Partnership determined pursuant to Article XIII.
ARTICLE XIV
GENERAL PROVISIONS
Section 14.1. Complete Agreement; Amendment. The Transaction Documents
constitute the entire agreement among the parties thereto with respect to the
subject matter thereof and supersede all other agreements, representations,
warranties, statements, promises and understandings, whether oral or written,
with respect to the subject matter thereof. This LP Agreement may not be
amended, altered or modified except by a writing signed by duly authorized
officers of all the Partners.
Section 14.2. Notices.
14.2.1. Addresses. All notices under this LP Agreement shall
be in writing and shall be delivered by personal service; certified or
registered mail, postage prepaid, return receipt requested;
nationally-recognized overnight courier, courier charges prepaid; or facsimile
transmission (followed by telephone confirmation of receipt), to the Partners at
the addresses herein set forth and to the Partnership at its principal place of
business.
The addresses for notices are as follows:
Weatherford Global Compression Holding, L.L.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ Enterra Compression Company, L.P.
c/o Weatherford International, Inc.
▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Global Compression Services, Inc.
c/o General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
14.2.2. Effective Date of Notices, etc. All notices, demands
and requests shall be effective upon actual receipt or, in the case of delivery
by facsimile transmission, the completion of such transmission during the normal
business hours of the recipient. Rejection or other refusal to accept or the
inability to deliver because of changed address of which no notice was given as
provided in Section 14.2.3 shall be deemed to be receipt of the notice, demand
or request sent.
14.2.3. Changes. By giving to the other Partners and the
Partnership at least 10 Business Days' written notice thereof, the Partners and
their respective permitted successors and permitted assigns shall have the right
from time to time and at any time during the term of this LP Agreement to change
their respective addresses for notices and each shall have the right to specify
as its address for notices any other address within the United States of
America.
Section 14.3. Validity. In the event that any provisions of this LP
Agreement shall be held to be invalid or unenforceable, the same shall not
affect in any respect whatsoever the validity or enforceability of the remainder
of this LP Agreement.
Section 14.4. Survival of Rights. Except as expressly provided herein
to the contrary, this LP Agreement shall be binding upon and inure to the
benefit of the Partners and their permitted successors and permitted assigns.
Section 14.5. Governing Law. This LP Agreement and the rights and
liabilities of the Partners shall be governed by and construed in accordance
with the internal laws of the State of Delaware, without regard to conflicts of
laws provisions thereof.
Section 14.6. Waiver. No consent or waiver, express or implied, by a
Partner to or of any breach or default by any other Partner in the performance
by such other Partner of its obligations hereunder shall be deemed or construed
to be a consent or waiver to or of any other breach or default in the
performance by such other or any other Partner of the same or any other
obligations of such other or any other Partner hereunder. Failure on the part of
a Partner to complain of any act or failure to act of any other Partner or to
declare any other Partner in default, irrespective of how long such failure
continues, shall not constitute a waiver by such Partner of its rights
hereunder. The giving of consent by a Partner in any one instance shall not
limit or waive the necessity to obtain such Partner's consent in any future
instance.
Section 14.7. Remedies in Equity. The rights and remedies of the
Partners hereunder shall not be mutually exclusive, and the exercise of one or
more rights or remedies shall not preclude the exercise of any other rights or
remedies. Each of the Partners confirms that damages at law will be
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an inadequate remedy for a breach or threatened breach of this LP Agreement and
agrees that, except as expressly provided to the contrary in this LP Agreement,
in the event of a breach or threatened breach of any provision hereof, the
respective rights and obligations hereunder shall be enforceable by specific
performance, injunction or other equitable remedy, but nothing herein contained
is intended to, nor shall it, limit or affect any rights at law or by statute or
otherwise of any Partner aggrieved as against any other for a breach or
threatened breach of any provision hereof, it being the intention by this
Section 14.7 to make clear the agreement of the Partners that the respective
rights and obligations of the Partners hereunder, except as expressly provided
to the contrary herein, shall be enforceable in equity as well as at law or
otherwise.
Section 14.8. No Member Liability. No Member shall have any personal
obligation for any liabilities of the General Partner (including those that may
be caused by any act or failure to act of the General Partner), whether such
liabilities arise in contract, tort or otherwise, except to the extent that any
such liabilities are expressly assumed in writing by such Member; provided,
however, that nothing in this Section 14.8 shall be construed to relieve either
Member of any obligation it may have pursuant to the Transaction Documents
(other than in its capacity as a Member).
Section 14.9. Terminology. All personal pronouns used in this LP
Agreement, whether used in the masculine, feminine, or neuter gender, shall
include all other genders; and the singular shall include the plural and vice
versa. Titles of Articles and Sections are for convenience only, and neither
limit nor amplify the provisions of this LP Agreement itself.
Section 14.10. Counterparts. This LP Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which shall constitute one and the same agreement.
Section 14.11. Further Assurances. Each Partner agrees to do all acts
and things and to make, execute and deliver such written instruments, as shall
from time to time be reasonably required to carry out the terms and provisions
of this LP Agreement.
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IN WITNESS WHEREOF, the Partners have executed this LP
Agreement as of the day and year first above set forth.
Weatherford Global Compression Holding, L.L.C.,
as sole General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
President
Weatherford Enterra Compression Company, L.P., as
a Limited Partner
by Enterra Compression Company, its sole
General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
Senior Vice President
Global Compression Services, Inc., as a Limited
Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
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Weatherford hereby agrees to be jointly and severally liable with WECC
to fulfill WECC's obligations under Section 11.2 hereof.
▇▇▇▇▇▇▇▇▇▇▇ International, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
Senior Vice President
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Schedule 3.1
Capital Contributions and Returns
Percentage
Partner Initial Capital Contribution* Interests
------- ----------------------------- ---------
Gross Contribution (Liabilities) Net Contribution/Capital Account
------------------ ------------- --------------------------------
Limited, as the Sole
General Partner.......... 1.0%
WECC, as
Limited Partner.......... 63.36%
Global, as a Limited
Partner.................. 35.64%
------
100.0%
-----
Subsequent Return of
Capital Capital Unreturned
Partner Contributions Contributions Capital
------- ------------- ------------- -------
Limited, as the Sole
General Partner..........
WECC, as
Limited Partner..........
Global, as a Limited
Partner..................
* The Partners acknowledge that the fair market value of the Included
Weatherford Assets transferred by WECC expressed as a percentage of the fair
market value of the Partnership's assets is equal to the percentage of
Partnership Interests issued to WECC.
The Partners acknowledge that the fair market value of the Included Global
Assets transferred by Global expressed as a percentage of the fair market value
of the Partnership's assets is equal to the percentage of Partnership Interests
issued to Global.
The Partners acknowledge that the fair market value of the Included
Weatherford Assets and the Included Global Assets transferred by Limited
expressed as a percentage of the Partnership's fair market value is equal to the
percentage of Partnership Interests issued to Limited.
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The Company has not filed any schedules or exhibits with this Exhibit No. 10.2.
Listed below is a brief description of the omitted schedules and exhibits. The
Company agrees to furnish supplementally a copy of any of such omitted schedules
and exhibits to the Commission upon request.
ANNEX I-Glossary (attached to Exhibit 10.1)
Exhibits
Exhibit A [Reserved]
Exhibit B 1999 Partnership Annual Business Plan
Exhibit C Ethics/Integrity Policy
Schedules
Schedule 3.1 Capital Contributions and Returns
Schedule 5.2(a)(iv) Same Line of Business
Schedule 7.1 Accounting Policies, Controls and Procedures
Schedule 10.4(d) Investment Banking Firms