EXHIBIT 3.4
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
GENESIS CRUDE OIL, L.P.
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.1 Definitions
1.2 Construction
ARTICLE II
ORGANIZATION
2.1 Formation
2.2 Name
2.3 Registered Office; Registered Agent; Principal Office; Other Offices
2.4 Purpose and Business
2.5 Powers
2.6 Power of Attorney
2.7 Term
2.8 Title to Partnership Assets
ARTICLE III
RIGHTS OF LIMITED PARTNERS
3.1 Limitation of Liability
3.2 Management of Business
3.3 Outside Activities of Limited Partners
3.4 Rights of Limited Partners
ARTICLE IV
CERTIFICATES; RECORD HOLDERS;
TRANSFER OF PARTNERSHIP INTERESTS;
REDEMPTION OF PARTNERSHIP INTERESTS
4.1 Certificates
4.2 Mutilated, Destroyed, Lost or Stolen Certificates
4.3 Record Holders
4.4 Transfer Generally
4.5 Registration and Transfer of Limited Partner Interests
4.6 Transfer of a General Partner's General Partner Interest
4.7 Transfer of APIs
4.8 Restrictions on Transfers
ARTICLE V
CAPITAL CONTRIBUTIONS AND
ISSUANCE OF PARTNERSHIP INTERESTS
5.1 Organizational Contributions
5.2 Contributions by General Partners
5.3 Contributions by Initial Limited Partners
5.4 Interest and Withdrawal
5.5 Capital Accounts
5.6 Issuances of Additional Partnership Securities
5.7 Limitations on Issuance of Additional Partnership Securities
5.8 Conversion of Subordinated Units
5.9 Limited Preemptive Right
5.10 Splits and Combination
5.11 Fully Paid and Non-Assessable Nature of Limited Partner Interests
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
6.1 Allocations for Capital Account Purposes
6.2 Allocations for Tax Purposes
6.3 Requirement and Characterization of Distributions; Distributions to Record
Holders
6.4 Distributions of Available Cash from Operating Surplus
6.5 Distributions of Available Cash from Capital Surplus
6.6 Adjustment of Minimum Quarterly Distribution and Target Distribution Levels
6.7 Special Provisions Relating to the Holders of APIs
6.8 Entity-Level Taxation
6.9 Special Distribution to the Initial Limited Partners and the Operating
General Partner
6.10 Characterization of Distributions as Advances or Drawings
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
7.1 Management
7.2 Certificate of Limited Partnership
7.3 Restrictions on the General Partners' Authority
7.4 Reimbursement of the General Partners
7.5 Outside Activities
7.6 Loans from the General Partners; Loans or Contributions from the
Partnership;
Contracts with Affiliates; Certain Restrictions on the Operating General Partner
7.7 Indemnification
7.8 Liability of Indemnitees
7.9 Resolution of Conflicts of Interest
7.10 Other Matters Concerning the General Partners
7.11 Reliance by Third Parties
7.12 Incentive Compensation Payments to the Operating General Partner
7.13 Conversion of Operating General Partner's Incentive Compensation Payment
Rights
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 Records and Accounting
8.2 Fiscal Year
ARTICLE IX
TAX MATTERS
9.1 Tax Returns and Information
9.2 Tax Elections
9.3 Tax Controversies
9.4 Withholding
ARTICLE X
ADMISSION OF PARTNERS
10.1 Admission of General Partners
10.2 Admission of Successor or Transferee General Partner
10.3 Admission of Initial Limited Partners
10.4 Admission of Substituted Limited Partner
10.5 Admission of Additional Limited Partners
10.6 Amendment of Agreement and Certificate of Limited Partnership
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
11.1 Withdrawal of Operating General Partner
11.2 Removal of Operating General Partner
11.3 Interest of Departing Partner and Successor Operating General Partner
11.4 Withdrawal or Removal of Managing General Partner
11.5 Withdrawal of Limited Partners
ARTICLE XII
DISSOLUTION AND LIQUIDATION
12.1 Dissolution
12.2 Continuation of the Business of the Partnership After Dissolution
12.3 Liquidator
12.4 Liquidation
12.5 Cancellation of Certificate of Limited Partnership
12.6 Return of Contributions
12.7 Waiver of Partition
12.8 Capital Account Restoration
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT;
MEETINGS; RECORD DATE
13.1 Amendment to be Adopted Solely by Operating General Partner
13.2 Amendment Procedures
13.3 Amendment Requirements
13.4 Special Meetings
13.5 Notice of a Meeting
13.6 Record Date
13.7 Adjournment
13.8 Waiver of Notice; Approval of Meeting; Approval of Minutes
13.9 Quorum
13.10 Conduct of a Meeting
13.11 Action Without a Meeting
13.12 Voting and Other Rights
ARTICLE XIV
MERGER
14.1 Authority
14.2 Procedure for Merger or Consolidation
14.3 Approval by Partners of Merger or Consolidation
14.4 Certificate of Merger
14.5 Effect of Merger
ARTICLE XV
GENERAL PROVISIONS
15.1 Addresses and Notices
15.2 Further Action
15.3 Binding Effect
15.4 Integration
15.5 Creditors
15.6 Waiver
15.7 Counterparts
15.8 Applicable Law
15.9 Invalidity of Provisions
15.10 Consent of Partners
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
GENESIS CRUDE OIL, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF Genesis Crude
Oil, L.P., dated as of December 3, 1996, is entered into by and among Genesis
Energy, L.L.C., a Delaware limited liability company, as the Operating General
Partner, Genesis Energy, L.P., a Delaware limited partnership, as the Managing
General Partner and the Organizational Limited Partner, together with any other
Persons who become Partners in the Partnership or parties hereto as provided
herein. In consideration of the covenants, conditions and agreements contained
herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
''Acquisition'' means any transaction in which any Group Member acquires
(through an asset acquisition, merger, stock acquisition or other form of
investment) control over all or a portion of the assets, properties or business
of another Person for the purpose of increasing the operating capacity or
revenues of the Partnership Group from the operating capacity or revenues of the
Partnership Group existing immediately prior to such transaction.
''Additional Limited Partner'' means a Person admitted to the Partnership
as a Limited Partner pursuant to Section 10.5 and who is shown as such on the
books and records of the Partnership.
''Adjusted Capital Account'' means the Capital Account maintained for each
Partner as of the end of each fiscal year of the Partnership, (a) increased by
any amounts that such Partner is obligated to restore under the standards set by
Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to
restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and (b)
decreased by (i) the amount of all losses and deductions that, as of the end of
such fiscal year, are reasonably expected to be allocated to such Partner in
subsequent years under Sections 704(e)(2) and 706(d) of the Code and Treasury
Regulation Section 1.751-1(b)(2)(ii), and (ii) the amount of all distributions
that, as of the end of such fiscal year, are reasonably expected to be made to
such Partner in subsequent years in accordance with the terms of this Agreement
or otherwise to the extent they exceed offsetting increases to such Partner's
Capital Account that are reasonably expected to occur during (or prior to) the
year in which such distributions are reasonably expected to be made (other than
increases as a result of a minimum gain chargeback pursuant to Section 6.1(d)(i)
or 6.1(d)(ii)). The foregoing definition of Adjusted Capital Account is intended
to comply with the provisions of Treasury Regulation Section 1.704-
1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
''Adjusted Operating Surplus'' means, with respect to any period, Operating
Surplus generated during such period (a) less (i) any net increase in working
capital borrowings during such period, (ii) any net reduction in cash reserves
for Operating Expenditures during such period not relating to an Operating
Expenditure made during such period and (iii) any Capital Contributions made
during such period in exchange for APIs, and (b) plus (i) any net decrease in
working capital borrowings during such period, (ii) any net increase in cash
reserves for Operating Expenditures during such period required by any debt
instrument for the repayment of principal, interest or premium and (iii) the
amount of any Incentive Compensation Payments that reduced Operating Surplus for
such period. Adjusted Operating Surplus does not include that portion of
Operating Surplus included in clause (a)(i) of the definition of Operating
Surplus.
''Adjusted Property'' means any property the Carrying Value of which has
been adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii). Once an Adjusted
Property is deemed distributed by, and recontributed to, the Partnership for
federal income tax purposes upon a termination of the Partnership pursuant to
Treasury Regulation Section 1.708-1(b)(1)(iv), such property shall thereafter
constitute a Contributed Property until the Carrying Value of such property is
subsequently adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii). Upon a
termination of the Partnership following the publication of Proposed Treasury
Regulation 1.708-1(b)(1)(iv) as a final regulation, an Adjusted Property deemed
contributed to a new partnership in exchange for an interest in the new
partnership, followed by the deemed liquidation of the Partnership shall
thereafter constitute a Contributed Property until the Carrying Value of such
property is subsequently adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii).
''Affiliate'' means, with respect to any Person, any other Person that (i)
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question or (ii)
owns, beneficially, directly or indirectly, 20% or more of the outstanding
capital stock, shares or other equity interests of the Person in question. As
used herein, the term ''control'' means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.
''Agreed Allocation'' means any allocation, other than a Required
Allocation, of an item of income, gain, loss or deduction pursuant to the
provisions of Section 6.1, including, without limitation, a Curative Allocation
(if appropriate to the context in which the term ''Agreed Allocation'' is used).
''Agreed Value'' of any Contributed Property means the fair market value of
such property or other consideration at the time of contribution as determined
by the Operating General Partner using such reasonable method of valuation as it
may adopt; provided, however, that the Agreed Value of any property deemed
contributed to the Partnership for federal income tax purposes upon termination
and reconstitution thereof pursuant to Section 708 of the Code (whether before
or after finalization of Proposed Treasury Regulation Section 1.708-1(b)(1)(iv))
shall be determined in accordance with Section 5.5(c)(i). Subject to Section
5.5(c)(i), the Operating General Partner shall, in its discretion, use such
method as it deems reasonable and appropriate to allocate the aggregate Agreed
Value of Contributed Properties contributed to the Partnership in a single or
integrated transaction among each separate property on a basis proportional to
the fair market value of each Contributed Property.
''Agreement'' means this Amended and Restated Agreement of Limited
Partnership of Genesis Crude Oil, L.P., as it may be amended, supplemented or
restated from time to time.
''API'' means a non-voting, Limited Partner Interest issued (at a rate of
$100 per API) pursuant to Section 5.6 and in accordance with the Distribution
Support Agreement, which non-voting, Limited Partner Interest shall confer upon
the holder thereof only the rights and obligations specifically provided in this
Agreement with respect to APIs (and no other rights otherwise available to
holders of a Limited Partner Interest).
''Assets'' has the meaning assigned to such term in the Conveyance
Agreement.
''Assignee'' means a Person to whom one or more Limited Partner Interests
have been transferred in a manner permitted under this Agreement and who has
executed and delivered a Transfer Application as required by this Agreement, but
who has not been admitted as a Substituted Limited Partner.
''Audit Committee'' means a committee of the Board of Directors of the
Operating General Partner composed entirely of two or more directors who are
neither officers nor employees of the Operating General Partner or officers,
directors or employees of any Affiliate of the Operating General Partner.
''Available Cash,'' means, with respect to any Quarter ending prior to the
Liquidation Date,
(a) the sum of (i) all cash and cash equivalents of the Partnership Group
on hand at the end of such Quarter and (ii) all additional cash and cash
equivalents of the Partnership Group on hand on the date of determination of
Available Cash with respect to such Quarter resulting from borrowings for
working capital purposes and purchases of APIs made subsequent to the end of
such Quarter, less
(b) the amount of any cash reserves that is necessary or appropriate in the
reasonable discretion of the Operating General Partner to (i) provide for the
proper conduct of the business of the Partnership Group (including reserves for
future capital expenditures and for anticipated future credit needs of the
business of the Partnership Group) subsequent to such Quarter, (ii) comply with
applicable law or any loan agreement (including the Master Credit Support
Agreement), security agreement (including the Security Agreement), mortgage,
debt instrument or other agreement or obligation to which any Group Member is a
party or by which it is bound or its assets are subject or (iii) provide funds
for distributions under Section 6.4, 6.5 or 6.9 or to make Incentive
Compensation Payments to the Operating General Partner in respect of any one or
more of the next four Quarters; provided, however, that the Operating General
Partner may not establish cash reserves pursuant to (iii) above if the effect of
such reserves would be that the Partnership is unable to distribute the Minimum
Quarterly Distribution on all Common Units with respect to such Quarter; and,
provided further, that disbursements made by a Group Member or cash reserves
established, increased or reduced after the end of such Quarter but on or before
the date of determination of Available Cash with respect to such Quarter shall
be deemed to have been made, established, increased or reduced, for purposes of
determining Available Cash, within such Quarter if the Operating General Partner
so determines, less
(c) the amount necessary to make Incentive Compensation Payments to the
Operating General Partner pursuant to Section 7.12 with respect to such Quarter,
less
(d) any Redemption Proceeds on hand that have not yet been used by the
Partnership to redeem Common Units pursuant to the Redemption and Registration
Rights Agreement.
Notwithstanding the foregoing, ''Available Cash'' with respect to the
Quarter in which the Liquidation Date occurs and any subsequent Quarter shall
equal zero.
''Basis'' means Basis Petroleum, Inc., a Texas corporation.
''Book-Tax Disparity'' means with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Section 5.5 and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
''Business Day'' means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States of
America or the states of New York or Texas shall not be regarded as a Business
Day.
''Capital Account'' means the capital account maintained for a Partner
pursuant to Section 5.5.
''Capital Contribution'' means any cash, cash equivalents or the Net Agreed
Value of Contributed Property that a Partner contributes to the Partnership
pursuant to this Agreement or the Conveyance Agreement.
''Capital Improvement'' means any (a) addition or improvement to the
capital assets owned by any Group Member or (b) acquisition of existing or the
construction of new capital assets (including pipeline systems, storage
facilities and related assets), made to increase the operating capacity or
revenues of the Partnership Group from the operating capacity or revenues of the
Partnership Group existing immediately prior to such addition, improvement,
acquisition or construction.
''Capital Surplus'' has the meaning assigned to such term in Section
6.3(a).
''Carrying Value'' means (a) with respect to a Contributed Property, the
Agreed Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions charged to the Partners' and
Assignees' Capital Accounts in respect of such Contributed Property, and (b)
with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
The Carrying Value of any property shall be adjusted from time to time in
accordance with Sections 5.5(d)(i) and 5.5(d)(ii) and to reflect changes,
additions or other adjustments to the Carrying Value for dispositions and
acquisitions of Partnership properties, as deemed appropriate by the Operating
General Partner.
''Certificate'' means a certificate, substantially in the form of Exhibit A
to this Agreement or in such other form as may be adopted by the Operating
General Partner in its discretion, issued by the Partnership evidencing
ownership of one or more Common LP Units or Subordinated LP Units or a
certificate, in such form as may be adopted by the Operating General Partner in
its discretion, issued by the Partnership evidencing ownership of one or more
other Partnership Securities.
''Certificate of Limited Partnership'' means the Certificate of Limited
Partnership of the Partnership filed with the Secretary of State of the State of
Delaware as referenced in Section 7.2, as such Certificate of Limited
Partnership may be amended, supplemented or restated from time to time.
''Closing Date'' means the first date on which MLP Common Units are sold by
Genesis MLP to the Underwriters pursuant to the provisions of the Underwriting
Agreement.
''Code'' means the Internal Revenue Code of 1986, as amended and in effect
from time to time. Any reference herein to a specific section or sections of the
Code shall be deemed to include a reference to any corresponding provision of
future law.
''Commission'' means the United States Securities and Exchange Commission.
''Common GP Unit'' means a Partnership Security representing a fractional
part of the Partnership Interests of all General Partners and having the rights
and obligations specified with respect to a Common GP Unit in this Agreement.
The term ''Common GP Unit'' does not refer to a Subordinated GP Unit prior to
its conversion into a Common GP Unit pursuant to the terms of this Agreement.
''Common LP Unit'' means a Partnership Security representing a fractional
part of the Partnership Interests of all Limited Partners and Assignees (other
than of holders of the APIs) and having the rights and obligations specified
with respect to a Common LP Unit in this Agreement. The term ''Common LP Unit''
does not refer to a Subordinated LP Unit prior to its conversion into a Common
LP Unit pursuant to the terms of this Agreement.
''Common Unit'' means a Common GP Unit or a Common LP Unit.
''Common Unit Arrearage'' means as to any Quarter within the Subordination
Period commencing prior to the Liquidation Date, the excess, if any, of (a) the
Minimum Quarterly Distribution in respect of such Quarter over (b) the sum of
all Available Cash distributed with respect to a Common Unit in respect of such
Quarter pursuant to Section 6.4(a)(i).
''Contributed Property'' means each property or other asset, in such form
as may be permitted by the Delaware Act, but excluding cash, contributed to the
Partnership (or deemed contributed to the Partnership on termination and
reconstitution thereof pursuant to Section 708 of the Code, whether before or
after finalization of Proposed Treasury Regulation Section 1.708-1(b)(1)(iv)).
Once the Carrying Value of a Contributed Property is adjusted pursuant to
Section 5.5(d), such property shall no longer constitute a Contributed Property,
but shall be deemed an Adjusted Property.
''Conversion Election'' has the meaning assigned to such term in Section
7.13.
''Conveyance Agreement'' means that certain Purchase & Sale and
Contribution & Conveyance Agreement, dated as of November 26, 1996, among the
Partnership, Genesis MLP, Genesis Energy, L.L.C., Basis, ▇▇▇▇▇▇ and the ▇▇▇▇▇▇
Subsidiaries, together with the additional conveyance documents and instruments
contemplated or referenced thereunder.
''Cumulative Common Unit Arrearage'' means, with respect to any Common
Unit, whenever issued, and as of the end of any Quarter, the excess, if any, of
(a) the sum resulting from adding together the Common Unit Arrearage as to an
Initial Common Unit for each of the Quarters within the Subordination Period
ending on or before the last day of such Quarter over (b) the sum of any
distributions theretofore made pursuant to Section 6.4(a)(ii) and Section
6.5(ii) with respect to such Initial Common Unit (including any distributions to
be made in respect of the last of such Quarters).
''Curative Allocation'' means any allocation of an item of income, gain,
deduction, loss or credit pursuant to the provisions of Section 6.1(d)(xi).
''Delaware Act'' means the Delaware Revised Uniform Limited Partnership
Act, 6 Del C. 17-101, et seq., as amended, supplemented or restated from time
to time, and any successor to such statute.
''Departing Partner'' means a former Operating General Partner from and
after the effective date of any withdrawal or removal of such former Operating
General Partner pursuant to Section 11.1 or 11.2.
''Distribution Support Agreement'' means the Distribution Support
Agreement, dated as of the Closing Date, between the Partnership and Salomon,
which sets forth the agreement of the Partnership and Salomon relating to the
purchase of APIs.
''Economic Risk of Loss'' has the meaning set forth in Treasury Regulation
Section 1.752-2(a).
''Event of Withdrawal'' has the meaning assigned to such term in Section
11.1(a).
''Excess Basis Cash'' has the meaning assigned to such term in the
Conveyance Agreement.
''Excess Howell Cash'' has the meaning assigned to such term in the
Conveyance Agreement.
''Excess ▇▇▇▇▇▇ Subordinated LP Units'' has the meaning assigned to such
term in the Conveyance Agreement.
''Final Subordinated Units'' has the meaning assigned to such term in
Section 6.1(d)(x).
''First Target Distribution'' means $0.550 per Unit per Quarter (or, with
respect to the Quarter ending on March 31, 1997, it means the product of $0.550
multiplied by the sum of (x) 1.00 and (y) a fraction of which the numerator is
the number of days in the period commencing on the Closing Date and ending on
December 31, 1996, and of which the denominator is 92), subject to adjustment in
accordance with Sections 6.6 and 6.8.
''GP Unit'' means a Common GP Unit or a Subordinated GP Unit.
''General Partner'' means each of the Managing General Partner and the
Operating General Partner, and their successors and permitted assigns as general
partners of the Partnership.
''General Partner Interest'' means the ownership interest of a General
Partner in the Partnership (in its capacity as a general partner without
reference to any Limited Partner Interest held by it), which may be evidenced by
GP Units or other Partnership Securities or a combination thereof or interest
therein, and includes any and all benefits to which such General Partner is
entitled as provided in this Agreement (other than the right of the Operating
General Partner to receive Incentive Compensation Payments pursuant to Section
7.12), together with all obligations of such General Partner to comply with the
terms and provisions of this Agreement.
''Genesis Energy, L.L.C.'' means Genesis Energy, L.L.C., a Delaware limited
liability company, which is currently the Operating General Partner, and its
successors.
''Genesis MLP'' means Genesis Energy, L.P., a Delaware limited partnership,
and its successors.
''Genesis MLP Partnership Agreement'' means the Amended and Restated
Agreement of Limited Partnership of Genesis Energy, L.P., as it may be amended,
supplemented or restated from time to time.
''Group Member'' means a member of the Partnership Group.
''▇▇▇▇▇▇'' means ▇▇▇▇▇▇ Corporation, a Delaware corporation.
''▇▇▇▇▇▇ Affiliate Cash'' has the meaning assigned to such term in the
Conveyance Agreement.
''▇▇▇▇▇▇ Purchase Cash'' has the meaning assigned to such term in the
Conveyance Agreement.
''▇▇▇▇▇▇ Subsidiaries'' means ▇▇▇▇▇▇ Crude Oil Company, a Delaware
corporation, ▇▇▇▇▇▇ Pipeline Texas, Inc., a Delaware corporation, Howell
Pipeline USA, Inc., a Delaware corporation, ▇▇▇▇▇▇ Power Systems, Inc., a
Delaware corporation, and ▇▇▇▇▇▇ Transportation Services, Inc., a Delaware
corporation.
''Incentive Compensation Payment'' means a payment made to the Operating
General Partner pursuant to Section 7.12.
''Indemnitee'' means (a) a General Partner, any Departing Partner and any
Person who is or was an Affiliate of a General Partner or any Departing Partner,
(b) any Person who is or was a director, officer, employee, agent or trustee of
a Group Member, (c) any Person who is or was a member, officer, director,
employee, agent, or trustee of a General Partner or any Departing Partner or any
Affiliate of the General Partner or any Departing Partner, or any Affiliate of
any such Person, and (d) any Person who is or was serving at the request of a
General Partner or any Departing Partner or any such Affiliate as a director,
officer, employee, member, partner, agent, fiduciary or trustee of another
Person; provided, however, that a Person shall not be an Indemnitee by reason of
providing, on a fee-for-services basis, trustee, fiduciary or custodial
services.
''Initial Common Unit'' means a Common Unit issued on the Closing Date.
''Initial Limited Partners'' means Basis and the ▇▇▇▇▇▇ Subsidiaries upon
being admitted to the Partnership in accordance with Section 10.3.
''Initial Unit Price'' means the initial public offering price per MLP
Common Unit at which the Underwriters offered the MLP Common Units to the public
for sale as set forth on the cover page of the prospectus included as part of
the Registration Statement and first issued at or after the time the
Registration Statement first became effective, adjusted as appropriate to give
effect to any distribution, subdivision or combination of MLP Common Units.
''Interim Capital Transactions'' means the following transactions if they
occur prior to the Liquidation Date: (a) borrowings, refinancings or refundings
of indebtedness and sales of debt securities (other than for working capital
purposes and other than for items purchased on open account in the ordinary
course of business) by any Group Member; (b) sales of equity interests by any
Group Member (other than sales of APIs); and (c) sales or other voluntary or
involuntary dispositions of any assets of any Group Member other than (x) sales
or other dispositions of inventory in the ordinary course of business, (y) sales
or other dispositions of other current assets, including receivables and
accounts in the ordinary course of business, and (z) sales or other dispositions
of assets as part of normal retirements or replacements.
''Limited Partner'' means, unless the context otherwise requires, (a) the
Organizational Limited Partner, each Initial Limited Partner, each Substituted
Limited Partner, each Additional Limited Partner, (b) each holder of an API and
(c) solely for purposes of Articles V, VI, VII and IX and Section 12.4, each
Assignee.
''Limited Partner Interest'' means the ownership interest of a Limited
Partner or Assignee in the Partnership, which may be evidenced by LP Units, APIs
or other Partnership Securities or a combination thereof or interest therein,
and includes any and all benefits to which such Limited Partner or Assignee is
entitled as provided in this Agreement, together with all obligations of such
Limited Partner or Assignee to comply with the terms and provisions of this
Agreement.
''Liquidation Date'' means (a) in the case of an event giving rise to the
dissolution of the Partnership of the type described in clauses (a) and (b) of
the first sentence of Section 12.2, the date on which the applicable time period
during which the holders of Outstanding Units have the right to elect to
reconstitute the Partnership and continue its business has expired without such
an election being made, and (b) in the case of any other event giving rise to
the dissolution of the Partnership, the date on which such event occurs.
''Liquidator'' means one or more Persons selected by the Operating General
Partner to perform the functions described in Section 12.3 as liquidating
trustee of the Partnership within the meaning of the Delaware Act.
''LLC Overallotment Contribution'' has the meaning assigned to such term in
the Conveyance Agreement.
''LP Unit'' means a Common LP Unit or a Subordinated LP Unit.
''Managing General Partner'' means Genesis MLP and its successors and
permitted assigns as managing general partner of the Partnership.
''Majority Interest'' means, during the Subordination Period, at least a
majority in Voting Power of the Outstanding Common Units, voting as a separate
class, and at least a majority in Voting Power of the Outstanding Subordinated
Units, voting as a separate class and, thereafter, at least a majority of the
Outstanding Units, voting as a class, excluding in each case GP Units held by
the Operating General Partner.
''Master Credit Support Agreement'' means the Master Credit Support
Agreement, dated as of the Closing Date, among the Partnership, Salomon and
Basis which sets forth the agreement of the Partnership and Salomon relating to
the credit support to be provided by Salomon to the Partnership and the
agreement of the Partnership and Basis regarding working capital to be provided
by Basis to the Partnership.
''Merger Agreement'' has the meaning assigned to such term in Section 14.1.
''Minimum Quarterly Distribution'' means $0.50 per Unit per Quarter (or
with respect to the Quarter ending on March 31, 1997, it means the product of
$0.50 multiplied by the sum of (x) 1.00 and (y) a fraction of which the
numerator is equal to the number of days in the period commencing on the Closing
Date and ending on December 31, 1996, and of which the denominator is 92),
subject to adjustment in accordance with Sections 6.6 and 6.8.
''MLP Common Unit'' has the meaning assigned to the term ''Common Unit'' in
the Genesis MLP Partnership Agreement.
''MLP General Partner Interest'' has the meaning assigned to the term
''General Partner Interest'' in the Genesis MLP Partnership Agreement.
''MLP Parity Unit'' has the meaning assigned to the term ''Parity Unit'' in
the Genesis MLP Partnership Agreement.
''MLP Partnership Security'' has the meaning assigned to the term
''Partnership Security'' in the Genesis MLP Partnership Agreement.
''MLP Unit'' has the meaning assigned to the term ''Unit'' in the Genesis
MLP Partnership Agreement.
''Net Agreed Value'' means, (a) in the case of any Contributed Property,
the Agreed Value of such property reduced by any liabilities either assumed by
the Partnership upon such contribution or to which such property is subject when
contributed, and (b) in the case of any property distributed to a Partner or
Assignee by the Partnership, the Partnership's Carrying Value of such property
(as adjusted pursuant to Section 5.5(d)(ii)) at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner or
Assignee upon such distribution or to which such property is subject at the time
of distribution, in either case, as determined under Section 752 of the Code.
''Net Income'' means, for any taxable year, the excess, if any, of the
Partnership's items of income and gain (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnership's items of loss and deduction (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation
of Net Income shall be determined in accordance with Section 5.5(b) and shall
not include any items specially allocated under Section 6.1(d).
''Net Loss'' means, for any taxable year, the excess, if any, of the
Partnership's items of loss and deduction (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnership's items of income and gain (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation
of Net Loss shall be determined
in accordance with Section 5.5(b) and shall not include any items specially
allocated under
Section 6.1(d).
''Net MLP Proceeds'' has the meaning assigned to such term in the
Conveyance Agreement.
''Net Overallotment Proceeds'' has the meaning assigned to such term in the
Conveyance Agreement.
''Net Termination Gain'' means, for any taxable year, the sum, if positive,
of all items of income, gain, loss or deduction recognized by the Partnership
after the Liquidation Date. The items included in the determination of Net
Termination Gain shall be determined in accordance with Section 5.5(b) and shall
not include any items of income, gain or loss specially allocated under Section
6.1(d).
''Net Termination Loss'' means, for any taxable period, the sum, if
negative, of all items of income, gain, loss or deduction recognized by the
Partnership after the Liquidation Date. The items included in the determination
of Net Termination Loss shall be determined in accordance with Section 5.5(b)
and shall not include any items of income, gain or loss specially allocated
under Section 6.1(d).
''Ninety Percent Interest'' means at least 90% in Voting Power of the
Outstanding Units, excluding GP Units held by the Operating General Partner.
''Non-Competition Agreement'' means the Non-Competition Agreement, dated as
of the Closing Date, among the Partnership, Genesis MLP, Salomon, Basis and
▇▇▇▇▇▇.
''Nonrecourse Built-in Gain'' means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or pledge
securing a Nonrecourse Liability, the amount of any taxable gain that would be
allocated to the Partners pursuant to Sections 6.2(b)(i)(A), 6.2(b)(ii)(A) and
6.2(b)(iii) if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.
''Nonrecourse Deductions'' means any and all items of loss, deduction or
expenditures (described in Section 705(a)(2)(B) of the Code) that, in accordance
with the principles of Treasury Regulation Section 1.704-2(b), are attributable
to a Nonrecourse Liability.
''Nonrecourse Liability'' has the meaning set forth in Treasury Regulation
Section 1.752-1(a)(2).
''Operating Expenditures'' means all Partnership Group expenditures,
including, but not limited to, taxes, reimbursements of the General Partners,
Incentive Compensation Payments to the Operating General Partner, debt service
payments, guarantee fees and capital expenditures, subject to the following:
(a) Payments (including prepayments) of principal of and premium on
indebtedness shall not be an Operating Expenditure if the payment is (i)
required in connection with the sale or other disposition of assets or (ii) made
in connection with the refinancing or refunding of indebtedness with the
proceeds from new indebtedness or from the sale of equity interests. For
purposes of the foregoing, at the election and in the reasonable discretion of
the Operating General Partner, any payment of principal or premium shall be
deemed to be refunded or refinanced by any indebtedness incurred or to be
incurred by the Partnership Group within 180 days before or after such payment
to the extent of the principal amount of such indebtedness.
(b) Operating Expenditures shall not include (i) capital expenditures made
for Acquisitions or for Capital Improvements, (ii) payment of transaction
expenses relating to Interim Capital Transactions or (iii) distributions to
Partners. Where capital expenditures are made in part for Acquisitions or for
Capital Improvements and in part for other purposes, the Operating General
Partner's good faith allocation between the amounts paid for each shall be
conclusive.
''Operating General Partner'' means Genesis Energy, L.L.C., and its
successors and permitted assigns as operating general partner of the
Partnership.
''Operating Surplus'' means, with respect to any period ending prior to the
Liquidation Date, on a cumulative basis and without duplication,
(a) the sum of (i) $20 million plus all cash and cash equivalents of the
Partnership Group on hand as of the close of business on the Closing Date, (ii)
all cash receipts of the Partnership Group for the period beginning on the
Closing Date and ending with the last day of such period, other than cash
receipts from Interim Capital Transactions (except to the extent specified in
Section 6.5) and (iii) all cash receipts of the Partnership Group after the end
of such period but on or before the date of determination of Operating Surplus
with respect to such period resulting from borrowings for working capital
purposes and purchases of APIs, less
(b) the sum of (i) Operating Expenditures for the period beginning on the
Closing Date and ending with the last day of such period and (ii) the amount of
cash reserves that is necessary or advisable in the reasonable discretion of the
Operating General Partner to provide funds for future Operating Expenditures,
provided, however, that disbursements made (including contributions to a Group
Member or disbursements on behalf of a Group Member) or cash reserves
established, increased or reduced after the end of such period but on or before
the date of determination of Available Cash with respect to such period shall be
deemed to have been made, established, increased or reduced for purposes of
determining Operating Surplus, within such period if the Operating General
Partner so determines.
Notwithstanding the foregoing, ''Operating Surplus'' with respect to the Quarter
in which the Liquidation Date occurs and any subsequent Quarter shall equal
zero.
''Opinion of Counsel'' means a written opinion of counsel (who may be
regular counsel to the Partnership or a General Partner or any of their
Affiliates) acceptable to the Operating General Partner in its reasonable
discretion.
''Option Closing Date'' has the meaning assigned to such term in the
Underwriting Agreement.
''Organizational Limited Partner'' means Genesis MLP in its capacity as the
organizational limited partner of the Partnership pursuant to this Agreement.
''Outstanding'' means, with respect to Partnership Securities, all
Partnership Securities that are issued by the Partnership and reflected as
Outstanding on the Partnership's books and records as of the date of
determination.
''Over-allotment Option'' means the over-allotment option granted to the
Underwriters by Genesis MLP pursuant to the Underwriting Agreement.
''Parity Units'' means Common Units and all other Partnership Securities
having rights to distributions or in liquidation on a parity with the Common
Units.
''Partner'' means each General Partner and each Limited Partner.
''Partner Nonrecourse Debt'' has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(4).
''Partner Nonrecourse Debt Minimum Gain'' has the meaning set forth in
Treasury Regulation Section 1.704-2(i)(2).
''Partner Nonrecourse Deductions'' means any and all items of loss,
deduction or expenditure (including, without limitation, any expenditure
described in Section 705(a)(2)(B) of the Code) that, in accordance with the
principles of Treasury Regulation Section 1.704-2(i), are attributable to a
Partner Nonrecourse Debt.
''Partnership'' means Genesis Crude Oil, L.P., a Delaware limited
partnership, and any successors thereto.
''Partnership Group'' means the Partnership and any Subsidiary of the
Partnership, treated as a single consolidated entity.
''Partnership Interest'' means an ownership interest in the Partnership
which shall include General Partner Interests and Limited Partner Interests.
''Partnership Minimum Gain'' means that amount determined in accordance
with the principles of Treasury Regulation Section 1.704-2(d).
''Partnership Security'' means any class or series of equity interest in
the Partnership and shall include, without limitation, Common Units,
Subordinated Units and APIs.
''Per Unit Capital Amount'' means, as of any date of determination, the
Capital Account, stated on a per Unit basis, underlying any Common Unit held by
the Managing General Partner.
''Percentage Interest'' means as of the date of such determination (a) as
to any Partner or an Assignee holding Units, the product obtained by multiplying
(i) 100% less the percentage applicable to paragraph (b) by (ii) the quotient
obtained by dividing (A) the number of Units held by such Partner or Assignee by
(B) the total number of all Outstanding Units and (b) as to the holders of
additional Partnership Securities issued by the Partnership in accordance with
Section 5.6, the percentage established as a part of such issuance. The
Percentage Interest with respect to an API shall at all times be zero.
''Person'' means an individual or a corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, association,
government agency or political subdivision thereof or other entity.
''Pro Rata'' means (a) when modifying Units or any class thereof,
apportioned among all designated Units in accordance with their relative
Percentage Interests, (b) when modifying Partners and Assignees, apportioned
among all Partners and Assignees in accordance with their respective Percentage
Interests and (c) when modifying holders of APIs, apportioned among all holders
of APIs in accordance with the relative number of APIs held by each such holder.
''Quarter'' means, unless the context requires otherwise, a calendar
quarter.
''Recapture Income'' means any gain recognized by the Partnership (computed
without regard to any adjustment required by Section 734 or 743 of the Code)
upon the disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
''Record Date'' means the date established by the Operating General Partner
for determining (a) the identity of the Record Holders entitled to notice of, or
to vote at, any meeting of Partners or entitled to vote by ballot or give
approval of Partnership action in writing without a meeting or entitled to
exercise rights in respect of any lawful action of Partners or (b) the identity
of Record Holders entitled to receive any report or distribution or participate
in any offer.
''Record Holder'' means, as of a particular Business Day, with respect to a
holder of a Common Unit, a Subordinated Unit, an API or other Partnership
Security, the Person in whose name such Common Unit, Subordinated Unit, API or
other Partnership Security is registered on the books which the Operating
General Partner has caused to be kept as of the opening of business on such
Business Day.
''Redemption and Registration Rights Agreement'' means the Redemption and
Registration Rights Agreement, dated as of the Closing Date, among Basis,
▇▇▇▇▇▇, the ▇▇▇▇▇▇ Subsidiaries, the Partnership and Genesis MLP which sets
forth the agreement regarding the redemption of Common LP Units by the
Partnership.
''Redemption Proceeds'' means any cash contributed by Genesis MLP to the
Partnership which is to be used by the Partnership to redeem Common LP Units
pursuant to the Redemption and Registration Rights Agreement.
''Registration Statement'' means the Registration Statement on Form S-1
(Registration No. 333-11545) as it has been or as it may be amended or
supplemented from time to time, filed by Genesis MLP with the Commission under
the Securities Act to register the initial offering and sale of MLP Common Units
to the public.
''Required Allocations'' means (a) any limitation imposed on any allocation
of Net Losses or Net Termination Losses under Section 6.1(b) or Section 6.1(c)
and (b) any allocation of an item of income, gain, loss or deduction pursuant to
Section 6.1(d)(i), 6.1(d)(ii), 6.1(d)(iv), 6.1(d)(vii) or 6.1(d)(ix).
''Residual Gain'' or ''Residual Loss'' means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of a Contributed Property
or Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 6.2(b)(i)(A) or 6.2(b)(ii)(A), respectively, to eliminate
Book-Tax Disparities.
''Salomon'' means Salomon Inc, a Delaware corporation.
''Second Target Distribution'' means $0.635 per Unit per Quarter (or, with
respect to the Quarter ending on March 31, 1997, it means the product of $0.635
multiplied by the sum of (x) 1.00 and (y) a fraction of which the numerator is
equal to the number of days in the period commencing on the Closing Date and
ending on December 31, 1996, and of which the denominator is 92), subject to
adjustment in accordance with Sections 6.6 and 6.8.
''Securities Act'' means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to such statute.
''Security Agreement'' means the Security Agreement, dated as of the
Closing Date, among the Partnership, Salomon and the Secured Parties (as defined
in the Security Agreement) securing the obligations of the Partnership under the
Master Credit Support Agreement and creating a security interest in the
Collateral (as defined in the Security Agreement) in favor of the Collateral
Agent (as defined in the Security Agreement).
''Special Approval'' means approval by a majority of the members of the
Audit Committee.
''Subordinated GP Unit'' means a Partnership Security representing a
fractional part of the Partnership Interests of all General Partners and having
the rights and obligations specified with respect to a Subordinated GP Unit in
this Agreement.
''Subordinated LP Unit'' means a Partnership Security representing a
fractional part of the Partnership Interests of all Limited Partners and
Assignees (other than of holders of the APIs) and having the rights and
obligations specified with respect to a Subordinated LP Unit in this Agreement.
''Subordinated Unit'' means a Subordinated GP Unit or a Subordinated LP
Unit.
''Subordination Period'' means the period commencing on the Closing Date
and ending on the first day of any Quarter beginning after December 31, 2001 in
respect of which (i) distributions of Available Cash from Operating Surplus on
each of the Outstanding Common Units and Subordinated Units with respect to each
of the three consecutive, non-overlapping four-Quarter periods immediately
preceding such date equaled or exceeded the sum of the Minimum Quarterly
Distribution on all Outstanding Common Units and Subordinated Units during such
periods, (ii) the Adjusted Operating Surplus generated during each of the three
consecutive, non-overlapping four-Quarter periods immediately preceding such
date equaled or exceeded the sum of the Minimum Quarterly Distribution on all of
the Outstanding Common Units and Subordinated Units during such periods and
(iii) there are no outstanding Cumulative Common Unit Arrearages.
''Subsidiary'' means, with respect to any Person, (a) a corporation of
which more than 50% of the voting power of shares entitled (without regard to
the occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of such Person or
a combination thereof, (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the
partnership interests of such partnership (considering all of the partnership
interests of such partnership as a single class) is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person
(other than a corporation or a partnership) in which such Person, one or more
Subsidiaries of such Person, or a combination thereof, directly or indirectly,
at the date of determination, has (i) at least a majority ownership interest or
(ii) the power to elect or direct the election of a majority of the directors or
other governing body of such Person.
''Substituted Limited Partner'' means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 10.4 in place of and with all the
rights of a Limited Partner and who is shown as a Limited Partner on the books
and records of the Partnership.
''Surviving Business Entity'' has the meaning assigned to such term in
Section 14.2(b).
''Third Target Distribution'' means $0.825 per Unit per Quarter (or, with
respect to the Quarter ending on March 31, 1997, it means the product of $0.825
multiplied by the sum of (x) 1.00 and (y) a fraction of which the numerator is
equal to the number of days in the period commencing on the Closing Date and
ending on December 31, 1996, and of which the denominator is 92), subject to
adjustment in accordance with Sections 6.6 and 6.8.
''transfer'' has the meaning assigned to such term in Section 4.4(a).
''Transfer Application'' means an application and agreement for transfer of
Partnership Securities in the form set forth on the back of a Certificate or in
a form substantially to the same effect in a separate instrument.
''Underwriter'' means each Person named as an underwriter in Schedule I to
the Underwriting Agreement who purchases MLP Common Units pursuant thereto.
''Underwriting Agreement'' means the Underwriting Agreement dated November
26, 1996, among the Underwriters, the Partnership, Genesis MLP, the Operating
General Partner and certain other parties, providing for the purchase of MLP
Common Units by such Underwriters.
''Unit'' means a Common Unit or Subordinated Unit or any other Partnership
Security that is designated as a ''Unit.''
''Unitholder'' means a holder of a Unit.
''Unpaid MQD'' has the meaning assigned to such term in Section
6.1(c)(i)(B).
''Unrealized Gain'' attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the fair market
value of such property as of such date (as determined under Section 5.5(d)) over
(b) the Carrying Value of such property as of such date (prior to any adjustment
to be made pursuant to Section 5.5(d) as of such date).
''Unrealized Loss'' attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the Carrying Value
of such property as of such date (prior to any adjustment to be made pursuant to
Section 5.5(d) as of such date) over (b) the fair market value of such property
as of such date (as determined under Section 5.5(d)).
''Unrecovered Capital'' means at any time, with respect to (a) a Unit, the
Initial Unit Price less the sum of all distributions constituting Capital
Surplus theretofore made in respect of an Initial Common Unit and any
distributions of cash (or the Net Agreed Value of any distributions in kind) in
connection with the dissolution and liquidation of the Partnership theretofore
made in respect of an Initial Common Unit, adjusted as the Operating General
Partner determines to be appropriate to give effect to any distribution,
subdivision or combination of such Units, and (b) an API, the excess of (i) the
cash amount contributed to the Partnership in exchange for such API over (ii)
any amounts previously distributed toward the redemption of such API pursuant to
Section 6.4 or 12.4.
''U.S. GAAP'' means United States Generally Accepted Accounting Principles
consistently applied.
''Voting Power'' means the right, if any, of the holder of a Partnership
Security to vote on Partnership matters. Each Common Unit and Subordinated Unit
shall entitle the holder thereof to one vote. Each additional Partnership
Security shall entitle the holder thereof to such vote, if any, as shall be
established at the time of issuance of such Partnership Security.
1.2 Construction
Unless the context requires otherwise: (a) any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa; (b) references to Articles and Sections refer to Articles and
Sections of this Agreement; and (c) ''include'' or ''includes'' means includes,
without limitation, and ''including'' means including, without limitation.
ARTICLE II
ORGANIZATION
2.1 Formation
The Operating General Partner and the Organizational Limited Partner have
previously formed the Partnership as a limited partnership pursuant to the
provisions of the Delaware Act and hereby amend and restate the original
Agreement of Limited Partnership of Genesis Crude Oil, L.P. in its entirety.
This amendment and restatement shall become effective on the date of this
Agreement. Except as expressly provided to the contrary in this Agreement, the
rights, duties (including fiduciary duties), liabilities and obligations of the
Partners and the administration, dissolution and termination of the Partnership
shall be governed by the Delaware Act. All Partnership Interests shall
constitute personal property of the owner thereof for all purposes and a Partner
has no interest in specific Partnership property.
2.2 Name
The name of the Partnership shall be ''Genesis Crude Oil, L.P.'' The
Partnership's business may be conducted under any other name or names deemed
necessary or appropriate by the Operating General Partner in its sole
discretion, including the name of a General Partner. The words ''Limited
Partnership,'' ''L.P.,'' ''Ltd.'' or similar words or letters shall be included
in the Partnership's name where necessary for the purpose of complying with the
laws of any jurisdiction that so requires. The Operating General Partner in its
discretion may change the name of the Partnership at any time and from time to
time and shall notify the Limited Partners of such change in the next regular
communication to the Limited Partners.
2.3 Registered Office; Registered Agent; Principal Office; Other Offices
Unless and until changed by the Operating General Partner, the registered
office of the Partnership in the State of Delaware shall be located at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the registered
agent for service of process on the Partnership in the State of Delaware at such
registered office shall be CT Corporation System. The principal office of the
Partnership shall be located at ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or
such other place as the Operating General Partner may from time to time
designate by notice to the other Partners. The Partnership may maintain offices
at such other place or places within or outside the State of Delaware as the
Operating General Partner deems necessary or appropriate. The address of the
Managing General Partner and the Operating General Partner shall be ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or such other place as the Managing General
Partner or the Operating General Partner, as the case may be, may from time to
time designate by notice to the Limited Partners.
2.4 Purpose and Business
The purpose and nature of the business to be conducted by the Partnership
shall be to (a) acquire, manage and operate the Assets and any similar assets or
properties, and to engage directly in, or to enter into or form any corporation,
partnership, joint venture, limited liability company or other arrangement to
engage indirectly in, any type of business or activity engaged in by Basis or
▇▇▇▇▇▇ immediately prior to the Closing Date associated with the Assets and, in
connection therewith, to exercise all of the rights and powers conferred upon
the Partnership pursuant to the agreements relating to such business activity,
(b) engage directly in, or to enter into or form any corporation, partnership,
joint venture, limited liability company or other arrangement to engage
indirectly in, any business activity that is approved by the Operating General
Partner and which lawfully may be conducted by a limited partnership organized
pursuant to the Delaware Act and, in connection therewith, to exercise all of
the rights and powers conferred upon the Partnership pursuant to the agreements
relating to such business activity, and (c) do anything necessary or appropriate
to the foregoing, including the making of capital contributions or loans to a
Group Member. The General Partners have no obligation or duty to the
Partnership, the Partners, or the Assignees to propose or approve, and in their
discretion may decline to propose or approve, the conduct by the Partnership of
any business.
2.5 Powers
The Partnership shall be empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described in Section
2.4 and for the protection and benefit of the Partnership.
2.6 Power of Attorney
(a) Each Limited Partner and each Assignee hereby constitutes and appoints
the Operating General Partner and, if a Liquidator shall have been selected
pursuant to Section 12.3, the Liquidator, severally (and any successor to the
Liquidator by merger, transfer, assignment, election or otherwise) and each of
their authorized officers and attorneys-in-fact, as the case may be, with full
power of substitution, as his true and lawful agent and attorney-in-fact, with
full power and authority in his name, place and ▇▇▇▇▇, to:
(i) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (A) all certificates, documents and other instruments
(including this Agreement and the Certificate of Limited Partnership and all
amendments or restatements hereof or thereof) that the Operating General Partner
or the Liquidator deems necessary or appropriate to form, qualify or continue
the existence or qualification of the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) in the State
of Delaware and in all other jurisdictions in which the Partnership may conduct
business or own property; (B) all certificates, documents and other instruments
that the Operating General Partner or the Liquidator deems necessary or
appropriate to reflect, in accordance with its terms, any amendment, change,
modification or restatement of this Agreement; (C) all certificates, documents
and other instruments (including conveyances and a certificate of cancellation)
that the Operating General Partner or the Liquidator deems necessary or
appropriate to reflect the dissolution and liquidation of the Partnership
pursuant to the terms of this Agreement; (D) all certificates, documents and
other instruments relating to the admission, withdrawal, removal or substitution
of any Partner pursuant to, or other events described in, Article IV, X, XI or
XII; (E) all certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of any class or series
of Partnership Securities issued pursuant to Section 5.6; and (F) all
certificates, documents and other instruments (including agreements and a
certificate of merger) relating to a merger or consolidation of the Partnership
pursuant to Article XIV; and
(ii) execute, swear to, acknowledge, deliver, file and record all ballots,
consents, approvals, waivers, certificates, documents and other instruments
necessary or appropriate, in the discretion of the Operating General Partner or
the Liquidator, to make, evidence, give, confirm or ratify any vote, consent,
approval, agreement or other action that is made or given by the Partners
hereunder or is consistent with the terms of this Agreement or is necessary or
appropriate, in the discretion of the Operating General Partner or the
Liquidator, to effectuate the terms or intent of this Agreement; provided, that
when required by Section 13.3 or any other provision of this Agreement that
establishes a percentage of the Limited Partners or of the Limited Partners of
any class or series required to take any action, the Operating General Partner
and the Liquidator may exercise the power of attorney made in this Section
2.6(a)(ii) only after the necessary vote, consent or approval of the Limited
Partners or of the Limited Partners of such class or series, as applicable.
Nothing contained in this Section 2.6(a) shall be construed as authorizing
the Operating General Partner to amend this Agreement except in accordance with
Article XIII or as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be irrevocable
and a power coupled with an interest, and it shall survive and, to the maximum
extent permitted by law, not be affected by the subsequent death, incompetency,
disability, incapacity, dissolution, bankruptcy or termination of any Limited
Partner or Assignee and the transfer of all or any portion of such Limited
Partner's or Assignee's Partnership Interest and shall extend to such Limited
Partner's or Assignee's heirs, successors, assigns and personal representatives.
Each such Limited Partner and Assignee hereby agrees to be bound by any
representation made by the Operating General Partner or the Liquidator acting in
good faith pursuant to such power of attorney; and each such Limited Partner and
Assignee, to the maximum extent permitted by law, hereby waives any and all
defenses that may be available to contest, negate or disaffirm the action of the
Operating General Partner or the Liquidator taken in good faith under such power
of attorney. Each Limited Partner and Assignee shall execute and deliver to the
Operating General Partner or the Liquidator, within 15 days after receipt of the
request therefor, such further designation, powers of attorney and other
instruments as the Operating General Partner or the Liquidator deems necessary
to effectuate this Agreement and the purposes of the Partnership.
2.7 Term
The term of the Partnership commenced upon the filing of the Certificate of
Limited Partnership in accordance with the Delaware Act and shall continue until
the close of Partnership business on December 31, 2086 or until the earlier
dissolution of the Partnership in accordance with the provisions of Article XII.
The existence of the Partnership as a separate legal entity shall continue until
the cancellation of the Certificate of Limited Partnership as provided in the
Delaware Act.
2.8 Title to Partnership Assets
Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partner or Assignee, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
a General Partner, one or more of a General Partner's Affiliates or one or more
nominees, as the Operating General Partner may determine. The General Partners
hereby declare and warrant that any Partnership assets for which record title is
held in the name of such General Partner or one or more of its Affiliates or one
or more nominees shall be held by such General Partner or such Affiliate or
nominee for the use and benefit of the Partnership in accordance with the
provisions of this Agreement; provided, however, that such General Partner shall
use reasonable efforts to cause record title to such assets (other than those
assets in respect of which the Operating General Partner determines that the
expense and difficulty of conveyancing makes transfer of record title to the
Partnership impracticable) to be vested in the Partnership as soon as reasonably
practicable; provided, further, that, prior to the withdrawal or removal of such
General Partner or as soon thereafter as practicable, such General Partner shall
use reasonable efforts to effect the transfer of record title to the Partnership
and, prior to any such transfer, will provide for the use of such assets in a
manner satisfactory to the Operating General Partner. All Partnership assets
shall be recorded as the property of the Partnership in its books and records,
irrespective of the name in which record title to such Partnership assets is
held.
ARTICLE III
RIGHTS OF LIMITED PARTNERS
3.1 Limitation of Liability
The Limited Partners and the Assignees shall have no liability under this
Agreement except as expressly provided in this Agreement or the Delaware Act.
3.2 Management of Business
No Limited Partner or Assignee, in its capacity as such, shall participate
in the operation, management or control (within the meaning of the Delaware Act)
of the Partnership's business, transact any business in the Partnership's name
or have the power to sign documents for or otherwise bind the Partnership. Any
action taken by any Affiliate of a General Partner or any officer, director,
employee, member, general partner, agent or trustee of a General Partner or any
of its Affiliates, or any officer, director, employee, member, general partner,
agent or trustee of a Group Member, in its capacity as such, shall not be deemed
to be participation in the control of the business of the Partnership by a
limited partner of the Partnership (within the meaning of Section 17-303(a) of
the Delaware Act) and shall not affect, impair or eliminate the limitations on
the liability of the Limited Partners or Assignees under this Agreement.
3.3 Outside Activities of Limited Partners
Subject to the provisions of Section 7.5, which shall continue to be
applicable to the Persons referred to therein, regardless of whether such
Persons shall also be Limited Partners or Assignees, any Limited Partner or
Assignee shall be entitled to and may have business interests and engage in
business activities in addition to those relating to the Partnership, including
business interests and activities in direct competition with the Partnership
Group. Neither the Partnership nor any of the other Partners or Assignees shall
have any rights by virtue of this Agreement in any business ventures of any
Limited Partner or Assignee.
3.4 Rights of Limited Partners
(a) In addition to other rights provided by this Agreement or by applicable
law, and except as limited by Section 3.4(b), each Limited Partner shall have
the right, for a purpose reasonably related to such Limited Partner's interest
as a limited partner in the Partnership, upon reasonable written demand and at
such Limited Partner's own expense:
(i) to obtain true and full information regarding the status of the
business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of the
Partnership's federal, state and local tax returns for each year;
(iii) to have furnished to him a current list of the name and last known
business, residence or mailing address of each Partner;
(iv) to have furnished to him a copy of this Agreement and the Certificate
of Limited Partnership and all amendments thereto, together with a copy of the
executed copies of all powers of attorney pursuant to which this Agreement, the
Certificate of Limited Partnership and all amendments thereto have been
executed;
(v) to obtain true and full information regarding the amount of cash and a
description and statement of the Net Agreed Value of any other Capital
Contribution by each Partner and which each Partner has agreed to contribute in
the future, and the date on which each became a Partner; and
(vi) to obtain such other information regarding the affairs of the
Partnership as is just and reasonable.
(b) The General Partners may keep confidential from the Limited Partners
and Assignees, for such period of time as the General Partners deem reasonable,
(i) any information that the General Partners reasonably believe to be in the
nature of trade secrets or (ii) other information the disclosure of which the
General Partners in good faith believe (A) is not in the best interests of the
Partnership Group, (B) could damage the Partnership Group or (C) that any Group
Member is required by law or by agreement with any third party to keep
confidential (other than agreements with Affiliates of the Partnership the
primary purpose of which is to circumvent the obligations set forth in this
Section 3.4).
ARTICLE IV
CERTIFICATES; RECORD HOLDERS; TRANSFER OF
PARTNERSHIP INTERESTS; REDEMPTION OF PARTNERSHIP INTERESTS
4.1 Certificates
Upon the request of any Person owning Units, APIs or other Partnership
Securities, the Partnership shall issue to such Person one or more Certificates
evidencing such Units, APIs or other Partnership Securities, as applicable.
Certificates shall be executed on behalf of the Partnership by the Operating
General Partner. Partners holding Certificates evidencing Subordinated GP Units
may exchange such Certificates for Certificates evidencing Common GP Units and
Partners holding Certificates evidencing Subordinated LP Units may exchange such
Certificates for Certificates evidencing Common LP Units, in each case on or
after the date on which such Subordinated Units are converted into Common Units
pursuant to Section 5.8.
4.2 Mutilated, Destroyed, Lost or Stolen Certificates
(a) If any mutilated Certificate is surrendered to the Operating General
Partner, the Operating General Partner on behalf of the Partnership shall
execute and deliver in exchange therefor, a new Certificate evidencing the same
number and type of Partnership Securities as the Certificate so surrendered.
(b) The Operating General Partner on behalf of the Partnership shall
execute and deliver a new Certificate in place of any Certificate previously
issued if the Record Holder of the Certificate:
(i) makes proof by affidavit, in form and substance satisfactory to the
Partnership, that a previously issued Certificate has been lost, destroyed or
stolen;
(ii) requests the issuance of a new Certificate before the Partnership has
notice that the Certificate has been acquired by a purchaser for value in good
faith and without notice of an adverse claim;
(iii) if requested by the Partnership, delivers to the Partnership a bond,
in form and substance satisfactory to the Partnership, with surety or sureties
and with fixed or open penalty as the Partnership may reasonably direct, in its
sole discretion, to indemnify the Partnership and the Partners against any claim
that may be made on account of the alleged loss, destruction or theft of the
Certificate; and
(iv) satisfies any other reasonable requirements imposed by the
Partnership.
If a Limited Partner or Assignee fails to notify the Partnership within a
reasonable time after he has notice of the loss, destruction or theft of a
Certificate, and a transfer of the Partnership Securities represented by the
Certificate is registered before the Partnership or the General Partners receive
such notification, the Limited Partner or Assignee shall be precluded from
making any claim against the Partnership or the General Partners for such
transfer or for a new Certificate.
(c) As a condition to the issuance of any new Certificate under this
Section 4.2, the Partnership may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses reasonably connected therewith.
4.3 Record Holders
The Partnership shall be entitled to recognize the Record Holder as the
Partner or Assignee with respect to any Partnership Interest and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such Partnership Interest on the part of any other Person, regardless of whether
the Partnership shall have actual or other notice thereof, except as otherwise
provided by law. Without limiting the foregoing, when a Person (such as a
broker, dealer, bank, trust company or clearing corporation or an agent of any
of the foregoing) is acting as nominee, agent or in some other representative
capacity for another Person in acquiring and/or holding Partnership Securities,
as between the Partnership on the one hand, and such other Persons on the other,
such representative Person (a) shall be the Partner or Assignee (as the case may
be) of record and beneficially, (b) must execute and deliver a Transfer
Application and (c) shall be bound by this Agreement and shall have the rights
and obligations of a Partner or Assignee (as the case may be) hereunder and as,
and to the extent, provided for herein.
4.4 Transfer Generally
(a) The term ''transfer,'' when used in this Agreement with respect to a
Partnership Interest, shall be deemed to refer to a transaction by which a
General Partner assigns its General Partner Interest to another Person or by
which a holder of a Limited Partner Interest assigns such Limited Partner
Interest to another Person who is or becomes a Limited Partner or an Assignee,
and includes a sale, assignment, gift, pledge, encumbrance, hypothecation,
mortgage, exchange or any other disposition by law or otherwise.
(b) No Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article IV.
Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article IV shall be null and void.
(c) Nothing contained in this Agreement shall be construed to prevent a
disposition by any interest holder of a General Partner of any or all of the
issued and outstanding interests of such General Partner.
4.5 Registration and Transfer of Limited Partner Interests
(a) The Partnership shall keep or cause to be kept on behalf of the
Partnership a register in which, subject to such reasonable regulations as it
may prescribe and subject to the provisions of Section 4.5(b), the Partnership
will provide for the registration and transfer of Limited Partner Interests. The
Partnership shall not recognize transfers of Certificates evidencing Limited
Partner Interests unless such transfers are effected in the manner described in
this Section 4.5. Upon surrender of a Certificate for registration of transfer
of any Limited Partner Interest evidenced by a Certificate, and subject to the
provisions of Section 4.5(b), the appropriate officers of the Operating General
Partner on behalf of the Partnership shall execute, in the name of the holder or
the designated transferee or transferees, as required pursuant to the holder's
instructions, one or more new Certificates evidencing the same aggregate number
and type of Limited Partner Interests as was evidenced by the Certificate so
surrendered.
(b) The Partnership shall not recognize any transfer of Limited Partner
Interests until the Certificates evidencing such Limited Partner Interests are
surrendered for registration of transfer and are accompanied by a Transfer
Application duly executed by the transferee (or the transferee's attorney-in-
fact duly authorized in writing). No charge shall be imposed by the Partnership
for such transfer; provided, however, that as a condition to the issuance of any
new Certificate under this Section 4.5, the Partnership may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed with respect thereto.
(c) Limited Partner Interests may be transferred only in the manner
described in this Section 4.5. The transfer of any Limited Partner Interests and
the admission of any new Limited Partner shall not constitute an amendment to
this Agreement.
(d) Until admitted as a Substituted Limited Partner pursuant to Section
10.4, the Record Holder of a Limited Partner Interest shall be an Assignee in
respect of such Limited Partner Interest. Limited Partners may include
custodians, nominees or any other individual or entity in its own or any
representative capacity.
(e) A transferee of a Limited Partner Interest who has completed and
delivered a Transfer Application shall be deemed to have (i) requested admission
as a Substituted Limited Partner, (ii) agreed to comply with and be bound by and
to have executed this Agreement, (iii) represented and warranted that such
transferee has the right, power and authority and, if an individual, the
capacity to enter into this Agreement, (iv) granted the powers of attorney set
forth in this Agreement and (v) given the consents and approvals and made the
waivers contained in this Agreement.
4.6 Transfer of a General Partner's General Partner Interest
(a) If the Operating General Partner transfers its MLP General Partner
Interest to any Person in accordance with the provisions of the Genesis MLP
Partnership Agreement, the Operating General Partner shall contemporaneously
therewith transfer all, but not less than all, of its General Partner Interest
to such Person, and the Partners hereby expressly consent to such transfer, and
following any such transfer such Person may become a successor Operating General
Partner pursuant to Section 10.4(a). Except as set forth in the immediately
preceding sentence, the Operating General Partner may not transfer all or any
part of its General Partner Interest.
(b) The Managing General Partner may transfer all, but not less than all,
of its Partnership Interest in connection with the merger, consolidation or
other combination of the Managing General Partner with or into any other Person
or the transfer by the Managing General Partner of all or substantially all of
its assets to another Person, and following any such transfer such Person may
become a successor Managing General Partner pursuant to Section 10.4(b). Except
as set forth in the immediately preceding sentence, or in connection with any
pledge of (or any related foreclosure on) the Managing General Partner's
Partnership Interest solely for the purpose of securing, directly or indirectly,
indebtedness of Genesis MLP, a Group Member or the Managing General Partner, the
Managing General Partner may not transfer all or any part of its Partnership
Interest.
4.7 Transfer of APIs
A holder of APIs may transfer any or all of the APIs held by such holder.
The Operating General Partner shall have the authority (but shall not be
required) to adopt such reasonable restrictions on the transfer of APIs and
requirements for registering the transfer of APIs as the Operating General
Partner, in its sole discretion, shall determine are necessary or appropriate.
4.8 Restrictions on Transfers
(a) Notwithstanding the other provisions of this Article IV, no transfer of
any Partnership Interest shall be made if such transfer would (i) violate the
then applicable federal or state securities laws or rules and regulations of the
Commission, any state securities commission or any other governmental
authorities with jurisdiction over such transfer, (ii) terminate the existence
or qualification of the Partnership under the laws of the jurisdiction of its
formation, or (iii) cause the Partnership to be treated as an association
taxable as a corporation or otherwise to be taxed as an entity for federal
income tax purposes (to the extent not already so treated or taxed).
(b) The Operating General Partner may impose restrictions on the transfer
of Partnership Interests if a subsequent Opinion of Counsel determines that such
restrictions are necessary to avoid a significant risk of the Partnership
becoming taxable as a corporation or otherwise to be taxed as an entity for
federal income tax purposes. The restrictions may be imposed by making such
amendments to this Agreement as the Operating General Partner may determine to
be necessary or appropriate to impose such restrictions.
ARTICLE V
CAPITAL CONTRIBUTIONS AND
ISSUANCE OF PARTNERSHIP INTERESTS
5.1 Organizational Contributions
In connection with the formation of the Partnership under the Delaware Act,
the Operating General Partner made an initial Capital Contribution to the
Partnership in the amount of $10.00, for an interest in the Partnership and has
been admitted as the Operating General Partner of the Partnership, and the
Organizational Limited Partner made an initial Capital Contribution to the
Partnership in the amount of $990.00 for an interest in the Partnership and has
been admitted as a Limited Partner of the Partnership. As of the Closing Date,
the interest of the Organizational Limited Partner shall be redeemed as provided
in the Conveyance Agreement; the initial Capital Contributions of each Partner
shall thereupon be refunded; and the Organizational Limited Partner shall cease
to be a Limited Partner of the Partnership. Ninety-nine percent of any interest
or other profit that may have resulted from the investment or other use of such
initial Capital Contributions shall be allocated and distributed to the
Organizational Limited Partner, and the balance thereof shall be allocated and
distributed to the Operating General Partner.
5.2 Contributions by General Partners
(a) Contributions by the Managing General Partner.
(i) On the Closing Date, the Managing General Partner shall, as set forth
in the Conveyance Agreement, contribute cash to the Partnership in an amount
equal to the Net MLP Proceeds in exchange for 7,653,061 Common GP Units.
(ii) As further set forth in the Conveyance Agreement, if the Underwriters
exercise the Over-Allotment Option, in whole or in part, the Managing General
Partner shall contribute cash to the Partnership in an amount equal to the sum
of (A) the Net Overallotment Proceeds plus (B) the LLC Overallotment
Contribution in exchange for an additional number of Common GP Units equal to
the number of MLP Units issued pursuant to Sections 5.2(b) and 5.3(b) of the
Genesis MLP Partnership Agreement. The Partnership shall use the cash
contributed by the Managing General Partner pursuant to this Section 5.2(a)(ii)
to redeem from all of the holders of Subordinated Units, in accordance with
their relative Percentage Interests, a number of Subordinated Units equal to the
number of additional Common GP Units issued pursuant to this Section 5.2(a)(ii).
(b) Contributions by the Operating General Partner. In the event that any
Capital Contribution is made to the Partnership subsequent to the Closing Date
(other than Capital Contributions made pursuant to Section 5.2(a)): (i) if such
Capital Contribution will be used by the Partnership solely to redeem
Partnership Securities pursuant to the terms of the Redemption and Registration
Rights Agreement, the Operating General Partner shall not be required to make an
additional Capital Contribution to the Partnership in conjunction therewith, or
(ii) if such Capital Contribution will be used, in whole or in part, by the
Partnership for any purpose other than the redemption of Partnership Securities
pursuant to the terms of the Redemption and Registration Rights Agreement, the
Operating General Partner shall make an additional Capital Contribution to the
Partnership in the amount necessary to maintain an overall two percent interest
in all Partnership distributions, taking into account for this purpose the
Operating General Partner's General Partner Interest and any indirect interest
in Partnership distributions held by the Operating General Partner as a
consequence of its MLP General Partner Interest.
(c) Except as set forth in Sections 5.2(a) and (b) and Article XII, the
General Partners shall not be obligated to make any Capital Contribution to the
Partnership.
5.3 Contributions by Initial Limited Partners
(a) On the Closing Date, as set forth in the Conveyance Agreement, (i) the
▇▇▇▇▇▇ Subsidiaries (other than ▇▇▇▇▇▇ Crude Oil Company), shall, in the event
the ▇▇▇▇▇▇ Purchase Cash is less than the ▇▇▇▇▇▇ Affiliate Cash, contribute to
the Partnership an undivided interest in the assets described in Sections
2.4(a)(ii)-(v) of the Conveyance Agreement in exchange for the number of
Subordinated LP Units specified in Section 2.4(b)(ii) of the Conveyance
Agreement, (ii) ▇▇▇▇▇▇ Crude Oil Company shall contribute to the Partnership the
assets described in Section 2.5(a)(ii) of the Conveyance Agreement in exchange
for (x) the Excess Howell Cash, (y) the Excess ▇▇▇▇▇▇ Subordinated LP Units, and
(z) 30,792 Subordinated GP Units, and (iii) Basis shall contribute to the
Partnership the assets described in Section 2.5(a)(i) of the Conveyance
Agreement in exchange for (x) the Excess Basis Cash, (y) 1,771,200 Subordinated
LP Units, and (z) 36,147 Subordinated GP Units.
(b) No Limited Partner Interests will be issuable as of or at the Closing
Date other than the Subordinated LP Units issued pursuant to Section 5.3(a).
5.4 Interest and Withdrawal
No interest shall be paid by the Partnership on Capital Contributions. No
Partner or Assignee shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent, if any, that distributions made pursuant to
this Agreement or upon termination of the Partnership may be considered as such
by law and then only to the extent provided for in this Agreement. Except to the
extent expressly provided in this Agreement, no Partner or Assignee shall have
priority over any other Partner or Assignee either as to the return of Capital
Contributions or as to profits, losses or distributions. Any such return shall
be a compromise to which all Partners and Assignees agree within the meaning of
Section 17-502(b) of the Delaware Act.
5.5 Capital Accounts
(a) The Partnership shall maintain for each Partner (or a beneficial owner
of Partnership Interests held by a nominee in any case in which the nominee has
furnished the identity of such owner to the Partnership in accordance with
Section 6031(c) of the Code or any other method acceptable to the Operating
General Partner in its sole discretion) owning a Partnership Interest a separate
Capital Account with respect to such Partnership Interest in accordance with the
rules of Treasury Regulation Section 1.704-1(b)(2)(iv). Such Capital Account
shall be increased by (i) the amount of all Capital Contributions made to the
Partnership with respect to such Partnership Interest pursuant to this Agreement
and (ii) all items of Partnership income and gain (including, without
limitation, income and gain exempt from tax) computed in accordance with Section
5.5(b) and allocated with respect to such Partnership Interest pursuant to
Section 6.1, and decreased by (x) the amount of cash or Net Agreed Value of all
actual and deemed distributions of cash or property made with respect to such
Partnership Interest pursuant to this Agreement and (y) all items of Partnership
deduction and loss computed in accordance with Section 5.5(b) and allocated with
respect to such Partnership Interest pursuant to Section 6.1.
(b) For purposes of computing the amount of any item of income, gain, loss
or deduction which is to be allocated pursuant to Article VI and is to be
reflected in the Partners' Capital Accounts, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes (including,
without limitation, any method of depreciation, cost recovery or amortization
used for that purpose), provided, that:
(i) All fees and other expenses incurred by the Partnership to promote the
sale of (or to sell) a Partnership Interest that can neither be deducted nor
amortized under Section 709 of the Code, if any, shall, for purposes of Capital
Account maintenance, be treated as an item of deduction at the time such fees
and other expenses are incurred and shall be allocated among the Partners
pursuant to Section 6.1.
(ii) Except as otherwise provided in Treasury Regulation Section 1.704-
1(b)(2)(iv)(m), the computation of all items of income, gain, loss and deduction
shall be made without regard to any election under Section 754 of the Code which
may be made by the Partnership and, as to those items described in Section
705(a)(1)(B) or 705(a)(2)(B) of the Code, without regard to the fact that such
items are not includable in gross income or are neither currently deductible nor
capitalized for federal income tax purposes. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b)
of the Code is required, pursuant to Treasury Regulation Section 1.704-
1(b)(2)(iv)(m) to be taken into account in determining Capital Accounts, the
amount of such adjustment in the Capital Accounts shall be treated as an item of
gain or loss.
(iii) Any income, gain or loss attributable to the taxable disposition of
any Partnership property shall be determined as if the adjusted basis of such
property as of such date of disposition were equal in amount to the
Partnership's Carrying Value with respect to such property as of such date.
(iv) In accordance with the requirements of Section 704(b) of the Code, any
deductions for depreciation, cost recovery or amortization attributable to any
Contributed Property shall be determined as if the adjusted basis of such
property on the date it was acquired by the Partnership were equal to the Agreed
Value of such property. Upon an adjustment pursuant to Section 5.5(d) to the
Carrying Value of any Partnership property subject to depreciation, cost
recovery or amortization, any further deductions for such depreciation, cost
recovery or amortization attributable to such property shall be determined (A)
as if the adjusted basis of such property were equal to the Carrying Value of
such property immediately following such adjustment and (B) using a rate of
depreciation, cost recovery or amortization derived from the same method and
useful life (or, if applicable, the remaining useful life) as is applied for
federal income tax purposes; provided, however, that, if the asset has a zero
adjusted basis for federal income tax purposes, depreciation, cost recovery or
amortization deductions shall be determined using any reasonable method that the
Operating General Partner may adopt.
(v) If the Partnership's adjusted basis in a depreciable or cost recovery
property is reduced for federal income tax purposes pursuant to Section 48(q)(1)
or 48(q)(3) of the Code, the amount of such reduction shall, solely for purposes
hereof, be deemed to be an additional depreciation or cost recovery deduction in
the year such property is placed in service and shall be allocated among the
Partners pursuant to Section 6.1. Any restoration of such basis pursuant to
Section 48(q)(2) of the Code shall, to the extent possible, be allocated in the
same manner to the Partners to whom such deemed deduction was allocated.
(c) A transferee of a Partnership Interest shall succeed to a pro rata
portion of the Capital Account of the transferor relating to the Partnership
Interest so transferred; provided, however, that, if the transfer causes a
termination of the Partnership under Section 708(b)(1)(B) of the Code, the
Partnership's properties and liabilities shall be deemed (i) to have been
distributed in liquidation of the Partnership to the Partners (including any
transferee of a Partnership Interest that is a party to the transfer causing
such termination) pursuant to Section 12.4 (after adjusting the balance of the
Capital Accounts of the Partners as provided in Section 5.5(d)(ii)) and
recontributed by such Partners in reconstitution of the Partnership or (ii) in
the event of a termination of the Partnership that occurs after the finalization
of Proposed Treasury Regulation Section 1.704-1(b)(1)(iv), to have been
contributed to a new partnership which will be deemed to be a continuation of,
and successor to, the Partnership and the Partnership will be deemed to make
liquidating distributions of the interests in this new partnership to the
Partners (including any transferee of a Partnership Interest that is a party to
the transfer causing such termination) pursuant to Section 12.4 (after adjusting
the balance of the Capital Accounts of the Partners as provided in Section
5.5(d)(ii)). Any such deemed distribution and contribution, in the case of a
characterization under clause (i) of the preceding sentence, or any such deemed
contribution and distribution, in the case of a characterization under clause
(ii) of the preceding sentence, shall be treated as an actual contribution and
distribution for purposes of this Section 5.5. In such event, the Carrying
Values of the Partnership properties shall be adjusted immediately prior to such
deemed distribution and contribution, or deemed contribution and distribution,
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv) and this Section 5.5
and such Carrying Values shall then constitute the Agreed Values of such
properties upon such deemed contribution to the new Partnership. In either case,
the Capital Accounts of the new Partnership that results under the applicable
characterization shall be maintained in accordance with the principles of this
Section 5.5.
(d) (i) In accordance with Treasury Regulation Section 1.704-
1(b)(2)(iv)(f), on an issuance of additional Partnership Interests for cash or
Contributed Property, the conversion of the Operating General Partner's Combined
Interest to MLP Common Units pursuant to Section 11.3(b) of the Genesis MLP
Partnership Agreement, or the conversion of the Operating General Partner's
right to Incentive Compensation Payments pursuant to Section 7.13, the Capital
Account of all Partners and the Carrying Value of each Partnership property
immediately prior to such issuance or conversion shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss attributable to such
Partnership property, as if such Unrealized Gain or Unrealized Loss had been
recognized on an actual sale of each such property immediately prior to such
issuance and had been allocated to the Partners at such time pursuant to Section
6.1(c). In determining such Unrealized Gain or Unrealized Loss, the aggregate
cash amount and fair market value of all Partnership assets (including, without
limitation, cash or cash equivalents) immediately prior to the issuance of
additional Units shall be determined by the Operating General Partner using such
reasonable method of valuation as it may adopt; provided, however, that the
Operating General Partner, in arriving at such valuation, must take fully into
account the fair market value of the Partnership Interests of all Partners at
such time. The Operating General Partner shall allocate such aggregate value
among the assets of the Partnership (in such manner as it determines in its
discretion to be reasonable) to arrive at a fair market value for individual
properties.
(ii) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f),
immediately prior to any actual or deemed distribution to a Partner of any
Partnership property (other than a distribution of cash that is not in
redemption or retirement of a Partnership Interest), the Capital Accounts of all
Partners and the Carrying Value of all Partnership property shall be adjusted
upward or downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as if such Unrealized Gain or
Unrealized Loss had been recognized in a sale of such property immediately prior
to such distribution for an amount equal to its fair market value, and had been
allocated to the Partners, at such time, pursuant to Section 6.1(c). In
determining such Unrealized Gain or Unrealized Loss the aggregate cash amount
and fair market value of all Partnership assets (including, without limitation,
cash or cash equivalents) immediately prior to a distribution shall (A) in the
case of an actual distribution which is not made pursuant to Section 12.4 or in
the case of a deemed distribution occurring as a result of a termination of the
Partnership pursuant to Section 708 of the Code, whether before or after the
finalization of Proposed Treasury Regulation Section 1.704-1(b)(l)(iv), be
determined and allocated in the same manner as that provided in Section
5.5(d)(i) or (B) in the case of a liquidating distribution pursuant to Section
12.4, be determined and allocated by the Liquidator using such reasonable method
of valuation as it may adopt.
5.6 Issuances of Additional Partnership Securities
(a) Subject to Sections 5.7 and 7.3(d), the Partnership may issue
additional Partnership Securities and options, rights, warrants and appreciation
rights relating to Partnership Securities for any Partnership purpose at any
time and from time to time to such Persons for such consideration and on such
terms and conditions as shall be established by the Operating General Partner in
its sole discretion, all without the approval of any Limited Partners.
(b) Each additional Partnership Security authorized to be issued by the
Partnership pursuant to Section 5.6(a) may be issued in one or more classes, or
one or more series of any such classes, with such designations, preferences,
rights, powers and duties (which may be senior to existing classes and series of
Partnership Securities), as shall be fixed by the Operating General Partner in
the exercise of its sole discretion, including (i) the right to share
Partnership profits and losses or items thereof; (ii) the right to share in
Partnership distributions; (iii) the rights upon dissolution and liquidation of
the Partnership; (iv) whether, and the terms and conditions upon which, the
Partnership may redeem such Partnership Security; (v) whether such Partnership
Security is issued with the privilege of conversion or exchange and, if so, the
terms and conditions of such conversion or exchange; (vi) the terms and
conditions upon which such Partnership Security will be issued, evidenced by
Certificates and assigned or transferred; and (vii) the right, if any, of such
Partnership Security to vote on Partnership matters, including matters relating
to the relative rights, preferences and privileges of such Partnership Security.
(c) The Operating General Partner is hereby authorized and directed to take
all actions that it deems necessary or appropriate in connection with (i) each
issuance of Partnership Securities pursuant to this Section 5.6, (ii) the
admission of Additional Limited Partners and (iii) all additional issuances of
Partnership Securities. The Operating General Partner is further authorized and
directed to specify the relative rights, powers and duties of the holders of
Partnership Securities being so issued. The Operating General Partner shall do
all things necessary to comply with the Delaware Act and is authorized and
directed to do all things it deems to be necessary or advisable in connection
with any future issuance of Partnership Securities pursuant to the terms of this
Agreement, including compliance with any statute, rule, regulation or guideline
of any federal, state or other governmental agency.
5.7 Limitations on Issuance of Additional Partnership Securities
The issuance of Partnership Securities pursuant to Section 5.6 shall be
subject to the following restrictions and limitations:
(a) During the Subordination Period, the Partnership shall not issue an
aggregate of more than 3,750,000 additional Parity Units without the prior
approval of the holders of a Majority Interest; provided, however, that the
number of additional Parity Units that may be issued without the prior approval
of the holders of a Majority Interest shall be reduced by the number of MLP
Parity Units issued by Genesis MLP that count against the limitation on issuance
of MLP Parity Units in Section 5.7(a) of the Genesis MLP Partnership Agreement.
In applying this limitation, there shall be excluded Common GP Units issued (i)
to Genesis MLP, (ii) in accordance with Section 5.7(b), (iii) pursuant to the
employee benefit plans of a General Partner, the Partnership or any other Group
Member and (iv) in the event of a combination or subdivision of Common Units.
(b) The Partnership may also issue an unlimited number of Parity Units,
prior to the end of the Subordination Period and without the prior approval of
the Partners if such issuance occurs (i) in connection with an Acquisition or a
Capital Improvement or (ii) within 365 days of, and the net proceeds from such
issuance are used to repay debt incurred in connection with, an Acquisition or a
Capital Improvement, in each case where such Acquisition or Capital Improvement
involves assets that, if acquired by the Partnership as of the date that is one
year prior to the first day of the Quarter in which such Acquisition is to be
consummated or such Capital Improvement is to be completed, would have resulted,
on a pro forma basis, in an increase in:
(A) the amount of Adjusted Operating Surplus generated by the Partnership
on a per-Unit basis (for all Outstanding OLP Units) with respect to each of the
four most recently completed Quarters (on a pro forma basis as described below)
as compared to
(B) the actual amount of Adjusted Operating Surplus generated by the
Partnership on a per-Unit basis (for all Outstanding OLP Units) (excluding
Adjusted Operating Surplus attributable to the Acquisition or Capital
Improvement) with respect to each of such four most recently completed Quarters.
If the issuance of Partnership Securities with respect to an Acquisition or
Capital Improvement occurs within the first four full Quarters after the Closing
Date, then Adjusted Operating Surplus as used in clauses (A) (subject to the
succeeding sentence) and (B) above shall be calculated (i) for each Quarter, if
any, that commenced after the Closing Date for which actual results of
operations are available, based on the actual Adjusted Operating Surplus of
Genesis OLP generated with respect to such Quarter, and (ii) for each other
Quarter, on a pro forma basis not inconsistent with the procedure, as
applicable, set forth in Appendix E to the Registration Statement. Furthermore,
the amount in clause (A) shall be determined on a pro forma basis assuming that
(1) all of the Parity Units or Partnership Securities to be issued in connection
with or within 365 days of such Acquisition or Capital Improvement had been
issued and outstanding, (2) all indebtedness for borrowed money to be incurred
or assumed in connection with such Acquisition or Capital Improvement (other
than any such indebtedness that is to be repaid with the proceeds of such
issuance) had been incurred or assumed, in each case as of the commencement of
such four-Quarter period, (3) the personnel expenses that would have been
incurred by the Partnership in the operation of the acquired assets are the
personnel expenses for employees to be retained by the Partnership in the
operation of the acquired assets, and (4) the non-personnel costs and expenses
are computed on the same basis as those incurred by the Partnership in the
operation of the Partnership's business at similarly situated Partnership
facilities.
(c) During the Subordination Period, the Partnership shall not issue
additional Partnership Securities having rights to distributions or in
liquidation ranking prior or senior to the Common Units, without the prior
approval of the holders of a Majority Interest.
5.8 Conversion of Subordinated Units
(a) A total of 16,735 of the Outstanding Subordinated GP Units will convert
into Common GP Units on a one-for-one basis and a total of 820,000 of the
Outstanding Subordinated LP Units will convert into Common LP Units on a
one-for-one basis on the first day after the Record Date for distributions
in respect of any Quarter ending on or after December 31, 1999, in respect of
which:
(i) distributions under Section 6.4 in respect of all Outstanding Common
Units and Subordinated Units with respect to each of the three consecutive, non-
overlapping four-Quarter periods immediately preceding such date equals or
exceeds the sum of the Minimum Quarterly Distribution on all of the Outstanding
Common Units and Subordinated Units during such periods; and
(ii) the Adjusted Operating Surplus generated during each of the two
consecutive, non-overlapping four-Quarter periods immediately preceding such
date equals or exceeds the sum of the Minimum Quarterly Distribution on all of
the Outstanding Common Units and Subordinated Units, plus the related
distribution on the General Partner Interest in the Partnership, during such
periods; and
(iii) the Cumulative Common Unit Arrearage on all of the Common Units is
zero;
provided, however, that notwithstanding anything else herein contained the total
number of Outstanding Subordinated GP Units that may be converted pursuant to
this Section 5.8(a) shall be reduced by a number equal to one quarter of the
Subordinated GP Units, if any, redeemed by the Partnership pursuant to Section
5.2(a)(ii); and provided, further, that notwithstanding anything else herein
contained the total number of Outstanding Subordinated LP Units that may be
converted pursuant to this Section 5.8(a) shall be reduced by a number equal to
one quarter of the Subordinated LP Units, if any, redeemed by the Partnership
pursuant to Section 5.2(a)(ii).
(b) An additional 16,735 of the Outstanding Subordinated GP Units will
convert into Common GP Units on a one-for-one basis and an additional 820,000 of
the Outstanding Subordinated LP Units will convert into Common LP Units on a
one-for-one basis on the first day after the Record Date for distributions in
respect of any Quarter ending on or after December 31, 2000, in respect of
which:
(i) distributions under Section 6.4 in respect of all Outstanding Common
Units and Subordinated Units with respect to each of the three consecutive, non-
overlapping four-Quarter periods immediately preceding such date equals or
exceeds the sum of the Minimum Quarterly Distribution on all of the Outstanding
Common Units and Subordinated Units during such periods; and
(ii) the Adjusted Operating Surplus generated during each of the two
consecutive, non-overlapping four-Quarter periods immediately preceding such
date equals or exceeds the sum of the Minimum Quarterly Distribution on all of
the Outstanding Common Units and Subordinated Units, during such periods; and
(iii) the Cumulative Common Unit Arrearage on all of the Common Units is
zero;
provided, however, that the conversion of Subordinated Units pursuant to this
Section 5.8(b) may not occur until at least one year following the conversion of
Subordinated Units pursuant to Section 5.8(a); and provided, further, that
notwithstanding anything else herein contained the total number of Outstanding
Subordinated GP Units that may be converted pursuant to this Section 5.8(b)
shall be reduced by a number equal to one quarter of the Subordinated Units, if
any, redeemed by the Partnership pursuant to Section 5.2(a)(ii); and provided
further that notwithstanding anything else herein contained the total number of
Outstanding Subordinated LP Units that may be converted pursuant to this Section
5.8(b) shall be reduced by a number equal to one quarter of the Subordinated
Units, if any, redeemed by the Partnership pursuant to Section 5.2(a)(ii).
(c) (i) In the event that Outstanding Subordinated GP Units shall convert
into Common Units pursuant to Section 5.8(a) or 5.8(b) at a time when there
shall be more than one holder of Subordinated GP Units, then, unless all of the
holders of Subordinated GP Units shall agree to a different allocation, the
Subordinated GP Units that are to be converted into Common GP Units shall be
allocated among all of the holders of Subordinated GP Units in accordance with
their relative Percentage Interests.
(ii) In the event that Outstanding Subordinated LP Units shall convert into
Common Units pursuant to Section 5.8(a) or 5.8(b) at a time when there shall be
more than one holder of Subordinated LP Units, then, unless all of the holders
of Subordinated LP Units shall agree to a different allocation, the Subordinated
LP Units that are to be converted into Common LP Units shall be allocated among
all of the holders of Subordinated LP Units in accordance with their relative
Percentage Interests.
(d) Any Subordinated Units that are not converted into Common Units
pursuant to Sections 5.8(a) and 5.8(b) shall convert into Common Units on a one-
for-one basis on the first day following the Record Date for distributions in
respect of the final Quarter of the Subordination Period.
5.9 Limited Preemptive Right
Except as provided in this Section 5.9 and in Section 5.2, no Person shall
have any preemptive, preferential or other similar right with respect to the
issuance of any Partnership Security, whether unissued, held in the treasury or
hereafter created. The Operating General Partner shall have the right, which it
may from time to time assign in whole or in part to any of its Affiliates, to
purchase Partnership Securities from the Partnership whenever, and on the same
terms that, the Partnership issues Partnership Securities to Persons other than
the Operating General Partner and its Affiliates, to the extent necessary to
maintain the Percentage Interests of the Operating General Partner and its
Affiliates equal to that which existed immediately prior to the issuance of such
Partnership Securities.
5.10 Splits and Combination
(a) The Partnership may make a Pro Rata distribution of Partnership
Securities to all Record Holders or may effect a subdivision or combination of
Partnership Securities so long as, after any such event, each Partner shall have
the same Percentage Interest in the Partnership as before such event, and any
amounts calculated on a per Unit basis (including any Common Unit Arrearage or
Cumulative Common Unit Arrearage) or stated as a number of Units (including the
number of Subordinated Units that may convert prior to the end of the
Subordination Period and the number of additional Parity Units that may be
issued pursuant to Section 5.7 without a Unitholder vote) are proportionately
adjusted retroactive to the beginning of the Partnership.
(b) The Partnership may make distributions of Partnership Securities and
effect subdivisions and combinations of Partnership Securities to reflect any
such distribution, subdivision or combination of MLP Partnership Securities.
(c) Whenever such a distribution, subdivision or combination of Partnership
Securities is declared, the Operating General Partner shall select a Record Date
as of which the distribution, subdivision or combination shall be effective and
shall send notice thereof at least 20 days prior to such Record Date to each
Record Holder as of a date not less than 10 days prior to the date of such
notice. The Operating General Partner also may cause a firm of independent
public accountants selected by it to calculate the number of Partnership
Securities to be held by each Record Holder after giving effect to such
distribution, subdivision or combination. The Operating General Partner shall be
entitled to rely on any certificate provided by such firm as conclusive evidence
of the accuracy of such calculation.
(d) Promptly following any such distribution, subdivision or combination,
the Partnership may issue Certificates to the Record Holders of Partnership
Securities as of the applicable Record Date representing the new number of
Partnership Securities held by such Record Holders, or the Operating General
Partner may adopt such other procedures as it may deem appropriate to reflect
such changes. If any such combination results in a smaller total number of
Partnership Securities Outstanding, the Partnership shall require, as a
condition to the delivery to a Record Holder of such new Certificate, the
surrender of any Certificate held by such Record Holder immediately prior to
such Record Date.
5.11 Fully Paid and Non-Assessable Nature of Limited Partner Interests
All Limited Partner Interests issued pursuant to, and in accordance with
the requirements of, this Article V shall be fully paid and non-assessable
Limited Partner Interests in the Partnership, except as such non-assessability
may be affected by Section 17-607 of the Delaware Act.
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
6.1 Allocations for Capital Account Purposes
For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Section 5.5(b)) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided hereinbelow.
(a) Net Income. After giving effect to the special allocations set forth in
Section 6.1(d), Net Income for each taxable year and all items of income, gain,
loss and deduction taken into account in computing Net Income for such taxable
year shall be allocated as follows:
(i) First, 100% to the Operating General Partner until the aggregate Net
Income allocated to the Operating General Partner pursuant to this Section
6.1(a)(i) for the current taxable year and all previous taxable years is equal
to the aggregate Net Losses allocated to the Operating General Partner pursuant
to Section 6.1(b)(iv) for all previous taxable years;
(ii) Second, 100% to the holders of APIs, in the proportion that the
Capital Account maintained for each holder with respect to such APIs bears to
the aggregate Capital Accounts attributable to all APIs then Outstanding, until
the aggregate Net Income allocated to such holders pursuant to this Section
6.1(a)(ii) for the current taxable year and all previous taxable years is equal
to the aggregate Net Losses allocated to such holders pursuant to Section
6.1(b)(iii) for all previous taxable years;
(iii) Third, 100% to the Partners in accordance with their respective
Percentage Interests, until the aggregate Net Income allocated to the Partners
pursuant to this Section 6.1(a)(iii) for the current taxable year and all
previous taxable years is equal to the aggregate Net Losses allocated to the
Partners pursuant to Section 6.1(b)(ii) for all previous taxable years; and
(iv) Fourth, the balance, if any, 100% to the Partners in accordance with
their respective Percentage Interests.
(b) Net Losses. After giving effect to the special allocations set forth in
Section 6.1(d), Net Losses for each taxable period and all items of income,
gain, loss and deduction taken into account in computing Net Losses for such
taxable period shall be allocated as follows:
(i) First, 100% to the Partners, in accordance with their respective
Percentage Interests, until the aggregate Net Losses allocated pursuant to this
Section 6.1(b)(i) for the current taxable year and all previous taxable years is
equal to the aggregate Net Income allocated to the Partners pursuant to Section
6.1(a)(iv) for all previous taxable years; provided that Net Losses shall not be
allocated pursuant to this Section 6.1(b)(i) to the extent that such allocation
would cause any Partner other than the Operating General Partner to have a
deficit balance in its Adjusted Capital Account at the end of such taxable year
(or increase any existing deficit balance in its Adjusted Capital Account);
(ii) Second, 100% to the Partners in accordance with their respective
Percentage Interests; provided that Net Losses shall not be allocated pursuant
to this Section 6.1(b)(ii) to the extent that such allocation would cause any
Partner other than the Operating General Partner to have a deficit balance in
its Adjusted Capital Account at the end of such taxable year (or increase any
existing deficit balance in its Adjusted Capital Account);
(iii) Third, 100% to holders of APIs, in the proportion that the Capital
Account maintained for each holder with respect to such APIs bears to the
aggregate Capital Accounts attributable to all APIs then Outstanding; provided
that Net Losses shall not be allocated pursuant to this Section 6.1(b)(iii) to
the extent that such allocation would cause any holder of APIs to have a deficit
balance in its Adjusted Capital Account at the end of such taxable year (or
increase any existing deficit balance in its Adjusted Capital Account); and
(iv) Fourth, the balance, if any, 100% to the Operating General Partner.
(c) Net Termination Gains and Losses. After giving effect to the special
allocations set forth in Section 6.1(d), all items of income, gain, loss and
deduction taken into account in computing Net Termination Gain or Net
Termination Loss for such taxable period shall be allocated in the same manner
as such Net Termination Gain or Net Termination Loss is allocated hereunder. All
allocations under this Section 6.1(c) shall be made after Capital Account
balances have been adjusted by all other allocations provided under this Section
6.1 and after all distributions of Available Cash provided under Sections 6.4
and 6.5 have been made; provided, however, that solely for purposes of this
Section 6.1(c), Capital Accounts shall not be adjusted for distributions made
pursuant to Section 12.4.
(i) If a Net Termination Gain is recognized (or deemed recognized pursuant
to Section 5.5(d)), such Net Termination Gain shall be allocated among the
General Partner and the Limited Partners in the following manner (and the
Capital Accounts of the Partners shall be increased by the amount so allocated
in each of the following subclauses, in the order listed, before an allocation
is made pursuant to the next succeeding subclause):
(A) First, to each Partner having a deficit balance in its Capital Account,
in the proportion that such deficit bears to the total deficit balances in the
Capital Accounts of all Partners, until each Partner has been allocated Net
Termination Gain equal to any such deficit balance in its Capital Account;
(B) Second, 100% to all Partners holding Common Units, in accordance with
their relative Percentage Interests, until the Capital Account in respect of
each Common Unit held by the Managing General Partner is equal to the sum of (1)
its Unrecovered Capital, plus (2) the Minimum Quarterly Distribution for the
Quarter during which the Liquidation Date occurs (the ''Unpaid MQD''), plus (3)
any then existing Cumulative Common Unit Arrearages;
(C) Third, 100% to the holders of APIs, in the proportion that the Capital
Account maintained for each holder with respect to such APIs bears to the
aggregate Capital Accounts attributable to all APIs then Outstanding, until the
Capital Account in respect of each API then Outstanding is equal to its
Unrecovered Capital;
(D) Fourth, 100% to all Partners holding Subordinated Units, in accordance
with their relative Percentage Interests, until the Capital Account in respect
of each Subordinated LP Unit then Outstanding is equal to the sum of (1) its
Unrecovered Capital, plus (2) the Unpaid MQD; and
(E) Fifth, the balance, if any, 100% to the Partners in accordance with
their respective Percentage Interests.
(ii) If a Net Termination Loss is recognized (or deemed recognized pursuant
to Section 5.5(d)), such Net Termination Loss shall be allocated to the Partners
in the following manner:
(A) First, 100% to the Partners holding Subordinated Units in accordance
with their relative Percentage Interests until the Capital Account in respect of
each Subordinated LP Unit then Outstanding has been reduced to zero;
(B) Second, 100% to the holders of APIs, in the proportion that the Capital
Account maintained for each holder with respect to such APIs bears to the
aggregate Capital Accounts attributable to all APIs then Outstanding, to the
extent of the positive balances in the Capital Accounts maintained with respect
to such APIs;
(C) Third, 100% to the Partners holding Common Units in accordance with
their relative Percentage Interests until the Capital Account in respect of each
Common Unit held by the Managing General Partner has been reduced to zero; and
(D) Fourth, the balance, if any, 100% to the Operating General Partner.
(d) Special Allocations. Notwithstanding any other provision of this
Section 6.1, the following special allocations shall be made for such taxable
period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding any other
provision of this Section 6.1, if there is a net decrease in Partnership Minimum
Gain during any Partnership taxable period, each Partner shall be allocated
items of Partnership income and gain for such period (and, if necessary,
subsequent periods) in the manner and amounts provided in Treasury Regulation
Sections 1.704-2(f)(6), 1.704-2(g)(2) and 1.704-2(j)(2)(i), or any successor
provision. For purposes of this Section 6.1(d), each Partner's Adjusted Capital
Account balance shall be determined, and the allocation of income or gain
required hereunder shall be effected, prior to the application of any other
allocations pursuant to this Section 6.1(d) with respect to such taxable period
(other than an allocation pursuant to Sections 6.1(d)(vi) and 6.1(d)(vii)). This
Section 6.1(d)(i) is intended to comply with the Partnership Minimum Gain
chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall be
interpreted consistently therewith.
(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain. Notwithstanding
the other provisions of this Section 6.1 (other than Section 6.1(d)(i)), except
as provided in Treasury Regulation Section 1.704-2(i)(4), if there is a net
decrease in Partner Nonrecourse Debt Minimum Gain during any Partnership taxable
period, any Partner with a share of Partner Nonrecourse Debt Minimum Gain at the
beginning of such taxable period shall be allocated items of Partnership income
and gain for such period (and, if necessary, subsequent periods) in the manner
and amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and 1.704-
2(j)(2)(ii), or any successor provisions. For purposes of this Section 6.1(d),
each Partner's Adjusted Capital Account balance shall be determined, and the
allocation of income or gain required hereunder shall be effected, prior to the
application of any other allocations pursuant to this Section 6.1(d), other than
Section 6.1(d)(i) and other than an allocation pursuant to Sections 6.1(d)(vi)
and 6.1(d)(vii), with respect to such taxable period. This Section 6.1(d)(ii) is
intended to comply with the chargeback of items of income and gain requirement
in Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.
(iii) Priority Allocations. If the amount of cash or the Net Agreed Value
of any property distributed (except cash or property distributed pursuant to
Section 12.4) to any Partner with respect to its Common Units for a taxable year
is greater (on a per Unit basis) than the amount of cash or the Net Agreed Value
of property distributed to the Partners holding Subordinated Units with respect
to their Units (on a per Unit basis), then each Partner receiving such greater
cash or property distribution shall be allocated gross income in an amount equal
to the product of (aa) the amount by which the distribution (on a per Unit
basis) to such Partner exceeds the distribution (on a per Unit basis) to the
Partners receiving the smallest distribution and (bb) the number of Units owned
by the Partner receiving the greater distribution.
(iv) Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-
1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
allocated to such Partner in an amount and manner sufficient to eliminate, to
the extent required by the Treasury Regulations promulgated under Section 704(b)
of the Code, the deficit balance, if any, in its Adjusted Capital Account
created by such adjustments, allocations or distributions as quickly as possible
unless such deficit balance is otherwise eliminated pursuant to Section
6.1(d)(i) or 6.1(d)(ii).
(v) Gross Income Allocations. In the event any Partner has a deficit
balance in its Capital Account at the end of any Partnership taxable period in
excess of the sum of (A) the amount such Partner is required to restore pursuant
to the provisions of this Agreement and (B) the amount such Partner is deemed
obligated to restore pursuant to Treasury Regulation Sections 1.704-2(g) and
1.704-2(i)(5), such Partner shall be specially allocated items of Partnership
gross income and gain in the amount of such excess as quickly as possible;
provided, that an allocation pursuant to this Section 6.1(d)(v) shall be made
only if and to the extent that such Partner would have a deficit balance in its
Capital Account as adjusted after all other allocations provided for in this
Section 6.1 have been tentatively made as if this Section 6.1(d)(v) were not in
this Agreement.
(vi) Nonrecourse Deductions. Nonrecourse Deductions for any taxable period
shall be allocated to the Partners in accordance with their respective
Percentage Interests. If the Operating General Partner determines in its good
faith discretion that the Partnership's Nonrecourse Deductions must be allocated
in a different ratio to satisfy the safe harbor requirements of the Treasury
Regulations promulgated under Section 704(b) of the Code, the Operating General
Partner is authorized, upon notice to the other Partners, to revise the
prescribed ratio to the numerically closest ratio that does satisfy such
requirements.
(vii) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for
any taxable period shall be allocated 100% to the Partner that bears the
Economic Risk of Loss with respect to the Partner Nonrecourse Debt to which such
Partner Nonrecourse Deductions are attributable in accordance with Treasury
Regulation Section 1.704-2(i). If more than one Partner bears the Economic Risk
of Loss with respect to a Partner Nonrecourse Debt, such Partner Nonrecourse
Deductions attributable thereto shall be allocated between or among such
Partners in accordance with the ratios in which they share such Economic Risk of
Loss.
(viii) Nonrecourse Liabilities. For purposes of Treasury Regulation Section
1.752-3(a)(3), the Partners agree that Nonrecourse Liabilities of the
Partnership in excess of the sum of (A) the amount of Partnership Minimum Gain
and (B) the total amount of Nonrecourse Built-in Gain shall be allocated among
the Partners in accordance with their respective Percentage Interests.
(ix) Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(c)
of the Code is required, pursuant to Treasury Regulation Section 1.704-
1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the
amount of such adjustment to the Capital Accounts shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis), and such item of gain or loss shall be
specially allocated to the Partners in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted pursuant to such
Section of the Treasury Regulations.
(x) Economic Uniformity. At the election of the Operating General Partner
with respect to any taxable period ending upon, or after, the termination of the
Subordination Period, all or a portion of the remaining items of Partnership
gross income or gain for such taxable period, after taking into account
allocations pursuant to Section 6.1(d)(iii), shall be allocated 100% to each
Partner holding Subordinated Units that are Outstanding as of the termination of
the Subordination Period (''Final Subordinated Units'') in the proportion of the
number of Final Subordinated Units held by such Partner to the total number of
Final Subordinated Units then Outstanding, until each such Partner has been
allocated an amount of gross income or gain which increases the Capital Account
maintained with respect to such Final Subordinated Units to an amount equal to
the product of (A) the number of Final Subordinated Units held by such Partner
and (B) the Per Unit Capital Amount. The purpose of this allocation is to
establish uniformity between the Capital Accounts underlying Final Subordinated
Units and the Capital Accounts underlying Common Units immediately prior to the
conversion of such Final Subordinated Units into Common Units.
(xi) Curative Allocation. (A) Notwithstanding any other provision of this
Section 6.1, other than the Required Allocations, the Required Allocations shall
be taken into account in making the Agreed Allocations so that, to the extent
possible, the net amount of items of income, gain, loss and deduction allocated
to each Partner pursuant to the Required Allocations and the Agreed Allocations,
together, shall be equal to the net amount of such items that would have been
allocated to each such Partner under the Agreed Allocations had the Required
Allocations and the related Curative Allocation not otherwise been provided in
this Section 6.1. Notwithstanding the preceding sentence, Required Allocations
relating to (1) Nonrecourse Deductions shall not be taken into account except to
the extent that there has been a decrease in Partnership Minimum Gain and (2)
Partner Nonrecourse Deductions shall not be taken into account except to the
extent that there has been a decrease in Partner Nonrecourse Debt Minimum Gain.
Allocations pursuant to this Section 6.1(d)(xi)(A) shall only be made with
respect to Required Allocations to the extent the Operating General Partner
reasonably determines that such allocations will otherwise be inconsistent with
the economic agreement among the Partners. Further, allocations pursuant to this
Section 6.1(d)(xi)(A) shall be deferred with respect to allocations pursuant to
clauses (1) and (2) hereof to the extent the Operating General Partner
reasonably determines that such allocations are likely to be offset by
subsequent Required Allocations.
(B) The Operating General Partner shall have reasonable discretion, with
respect to each taxable period, to (1) apply the provisions of Section
6.1(d)(xi)(A) in whatever order is most likely to minimize the economic
distortions that might otherwise result from the Required Allocations, and (2)
divide all allocations pursuant to Section 6.1(d)(xi)(A) among the Partners in a
manner that is likely to minimize such economic distortions.
6.2 Allocations for Tax Purposes
(a) Except as otherwise provided herein, for federal income tax purposes,
each item of income, gain, loss and deduction shall be allocated among the
Partners in the same manner as its correlative item of ''book'' income, gain,
loss or deduction is allocated pursuant to Section 6.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated for
federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items attributable
thereto shall be allocated among the Partners in the manner provided under
Section 704(c) of the Code that takes into account the variation between the
Agreed Value of such property and its adjusted basis at the time of
contribution; and (B) any item of Residual Gain or Residual Loss attributable to
a Contributed Property shall be allocated among the Partners in the same manner
as its correlative item of ''book'' gain or loss is allocated pursuant to
Section 6.1.
(ii) (A) In the case of an Adjusted Property, such items shall (1) first,
be allocated among the Partners in a manner consistent with the principles of
Section 704(c) of the Code to take into account the Unrealized Gain or
Unrealized Loss attributable to such property and the allocations thereof
pursuant to Section 5.5(d)(i) or 5.5(d)(ii), and (2) second, in the event such
property was originally a Contributed Property, be allocated among the Partners
in a manner consistent with Section 6.2(b)(i)(A); and (B) any item of Residual
Gain or Residual Loss attributable to an Adjusted Property shall be allocated
among the Partners in the same manner as its correlative item of ''book'' gain
or loss is allocated pursuant to Section 6.1.
(iii) The Operating General Partner shall apply the principles of Treasury
Regulation Section 1.704-3(d) to eliminate Book-Tax Disparities.
(c) For the proper administration of the Partnership and for the
preservation of uniformity of Partnership Securities (or any class or classes
thereof), the Operating General Partner shall have sole discretion to (i) adopt
such conventions as it deems appropriate in determining the amount of
depreciation, amortization and cost recovery deductions; (ii) make special
allocations for federal income tax purposes of income (including, without
limitation, gross income) or deductions; and (iii) amend the provisions of this
Agreement as appropriate (x) to reflect the proposal or promulgation of Treasury
regulations under Section 704(b) or 704(c) of the Code or (y) otherwise to
preserve or achieve uniformity of Partnership Securities (or any class or
classes thereof). The Operating General Partner may adopt such conventions, make
such allocations and make such amendments to this Agreement as provided in this
Section 6.2(c) only if such conventions, allocations or amendments would not
have a material adverse effect on the Partners, the holders of any class or
classes of Partnership Securities issued and Outstanding or the Partnership, and
if such allocations are consistent with the principles of Section 704 of the
Code.
(d) The Operating General Partner in its discretion may determine to
depreciate or amortize the portion of an adjustment under Section 743(b) of the
Code attributable to unrealized appreciation in any Adjusted Property (to the
extent of the unamortized Book-Tax Disparity) using a predetermined rate derived
from the depreciation or amortization method and useful life applied to the
Partnership's common basis of such property, despite any inconsistency of such
approach with Proposed Treasury Regulation Section 1.168-2(n), Treasury
Regulation Section 1.167(c)-l(a)(6) or the legislative history of Section 197 of
the Code. If the Operating General Partner determines that such reporting
position cannot reasonably be taken, the Operating General Partner may adopt
depreciation and amortization conventions under which all purchasers acquiring
Partnership Securities in the same month would receive depreciation and
amortization deductions, based upon the same applicable rate as if they had
purchased a direct interest in the Partnership's property. If the Operating
General Partner chooses not to utilize such aggregate method, the Operating
General Partner may use any other reasonable depreciation and amortization
conventions to preserve the uniformity of the intrinsic tax characteristics of
any Partnership Securities that would not have a material adverse effect on the
Limited Partners, the Managing General Partner or the Record Holders of any
class or classes of Partnership Securities.
(e) Any gain allocated to the Partners upon the sale or other taxable
disposition of any Partnership asset shall, to the extent possible, after taking
into account other required allocations of gain pursuant to this Section 6.2, be
characterized as Recapture Income in the same proportions and to the same extent
as such Partners (or their predecessors in interest) have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.
(f) All items of income, gain, loss, deduction and credit recognized by the
Partnership for federal income tax purposes and allocated to the Partners in
accordance with the provisions hereof shall be determined without regard to any
election under Section 754 of the Code which may be made by the Partnership;
provided, however, that such allocations, once made, shall be adjusted as
necessary or appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
(g) Each item of Partnership income, gain, loss and deduction attributable
to a transferred Partnership Interest, shall for federal income tax purposes, be
determined on an annual basis and prorated on a monthly basis and shall be
allocated to the Partners as of the opening of the New York Stock Exchange on
the first Business Day of each month; provided, however, that (i) if the Over-
allotment Option is not exercised, such items for the period beginning on the
Closing Date and ending on the last day of the month in which the Closing Date
occurs shall be allocated to Partners as of the opening of the New York Stock
Exchange on the first Business Day of the next succeeding month or (ii) if the
Over-allotment Option is exercised, such items for the period beginning on the
Closing Date and ending on the last day of the month in which the Option Closing
Date occurs shall be allocated to the Partners as of the opening of the New York
Stock Exchange on the first Business Day of the next succeeding month; and
provided, further, that gain or loss on a sale or other disposition of any
assets of the Partnership other than in the ordinary course of business shall be
allocated to the Partners as of the opening of the New York Stock Exchange on
the first Business Day of the month in which such gain or loss is recognized for
federal income tax purposes. The Operating General Partner may revise, alter or
otherwise modify such methods of allocation as it determines necessary, to the
extent permitted or required by Section 706 of the Code and the regulations or
rulings promulgated thereunder.
(h) Allocations that would otherwise be made to a Partner under the
provisions of this Article VI shall instead be made to the beneficial owner of
Partnership Securities held by a nominee in any case in which the nominee has
furnished the identity of such owner to the Partnership in accordance with
Section 6031(c) of the Code or any other method acceptable to the Operating
General Partner in its sole discretion.
6.3 Requirement and Characterization of Distributions; Distributions to Record
Holders
(a) Within 45 days following the end of each Quarter commencing with the
Quarter ending on March 31, 1997, an amount equal to 100% of Available Cash with
respect to such Quarter shall, subject to Section 17-607 of the Delaware Act, be
distributed in accordance with this Article VI by the Partnership to the
Partners as of the Record Date selected by the Operating General Partner in its
reasonable discretion. All amounts of Available Cash distributed by the
Partnership on any date from any source shall be deemed to be Operating Surplus
until the sum of all amounts of Available Cash theretofore distributed by the
Partnership to the Partners pursuant to Section 6.4 equals the Operating Surplus
from the Closing Date through the close of the immediately preceding Quarter.
Any remaining amounts of Available Cash distributed by the Partnership on such
date shall, except as otherwise provided in Section 6.5, be deemed to be
''Capital Surplus.'' All distributions required to be made under this Agreement
shall be made subject to Section 17-607 of the Delaware Act.
(b) In the event of the dissolution and liquidation of the Partnership, all
receipts received during or after the Quarter in which the Liquidation Date
occurs, other than from borrowings described in (a)(ii) of the definition of
Available Cash, shall be applied and distributed solely in accordance with, and
subject to the terms and conditions of, Section 12.4.
(c) The Operating General Partner shall have the discretion to treat taxes
paid by the Partnership on behalf of, or amounts withheld with respect to, all
or less than all of the Partners, as a distribution of Available Cash to such
Partners.
(d) Each distribution in respect of a Partnership Interest shall be paid by
the Partnership, directly or through any agent, only to the Record Holder of
such Partnership Interest as of the Record Date set for such distribution. Such
payment shall constitute full payment and satisfaction of the Partnership's
liability in respect of such payment, regardless of any claim of any Person who
may have an interest in such payment by reason of an assignment or otherwise.
6.4 Distributions of Available Cash from Operating Surplus
(a) During Subordination Period. Available Cash with respect to any Quarter
within the Subordination Period that is deemed to be Operating Surplus pursuant
to the provisions of Section 6.3 or 6.5 shall, subject to Section 17-607 of the
Delaware Act, be distributed as follows, except as otherwise required by Section
5.6(b) (in respect of additional Partnership Securities issued pursuant thereto)
or permitted by Section 6.9:
(i) First, 100% to the Partners holding Common Units, in proportion to
their relative Percentage Interests, until there has been distributed in respect
of each Common Unit then Outstanding an amount equal to the Minimum Quarterly
Distribution for such Quarter;
(ii) Second, 100% to the Partners holding Common Units, in proportion to
their relative Percentage Interests, until there has been distributed in respect
of each Common Unit then Outstanding an amount equal to the Cumulative Common
Unit Arrearage existing with respect to such Quarter;
(iii) Third, 100% to the Partners holding Subordinated Units, in proportion
to their relative Percentage Interests, until there has been distributed in
respect of each Subordinated Unit then Outstanding an amount equal to the
Minimum Quarterly Distribution for such Quarter;
(iv) Fourth, 100% to Salomon and its Affiliates, Pro Rata, to redeem
Outstanding APIs held by them at a price of $100 per API, until Salomon and its
Affiliates hold 54% of the total number of Outstanding APIs;
(v) Fifth, 100% to the holders of APIs, Pro Rata, to redeem Outstanding
APIs at a price of $100 per API, until all Outstanding APIs have been redeemed;
and
(vi) Thereafter, 100% to all Partners in accordance with their respective
Percentage Interests;
provided, however, if the Minimum Quarterly Distribution, the First Target
Distribution, the Second Target Distribution and the Third Target Distribution
have been reduced to zero pursuant to the second sentence of Section 6.6(a), the
distribution of Available Cash that is deemed to be Operating Surplus with
respect to any Quarter will be made solely in accordance with Sections
6.4(a)(ii), (iv), (v) and (vi).
(b) After Subordination Period. Available Cash with respect to any Quarter
after the Subordination Period that is deemed to be Operating Surplus pursuant
to the provisions of Section 6.3 or 6.5, subject to Section 17-607 of the
Delaware Act, shall be distributed as follows, except as otherwise required by
Section 5.6(b) (in respect of additional Partnership Securities issued pursuant
thereto) or permitted by Section 6.9:
(i) First, 100% to all Partners, in accordance with their relative
Percentage Interests, until there has been distributed in respect of each Unit
then Outstanding an amount equal to the Minimum Quarterly Distribution for such
Quarter;
(ii) Second, 100% to Salomon and its Affiliates, Pro Rata, to redeem
Outstanding APIs held by them at a price of $100 per API, until Salomon and its
Affiliates hold 54% of the total number of Outstanding APIs;
(iii) Third, 100% to the holders of APIs, Pro Rata, to redeem Outstanding
APIs at a price of $100 per API, until all Outstanding APIs have been redeemed;
and
(iv) Thereafter, 100% to all Partners, in accordance with their respective
Percentage Interests;
provided, however, if the Minimum Quarterly Distribution, the First Target
Distribution, the Second Target Distribution and the Third Target Distribution
have been reduced to zero pursuant to the second sentence of Section 6.6(a), the
distribution of Available Cash that is deemed to be Operating Surplus with
respect to any Quarter will be made solely in accordance with Sections
6.4(b)(ii), (iii) and (iv).
6.5 Distributions of Available Cash from Capital Surplus
Available Cash with respect to any Quarter that is deemed to be Capital
Surplus pursuant to the provisions of Section 6.3 shall, subject to Section 17-
607 of the Delaware Act, be distributed as follows, unless the provisions of
Section 6.3 require otherwise:
(i) First, 100% to all Partners, in accordance with their respective
Percentage Interests, until a hypothetical holder of a Common Unit acquired on
the Closing Date has received with respect to such Common Unit, during the
period since the Closing Date through such date, distributions of Available Cash
that are deemed to be Capital Surplus in an aggregate amount equal to the
Initial Unit Price;
(ii) Second, 100% to all Partners holding Common Units, in proportion to
their relative Percentage Interests, until there has been distributed in respect
of each Common Unit then Outstanding an amount equal to the Cumulative Common
Unit Arrearage existing with respect to such Quarter; and
(iii) Thereafter, all Available Cash that is deemed to be Capital Surplus
pursuant to the provisions of Section 6.3 shall be distributed as if it were
Operating Surplus and shall be distributed in accordance with Section 6.4.
6.6 Adjustment of Minimum Quarterly Distribution and Target Distribution Levels
(a) The Minimum Quarterly Distribution, First Target Distribution, Second
Target Distribution, Third Target Distribution, Common Unit Arrearages and
Cumulative Common Unit Arrearages shall be proportionately adjusted in the event
of any distribution, combination or subdivision (whether effected by a
distribution payable in Units or otherwise) of Units or other Partnership
Securities in accordance with Section 5.10. In the event of a distribution of
Available Cash that is deemed to be from Capital Surplus, the then applicable
Minimum Quarterly Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution shall be adjusted proportionately
downward to equal the product obtained by multiplying the otherwise applicable
Minimum Quarterly Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution, as the case may be, by a fraction of
which the numerator is the Unrecovered Capital of the Common Units immediately
after giving effect to such distribution and of which the denominator is the
Unrecovered Capital of the Common Units immediately prior to giving effect to
such distribution.
(b) The Minimum Quarterly Distribution, First Target Distribution, Second
Target Distribution and Third Target Distribution shall also be subject to
adjustment pursuant to Section 6.8.
6.7 Special Provisions Relating to the Holders of APIs
Notwithstanding anything to the contrary set forth in this Agreement, the
holders of APIs (a) shall (i) possess the rights and obligations provided in
this Agreement with respect to a Limited Partner pursuant to Articles III and
VII and (ii) have a Capital Account as a Partner pursuant to Section 5.5 and all
other provisions related thereto and (b) shall not (i) be entitled to vote on
any matters requiring the approval or vote of the holders of Outstanding Units,
(ii) be entitled to any distributions other than to such holders as provided by
Section 6.4 and 12.4 or (iii) be allocated items of income, gain, loss or
deduction other than as specified in this Article VI.
6.8 Entity-Level Taxation
If legislation is enacted or the interpretation of existing language is
modified by the relevant governmental authority which causes the Partnership to
be treated as an association taxable as a corporation or otherwise subjects the
Partnership to entity-level taxation for federal income tax purposes, the then
applicable Minimum Quarterly Distribution, First Target Distribution, Second
Target Distribution and Third Target Distribution shall be adjusted to equal the
product obtained by multiplying (a) the amount thereof by (b) one minus the sum
of (i) the highest marginal federal corporate (or other entity, as applicable)
income tax rate of the Partnership for the taxable year of the Partnership in
which such Quarter occurs (expressed as a percentage) plus (ii) the effective
overall state and local income tax rate (expressed as a percentage) applicable
to the Partnership for the calendar year next preceding the calendar year in
which such Quarter occurs (after taking into account the benefit of any
deduction allowable for federal income tax purposes with respect to the payment
of state and local income taxes), but only to the extent of the increase in such
rates resulting from such legislation or interpretation. Such effective overall
state and local income tax rate shall be determined for the taxable year next
preceding the first taxable year during which the Partnership is taxable for
federal income tax purposes as an association taxable as a corporation or is
otherwise subject to entity-level taxation by determining such rate as if the
Partnership had been subject to such state and local taxes during such preceding
taxable year.
6.9 Special Distribution to the Initial Limited Partners and the Operating
General Partner
At any time following the first anniversary of the Closing Date, the
Operating General Partner may, but shall not be required, to cause the
Partnership to distribute up to $5 million to the Initial Limited Partners and
the Operating General Partner in the ratio of their respective Percentage
Interests; provided, however, that no distribution shall be made by the
Partnership pursuant to this Section 6.9 prior to the second anniversary of the
Closing Date unless the Operating General Partner reasonably believes that the
Partnership will distribute the Minimum Quarterly Distribution on all Common
Units in each of the next four Quarters.
6.10 Characterization of Distributions as Advances or Drawings
Any distribution made to a Partner pursuant to Section 6.4, Section 6.5 or
Section 12.4 of this Agreement shall be treated as an advance or drawing against
such Partner's share of Partnership income under Treasury Regulation Section
1.731-1(a)(1)(ii). Any other distribution made to a Partner pursuant to the
terms of this Agreement shall not be treated as an advance or drawing against
such Partner's share of Partnership income under Treasury Regulation Section
1.731-1(a)(1)(ii).
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
7.1 Management
(a) The General Partners shall conduct, direct and manage all activities of
the Partnership. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership shall be
exclusively vested in the General Partners, and no Limited Partner shall have
any management power over the business and affairs of the Partnership. Subject
to the provisions of Section 7.3(d), the day-to-day activities of the
Partnership shall be conducted, directed and managed on the Partnership's behalf
by the Operating General Partner. In addition to the powers now or hereafter
granted a general partner of a limited partnership under applicable law or which
are granted to the General Partners under any other provision of this Agreement,
the General Partners, subject to Section 7.3, shall have full power and
authority to do all things and on such terms as they, in their sole discretion,
may deem necessary or appropriate to conduct the business of the Partnership, to
exercise all powers set forth in Section 2.5 and to effectuate the purposes set
forth in Section 2.4, including the following:
(i) the making of any expenditures, the lending or borrowing of money, the
assumption or guarantee of, or other contracting for, indebtedness and other
liabilities, including entering into the Master Credit Support Agreement, the
issuance of evidences of indebtedness, including indebtedness that is
convertible into Partnership Securities, and the incurring of any other
obligations;
(ii) the making of tax, regulatory and other filings, or rendering of
periodic or other reports to governmental or other agencies having jurisdiction
over the business or assets of the Partnership;
(iii) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any or all of the assets of the Partnership or the
merger or other combination of the Partnership with or into another Person (the
matters described in this clause (iii) being subject, however, to any prior
approval that may be required by Section 7.3);
(iv) the use of the assets of the Partnership (including cash on hand) for
any purpose consistent with the terms of this Agreement, including the financing
of the conduct of the operations of the Partnership Group, the lending of funds
to other Persons, the repayment of obligations of the Partnership and the making
of capital contributions to any member of the Partnership Group;
(v) the negotiation, execution and performance of any contracts,
conveyances or other instruments (including instruments that limit the liability
of the Partnership under contractual arrangements to all or particular assets of
the Partnership, with the other party to the contract to have no recourse
against a General Partner or its assets other than its interest in the
Partnership, even if same results in the terms of the transaction being less
favorable to the Partnership than would otherwise be the case);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees (including employees having
titles such as ''president,'' ''vice president,'' ''secretary'' and
''treasurer'') and agents, outside attorneys, accountants, consultants and
contractors and the determination of their compensation and other terms of
employment or hiring;
(viii) the maintenance of such insurance for the benefit of the Partnership
Group and the Partners as it deems necessary or appropriate;
(ix) the formation of, or acquisition of an interest in, and the
contribution of property and the making of loans to, any further limited or
general partnerships, joint ventures, corporations or other relationships;
(x) the control of any matters affecting the rights and obligations of the
Partnership, including the bringing and defending of actions at law or in equity
and otherwise engaging in the conduct of litigation and the incurring of legal
expense and the settlement of claims and litigation;
(xi) the indemnification of any Person against liabilities and
contingencies to the extent permitted by law; and
(xii) the purchase, sale or other acquisition or disposition of Partnership
Securities, or, unless restricted or prohibited by Section 5.7, the issuance of
additional Partnership Securities and options, rights, warrants and appreciation
rights relating to Partnership Securities.
(b) Notwithstanding any other provision of this Agreement, the Delaware Act
or any applicable law, rule or regulation, each of the Partners and each other
Person who may acquire an interest in Partnership Securities hereby (i)
approves, ratifies and confirms the execution, delivery and performance by the
parties thereto of this Agreement, the other agreements and documents filed as
exhibits to the Registration Statement and the other agreements described in the
Registration Statement; (ii) agrees that the General Partners (on their own or
through any officer of the Partnership) are authorized to execute, deliver and
perform the agreements referred to in clause (i) of this sentence and the other
agreements, acts, transactions and matters described in or contemplated by the
Registration Statement on behalf of the Partnership without any further act,
approval or vote of the Partners or the other Persons who may acquire an
interest in Partnership Securities; and (iii) agrees that the execution,
delivery or performance by the General Partners, any Group Member or any
Affiliate of any of them, of this Agreement or any agreement authorized or
permitted under this Agreement, shall not constitute a breach by the General
Partners of any duty that the General Partners may owe the Partnership or the
Limited Partners or any other Persons under this Agreement (or any other
agreements) or of any duty stated or implied by law or equity.
7.2 Certificate of Limited Partnership
The Operating General Partner has caused the Certificate of Limited
Partnership to be filed with the Secretary of State of the State of Delaware as
required by the Delaware Act and shall use all reasonable efforts to cause to be
filed such other certificates or documents as may be determined by the Operating
General Partner in its sole discretion to be reasonable and necessary or
appropriate for the formation, continuation, qualification and operation of a
limited partnership (or a partnership in which the limited partners have limited
liability) in the State of Delaware or any other state in which the Partnership
may elect to do business or own property. To the extent that such action is
determined by the Operating General Partner in its sole discretion to be
reasonable and necessary or appropriate, the Operating General Partner shall
file amendments to and restatements of the Certificate of Limited Partnership
and do all things to maintain the Partnership as a limited partnership (or a
partnership or other entity in which the limited partners have limited
liability) under the laws of the State of Delaware or of any other state in
which the Partnership may elect to do business or own property. Subject to the
terms of Section 3.4(a), the Operating General Partner shall not be required,
before or after filing, to deliver or mail a copy of the Certificate of Limited
Partnership, any qualification document or any amendment thereto to any Limited
Partner.
7.3 Restrictions on the General Partners' Authority
(a) The General Partners may not, without written approval of the specific
act by holders of all of the Outstanding Partnership Securities or by other
written instrument executed and delivered by all of the Outstanding Partnership
Securities subsequent to the date of this Agreement, take any action in
contravention of this Agreement, including, except as otherwise provided in this
Agreement, (i) possessing Partnership property, or assigning any rights in
specific Partnership property, for other than a Partnership purpose; (ii)
admitting a Person as a Partner; (iii) amending this Agreement in any manner; or
(iv) transferring its General Partner Interest.
(b) Except as provided in Articles XII and XIV, the General Partners may
not sell, exchange or otherwise dispose of all or substantially all of the
assets of the Partnership Group in a single transaction or a series of related
transactions, without the approval of holders of a Majority Interest; provided,
however, that this provision shall not preclude or limit the General Partners'
ability to mortgage, pledge, hypothecate or grant a security interest in all or
substantially all of the assets of the Partnership Group and shall not apply to
any forced sale of any or all of the assets of the Partnership Group pursuant to
the foreclosure of, or other realization upon, any such encumbrance.
(c) At all times while serving as the general partner of the Partnership,
the Operating General Partner shall not make any dividend or distribution on, or
repurchase any shares of, its stock or take any other action within its control
if the effect of such action would cause its net worth, independent of its
interest in the Partnership Group, to be less than $7.5 million or such lower
amount, which based on an Opinion of Counsel that states, (i) based on a change
in the position of the Internal Revenue Service with respect to partnership
status pursuant to Code Section 7701, such lower amount would not cause the
Partnership to be treated as an association taxable as a corporation or
otherwise to be taxed as an entity for federal income tax purposes and (ii)
would not result in the loss of the limited liability of any Limited Partner.
(d) Notwithstanding anything else herein contained, the Operating General
Partner shall not hire or terminate Partnership officers or cause the
Partnership to take any of the following actions, in each case without the prior
approval of the Managing General Partner:
(i) sell, exchange or otherwise dispose of Partnership assets outside the
ordinary course of business if the consideration (including Partnership
liabilities assumed) received from such sale, exchange or other disposition
exceeds $100,000;
(ii) purchase or otherwise acquire assets outside the ordinary course of
business if the acquisition price (including liabilities assumed by the
Partnership) exceeds $100,000;
(iii) undertake a capital project that is budgeted to exceed $100,000;
(iv) reorganize, merge, consolidate or dissolve;
(v) issue any additional Partnership Securities;
(vi) incur any debt or the guarantee of or contingent liability for any
debt outside the ordinary course of business if the debt proceeds exceed
$100,000;
(vii) file any Federal or state income tax returns for the Partnership;
(viii) make any distributions to the Partners;
(ix) adopt any employee benefit plans, employee programs or practices;
(x) lend money; or
(xi) any other action that is either (A) outside the ordinary course of the
business of the Partnership or (B) similar in scope or magnitude to the
foregoing items listed in this Section 7.3(d).
7.4 Reimbursement of the General Partners
(a) Except as provided in this Section 7.4 and elsewhere in this Agreement
or the Genesis MLP Partnership Agreement, the General Partners shall not be
compensated for their services as general partner of Genesis MLP or any Group
Member.
(b) The General Partners shall be reimbursed on a monthly basis, or such
other reasonable basis as the General Partners may determine in their sole
discretion, for (i) all direct and indirect expenses they incur or payments they
make on behalf of Genesis MLP and the Partnership Group (including salary,
bonus, incentive compensation and other amounts paid to any Person, including
Affiliates of the General Partners, to perform services for Genesis MLP and the
Partnership Group or for the General Partners in the discharge of their duties
to Genesis MLP or the Partnership Group), and (ii) all other necessary or
appropriate expenses allocable to Genesis MLP and the Partnership Group or
otherwise reasonably incurred by the General Partners in connection with
operating the business of Genesis MLP and the Partnership Group (including
expenses allocated to the General Partners by their Affiliates). The General
Partners shall determine the expenses that are allocable to Genesis MLP and the
Partnership in any reasonable manner determined by the General Partners in their
sole discretion. Reimbursements pursuant to this Section 7.4 shall be in
addition to any reimbursement to the General Partners as a result of
indemnification pursuant to Section 7.7.
(c) Expenses incurred by a General Partner in connection with any employee
benefit plans, employee programs and employee practices (including the net cost
to such General Partner or such Affiliate of MLP Units or other MLP Partnership
Securities purchased by such General Partner or such Affiliate from the
Partnership to fulfill options or awards under such plans, programs and
practices) shall be reimbursed in accordance with Section 7.4(b). Any and all
obligations of a General Partner under any employee benefit plans, employee
programs or employee practices adopted by such General Partner as permitted by
this Section 7.4(c) shall constitute obligations of such General Partner
hereunder and shall be assumed by any successor General Partner approved
pursuant to Section 11.1 or 11.2 or the transferee of or successor to all of
such General Partner's General Partner Interest pursuant to Section 4.6.
7.5 Outside Activities
(a) After the Closing Date, the Operating General Partner, for so long as
it is a general partner of the Partnership, (i) agrees that its sole business
will be to act as a general partner of the Partnership, Genesis MLP and any
other partnership of which the Partnership or Genesis MLP is, directly or
indirectly, a partner and to undertake activities that are ancillary or related
thereto (including being a limited partner in the Partnership or any such other
partnership) and (ii) shall not, directly or indirectly, engage in any business
or activity or incur any debts or liabilities except in connection with or
incidental to (A) its performance as general partner of one or more Group
Members or as described in or contemplated by the Registration Statement or (B)
the acquiring, owning or disposing of debt or equity securities of Genesis MLP
or any Group Member.
(b) Salomon, Basis and ▇▇▇▇▇▇ have entered into the Non-Competition
Agreement with the Partnership and Genesis MLP which agreement sets forth
certain restrictions on their ability to engage in the business of (i) crude oil
gathering at the wellhead in the states of Alabama, Florida, Kansas, Louisiana,
Mississippi, New Mexico, Oklahoma or Texas, or any states contiguous to such
states, and (ii) transporting for third parties crude oil by pipeline along the
routes of the Partnership's crude oil pipelines owned as of the Closing Date.
(c) Except as specifically restricted by Section 7.5(a) and the Non-
Competition Agreement, each Indemnitee shall have the right to engage in
businesses of every type and description and other activities for profit and to
engage in and possess an interest in other business ventures of any and every
type or description, whether in businesses engaged in or anticipated to be
engaged in by any Group Member, independently or with others, including business
interests and activities in direct competition with the business and activities
of any Group Member, and none of the same shall constitute a breach of this
Agreement or any duty express or implied by law to any Group Member or any
Partner. Neither any Group Member, any Limited Partner nor any other Person
shall have any rights by virtue of this Agreement, the Genesis MLP Partnership
Agreement or the partnership relationship established hereby in any business
ventures of any Indemnitee.
(d) Subject to the terms of Sections 7.5(a), 7.5(b) and 7.5(c) and the Non-
Competition Agreement, but otherwise notwithstanding anything to the contrary in
this Agreement, (i) the engaging in competitive activities by any Indemnitees
(other than the Operating General Partner) in accordance with the provisions of
this Section 7.5 is hereby approved by the Partnership and all Partners and (ii)
it shall be deemed not to be a breach of the Operating General Partner's
fiduciary duty or any other obligation of any type whatsoever of the Operating
General Partner for the Indemnitees (other than the Operating General Partner)
to engage in such business interests and activities in preference to or to the
exclusion of the Partnership, and the Operating General Partner and the
Indemnitees shall have no obligation to present business opportunities to the
Partnership.
(e) The Operating General Partner and any of its Affiliates may acquire
Partnership Securities in addition to those acquired on the Closing Date and,
except as otherwise provided in this Agreement, shall be entitled to exercise
all rights of a General Partner or Limited Partner, as applicable, relating to
such Partnership Securities.
(e) The term ''Affiliates'' when used in this Section 7.5 with respect to
the Operating General Partner shall not include Genesis MLP, any Group Member or
any Subsidiary of a Group Member.
7.6 Loans from the General Partners; Loans or Contributions from the
Partnership; Contracts with Affiliates; Certain Restrictions on the Operating
General Partner
(a) Subject to Section 7.3(d), the General Partners and any of their
Affiliates may lend to any Group Member, and any Group Member may borrow from
the General Partners or any of their Affiliates, funds needed or desired by the
Group Member for such periods of time and in such amounts as the Operating
General Partner may determine; provided, however, that in any such case the
lending party may not charge the borrowing party interest at a rate greater than
the rate that would be charged the borrowing party or impose terms less
favorable to the borrowing party than would be charged or imposed on the
borrowing party by unrelated lenders on comparable loans made on an arm's-length
basis (without reference to the lending party's financial abilities or
guarantees). The borrowing party shall reimburse the lending party for any costs
(other than any additional interest costs) incurred by the lending party in
connection with the borrowing of such funds. For purposes of this Section 7.6(a)
and Section 7.6(b), the term ''Group Member'' shall include any Affiliate of a
Group Member that is controlled by the Group Member. No Group Member may lend
funds to the Operating General Partner or any of its Affiliates (other than
Genesis MLP or another Group Member).
(b) Subject to Section 7.3(d), the Partnership may lend or contribute to
Genesis MLP or any Group Member, and Genesis MLP and any Group Member may borrow
from the Partnership, funds on terms and conditions established in the sole
discretion of the Operating General Partner; provided, however, that the
Partnership may not charge Genesis MLP or the Group Member interest at a rate
less than the rate that would be charged to the Group Member (without reference
to the General Partners' financial abilities or guarantees) by unrelated lenders
on comparable loans. Subject to Section 7.3(d), the foregoing authority shall be
exercised by the Operating General Partner in its sole discretion and shall not
create any right or benefit in favor of Genesis MLP or any Group Member or any
other Person.
(c) The General Partners may themselves, or may enter into an agreement
with any of their Affiliates to, render services to a Group Member or to the
General Partners in the discharge of their duties as general partners of the
Partnership. Any services rendered to a Group Member by a General Partner or any
of its Affiliates shall be on terms that are fair and reasonable to the
Partnership; provided, however, that the requirements of this Section 7.6(c)
shall be deemed satisfied as to (i) any transaction approved by Special
Approval, (ii) any transaction, the terms of which are no less favorable to the
Partnership Group than those generally being provided to or available from
unrelated third parties or (iii) any transaction that, taking into account the
totality of the relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to the
Partnership Group), is equitable to the Partnership Group. The provisions of
Section 7.4 shall apply to the rendering of services described in this Section
7.6(c).
(d) The Partnership Group may transfer assets to joint ventures, other
partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.
(e) Neither the Operating General Partner nor any of its Affiliates shall
sell, transfer or convey any property to, or purchase any property from the
Partnership, directly or indirectly, except pursuant to transactions that are
fair and reasonable to the Partnership; provided, however, that the requirements
of this Section 7.6(e) shall be deemed to be satisfied as to (i) the
transactions effected pursuant to Sections 5.1, 5.2 and 5.3, the Conveyance
Agreement and any other transactions described in or contemplated by the
Registration Statement, (ii) any transaction approved by Special Approval, (iii)
any transaction, the terms of which are no less favorable to the Partnership
than those generally being provided to or available from unrelated third
parties, or (iv) any transaction that, taking into account the totality of the
relationships between the parties involved (including other transactions that
may be particularly favorable or advantageous to the Partnership), is equitable
to the Partnership. With respect to any contribution of assets to the
Partnership in exchange for Partnership Securities, the Audit Committee, in
determining whether the appropriate number of Partnership Securities are being
issued, may take into account, among other things, the fair market value of the
assets, the liquidated and contingent liabilities assumed, the tax basis in the
assets, the extent to which tax-only allocations to the transferor will protect
the existing partners of the Partnership against a low tax basis, and such other
factors as the Audit Committee deems relevant under the circumstances.
(f) The Operating General Partner and its Affiliates will have no
obligation to permit any Group Member to use any facilities or assets of the
Operating General Partner and its Affiliates, except as may be provided in
contracts entered into from time to time specifically dealing with such use, nor
shall there be any obligation on the part of the Operating General Partner or
its Affiliates to enter into such contracts.
(g) Without limitation of Sections 7.6(a) through 7.6(f), and
notwithstanding anything to the contrary in this Agreement, the existence of the
conflicts of interest described in the Registration Statement are hereby
approved by all Partners.
7.7 Indemnification
(a) To the fullest extent permitted by law but subject to the limitations
expressly provided in this Agreement, all Indemnitees shall be indemnified and
held harmless by the Partnership from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including legal fees and
expenses), judgments, fines, penalties, interest, settlements or other amounts
arising from any and all claims, demands, actions, suits or proceedings, whether
civil, criminal, administrative or investigative, in which any Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, by reason of
its status as an Indemnitee; provided, that in each case the Indemnitee acted in
good faith and in a manner that such Indemnitee reasonably believed to be in, or
not opposed to, the best interests of the Partnership and, with respect to any
criminal proceeding, had no reasonable cause to believe its conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere, or its equivalent,
shall not create a presumption that the Indemnitee acted in a manner contrary to
that specified above. Any indemnification pursuant to this Section 7.7 shall be
made only out of the assets of the Partnership, it being agreed that the General
Partners shall not be personally liable for such indemnification and shall have
no obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including legal fees
and expenses) incurred by an Indemnitee who is indemnified pursuant to Section
7.7(a) in defending any claim, demand, action, suit or proceeding shall, from
time to time, be advanced by the Partnership prior to the final disposition of
such claim, demand, action, suit or proceeding upon receipt by the Partnership
of any undertaking by or on behalf of the Indemnitee to repay such amount if it
shall be determined that the Indemnitee is not entitled to be indemnified as
authorized in this Section 7.7.
(c) The indemnification provided by this Section 7.7 shall be in addition
to any other rights to which an Indemnitee may be entitled under any agreement,
pursuant to any vote of the holders of Outstanding Partnership Securities, as a
matter of law or otherwise, both as to actions in the Indemnitee's capacity as
an Indemnitee and as to actions in any other capacity (including any capacity
under the Underwriting Agreement), and shall continue as to an Indemnitee who
has ceased to serve in such capacity and shall inure to the benefit of the
heirs, successors, assigns and administrators of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse a General
Partner or its Affiliates for the cost of) insurance, on behalf of a General
Partner, its Affiliates and such other Persons as the Operating General Partner
shall determine, against any liability that may be asserted against or expense
that may be incurred by such Person in connection with the Partnership's
activities or such Person's activities on behalf of the Partnership, regardless
of whether the Partnership would have the power to indemnify such Person against
such liability under the provisions of this Agreement.
(e) For purposes of this Section 7.7, the Partnership shall be deemed to
have requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute
''fines'' within the meaning of Section 7.7(a); and action taken or omitted by
it with respect to any employee benefit plan in the performance of its duties
for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is in, or not opposed to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in part
under this Section 7.7 because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 7.7 or any
provision hereof shall in any manner terminate, reduce or impair the right of
any past, present or future Indemnitee to be indemnified by the Partnership, nor
the obligations of the Partnership to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 7.7 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
7.8 Liability of Indemnitees
(a) Notwithstanding anything to the contrary set forth in this Agreement,
no Indemnitee shall be liable for monetary damages to the Partnership, the
Limited Partners or any other Persons who have acquired interests in Partnership
Securities, for losses sustained or liabilities incurred as a result of any act
or omission if such Indemnitee acted in good faith.
(b) Subject to their obligations and duties as a general partner of the
Partnership set forth in Section 7.1(a), the General Partners may exercise any
of the powers granted to them by this Agreement and perform any of the duties
imposed upon them hereunder either directly or by or through their agents, and a
General Partner shall not be responsible for any misconduct or negligence on the
part of any such agent appointed by a General Partner in good faith.
(c) To the extent that, at law or in equity, an Indemnitee has duties
(including fiduciary duties) and liabilities relating thereto to the Partnership
or to the Partners, the General Partners and any other Indemnitee acting in
connection with the Partnership's business or affairs shall not be liable to the
Partnership or to any Partner for its good faith reliance on the provisions of
this Agreement. The provisions of this Agreement, to the extent that they
restrict or otherwise modify the duties and liabilities of an Indemnitee
otherwise existing at law or in equity, are agreed by the Partners to replace
such other duties and liabilities of such Indemnitee.
(d) Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability of the Indemnitees under this Section 7.8 as in
effect immediately prior to such amendment, modification or repeal with respect
to claims arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such claims
may arise or be asserted.
7.9 Resolution of Conflicts of Interest
(a) Unless otherwise expressly provided in this Agreement, whenever a
potential conflict of interest exists or arises between a General Partner or any
of its Affiliates, on the one hand, and the Partnership or any Partner, on the
other, any resolution or course of action by the General Partner or its
Affiliates in respect of such conflict of interest shall be permitted and deemed
approved by all Partners, and shall not constitute a breach of this Agreement,
of any agreement contemplated herein, or of any duty stated or implied by law or
equity, if the resolution or course of action is, or by operation of this
Agreement is deemed to be, fair and reasonable to the Partnership. The Operating
General Partner shall be authorized but not required in connection with its
resolution of such conflict of interest to seek Special Approval of such
resolution. Any conflict of interest and any resolution of such conflict of
interest shall be conclusively deemed fair and reasonable to the Partnership if
such conflict of interest or resolution is (i) approved by Special Approval (as
long as the material facts known to the Operating General Partner or any of its
Affiliates regarding any proposed transaction were disclosed to the Audit
Committee at the time it gave its approval), (ii) on terms no less favorable to
the Partnership than those generally being provided to or available from
unrelated third parties or (iii) fair to the Partnership, taking into account
the totality of the relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to the
Partnership). The Operating General Partner may also adopt a resolution or
course of action that has not received Special Approval. The Operating General
Partner (including the Audit Committee in connection with Special Approval)
shall be authorized in connection with its determination of what is ''fair and
reasonable'' to the Partnership and in connection with its resolution of any
conflict of interest to consider (A) the relative interests of any party to such
conflict, agreement, transaction or situation and the benefits and burdens
relating to such interest; (B) any customary or accepted industry practices and
any customary or historical dealings with a particular Person; (C) any
applicable generally accepted accounting practices or principles; and (D) such
additional factors as the Operating General Partner (including the Audit
Committee) determines in its sole discretion to be relevant, reasonable or
appropriate under the circumstances. Nothing contained in this Agreement,
however, is intended to nor shall it be construed to require the Operating
General Partner (including the Audit Committee) to consider the interests of any
Person other than the Partnership. In the absence of bad faith by the Operating
General Partner, the resolution, action or terms so made, taken or provided by
the Operating General Partner with respect to such matter shall not constitute a
breach of this Agreement or any other agreement contemplated herein or a breach
of any standard of care or duty imposed herein or therein or, to the extent
permitted by law, under the Delaware Act or any other law, rule or regulation.
(b) Whenever this Agreement or any other agreement contemplated hereby
provides that a General Partner or any of its Affiliates is permitted or
required to make a decision (i) in its ''sole discretion'' or ''discretion,''
that it deems ''necessary or appropriate'' or ''necessary or advisable'' or
under a grant of similar authority or latitude, except as otherwise provided
herein, a General Partner or such Affiliate shall be entitled to consider only
such interests and factors as it desires and shall have no duty or obligation to
give any consideration to any interest of, or factors affecting, Genesis MLP,
the Partnership, any other General Partner or any Limited Partner, (ii) it may
make such decision in its sole discretion (regardless of whether there is a
reference to ''sole discretion'' or ''discretion'') unless another express
standard is provided for, or (iii) in ''good faith'' or under another express
standard, a General Partner or such Affiliate shall act under such express
standard and shall not be subject to any other or different standards imposed by
this Agreement, any other agreement contemplated hereby or under the Delaware
Act or any other law, rule or regulation. In addition, any actions taken by a
General Partner or such Affiliate consistent with the standards of ''reasonable
discretion'' set forth in the definitions of Available Cash or Operating Surplus
shall not constitute a breach of any duty of a General Partner to the
Partnership or the Limited Partners. The General Partners shall have no duty,
express or implied, to sell or otherwise dispose of any asset of the Partnership
Group other than in the ordinary course of business. No borrowing by any Group
Member or the approval thereof by a General Partner shall be deemed to
constitute a breach of any duty of the General Partner to the Partnership, any
other General Partner, any Limited Partner or any Assignee by reason of the fact
that the purpose or effect of such borrowing is directly or indirectly to (A)
enable the Operating General Partner to receive Incentive Compensation Payments
or (B) hasten the expiration of the Subordination Period or the conversion of
any Subordinated Units into Common Units.
(c) Whenever a particular transaction, arrangement or resolution of a
conflict of interest is required under this Agreement to be ''fair and
reasonable'' to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transactions.
(d) The Unitholders hereby authorize the Operating General Partner, on
behalf of the Partnership as a partner of a Group Member, to approve of actions
by the general partner of such Group Member similar to those actions permitted
to be taken by a General Partner pursuant to this Section 7.9.
7.10 Other Matters Concerning the General Partners
(a) The General Partners may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(b) The General Partners may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion (including an Opinion of Counsel) of such Persons as to matters
that such General Partner reasonably believes to be within such Person's
professional or expert competence shall be conclusively presumed to have been
done or omitted in good faith and in accordance with such opinion.
(c) The General Partners shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers, a duly appointed attorney or attorneys-in-fact or the duly authorized
officers of the Partnership.
(d) Any standard of care and duty imposed by this Agreement or under the
Delaware Act or any applicable law, rule or regulation shall be modified, waived
or limited, to the extent permitted by law, as required to permit the General
Partners to act under this Agreement or any other agreement contemplated by this
Agreement and to make any decision pursuant to the authority prescribed in this
Agreement, so long as such action is reasonably believed by such General Partner
to be in, or not inconsistent with, the best interests of the Partnership.
7.11 Reliance by Third Parties
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that any General
Partner and any officer of a General Partner authorized by such General Partner
to act on behalf of and in the name of the Partnership has full power and
authority to encumber, sell or otherwise use in any manner any and all assets of
the Partnership and to enter into any authorized contracts on behalf of the
Partnership, and such Person shall be entitled to deal with a General Partner or
any such officer as if it were the Partnership's sole party in interest, both
legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies that may be available against such Person to contest,
negate or disaffirm any action of a General Partner or any such officer in
connection with any such dealing. In no event shall any Person dealing with a
General Partner or any such officer or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to inquire
into the necessity or expedience of any act or action of a General Partner or
any such officer or its representatives. Each and every certificate, document or
other instrument executed on behalf of the Partnership by a General Partner or
its representatives shall be conclusive evidence in favor of any and every
Person relying thereon or claiming thereunder that (a) at the time of the
execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (b) the Person executing and delivering
such certificate, document or instrument was duly authorized and empowered to do
so for and on behalf of the Partnership and (c) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
7.12 Incentive Compensation Payments to the Operating General Partner
(a) Within 45 days following the end of each Quarter commencing with the
Quarter ending on March 31, 1997 and ending with the Quarter immediately
preceding the Quarter in which a Conversion Election is made, the Partnership
shall make the following payments to the Operating General Partner as
compensation for management and other services provided to the Partnership (such
payments will be characterized for federal income tax purposes as guaranteed
payments within the meaning of Section 707(c) of the Code):
(i) An amount equal to 13/85ths of all amounts distributed to the Partners
with respect to such Quarter pursuant to Section 6.4(a)(vi) or Section
6.4(b)(iv) on a per Unit basis that are in excess of the First Target
Distribution up to and including the Second Target Distribution;
(ii) An amount equal to 23/75ths of all amounts distributed to the Partners
with respect to such Quarter pursuant to Section 6.4(a)(vi) or Section
6.4(b)(iv) on a per Unit basis that are in excess of the Second Target
Distribution up to and including the Third Target Distribution; and
(iii) An amount equal to 48/50ths of all amounts distributed to the
Partners with respect to such Quarter pursuant to Section 6.4(a)(vi) or Section
6.4(b)(iv) on a per Unit basis that are in excess of the Third Target
Distribution.
(b) The Operating General Partner shall not be entitled to transfer the
right to receive Incentive Compensation Payments to any Person; provided,
however, that upon the admission of a successor Operating General Partner
pursuant to Section 10.4(a), such successor Operating General Partner shall,
unless a Conversion Election has been previously made, be entitled to receive
Incentive Compensation Payments and shall have the right to elect to convert its
right to receive Incentive Compensation Payments into a right to participate
with all other Partners in distributions made in excess of the First Target
Distribution as provided in Section 7.13.
7.13 Conversion of Operating General Partner's Incentive Compensation Payment
Rights
At any time following the second anniversary of the Closing Date, the
Operating General Partner may elect to convert (a ''Conversion Election'') its
right to receive Incentive Compensation Payments pursuant to Section 7.12 into a
right to participate with all other Partners in distributions made in excess of
the First Target Distribution in a ratio which would result in the Operating
General Partner receiving additional cash distributions with respect to the
Quarter in which the Conversion Election is made and for any subsequent Quarter
in an amount equal to the amount of Incentive Compensation Payments which would
have otherwise been made to the Operating General Partner pursuant to Section
7.12 for such Quarters. If the Operating General Partner makes a Conversion
Election, the Partnership Agreement shall be amended to reflect the following:
(a) the Operating General Partner's right to Incentive Compensation
Payments has been extinguished;
(b) the Operating General Partner's right to participate in distributions
in excess of the First Target Distribution in a ratio which would result in the
Operating General Partner receiving additional cash distributions with respect
to the Quarter in which the Conversion Election is made and for any subsequent
Quarter pursuant to such provisions in an amount equal to the amount of
Incentive Compensation Payments which would have otherwise been made to the
Operating General Partner pursuant to Section 7.12 for such Quarters;
(c) the special allocation of additional Net Income to the Operating
General Partner in a manner which matches the Operating General Partner's
increased share of subsequent distributions, but only to the extent that the
Partnership has sufficient net income to achieve such matching in that year or
later years;
(d) the Operating General Partner's right to participate in an increased
share of any gains realized (or deemed realized) by the Partnership following
the Conversion Election in connection with (i) an issuance of additional
Partnership Interests, (ii) distributions of Partnership property, or (iii) the
liquidation of the Partnership; and
(e) any special allocations or other matters associated with and reasonably
necessary to the implementation of the foregoing to the extent such special
allocations or other matters do not adversely impact the interests of the other
Partners.
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 Records and Accounting
The Operating General Partner shall keep or cause to be kept at the
principal office of the Partnership, appropriate books and records with respect
to the Partnership's business, including all books and records necessary to
provide to the Unitholders any information required to be provided pursuant to
Section 3.4(a). Any books and records maintained by or on behalf of the
Partnership in the regular course of its business, including the record of the
Record Holders and Assignees of Units or other Partnership Securities, books of
account and records of Partnership proceedings, may be kept on, or be in the
form of, computer disks, hard drives, punch cards, magnetic tape, photographs,
micrographics or any other information storage device; provided, that the books
and records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial reporting purposes, on an accrual basis in accordance
with U.S. GAAP.
8.2 Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
ARTICLE IX
TAX MATTERS
9.1 Tax Returns and Information
The Operating General Partner shall arrange for the preparation and timely
filing of all returns of the Partnership that are required for federal, state
and local income tax purposes on the basis of the accrual method and a taxable
year ending on December 31. The tax information reasonably required by Record
Holders for federal and state income tax reporting purposes with respect to a
taxable year shall be furnished to them within 90 days of the close of the
calendar year in which the Partnership's taxable year ends. The classification,
realization and recognition of income, gain, losses and deductions and other
items shall be on the accrual method of accounting for federal income tax
purposes.
9.2 Tax Elections
(a) The Partnership shall make the election under Section 754 of the Code
in accordance with applicable regulations thereunder, subject to the reservation
of the right to seek to revoke any such election upon the Operating General
Partner's determination that such revocation is in the best interests of the
Unitholders.
(b) The Partnership shall elect to deduct expenses incurred in organizing
the Partnership ratably over a sixty-month period as provided in Section 709 of
the Code.
(c) Except as otherwise provided herein, the Operating General Partner
shall determine whether the Partnership should make any other elections
permitted by the Code.
9.3 Tax Controversies
Subject to the provisions hereof, the Operating General Partner is
designated as the Tax Matters Partner (as defined in the Code) and is authorized
and required to represent the Partnership (at the Partnership's expense) in
connection with all examinations of the Partnership's affairs by tax
authorities, including resulting administrative and judicial proceedings, and to
expend Partnership funds for professional services and costs associated
therewith. Each Partner agrees to cooperate with the Operating General Partner
and to do or refrain from doing any or all things reasonably required by the
Operating General Partner to conduct such proceedings.
9.4 Withholding
Notwithstanding any other provision of this Agreement, the Operating
General Partner is authorized to take any action that it determines in its
discretion to be necessary or appropriate to cause the Partnership to comply
with any withholding requirements established under the Code or any other
federal, state or local law including, without limitation, pursuant to Sections
1441, 1442, 1445 and 1446 of the Code. To the extent that the Partnership is
required or elects to withhold and pay over to any taxing authority any amount
resulting from the allocation or distribution of income to any Partner or
Assignee (including, without limitation, by reason of Section 1446 of the Code),
the amount withheld may be treated as a distribution of cash pursuant to Section
6.3 in the amount of such withholding from such Partner.
ARTICLE X
ADMISSION OF PARTNERS
10.1 Admission of General Partners
(a) In connection with the formation of the Partnership under the Delaware
Act, the Operating General Partner made an initial Capital Contribution to the
Partnership in the amount of $10.00 for an interest in the Partnership and has
been admitted as the Operating General Partner of the Partnership.
(b) Upon the issuance of Common GP Units pursuant to Section 5.2(a),
Genesis MLP will be admitted to the Partnership as the Managing General Partner.
10.2 Admission of Successor or Transferee General Partner
(a) A successor Operating General Partner approved pursuant to Section 11.1
or 11.2 or the transferee of or successor to all of the Operating General
Partner's General Partner Interest pursuant to Section 4.6(a) who is proposed to
be admitted as a successor Operating General Partner shall, subject to
compliance with the terms of Section 11.3, if applicable, be admitted to the
Partnership as a successor Operating General Partner, effective immediately
prior to the withdrawal or removal of the Operating General Partner pursuant to
Section 11.1 or 11.2 or the transfer of the Operating General Partner's General
Partner Interest pursuant to Section 4.6(a); provided, however, that no such
successor shall be admitted to the Partnership until compliance with the terms
of Section 4.6(a) has occurred and such successor has executed and delivered
such other documents or instruments as may be required to effect such admission.
Any such successor shall, subject to the terms hereof, carry on the business of
the Partnership without dissolution.
(b) A successor Managing General Partner approved pursuant to Section 11.4
or the transferee of or successor to all of the Managing General Partner's
General Partner Interest pursuant to Section 4.6(b) who is proposed to be
admitted as a successor Managing General Partner shall be admitted to the
Partnership as a successor Managing General Partner, effective immediately prior
to the withdrawal or removal of the Managing General Partner pursuant to Section
11.4 or the transfer of the Managing General Partner's General Partner Interest
pursuant to Section 4.6(b); provided, however, that no such successor shall be
admitted to the Partnership until compliance with the terms of Section 4.6(b)
has occurred and such successor has executed and delivered such other documents
or instruments as may be required to effect such admission. Any such successor
shall, subject to the terms hereof, carry on the business of the Partnership
without dissolution.
10.3 Admission of Initial Limited Partners
Upon the issuance of Subordinated LP Units pursuant to Section 5.3(a),
Basis and the ▇▇▇▇▇▇ Subsidiaries will be admitted to the Partnership as Initial
Limited Partners.
10.4 Admission of Substituted Limited Partner
By transfer of a Limited Partner Interest in accordance with Article IV,
the transferor shall be deemed to have given the transferee the right to seek
admission as a Substituted Limited Partner subject to the conditions of, and in
the manner permitted under, this Agreement. A transferor of a Certificate
representing a Limited Partner Interest shall, however, only have the authority
to convey to a purchaser or other transferee who does not execute and deliver a
Transfer Application (a) the right to negotiate such Certificate to a purchaser
or other transferee and (b) the right to transfer the right to request admission
as a Substituted Limited Partner to such purchaser or other transferee in
respect of the transferred Limited Partner Interests. Each transferee of a
Limited Partner Interest (including any nominee holder or an agent acquiring
such Limited Partner Interest for the account of another Person) who executes
and delivers a Transfer Application shall, by virtue of such execution and
delivery, be an Assignee and be deemed to have applied to become a Substituted
Limited Partner with respect to the Limited Partner Interest so transferred to
such Person. Such Assignee shall become a Substituted Limited Partner (x) at
such time as the Operating General Partner consents thereto, which consent may
be given or withheld in the Operating General Partner's discretion and (y) when
any such admission is shown on the books and records of the Partnership. If such
consent is withheld, such transferee shall be an Assignee. An Assignee shall
have an interest in the Partnership equivalent to that of a Limited Partner with
respect to allocations and distributions, including liquidating distributions,
of the Partnership. With respect to voting rights attributable to Limited
Partner Interests that are held by Assignees, the Operating General Partner
shall be deemed to be the Limited Partner with respect thereto and shall, in
exercising the voting rights in respect of such Limited Partner Interests on any
matter, vote such Limited Partner Interests at the written direction of the
Assignee who is the Record Holder of such Limited Partner Interests. If no such
written direction is received, such Limited Partner Interests will not be voted.
An Assignee shall have no other rights of a Limited Partner.
10.5 Admission of Additional Limited Partners
(a) A Person (other than a General Partner, an Initial Limited Partner or a
Substituted Limited Partner) who makes a Capital Contribution to the Partnership
in accordance with this Agreement in exchange for Limited Partner Interests
(other than by virtue of the purchase of APIs) shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the
Operating General Partner (i) evidence of acceptance in form satisfactory to the
Operating General Partner of all of the terms and conditions of this Agreement,
including the power of attorney granted in Section 2.6, and (ii) such other
documents or instruments as may be required in the discretion of the Operating
General Partner to effect such Person's admission as an Additional Limited
Partner.
(b) Notwithstanding anything to the contrary in this Section 10.5, no
Person shall be admitted as an Additional Limited Partner without the consent of
the Operating General Partner, which consent may be given or withheld in the
Operating General Partner's discretion. The admission of any Person as an
Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded as such in the books and records of the
Partnership, following the consent of the Operating General Partner to such
admission.
10.6 Amendment of Agreement and Certificate of Limited Partnership
To effect the admission to the Partnership of any Partner, the Operating
General Partner shall take all steps necessary and appropriate under the
Delaware Act to amend the records of the Partnership to reflect such admission
and, if necessary, to prepare as soon as practicable an amendment to this
Agreement and, if required by law, the Operating General Partner shall prepare
and file an amendment to the Certificate of Limited Partnership, and the
Operating General Partner may for this purpose, among others, exercise the power
of attorney granted pursuant to Section 2.6.
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
11.1 Withdrawal of Operating General Partner
(a) The Operating General Partner shall be deemed to have withdrawn from
the Partnership upon the occurrence of any one of the following events (each
such event herein referred to as an ''Event of Withdrawal'');
(i) the Operating General Partner voluntarily withdraws from the
Partnership by giving written notice to the other Partners (and it shall be
deemed that the Operating General Partner has withdrawn pursuant to this Section
11.1(a)(i) if the Operating General Partner voluntarily withdraws as a general
partner of Genesis MLP);
(ii) the Operating General Partner transfers all of its General Partner
Interest pursuant to Section 4.6;
(iii) the Operating General Partner is removed pursuant to Section 11.2;
(iv) the Operating General Partner (A) makes a general assignment for the
benefit of creditors; (B) files a voluntary bankruptcy petition for relief under
Chapter 7 of the United States Bankruptcy Code; (C) files a petition or answer
seeking for itself a liquidation, dissolution or similar relief (but not a
reorganization) under any law; (D) files an answer or other pleading admitting
or failing to contest the material allegations of a petition filed against the
Operating General Partner in a proceeding of the type described in clauses (A)-
(C) of this Section 11.1(a)(iv); or (E) seeks, consents to or acquiesces in the
appointment of a trustee (but not a debtor in possession), receiver or
liquidator of the Operating General Partner or of all or any substantial part of
its properties;
(v) a final and non-appealable order of relief under Chapter 7 of the
United States Bankruptcy Code is entered by a court with appropriate
jurisdiction pursuant to a voluntary or involuntary petition by or against the
Operating General Partner; or
(vi) (A) in the event the Operating General Partner is a corporation, a
certificate of dissolution or its equivalent is filed for the Operating General
Partner, or 90 days expire after the date of notice to the Operating General
Partner of revocation of its charter without a reinstatement of its charter,
under the laws of its state of incorporation; (B) in the event the Operating
General Partner is a partnership, the dissolution and commencement of winding up
of the Operating General Partner; (C) in the event the Operating General Partner
is acting in such capacity by virtue of being a trustee of a trust, the
termination of the trust; (D) in the event the Operating General Partner is a
natural person, his death or adjudication of incompetency; and (E) otherwise in
the event of the termination of the Operating General Partner.
If an Event of Withdrawal specified in Section 11.1(a)(iv), (v) or (vi)(A), (B),
(C) or (E) occurs, the withdrawing Operating General Partner shall give notice
to the Partners within 30 days after such occurrence. The Partners hereby agree
that only the Events of Withdrawal described in this Section 11.1 shall result
in the withdrawal of the Operating General Partner from the Partnership.
(b) Withdrawal of the Operating General Partner from the Partnership upon
the occurrence of an Event of Withdrawal shall not constitute a breach of this
Agreement under the following circumstances: (i) if the Operating General
Partner has voluntarily withdrawn as a general partner of Genesis MLP and such
withdrawal was not in breach of the Genesis MLP Partnership Agreement or (ii) at
any time that the Operating General Partner ceases to be the Operating General
Partner pursuant to Section 11.1(a)(ii) or is removed pursuant to Section 11.2.
The withdrawal of the Operating General Partner from the Partnership upon the
occurrence of an Event of Withdrawal shall also constitute the withdrawal of the
Operating General Partner as general partner of the other Group Members. If the
Operating General Partner gives a notice of withdrawal pursuant to Section
11.1(a)(i), the Person elected as successor general partner of Genesis MLP
shall, upon admission as a successor general partner of Genesis MLP,
automatically become the successor Operating General Partner and a successor
general partner of the other Group Members of which the Operating General
Partner is a general partner. If, prior to the effective date of the Operating
General Partner's withdrawal, a successor Operating General is not selected as
provided herein, the Partnership shall be dissolved in accordance with Section
12.1. Any successor Operating General Partner selected in accordance with the
terms of this Section 11.1 shall be subject to the provisions of Section 10.3.
11.2 Removal of Operating General Partner
The Operating General Partner may not be removed as a general partner of
the Partnership unless the Operating General Partner is removed as a general
partner of Genesis MLP pursuant to Section 11.2 of the Genesis MLP Partnership
Agreement. If the Operating General Partner is removed as a general partner of
Genesis MLP pursuant to Section 11.2 of the Genesis MLP Partnership Agreement,
the Operating General Partner shall be removed as a general partner of the
Partnership. Such removal shall be effective concurrently with the effectiveness
of the removal of the Operating General Partner as a general partner of Genesis
MLP pursuant to the terms of the Genesis MLP Partnership Agreement. If a Person
is elected as a successor general partner of Genesis MLP in connection with the
removal of the Operating General Partner as a general partner of Genesis MLP,
such Person shall, upon admission as a successor general partner of Genesis MLP,
automatically become the successor Operating General Partner of the Partnership
and a successor general partner of the other Group Members of which the
Operating General Partner is a general partner.
11.3 Interest of Departing Partner and Successor Operating General Partner
(a) The General Partner Interest of a Departing Partner departing as a
result of withdrawal or removal pursuant to Section 11.1 or 11.2 shall (unless
it is otherwise required to be converted into MLP Common Units pursuant to
Section 11.3(b) of the Genesis MLP Partnership Agreement) be purchased by the
successor to the Departing Partner for cash in the manner specified in the
Genesis MLP Partnership Agreement. Such purchase (or conversion into MLP Common
Units, as applicable) shall be a condition to the admission to the Partnership
of the successor as the Operating General Partner. Any successor Operating
General Partner shall indemnify the Departing General Partner as to all debts
and liabilities of the Partnership arising on or after the effective date of the
withdrawal or removal of the Departing Partner.
(b) The Departing Partner shall be entitled to receive all reimbursements
due such Departing Partner pursuant to Section 7.4, including any employee-
related liabilities (including severance liabilities), incurred in connection
with the termination of any employees employed by the General Partner for the
benefit of the Partnership or the other Group Members.
11.4 Withdrawal or Removal of Managing General Partner
(a) Without the prior written consent of the Operating General Partner,
which may be granted or withheld in its sole discretion, the Managing General
Partner shall not have the right to withdraw from the Partnership.
(b) The Partners shall not have the right to remove the Managing General
Partner.
11.5 Withdrawal of Limited Partners
No Limited Partner shall have any right to withdraw from the Partnership;
provided, however, that when a transferee of a Limited Partner's LP Units or
APIs becomes a Record Holder of the LP Units or APIs so transferred, such
transferring Limited Partner shall cease to be a Limited Partner with respect to
the LP Units or APIs so transferred.
ARTICLE XII
DISSOLUTION AND LIQUIDATION
12.1 Dissolution
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the removal or withdrawal of the Operating General Partner, if a successor
Operating General Partner is selected as provided in Section 11.1 or 11.2, the
Partnership shall not be dissolved and such successor Operating General Partner
shall continue the business of the Partnership. The Partnership shall dissolve,
and (subject to Section 12.2) its affairs shall be wound up, upon:
(a) the expiration of its term as provided in Section 2.7;
(b) an Event of Withdrawal of the Operating General Partner as provided in
Section 11.1(a) (other than Section 11.1(a)(ii)), unless a successor is selected
as provided in Section 11.1(b) or 11.2 and such successor is admitted to the
Partnership pursuant to Section 10.3;
(c) an election to dissolve the Partnership by the Operating General
Partner that is approved by the holders of a Majority Interest;
(d) the entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Delaware Act; or
(e) the sale of all or substantially all of the assets and properties of
the Partnership Group.
12.2 Continuation of the Business of the Partnership After Dissolution
Upon (a) dissolution of the Partnership following an Event of Withdrawal
caused by the withdrawal or removal of the Operating General Partner as provided
in Section 11.1(a)(i) or (iii) and the failure of the Partners to select a
successor to such Departing Partner pursuant to Section 11.1 or 11.2, then
within 90 days thereafter, or (b) dissolution of the Partnership upon an event
constituting an Event of Withdrawal as defined in Section 11.1(a)(iv), (v) or
(vi), then, to the maximum extent permitted by law, within 180 days thereafter,
the holders of a Majority Interest may elect to reconstitute the Partnership and
continue its business on the same terms and conditions set forth in this
Agreement by forming a new limited partnership on terms identical to those set
forth in this Agreement and having as the successor Operating General Partner a
Person approved by the holders of a Majority Interest. Unless such an election
is made within the applicable time period as set forth above, the Partnership
shall conduct only activities necessary to wind up its affairs. If such an
election is so made, then:
(i) the reconstituted Partnership shall continue until the end of the term
set forth in Section 2.7 unless earlier dissolved in accordance with this
Article XII;
(ii) if the successor Operating General Partner is not the former Operating
General Partner, then the interest of the former Operating General Partner shall
be treated in the manner provided in Section 11.3; and
(iii) all necessary steps shall be taken to cancel this Agreement and the
Certificate of Limited Partnership and to enter into and, as necessary, to file
a new partnership agreement and certificate of limited partnership, and the
successor general partner may for this purpose exercise the powers of attorney
granted the Operating General Partner pursuant to Section 2.6; provided, that
the right of the holders of a Majority Interest to approve a successor Operating
General Partner and to reconstitute and to continue the business of the
Partnership shall not exist and may not be exercised unless the Partnership has
received an Opinion of Counsel that (x) the exercise of the right would not
result in the loss of limited liability of any Limited Partner and (y) neither
the Partnership nor the reconstituted limited partnership would be treated as an
association taxable as a corporation or otherwise be taxable as an entity for
federal income tax purposes upon the exercise of such right to continue.
12.3 Liquidator
Upon dissolution of the Partnership, unless the Partnership is continued
under an election to reconstitute and continue the Partnership pursuant to
Section 12.2, the Operating General Partner shall select one or more Persons to
act as Liquidator. The Liquidator (if other than the Operating General Partner)
shall be entitled to receive such compensation for its services as may be
approved by the holders of a Majority Interest. The Liquidator (if other than
the Operating General Partner) shall agree not to resign at any time without 15
days' prior notice and may be removed at any time, with or without cause, by
notice of removal approved by the holders of at least a majority of the
Outstanding Units voting as a single class. Upon dissolution, removal or
resignation of the Liquidator, a successor and substitute Liquidator (who shall
have and succeed to all rights, powers and duties of the original Liquidator)
shall within 30 days thereafter be approved by the holders of at least a
majority of the Outstanding Units voting as a single class. The right to approve
a successor or substitute Liquidator in the manner provided herein shall be
deemed to refer also to any such successor or substitute Liquidator approved in
the manner herein provided. Except as expressly provided in this Article XII,
the Liquidator approved in the manner provided herein shall have and may
exercise, without further authorization or consent of any of the parties hereto,
all of the powers conferred upon the Operating General Partner under the terms
of this Agreement (but subject to all of the applicable limitations, contractual
and otherwise, upon the exercise of such powers, other than the limitation on
sale set forth in Section 7.3(b)) to the extent necessary or desirable in the
good faith judgment of the Liquidator to carry out the duties and functions of
the Liquidator hereunder for and during such period of time as shall be
reasonably required in the good faith judgment of the Liquidator to complete the
winding up and liquidation of the Partnership as provided for herein.
12.4. Liquidation
The Liquidator shall proceed to dispose of the assets of the Partnership,
discharge its liabilities, and otherwise wind up its affairs in such manner and
over such period as the Liquidator determines to be in the best interest of the
Partners, subject to Section 17-804 of the Delaware Act and the following:
(a) Disposition of Assets. The assets may be disposed of by public or
private sale or by distribution in kind to one or more Partners on such terms as
the Liquidator and such Partner or Partners may agree. If any property is
distributed in kind, the Partner receiving the property shall be deemed for
purposes of Section 12.4(c) to have received cash equal to its fair market
value; and contemporaneously therewith, appropriate cash distributions must be
made to the other Partners. The Liquidator may, in its absolute discretion,
defer liquidation or distribution of the Partnership's assets for a reasonable
time if it determines that an immediate sale of all or some of the Partnership's
assets would be impractical or would cause undue loss to the partners. The
Liquidator may, in its absolute discretion, distribute the Partnership's assets,
in whole or in part, in kind if it determines that a sale would be impractical
or would cause undue loss to the partners.
(b) Discharge of Liabilities. Liabilities of the Partnership include
amounts owed to Partners otherwise than in respect of their distribution rights
under Article VI. With respect to any liability that is contingent, conditional
or unmatured or is otherwise not yet due and payable, the Liquidator shall
either settle such claim for such amount as it thinks appropriate or establish a
reasonable reserve of cash or other assets to provide for its payment. When
paid, any unused portion of the reserve shall be distributed as additional
liquidation proceeds.
(c) Liquidation Distributions. All property and all cash in excess of that
required to discharge liabilities as provided in Section 12.4(b) shall be
distributed to the Partners in accordance with, and to the extent of, the
positive balances in their respective Capital Accounts, as determined after
taking into account all Capital Account adjustments (other than those made by
reason of distributions pursuant to this Section 12.4(c)) for the taxable year
of the Partnership during which the liquidation of the Partnership occurs (with
such date of occurrence being determined pursuant to Treasury Regulation Section
1.704-1(b)(2)(ii)(g)), and such distribution shall be made by the end of such
taxable year (or, if later, within 90 days after said date of such occurrence).
12.5 Cancellation of Certificate of Limited Partnership
Upon the completion of the distribution of Partnership cash and property as
provided in Section 12.4 in connection with the liquidation of the Partnership,
the Partnership shall be terminated and the Certificate of Limited Partnership
and all qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware shall be canceled and such other
actions as may be necessary to terminate the Partnership shall be taken.
12.6 Return of Contributions
The General Partners shall not be personally liable for, and shall have no
obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate, the return of the Capital Contributions of the Limited
Partners or Unitholders, or any portion thereof, it being expressly understood
that any such return shall be made solely from Partnership assets.
12.7 Waiver of Partition
To the maximum extent permitted by law, each Partner hereby waives any
right to partition of the Partnership property.
12.8 Capital Account Restoration
Neither the Managing General Partner nor any Limited Partner shall have any
obligation to restore any negative balance in its Capital Account upon
liquidation of the Partnership. The Operating General Partner shall be obligated
to restore any negative balance in its Capital Account upon liquidation of its
interest in the Partnership by the end of the taxable year of the Partnership
during which such liquidation occurs, or, if later, within 90 days after the
date of such liquidation.
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT;
MEETINGS; RECORD DATE
13.1 Amendment to be Adopted Solely by Operating General Partner
Each Partner agrees that the Operating General Partner, without the
approval of any Partner or Assignee, may amend any provision of this Agreement
and execute, swear to, acknowledge, deliver, file and record whatever documents
may be required in connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the principal
place of business of the Partnership, the registered agent of the Partnership or
the registered office of the Partnership;
(b) the admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement;
(c) a change that, in the sole discretion of the Operating General Partner,
is necessary or advisable to qualify or continue the qualification of the
Partnership as a limited partnership or a partnership in which the Limited
Partners have limited liability under the laws of any state or to ensure that
the Partnership will not be treated as an association taxable as a corporation
or otherwise taxed as an entity for federal income tax purposes;
(d) a change that, in the discretion of the Operating General Partner, (i)
does not adversely affect the Partners in any material respect, (ii) is
necessary or advisable (A) to satisfy any requirements, conditions or guidelines
contained in any opinion, directive, order, ruling or regulation of any federal
or state agency or judicial authority or contained in any federal or state
statute (including the Delaware Act), (B) to facilitate the trading of the
Partnership Securities (including the division of any class or classes of
Outstanding Partnership Securities into different classes to facilitate
uniformity of tax consequences within such classes of Partnership Securities),
compliance with any of which the Operating General Partner determines in its
discretion to be in the best interests of the Partnership and the Partners, (C)
in connection with action taken by the Operating General Partner pursuant to
Section 5.10, or (D) to effect the conversion of the Operating General Partner's
Incentive Compensation Payments as provided in Section 7.13, or (iii) is
required to effect the intent expressed in the Registration Statement or the
intent of the provisions of this Agreement or is otherwise contemplated by this
Agreement;
(e) a change in the fiscal year or taxable year of the Partnership and any
changes that, in the discretion of the Operating General Partner, are necessary
or advisable as a result of a change in the fiscal year or taxable year of the
Partnership including, if the Operating General Partner shall so determine, a
change in the definition of ''Quarter'' and the dates on which distributions are
to be made by the Partnership;
(f) an amendment that is necessary, in the Opinion of Counsel, to prevent
the Partnership, or the General Partners or their directors, officers, trustees
or agents from in any manner being subjected to the provisions of the Investment
Company Act of 1940, as amended, the Investment Advisers Act of 1940, as
amended, or ''plan asset'' regulations adopted under the Employee Retirement
Income Security Act of 1974, as amended, regardless of whether such are
substantially similar to plan asset regulations currently applied or proposed by
the United States Department of Labor;
(g) subject to the terms of Section 5.7, an amendment that, in the
discretion of the Operating General Partner, is necessary or advisable in
connection with the authorization of issuance of any class or series of
Partnership Securities pursuant to Section 5.6;
(h) any amendment expressly permitted in this Agreement to be made by the
Operating General Partner acting alone;
(i) an amendment effected, necessitated or contemplated by a Merger
Agreement approved in accordance with Section 14.3;
(j) an amendment that, in the discretion of the Operating General Partner,
is necessary or advisable to reflect, account for and deal with appropriately
the formation by the Partnership of, or investment by the Partnership in, any
corporation, partnership, joint venture, limited liability company or other
entity, in connection with the conduct by the Partnership of activities
permitted by the terms of Section 2.4;
(k) a merger or conveyance pursuant to Section 14.3(d); or
(l) any other amendments substantially similar to the foregoing.
13.2 Amendment Procedures
Except as provided in Sections 13.1 and 13.3, all amendments to this
Agreement shall be made in accordance with the following requirements.
Amendments to this Agreement may be proposed only by or with the consent of both
of the General Partners which consent may be given or withheld in their sole
discretion. A proposed amendment shall be effective upon its approval by the
holders of a Majority Interest, unless a greater or different percentage is
required under this Agreement or by Delaware law. Each proposed amendment that
requires the approval of the holders of a specified percentage of Outstanding
Partnership Securities shall be set forth in a writing that contains the text of
the proposed amendment. If such an amendment is proposed, the Operating General
Partner shall seek the written approval of the requisite percentage of
Outstanding Partnership Securities or call a meeting of the Partners to consider
and vote on such proposed amendment. The Operating General Partner shall notify
all Record Holders upon final adoption of any such proposed amendments.
13.3 Amendment Requirements
(a) Notwithstanding the provisions of Sections 13.1 and 13.2, no provision
of this Agreement that establishes a percentage of Outstanding Partnership
Securities required to take any action shall be amended, altered, changed,
repealed or rescinded in any respect that would have the effect of reducing such
voting percentage unless such amendment is approved by the written consent or
the affirmative vote of holders of Outstanding Partnership Securities whose
aggregate Outstanding Partnership Securities constitute not less than the voting
requirement sought to be reduced.
(b) Notwithstanding the provisions of Sections 13.1 and 13.2, no amendment
to this Agreement may (i) enlarge the obligations of any Limited Partner without
its consent, unless such shall be deemed to have occurred as a result of an
amendment approved pursuant to Section 13.3(c), (ii) enlarge the obligations of,
restrict in any way any action by or rights of, or reduce in any way the amounts
distributable, reimbursable or otherwise payable to, the General Partners or any
of their Affiliates without its consent, which may be given or withheld in its
sole discretion, (iii) change Section 12.1(a) or (c), or (iv) change the term of
the Partnership or, except as set forth in Section 12.1(c), give any Person the
right to dissolve the Partnership.
(c) Except as provided in Section 14.3, and except as otherwise provided,
and without limitation of the Operating General Partner's authority to adopt
amendments to this Agreement as contemplated in Section 13.1, any amendment that
would have a material adverse effect on the rights or preferences of any class
of Partnership Interests in relation to other classes of Partnership Interests
must be approved by the holders of not less than a majority of the Outstanding
Partnership Interests of the class affected.
(d) Notwithstanding any other provision of this Agreement, except for
amendments pursuant to Section 7.3 or 13.1 and except as otherwise provided by
Section 14.3(b), no amendments shall become effective without the approval of
the holders of a Ninety Percent Interest unless the Partnership obtains an
Opinion of Counsel to the effect that such amendment will not affect the limited
liability of any Limited Partner under applicable law.
(e) Except as provided in Section 13.1, this Section 13.3 shall only be
amended with the approval of the holders of a Ninety Percent Interest.
13.4 Special Meetings
All acts of Partners to be taken pursuant to this Agreement shall be taken
in the manner provided in this Article XIII. Special meetings of the Partners
may be called by a General Partner or by Partners owning 20% or more of the
Outstanding Partnership Securities of the class or classes for which a meeting
is proposed and which are entitled to vote thereat. Partners shall call a
special meeting by delivering to the Operating General Partner one or more
requests in writing stating that the signing Partners wish to call a special
meeting and indicating the general or specific purposes for which the special
meeting is to be called. Within 60 days after receipt of such a call from
Partners or within such greater time as may be reasonably necessary for the
Partnership to comply with any statutes, rules, regulations, listing agreements
or similar requirements governing the holding of a meeting or the solicitation
of proxies for use at such a meeting, the Operating General Partner shall send a
notice of the meeting to the Partners. A meeting shall be held at a time and
place determined by the Operating General Partner on a date not less than 10
days nor more than 60 days after the mailing of notice of the meeting. Limited
Partners shall not vote on matters that would cause the Limited Partners to be
deemed to be taking part in the management and control of the business and
affairs of the Partnership so as to jeopardize the Limited Partners' limited
liability under the Delaware Act or the law of any other state in which the
Partnership is qualified to do business.
13.5 Notice of a Meeting
Notice of a meeting called pursuant to Section 13.4 shall be given to the
Record Holders in writing by mail or other means of written communication in
accordance with Section 15.1. The notice shall be deemed to have been given at
the time when deposited in the mail or sent by other means of written
communication.
13.6 Record Date
For purposes of determining the Partners entitled to notice of or to vote
at a meeting of Partners or to give approvals without a meeting as provided in
Section 13.11, the Operating General Partner may set a Record Date, which shall
not be less than 10 nor more than 60 days before (a) the date of the meeting or
(b) in the event that approvals are sought without a meeting, the date by which
Partners are requested in writing by the Operating General Partner to give such
approvals.
13.7 Adjournment
When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting and a new Record Date need not be fixed, if the
time and place thereof are announced at the meeting at which the adjournment is
taken, unless such adjournment shall be for more than 45 days. At the adjourned
meeting, the Partnership may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than 45 days
or if a new Record Date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given in accordance with this Article XIII.
13.8 Waiver of Notice; Approval of Meeting; Approval of Minutes
The transactions of any meeting of Partners, however called and noticed,
and whenever held, shall be as valid as if occurred at a meeting duly held after
regular call and notice, if a quorum is present either in person or by proxy,
and if, either before or after the meeting, Partners representing such quorum
who were present in person or by proxy and entitled to vote, sign a written
waiver of notice or an approval of the holding of the meeting or an approval of
the minutes thereof. All waivers and approvals shall be filed with the
Partnership records or made a part of the minutes of the meeting. Attendance of
a Partner at a meeting shall constitute a waiver of notice of the meeting,
except when the Partner does not approve, at the beginning of the meeting, of
the transaction of any business because the meeting is not lawfully called or
convened; and except that attendance at a meeting is not a waiver of any right
to disapprove the consideration of matters required to be included in the notice
of the meeting, but not so included, if the disapproval is expressly made at the
meeting.
13.9 Quorum
The holders of a majority of the Outstanding Partnership Securities of the
class or classes for which a meeting has been called represented in person or by
proxy shall constitute a quorum at a meeting of Partners of such class or
classes unless any such action by the Partners requires approval by holders of a
greater percentage of such Partnership Securities, in which case the quorum
shall be such greater percentage. At any meeting of the Partners duly called and
held in accordance with this Agreement at which a quorum is present, the act of
Partners holding Outstanding Partnership Securities that in the aggregate
represent a majority of the Outstanding Partnership Securities entitled to vote
and be present in person or by proxy at such meeting shall be deemed to
constitute the act of all Partners, unless a greater or different percentage is
required with respect to such action under the provisions of this Agreement, in
which case the act of the Partners holding Outstanding Partnership Securities
that in the aggregate represent at least such greater or different percentage
shall be required. The Partners present at a duly called or held meeting at
which a quorum is present may continue to transact business until adjournment,
notwithstanding the withdrawal of enough Partners to leave less than a quorum,
if any action taken (other than adjournment) is approved by the required
percentage of Outstanding Partnership Securities specified in this Agreement. In
the absence of a quorum any meeting of Partners may be adjourned from time to
time by the affirmative vote of holders of at least a majority of the
Outstanding Partnership Securities represented either in person or by proxy, but
no other business may be transacted, except as provided in Section 13.7.
13.10 Conduct of a Meeting
The Operating General Partner shall have full power and authority
concerning the manner of conducting any meeting of the Partners or solicitation
of approvals in writing, including the determination of Persons entitled to
vote, the existence of a quorum, the satisfaction of the requirements of Section
13.4, the conduct of voting, the validity and effect of any proxies and the
determination of any controversies, votes or challenges arising in connection
with or during the meeting or voting. The Operating General Partner shall
designate a Person to serve as chairman of any meeting and shall further
designate a Person to take the minutes of any meeting. All minutes shall be kept
with the records of the Partnership maintained by the Operating General Partner.
The Operating General Partner may make such other regulations consistent with
applicable law and this Agreement as it may deem advisable concerning the
conduct of any meeting of the Partners or solicitation of approvals in writing,
including regulations in regard to the appointment of proxies, the appointment
and duties of inspectors of votes and approvals, the submission and examination
of proxies and other evidence of the right to vote, and the revocation of
approvals in writing.
13.11 Action Without a Meeting
If authorized by the Operating General Partner, any action that may be
taken at a meeting of the Partners may be taken without a meeting if an approval
in writing setting forth the action so taken is signed by Partners owning not
less than the minimum percentage of the Outstanding Partnership Securities that
would be necessary to authorize or take such action at a meeting at which all
the Partners were present and voted. Prompt notice of the taking of action
without a meeting shall be given to the Partners who have not approved in
writing. The Operating General Partner may specify that any written ballot
submitted to Partners for the purpose of taking any action without a meeting
shall be returned to the Partnership within the time period, which shall be not
less than 20 days, specified by the Operating General Partner. If a ballot
returned to the Partnership does not vote all of the Partnership Securities held
by a Person the Partnership shall be deemed to have failed to receive a ballot
for the Partnership Securities that were not voted. If approval of the taking of
any action by the Partners is solicited by any Person other than by or on behalf
of the Operating General Partner, the written approvals shall have no force and
effect unless and until (a) they are deposited with the Partnership in care of
the Operating General Partner, (b) approvals sufficient to take the action
proposed are dated as of a date not more than 90 days prior to the date
sufficient approvals are deposited with the Partnership and (c) an Opinion of
Counsel is delivered to the Operating General Partner to the effect that the
exercise of such right and the action proposed to be taken with respect to any
particular matter (i) will not cause the Limited Partners to be deemed to be
taking part in the management and control of the business and affairs of the
Partnership so as to jeopardize the Limited Partners' limited liability, and
(ii) is otherwise permissible under the state statutes then governing the
rights, duties and liabilities of the Partnership and the Partners.
13.12 Voting and Other Rights
(a) Only those Record Holders of Partnership Securities on the Record Date
set pursuant to Section 13.6 shall be entitled to notice of, and to vote at, a
meeting of Partners or to act with respect to matters as to which the holders of
the Outstanding Partnership Securities have the right to vote or to act. All
references in this Agreement to votes of, or other acts that may be taken by,
the Outstanding Partnership Securities shall be deemed to be references to the
votes or acts of the Record Holders of such Outstanding Partnership Securities.
(b) With respect to Partnership Securities that are held for a Person's
account by another Person (such as a broker, dealer, bank, trust company or
clearing corporation, or an agent of any of the foregoing), in whose name such
Partnership Securities are registered, such other Person shall, in exercising
the voting rights in respect of such Partnership Securities on any matter, and
unless the arrangement between such Persons provides otherwise, vote such
Partnership Securities in favor of, and at the direction of, the Person who is
the beneficial owner, and the Partnership shall be entitled to assume it is so
acting without further inquiry. The provisions of this Section 13.12(b) (as well
as all other provisions of this Agreement) are subject to the provisions of
Section 4.3.
ARTICLE XIV
MERGER
14.1 Authority
The Partnership may merge or consolidate with one or more corporations,
limited liability companies, business trusts or associations, real estate
investment trusts, common law trusts or unincorporated businesses, including a
general partnership or limited partnership, formed under the laws of the State
of Delaware or any other state of the United States of America, pursuant to a
written agreement of merger or consolidation (''Merger Agreement'') in
accordance with this Article XIV.
14.2 Procedure for Merger or Consolidation
Merger or consolidation of the Partnership pursuant to this Article XIV
requires the prior approval of the General Partners. If the General Partners
shall determine, in the exercise of their discretion, to consent to the merger
or consolidation, the General Partners shall approve the Merger Agreement, which
shall set forth:
(a) The names and jurisdictions of formation or organization of each of the
business entities proposing to merge or consolidate;
(b) The name and jurisdiction of formation or organization of the business
entity that is to survive the proposed merger or consolidation (the ''Surviving
Business Entity'');
(c) The terms and conditions of the proposed merger or consolidation;
(d) The manner and basis of exchanging or converting the equity securities
of each constituent business entity for, or into, cash, property or general or
limited partner interests, rights, securities or obligations of the Surviving
Business Entity; and (i) if any general or limited partner interests, securities
or rights of any constituent business entity are not to be exchanged or
converted solely for, or into, cash, property or general or limited partner
interests, rights, securities or obligations of the Surviving Business Entity,
the cash, property or general or limited partner interests, rights, securities
or obligations of any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity) which the holders of such general or
limited partner interests, securities or rights are to receive in exchange for,
or upon conversion of their general or limited partner interests, securities or
rights, and (ii) in the case of securities represented by certificates, upon the
surrender of such certificates, which cash, property or general or limited
partner interests, rights, securities or obligations of the Surviving Business
Entity or any general or limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity), or evidences thereof, are to be
delivered;
(e) A statement of any changes in the constituent documents or the adoption
of new constituent documents (the articles or certificate of incorporation,
articles of trust, declaration of trust, certificate or agreement of limited
partnership or other similar charter or governing document) of the Surviving
Business Entity to be effected by such merger or consolidation;
(f) The effective time of the merger, which may be the date of the filing
of the certificate of merger pursuant to Section 14.4 or a later date specified
in or determinable in accordance with the Merger Agreement (provided, that if
the effective time of the merger is to be later than the date of the filing of
the certificate of merger, the effective time shall be fixed no later than the
time of the filing of the certificate of merger and stated therein); and
(g) Such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or appropriate by the General Partners.
14.3 Approval by Partners of Merger or Consolidation
(a) Except as provided in Section 14.3(d), the General Partners, upon their
approval of the Merger Agreement, shall direct that the Merger Agreement be
submitted to a vote of Partners, whether at a special meeting or by written
consent, in either case in accordance with the requirements of Article XIII. A
copy or a summary of the Merger Agreement shall be included in or enclosed with
the notice of a special meeting or the written consent.
(b) Except as provided in Section 14.3(d), the Merger Agreement shall be
approved upon receiving the affirmative vote or consent of the holders of a
Majority Interest unless the Merger Agreement contains any provision that, if
contained in an amendment to this Agreement, the provisions of this Agreement or
the Delaware Act would require the vote or consent of a greater percentage of
the Outstanding Partnership Securities or of any class of Partners, in which
case such greater percentage vote or consent shall be required for approval of
the Merger Agreement.
(c) Except as provided in Section 14.3(d), after such approval by vote or
consent of the Partners, and at any time prior to the filing of the certificate
of merger pursuant to Section 14.4, the merger or consolidation may be abandoned
pursuant to provisions therefor, if any, set forth in the Merger Agreement.
(d) Notwithstanding anything else contained in this Article XIV or in this
Agreement, the Operating General Partner is permitted, in its discretion,
without Partner approval, to merge the Partnership or any Group Member into, or
convey all of the Partnership's assets to, another limited liability entity
which shall be newly formed and shall have no assets, liabilities or operations
at the time of such Merger other than those it receives from the Partnership or
other Group Member if (i) the Operating General Partner has received an Opinion
of Counsel that the merger or conveyance, as the case may be, would not result
in the loss of the limited liability of any Limited Partner or cause the
Partnership to be treated as an association taxable as a corporation or
otherwise to be taxed as an entity for federal income tax purposes (to the
extent not previously treated as such), (ii) the sole purpose of such merger or
conveyance is to effect a mere change in the legal form of the Partnership into
another limited liability entity and (iii) the governing instruments of the new
entity provide the Limited Partners and the General Partners with the same
rights and obligations as are herein contained.
14.4 Certificate of Merger
Upon the required approval by the Partners of a Merger Agreement, a
certificate of merger shall be executed and filed with the Secretary of State of
the State of Delaware in conformity with the requirements of the Delaware Act.
14.5 Effect of Merger
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the business
entities that has merged or consolidated, and all property, real, personal and
mixed, and all debts due to any of those business entities and all other things
and causes of action belonging to each of those business entities shall be
vested in the Surviving Business Entity and after the merger or consolidation
shall be the property of the Surviving Business Entity to the extent they were
of each constituent business entity;
(ii) the title to any real property vested by deed or otherwise in any of
those constituent business entities shall not revert and is not in any way
impaired because of the merger or consolidation;
(iii) all rights of creditors and all liens on or security interests in
property of any of those constituent business entities shall be preserved
unimpaired; and
(iv) all debts, liabilities and duties of those constituent business
entities shall attach to the Surviving Business Entity, and may be enforced
against it to the same extent as if the debts, liabilities and duties had been
incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this Article shall not
be deemed to result in a transfer or assignment of assets or liabilities from
one entity to another.
ARTICLE XV
GENERAL PROVISIONS
15.1 Addresses and Notices
Any notice, demand, request, report or proxy materials required or
permitted to be given or made to a Partner or Assignee under this Agreement
shall be in writing and shall be deemed given or made when delivered in person
or when sent by first class United States mail or by other means of written
communication to the Partner or Assignee at the address described below. Any
notice, payment or report to be given or made to a Partner or Assignee hereunder
shall be deemed conclusively to have been given or made, and the obligation to
give such notice or report or to make such payment shall be deemed conclusively
to have been fully satisfied, upon sending of such notice, payment or report to
the Record Holder of such Partnership Security at his address as shown on the
records of the Transfer Agent or as otherwise shown on the records of the
Partnership, regardless of any claim of any Person who may have an interest in
such Partnership Security by reason of any assignment or otherwise. An affidavit
or certificate of making of any notice, payment or report in accordance with the
provisions of this Section 15.1 executed by the Operating General Partner, the
Transfer Agent or the mailing organization shall be prima facie evidence of the
giving or making of such notice, payment or report. If any notice, payment or
report addressed to a Record Holder at the address of such Record Holder
appearing on the books and records of the Transfer Agent or the Partnership is
returned by the United States Post Office marked to indicate that the United
States Postal Service is unable to deliver it, such notice, payment or report
and any subsequent notices, payments and reports shall be deemed to have been
duly given or made without further mailing (until such time as such Record
Holder or another Person notifies the Transfer Agent or the Partnership of a
change in his address) if they are available for the Partner or Assignee at the
principal office of the Partnership for a period of one year from the date of
the giving or making of such notice, payment or report to the other Partners and
Assignees. Any notice to the Partnership shall be deemed given if received by
the Operating General Partner at the principal office of the Partnership
designated pursuant to Section 2.3. The General Partners may rely and shall be
protected in relying on any notice or other document from a Partner, Assignee or
other Person if believed by it to be genuine.
15.2 Further Action
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
15.3 Binding Effect
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
15.4 Integration
This Agreement constitutes the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto.
15.5 Creditors
None of the provisions of this Agreement shall be for the benefit of, or
shall be enforceable by, any creditor of the Partnership.
15.6 Waiver
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach of any other covenant, duty, agreement or condition.
15.7 Counterparts
This Agreement may be executed in counterparts, all of which together shall
constitute an agreement binding on all the parties hereto, notwithstanding that
all such parties are not signatories to the original or the same counterpart.
Each party shall become bound by this Agreement immediately upon affixing its
signature hereto or, in the case of a Person acquiring a Limited Partner
Interest, upon accepting the certificate evidencing such Limited Partner
Interest or executing and delivering a Transfer Application as herein described,
independently of the signature of any other party.
15.8 Applicable Law
This Agreement shall be construed in accordance with and governed by the
laws of the State of Delaware, without regard to the principles of conflicts of
law.
15.9 Invalidity of Provisions
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
15.10 Consent of Partners
Each Partner hereby expressly consents and agrees that, whenever in this
Agreement it is specified that an action may be taken upon the affirmative vote
or consent of less than all of the Partners, such action may be so taken upon
the concurrence of less than all of the Partners and each Partner shall be bound
by the results of such action.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
OPERATING GENERAL PARTNER
GENESIS ENERGY, L.L.C.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
MANAGING GENERAL PARTNER
GENESIS ENERGY, L.P.
By: GENESIS ENERGY, L.L.C.,
As General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
ORGANIZATIONAL LIMITED PARTNER
GENESIS ENERGY, L.P.
By: GENESIS ENERGY, L.L.C.,
As General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
LIMITED PARTNERS
All Limited Partners now and hereafter admitted as Limited Partners of the
Partnership, pursuant to powers of attorney now and hereafter executed in favor
of, and granted and delivered to the Operating General Partner.
By: Genesis Energy, L.L.C.
General Partner, as attorney-in-fact for all Limited Partners pursuant to the
Powers of Attorney granted pursuant to Section 2.6.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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