Exhibit 3.4
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
K-SEA OPERATING PARTNERSHIP L.P.
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS ............................................................................................1
Section 1.1 DEFINITIONS ....................................................................................1
Section 1.2 CONSTRUCTION ...................................................................................7
ARTICLE II ORGANIZATION ..........................................................................................8
Section 2.1 FORMATION ......................................................................................8
Section 2.2 NAME ...........................................................................................8
Section 2.3 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE; OTHER OFFICES ...........................8
Section 2.4 PURPOSE AND BUSINESS ...........................................................................8
Section 2.5 POWERS .........................................................................................9
Section 2.6 POWER OF ATTORNEY ..............................................................................9
Section 2.7 TERM ..........................................................................................10
Section 2.8 TITLE TO PARTNERSHIP ASSETS ...................................................................10
ARTICLE III RIGHTS OF LIMITED PARTNERS ..........................................................................11
Section 3.1 LIMITATION OF LIABILITY .......................................................................11
Section 3.2 MANAGEMENT OF BUSINESS ........................................................................11
Section 3.3 OUTSIDE ACTIVITIES OF THE LIMITED PARTNERS ....................................................11
Section 3.4 RIGHTS OF LIMITED PARTNERS ....................................................................11
ARTICLE IV TRANSFERS OF PARTNERSHIP INTERESTS ...................................................................12
Section 4.1 TRANSFER GENERALLY ............................................................................12
Section 4.2 TRANSFER OF THE GENERAL PARTNER'S GENERAL PARTNER INTEREST ....................................13
Section 4.3 TRANSFER OF A LIMITED PARTNER'S PARTNERSHIP INTEREST ..........................................13
Section 4.4 RESTRICTIONS ON TRANSFERS .....................................................................13
ARTICLE V CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS ...........................................14
Section 5.1 INITIAL CONTRIBUTIONS .........................................................................14
Section 5.2 CONTRIBUTIONS PURSUANT TO THE CONTRIBUTION AGREEMENT ..........................................14
Section 5.3 ADDITIONAL CAPITAL CONTRIBUTIONS ..............................................................14
Section 5.4 INTEREST AND WITHDRAWAL .......................................................................14
Section 5.5 LOANS FROM PARTNERS ...........................................................................15
Section 5.6 ISSUANCES OF ADDITIONAL PARTNERSHIP SECURITIES ................................................15
Section 5.7 LIMITED PREEMPTIVE RIGHTS .....................................................................16
Section 5.8 FULLY PAID AND NON-ASSESSABLE NATURE OF LIMITED PARTNER INTERESTS .............................16
ARTICLE VI ALLOCATIONS AND DISTRIBUTIONS ........................................................................16
Section 6.1 ALLOCATIONS ...................................................................................16
Section 6.2 DISTRIBUTIONS .................................................................................16
ARTICLE VII MANAGEMENT AND OPERATION OF BUSINESS ................................................................17
Section 7.1 MANAGEMENT ....................................................................................17
Section 7.2 CERTIFICATE OF LIMITED PARTNERSHIP ............................................................19
Section 7.3 RESTRICTIONS ON THE GENERAL PARTNER'S AUTHORITY ...............................................19
Section 7.4 REIMBURSEMENT OF THE GENERAL PARTNER ..........................................................20
Section 7.5 OUTSIDE ACTIVITIES ............................................................................20
Section 7.6 LOANS FROM THE GENERAL PARTNER; LOANS OR CONTRIBUTIONS FROM THE PARTNERSHIP;
CONTRACTS WITH AFFILIATES; CERTAIN RESTRICTIONS ON THE GENERAL PARTNER .......................................22
Section 7.7 INDEMNIFICATION ...............................................................................23
Section 7.8 LIABILITY OF INDEMNITEES ......................................................................25
Section 7.9 RESOLUTION OF CONFLICTS OF INTEREST ...........................................................25
Section 7.10 OTHER MATTERS CONCERNING THE GENERAL PARTNER ..................................................27
Section 7.11 RELIANCE BY THIRD PARTIES .....................................................................27
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ARTICLE VIII BOOKS, RECORDS AND ACCOUNTING ......................................................................28
Section 8.1 RECORDS AND ACCOUNTING ........................................................................28
Section 8.2 FISCAL YEAR ...................................................................................28
ARTICLE IX TAX MATTERS ..........................................................................................28
Section 9.1 DISREGARDED ENTITY ............................................................................28
Section 9.2 TAX RETURNS ...................................................................................28
Section 9.3 TAX ELECTIONS .................................................................................28
Section 9.4 TAX CONTROVERSIES .............................................................................28
Section 9.5 WITHHOLDING ...................................................................................29
ARTICLE X ADMISSION OF PARTNERS .................................................................................29
Section 10.1 ADMISSION OF PARTNERS .........................................................................29
Section 10.2 ADMISSION OF SUBSTITUTED LIMITED PARTNERS .....................................................29
Section 10.3 ADMISSION OF ADDITIONAL LIMITED PARTNERS ......................................................30
Section 10.4 ADMISSION OF SUCCESSOR OR TRANSFEREE GENERAL PARTNER ..........................................30
Section 10.5 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP .................................30
ARTICLE XI WITHDRAWAL OR REMOVAL OF PARTNERS ....................................................................31
Section 11.1 WITHDRAWAL OF THE GENERAL PARTNER .............................................................31
Section 11.2 REMOVAL OF THE GENERAL PARTNER ................................................................32
Section 11.3 INTEREST OF DEPARTING PARTNER .................................................................32
Section 11.4 WITHDRAWAL OF A LIMITED PARTNER ...............................................................33
ARTICLE XII DISSOLUTION AND LIQUIDATION .........................................................................33
Section 12.1 DISSOLUTION ...................................................................................33
Section 12.2 CONTINUATION OF THE BUSINESS OF THE PARTNERSHIP AFTER DISSOLUTION .............................34
Section 12.3 LIQUIDATOR ....................................................................................35
Section 12.4 LIQUIDATION ...................................................................................35
Section 12.5 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP ............................................36
Section 12.6 RETURN OF CONTRIBUTIONS .......................................................................36
Section 12.7 WAIVER OF PARTITION ...........................................................................36
ARTICLE XIII AMENDMENT OF PARTNERSHIP AGREEMENT .................................................................36
Section 13.1 AMENDMENT TO BE ADOPTED SOLELY BY THE GENERAL PARTNER .........................................36
Section 13.2 AMENDMENT PROCEDURES ..........................................................................37
Section 13.3 PROHIBITED AMENDMENTS .........................................................................38
ARTICLE XIV MERGER ..............................................................................................38
Section 14.1 AUTHORITY .....................................................................................38
Section 14.2 PROCEDURE FOR MERGER OR CONSOLIDATION .........................................................38
Section 14.3 APPROVAL BY LIMITED PARTNERS OF MERGER OR CONSOLIDATION .......................................39
Section 14.4 CERTIFICATE OF MERGER .........................................................................40
Section 14.5 EFFECT OF MERGER ..............................................................................40
ARTICLE XV GENERAL PROVISIONS ...................................................................................40
Section 15.1 ADDRESSES AND NOTICES .........................................................................40
Section 15.2 FURTHER ACTION ................................................................................40
Section 15.3 BINDING EFFECT ................................................................................41
Section 15.4 INTEGRATION ...................................................................................41
Section 15.5 CREDITORS .....................................................................................41
Section 15.6 WAIVER ........................................................................................41
Section 15.7 COUNTERPARTS ..................................................................................41
Section 15.8 APPLICABLE LAW ................................................................................41
Section 15.9 INVALIDITY OF PROVISIONS ......................................................................41
Section 15.10 CONSENT OF PARTNERS ...........................................................................41
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AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
K-SEA OPERATING PARTNERSHIP L.P.
This AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of K-SEA
OPERATING PARTNERSHIP L.P., dated as of January 14, 2004, is entered into by and
between K-Sea OLP GP, LLC, a
Delaware limited liability company, as the General
Partner, and K-Sea Transportation Partners L.P., a
Delaware limited partnership,
as the Limited Partner, together with any other Persons who hereafter become
Partners in the Partnership or parties hereto as provided herein.
R E C I T A L S:
- - - - - - - -
WHEREAS, K-Sea OLP GP, LLC and K-Sea Transportation Partners L.P. formed
the Partnership pursuant to the Agreement of Limited Partnership of K-Sea
Operating Partnership L.P. dated as of August 29, 2003 (the "PRIOR AGREEMENT")
and a Certificate of Limited Partnership, which was filed with the Secretary of
State of the State of
Delaware on such date; and
WHEREAS, the Partners of the Partnership now desire to amend the Prior
Agreement to reflect additional contributions by the Partners and certain other
matters.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements contained herein, the parties hereto hereby amend the Prior Agreement
and, as so amended, restate it in its entirety as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. The following definitions shall be for
all purposes, unless otherwise clearly indicated to the contrary, applied to the
terms used in this Agreement. Capitalized terms used herein but not otherwise
defined shall have the meanings assigned to such terms in the MLP Agreement.
"ADDITIONAL LIMITED PARTNER" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 10.3 and who is shown
as such on the books and records of the Partnership.
"AFFILIATE" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question. 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.
"AGREEMENT" means this Amended and Restated Agreement of Limited
Partnership of K-Sea Operating Partnership L.P., as it may be amended,
supplemented or restated from time to time.
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"ASSETS" means all assets conveyed, contributed or otherwise
transferred, including any transfers of assets pursuant to the mergers set
forth in the Contribution Agreement, to the Partnership Group prior to or
on the Closing Date pursuant to the Contribution Agreement.
"ASSIGNEE" means a Person to whom one or more Limited Partner
Interests have been transferred in a manner permitted under this Agreement,
but who has not been admitted as a Substituted Limited Partner.
"ASSOCIATE" means, when used to indicate a relationship with any
Person, (a) any corporation or organization of which such Person is a
director, officer or partner or is, directly or indirectly, the owner of
20% or more of any class of voting stock or other voting interest; (b) any
trust or other estate in which such Person has at least a 20% beneficial
interest or as to which such Person serves as trustee or in a similar
fiduciary capacity; and (c) any relative or spouse of such Person, or any
relative of such spouse, who has the same principal residence as such
Person.
"AVAILABLE CASH" means, with respect to any Quarter ending prior to
the Liquidation Date:
(a) the sum of (i) all cash and cash equivalents of the Partnership
on hand at the end of such Quarter, and (ii) all additional cash and cash
equivalents of the Partnership on hand on the date of determination of Available
Cash with respect to such Quarter resulting from Working Capital Borrowings made
subsequent to the end of such Quarter, less
(b) the amount of any cash reserves that is necessary or appropriate
in the reasonable discretion of the General Partner to (i) provide for the
proper conduct of the business of the Partnership (including reserves for future
capital expenditures and for anticipated future credit needs of the Partnership)
subsequent to such Quarter, (ii) comply with applicable law or any loan
agreement, 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 and (iii) provide funds for distributions under Section 6.4
or Section 6.5 of the MLP Agreement in respect of any one or more of the next
four Quarters; provided, however, that the General Partner may not establish
cash reserves pursuant to (iii) above if the effect of such reserves would be
that the MLP is unable to distribute the Minimum Quarterly Distribution on all
Common Units, plus any Cumulative Common Unit Arrearage on all Common Units,
with respect to such Quarter; and, provided further, that disbursements made by
a Group Member or cash reserves established, increased or reduced after the end
of such Quarter but on or before the date of determination of Available Cash
with respect to such Quarter shall be deemed to have been made, established,
increased or reduced, for purposes of determining Available Cash, within such
Quarter if the General Partner so determines.
Notwithstanding the foregoing, "AVAILABLE CASH" with respect to the
Quarter in which the Liquidation Date occurs and any subsequent Quarter shall
equal zero.
"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
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in Section 7.2, as such Certificate of Limited Partnership may be amended,
supplemented or restated from time to time.
"CLOSING DATE" means the first date on which Common Units are sold by
the MLP to the Underwriters pursuant to the provisions of the Underwriting
Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended and in
effect from time to time. Any reference herein to a specific section or
sections of the Code shall be deemed to include a reference to any
corresponding provision of any successor law.
"COMMISSION" means the United States Securities and Exchange
Commission.
"CONTRIBUTION AGREEMENT" means that certain Contribution, Conveyance
and Assumption Agreement, dated as of the Closing Date, among the
Partnership, the MLP, K-Sea Transportation LLC, and certain other parties,
together with the additional conveyance documents and instruments
contemplated or referenced thereunder.
"
DELAWARE ACT" means the
Delaware Revised Uniform Limited Partnership
Act, 6 Del. C. Section 17-101 ET SEQ., as amended, supplemented or restated
from time to time, and any successor to such statute.
"DEPARTING PARTNER" means a former General Partner from and after the
effective date of any withdrawal or removal of such former General Partner
pursuant to Section 11.1 or Section 11.2.
"EVENT OF WITHDRAWAL" has the meaning assigned to such term in Section
11.1(a).
"GENERAL PARTNER" means K-Sea OLP GP, LLC and its successors and
permitted assigns as general partner of the Partnership.
"GENERAL PARTNER INTEREST" means the ownership interest of the General
Partner in the Partnership (in its capacity as a general partner) and
includes any and all benefits to which the General Partner is entitled as
provided in this Agreement, together with all obligations of the General
Partner to comply with the terms and provisions of this Agreement.
"GROUP MEMBER" means a member of the Partnership Group.
"INDEMNITEE" means (a) the General Partner, (b) any Departing Partner,
(c) any Person who is or was an Affiliate of the General Partner or any
Departing Partner, (d) any individual who is or was a director, officer or
manager of any Person which any of the preceding clauses of this definition
describes or (e) any Person the General Partner designates as an
"Indemnitee" for purposes of this Agreement.
"INITIAL OFFERING" means the initial offering and sale of Common Units
to the public, as described in the Registration Statement.
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"LIMITED PARTNER" means any Person that is admitted to the Partnership
as a limited partner pursuant to the terms and conditions of this
Agreement; but the term "Limited Partner" shall not include any Person from
and after the time such Person withdraws as a Limited Partner from the
Partnership.
"LIMITED PARTNER INTEREST" means the ownership interest of a Limited
Partner or Assignee in the Partnership and includes any and all benefits to
which such Limited Partner or Assignee is entitled as provided in this
Agreement, together with all obligations of such Limited Partner or
Assignee to comply with the terms and provisions of this Agreement.
"LIQUIDATION DATE" means (a) in the case of an event giving rise to
the dissolution of the Partnership of the type described in clauses (a) and
(b) of the first sentence of Section 12.2, the date on which the applicable
time period during which the Partners have the right to elect to
reconstitute the Partnership and continue its business has expired without
such an election being made, and (b) in the case of any other event giving
rise to the dissolution of the Partnership, the date on which such event
occurs.
"LIQUIDATOR" means one or more Persons selected by the General Partner
to perform the functions described in Section 12.3 as liquidating trustee
of the Partnership within the meaning of the
Delaware Act.
"MARAD GUARANTEED INDEBTEDNESS" means all liabilities described in the
Security Agreement, Contract No. MA-13781, dated June 7, 2002, as amended
and supplemented, as originally executed among K-Sea Transportation LLC, EW
Holding Corp. and the Secretary, and assumed by the MLP and the Partnership
relating to the obligations designated "United State Government Guaranteed
Ship Financing Obligations, K-Sea Series 2002-1, 2002-2, 2002-3 and 2002-4"
in the original aggregate principal amount of $40,441,000 to finance the
construction of the vessels identified as DBL 81 (official number 1132231),
DBL 82 (official number 1137538), DBL 101 (official number 1119760) and
Hull Number 422, to be known as DBL 102.
"MARITIME LAWS" has the meaning assigned to such term in Section 4.4.
"MERGER AGREEMENT" has the meaning assigned to such term in Section
14.1.
"MLP" means K-Sea Transportation Partners L.P., a
Delaware limited
partnership.
"MLP AGREEMENT" means the Second Amended and Restated Agreement of
Limited Partnership of K-Sea Transportation Partners L.P., as it may be
amended, supplemented or restated from time to time.
"MLP GENERAL PARTNER" means K-Sea General Partner L.P., a
Delaware
limited partnership and the general partner of the MLP.
"OLP SUBSIDIARY" means a Subsidiary of the Partnership.
4
"OMNIBUS AGREEMENT" means that Omnibus Agreement, dated as of the
Closing Date, among K-Sea Investors L.P., New K-Sea Transportation LLC,
K-Sea Acquisition Corp., New EW Holding Corp., New K-Sea Transportation
Corp., the MLP General Partner, K-Sea General Partner GP LLC, the MLP, the
General Partner and the Partnership.
"OPINION OF COUNSEL" means a written opinion of counsel (who may be
regular counsel to the Partnership or the General Partner or any of its
Affiliates) acceptable to the General Partner in its reasonable discretion.
"PARTNERS" means the General Partner and the Limited Partners.
"PARTNERSHIP" means K-Sea Operating Partnership L.P., a
Delaware
limited partnership, and any successors thereto.
"PARTNERSHIP GROUP" means the Partnership and all OLP Subsidiaries,
treated as a single consolidated entity.
"PARTNERSHIP INTEREST" means an interest of a Partner in the
Partnership, which shall include the General Partner Interest and the
Limited Partner Interest(s).
"PARTNERSHIP SECURITY" means any class or series of equity interest in
the Partnership (but excluding any options, rights, warrants and
appreciation rights relating to an equity interest in the Partnership).
"PERCENTAGE INTEREST" means the percentage interest in the Partnership
owned by each Partner upon completion of the transactions in Section 5.2
and shall mean, (a) as to the General Partner, 0.01% and (b) as to the MLP,
99.99%.
"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.
"PRIOR AGREEMENT" has the meaning assigned to such term in the
Recitals.
"QUARTER" means, unless the context requires otherwise, a fiscal
quarter, or, with respect to the first fiscal quarter after the Closing
Date, the portion of such fiscal quarter after the Closing Date, of the
Partnership.
"REGISTRATION STATEMENT" means the Registration Statement on Form S-1
(Registration No. 333-107084) as it has been or as it may be amended or
supplemented from time to time, filed by the MLP with the Commission under
the Securities Act to register the offering and sale of the Common Units in
the Initial Offering.
"SECRETARY" means the Secretary of the United States Department of
Transportation acting by and through the Maritime Administrator pursuant to
Title XI of the Merchant Marine Act of 1936, as amended.
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"SECURITIES ACT" means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to such
statute.
"SUBSIDIARY" means, with respect to any Person, (a) a corporation of
which more than 50% of the voting power of shares entitled (without regard
to the occurrence of any contingency) to vote in the election of directors
or other governing body of such corporation is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person or a combination thereof, (b) a partnership
(whether general or limited) in which such Person or a Subsidiary of such
Person is, at the date of determination, a general or limited partner of
such partnership, but only if more than 50% of the partnership interests of
such partnership (considering all of the partnership interests of the
partnership as a single class) is owned, directly or indirectly, at the
date of determination, by such Person, by one or more Subsidiaries of such
Person, or a combination thereof, or (c) any other Person (other than a
corporation or a partnership) in which such Person, one or more
Subsidiaries of such Person, or a combination thereof, directly or
indirectly, at the date of determination, has (i) at least a majority
ownership interest or (ii) the power to elect or direct the election of a
majority of the directors or other governing body of such Person.
"SUBSTITUTED LIMITED PARTNER" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 10.2 in place of and
with all the rights of a Limited Partner and who is shown as a Limited
Partner on the books and records of the Partnership.
"SURVIVING BUSINESS ENTITY" has the meaning assigned to such term in
Section 14.2(b).
"TRANSFER" has the meaning assigned to such term in Section 4.1(a) for
the purposes set forth in such section.
"UNDERWRITER" means each Person named as an underwriter in Schedule I
to the Underwriting Agreement who purchases Common Units pursuant thereto.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement, dated
January 8, 2004, among the Underwriters, the MLP, the Partnership and
certain other parties, providing for the purchase of Common Units by such
Underwriters.
"U.S. CITIZEN" means (a) an individual who is native-born,
naturalized, a derivative citizen of the United States, or otherwise
qualifies as a United States citizen; (b) a partnership or limited
partnership of which all of its general partners are citizens of the United
States and at least 75% of the interest in the partnership is Owned by
citizens of the United States; (c) a trust whereby each of its trustees is
a citizen of the United States, each beneficiary with an enforceable
interest in the trust is a citizen of the United States, and at least 75%
of the equity interest in the trust is Owned by citizens of the United
States; (d) an association or joint venture if each of its members is a
citizen of the United States; (e) a corporation if (I) it is incorporated
under the laws of the United States or of a State of the United States or a
political subdivision thereof, Guam, Puerto Rico,
6
the Virgin Islands, American Samoa, the District of Columbia, the Northern
Mariana Islands, or any other territory or possession of the United States,
(II) its chief executive officer, by whatever title, and its chairman of
the board of directors are citizens of the United States, (III) no more of
its directors are non-citizens than a minority of the number necessary to
constitute a quorum, and (IV) at least 75% of the interest in the
corporation is Owned by citizens of the United States; (f) a governmental
entity that is an entity of the federal government of the United States or
of the government of a State of the United States or a political
subdivision thereof, Guam, Puerto Rico, the Virgin Islands, American Samoa,
the District of Columbia, the Northern Mariana Islands, or any other
territory or possession of the United States, all as further defined in
Subpart C (Sections 67.30-67.47) of Title 46 of the Code of Federal
Regulations, as amended, modified or supplemented. With respect to a
limited liability company, a "U.S. Citizen" shall mean an entity that meets
the requirements of subclause (b) above, and, if the limited liability
company has a chief financial officer, by whatever title, or a board of
directors, then it shall also meet such relevant requirements of subclause
(e) above. As used in this definition, a Person shall be deemed the "owner"
of, or to "own" ownership interests to the extent such ownership interests
are (a) owned beneficially or held of record (with the power to act on
behalf of the beneficial owner), with respect to any class of stock, by
such Person; (b) may be voted by such Person; (c) entitled to distributions
or dividends in respect of such ownership interests by such Person; or (d)
which by any other means whatsoever controlled by such Person, or in which
control is permitted to be exercised by such Person, with the General
Partner being authorized to determine reasonably the meaning of such
control for this purpose under the guidelines set forth in Subpart C
(Sections 67.30-67.47) of Title 46 of the Code of Federal Regulations, as
amended, modified or supplemented).
"U.S. GAAP" means United States generally accepted accounting
principles consistently applied.
"WITHDRAWAL OPINION OF COUNSEL" has the meaning assigned to such term
in Section 11.1(b).
"WORKING CAPITAL BORROWINGS" means borrowings used solely for working
capital purposes or to pay distributions to Partners made pursuant to a
credit facility or other arrangement to the extent all such borrowings are
required to be reduced to a relatively small amount each year (or for the
year in which the Initial Offering is consummated, the 12-month period
beginning on the Closing Date) for an economically meaningful period of
time.
Section 1.2 CONSTRUCTION. 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) the term
"include" or "includes" means includes, without limitation, and "including"
means including, without limitation.
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ARTICLE II
ORGANIZATION
Section 2.1 FORMATION. The General Partner and the MLP previously
formed the Partnership as a limited partnership pursuant to the provisions of
the Delaware Act, and hereby amend and restate the Prior Agreement in its
entirety. This amendment and restatement shall become effective on the date of
this Agreement. Except as expressly provided to the contrary in this Agreement,
the rights, duties (including fiduciary duties), liabilities and obligations of
the Partners and the administration, dissolution and termination of the
Partnership shall be governed by the Delaware 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.
Section 2.2 NAME. The name of the Partnership shall be "K-Sea
Operating Partnership L.P." The Partnership's business may be conducted under
any other name or names deemed necessary or appropriate by the General Partner
in its sole discretion, including the name of the General Partner. The words
"Limited Partnership," "L.P.," "Ltd." or similar words or letters shall be
included in the Partnership's name where necessary for the purpose of complying
with the laws of any jurisdiction that so requires. The General Partner 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.
Section 2.3 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE;
OTHER OFFICES. Unless and until changed by the General Partner, the registered
office of the Partnership in the State of Delaware shall be located at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the registered agent for service
of process on the Partnership in the State of Delaware at such registered office
shall be The Corporation Trust Company. The principal office of the Partnership
shall be located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or
such other place as the General Partner may from time to time designate by
notice to the Limited Partners. The Partnership may maintain offices at such
other place or places within or outside the State of Delaware as the General
Partner deems necessary or appropriate. The address of the General Partner shall
be ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other place as
the General Partner may from time to time designate by notice to the Limited
Partners.
Section 2.4 PURPOSE AND BUSINESS. The purpose and nature of the
business to be conducted by the Partnership shall be to (a) acquire, manage,
operate and sell the Assets and any similar assets or properties now or
hereafter acquired by the Partnership, (b) engage directly in, or enter into or
form any corporation, partnership, joint venture, limited liability company or
other arrangement to engage indirectly in, any business activity that the
Partnership is permitted to engage in, or any type of business or activity
engaged in by the General Partner prior to the Closing Date and, in connection
therewith, to exercise all of the rights and powers conferred upon the
Partnership pursuant to the agreements relating to such business activity, (c)
engage directly in, or enter into or form any corporation, partnership, joint
venture, limited liability company or other arrangement to engage indirectly in,
any business activity that is approved by the General Partner and that lawfully
may be conducted by a limited partnership organized pursuant to the Delaware 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
8
activity; and (d) do anything necessary or appropriate to the foregoing,
including the making of capital contributions or loans to a Group Member, the
MLP or any Subsidiary of the MLP. The General Partner has no obligation or duty
to the Partnership, the Limited Partners or the Assignees to propose or approve,
and in its discretion may decline to propose or approve, the conduct by the
Partnership of any business.
Section 2.5 POWERS. The Partnership shall be empowered to do 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.
Section 2.6 POWER OF ATTORNEY.
(a) Each Limited Partner and each Assignee hereby constitutes and
appoints the General Partner and, if a Liquidator shall have been selected
pursuant to Section 12.3, the Liquidator (and any successor to the Liquidator by
merger, transfer, assignment, election or otherwise) and each of their
authorized officers and attorneys-in-fact, as the case may be, with full power
of substitution, as its true and lawful agent and attorney-in-fact, with full
power and authority in its name, place and stead, to:
(i) execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (A) all certificates, documents
and other instruments (including this Agreement and the Certificate of
Limited Partnership and all amendments or restatements hereof or thereof)
that the General Partner or the Liquidator deems necessary or appropriate
to form, qualify or continue the existence or qualification of the
Partnership as a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware and in all other
jurisdictions in which the Partnership may conduct business or own
property; (B) all certificates, documents and other instruments that the
General Partner or the Liquidator deems necessary or appropriate to
reflect, in accordance with its terms, any amendment, change, modification
or restatement of this Agreement; (C) all certificates, documents and other
instruments (including conveyances and a certificate of cancellation) that
the General Partner or the Liquidator deems necessary or appropriate to
reflect the dissolution and liquidation of the Partnership pursuant to the
terms of this Agreement; (D) all certificates, documents and other
instruments relating to the admission, withdrawal, removal or substitution
of any Partner pursuant to, or other events described in, Article IV, X, XI
or XII; (E) all certificates, documents and other instruments relating to
the determination of the rights, preferences and privileges of any class or
series of Partnership Interests issued pursuant hereto; and (F) all
certificates, documents and other instruments (including agreements and a
certificate of merger) relating to a merger 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
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
9
necessary or appropriate, in the discretion of the General Partner or the
Liquidator, to effectuate the terms or intent of this Agreement; provided,
that when required by any provision of this Agreement that establishes a
percentage of the Limited Partners or of the Limited Partners of any class
or series required to take any action, the General Partner and the
Liquidator may exercise the power of attorney made in this Section
2.6(a)(ii) only after the necessary vote, consent or approval of the
Limited Partners or of the Limited Partners of such class or series, as
applicable.
Nothing contained in this Section 2.6(a) shall be construed as authorizing
the General Partner to amend this Agreement except in accordance with Article
XIII or as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive and, to
the maximum extent permitted by law, not be affected by the subsequent death,
incompetency, disability, incapacity, dissolution, bankruptcy or termination of
any Limited Partner or Assignee and the transfer of all or any portion of such
Limited Partner's or Assignee's Partnership Interest and shall extend to such
Limited Partner's or Assignee's heirs, successors, assigns and personal
representatives. Each such Limited Partner or Assignee hereby agrees to be bound
by any representation made by the General Partner or the Liquidator acting in
good faith pursuant to such power of attorney; and each such Limited Partner or
Assignee, to the maximum extent permitted by law, hereby waives any and all
defenses that may be available to contest, negate or disaffirm the action of the
General Partner or the Liquidator taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver to the
General Partner or the Liquidator, within 15 days after receipt of the request
therefor, such further designation, powers of attorney and other instruments as
the General Partner or the Liquidator deems necessary to effectuate this
Agreement and the purposes of the Partnership.
Section 2.7 TERM. The term of the Partnership commenced upon the
filing of the Certificate of Limited Partnership in accordance with the Delaware
Act and shall continue in existence until the dissolution of the Partnership in
accordance with the provisions of Article XII. The existence of the Partnership
as a separate legal entity shall continue until the cancellation of the
Certificate of Limited Partnership as provided in the Delaware Act.
Section 2.8 TITLE TO PARTNERSHIP ASSETS. Title to Partnership
assets, whether real, personal or mixed and whether tangible or intangible,
shall be deemed to be owned by the Partnership as an entity, and no Partner or
Assignee, individually or collectively, shall have any ownership interest in
such Partnership assets or any portion thereof. Title to any or all of the
Partnership assets may be held in the name of the Partnership, the General
Partner, one or more of its Affiliates or one or more nominees, as the General
Partner may determine. The General Partner hereby declares and warrants that any
Partnership assets for which record title is held in the name of the General
Partner or one or more of its Affiliates or one or more nominees shall be held
by the General Partner or such Affiliate or nominee for the use and benefit of
the Partnership in accordance with the provisions of this Agreement; provided,
however, that the General Partner shall use reasonable efforts to cause record
title to such assets (other than those assets in respect of which the General
Partner determines that the expense and difficulty of conveyancing makes
transfer of record title to the Partnership impracticable) to be vested in the
10
Partnership as soon as reasonably practicable; provided, further, that, prior to
any withdrawal or removal of the General Partner or as soon thereafter as
practicable, the General Partner shall use reasonable efforts to effect the
transfer of record title to the Partnership and, prior to any such transfer,
will provide for the use of such assets in a manner satisfactory to the General
Partner. All Partnership assets shall be recorded as the property of the
Partnership in its books and records, irrespective of the name in which record
title to such Partnership assets is held.
ARTICLE III
RIGHTS OF LIMITED PARTNERS
Section 3.1 LIMITATION OF LIABILITY. The Limited Partners and the
Assignees shall have no liability under this Agreement except as expressly
provided in this Agreement or the Delaware Act.
Section 3.2 MANAGEMENT OF BUSINESS. No Limited Partner or Assignee,
in its capacity as such, shall participate in the control of the Partnership's
business (within the meaning of the Delaware Act), transact any business in the
Partnership's name or have the power to sign documents for or otherwise bind the
Partnership. Any action taken by any Affiliate of the General Partner or any
officer, director, employee, manager, member, general partner, agent or trustee
of the General Partner or any of its Affiliates, or any officer, director,
employee, manager, member, general partner, agent or trustee of a Group Member,
in its capacity as such, shall not be deemed to be participation in the control
of the business of the Partnership by a limited partner of the Partnership
(within the meaning of the Delaware Act) and shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or Assignees
under this Agreement.
Section 3.3 OUTSIDE ACTIVITIES OF THE LIMITED PARTNERS. Subject to
the provisions of Article II, the Omnibus Agreement and any other agreement
between a Group Member and a Limited Partner or an Assignee, 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.
Section 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 income tax returns for each
year, if any;
11
(iii) to have furnished to it a current list of the name and
last known business, residence or mailing address of each Partner;
(iv) to have furnished to it 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 Capital Contribution
by each Partner and that each Partner has agreed to contribute in the
future, and the date on which each became a Partner; and
(vi) to obtain such other information regarding the affairs
of the Partnership as is just and reasonable.
(b) The General Partner may keep confidential from the Limited
Partners and Assignees, for such period of time as the General Partner deems
reasonable, (i) any information that the General Partner reasonably believes to
be in the nature of trade secrets or (ii) other information the disclosure of
which the General Partner in good faith believes (A) is not in the best
interests of the 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
TRANSFERS OF PARTNERSHIP INTERESTS
Section 4.1 TRANSFER GENERALLY.
(a) The term "transfer," when used in this Agreement with respect to
a Partnership Interest, shall be deemed to refer to a transaction by which the
General Partner assigns its General Partner Interest to another Person who
becomes the General Partner or by which the holder of a Limited Partner Interest
assigns such Limited Partner Interest to another Person who is or becomes a
Limited Partner (or an Assignee), and includes a sale, assignment, gift, 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 stockholder, member, partner or other owner of the General
Partner of any or all of the shares of stock, membership interests, partnership
interests or other ownership interests in the General Partner.
12
Section 4.2 TRANSFER OF THE GENERAL PARTNER'S GENERAL PARTNER
INTEREST. No provision of this Agreement shall be construed to prevent (and the
Limited Partners do hereby expressly consent to) (i) the transfer by the General
Partner of all or a portion of its General Partner Interest to one or more
Affiliates, which transferred General Partner Interest, to the extent not
transferred to a successor General Partner, shall constitute a Limited Partner
Interest or (ii) the transfer by the General Partner, in whole and not in part,
of its General Partner Interest upon (a) its merger, consolidation or other
combination into any other Person or the transfer by it of all or substantially
all of its assets to another Person or (b) sale of all or substantially all of
the membership interests of the General Partner by its members if, in the case
of a transfer described in either clause (i) or (ii) of this sentence, the
rights and duties of the General Partner with respect to the General Partner
Interest so transferred are assumed by the transferee and the transferee agrees
to be bound by the provisions of this Agreement; PROVIDED, HOWEVER, that in
either such case, the transferee is a U.S. Citizen and is primarily controlled,
directly or indirectly, by the MLP or the MLP General Partner or any Person
primarily controlling, directly or indirectly, the MLP or the MLP General
Partner; PROVIDED, FURTHER, that in either such case, such transferee furnishes
to the Partnership an Opinion of Counsel that such merger, consolidation,
combination, transfer or assumption will not result in a loss of limited
liability of any Limited Partner or cause the Partnership to be taxable as a
corporation or otherwise to be taxed as an entity for federal income tax
purposes (to the extent not already so treated or taxed). In the case of a
transfer pursuant to this Section 4.2 to a Person proposed as a successor
general partner of the Partnership, the transferee or successor (as the case may
be) shall, subject to compliance with the terms of Section 10.4, be admitted to
the Partnership as the General Partner immediately prior to the transfer of the
Partnership Interest, and the business of the Partnership shall continue without
dissolution.
Section 4.3 TRANSFER OF A LIMITED PARTNER'S PARTNERSHIP INTEREST. A
Limited Partner may transfer all, but not less than all, of its Partnership
Interest as a Limited Partner in connection with the merger, consolidation or
other combination of such Limited Partner with or into any other Person or the
transfer by such Limited Partner of all or substantially all of its assets to
another Person and, following any such transfer, such Person may become a
Substituted Limited Partner pursuant to Article X; PROVIDED, HOWEVER, that in
either such case, the transferee is a U.S. Citizen. Except as set forth in the
immediately preceding sentence, or in connection with any pledge of (or any
related foreclosure on) a Partnership Interest of a Limited Partner solely for
the purpose of securing, directly or indirectly, indebtedness of the Partnership
or the MLP, a Limited Partner may not transfer all or any part of its
Partnership Interest or withdraw from the Partnership.
Section 4.4 RESTRICTIONS ON TRANSFERS.
(a) Notwithstanding the other provisions of this Article IV, no
transfer of any Partnership Interest shall be made if such transfer would (i)
violate the then applicable federal or state securities laws or the rules and
regulations of the Commission, any state securities commission or any other
governmental authority with jurisdiction over such transfer, (ii) terminate the
existence or qualification of the Partnership or the MLP under the laws of the
jurisdiction of its formation, (iii) cause the Partnership or the MLP to be
treated as an association taxable as a corporation or otherwise to be taxed as
an entity for federal income tax purposes (to the extent not already so treated
or taxed) or (iv) violate the citizenship requirements of the
13
Merchant Marine Act of 1936, as amended, and the Shipping Act of 1916, as
amended, and the regulations promulgated thereunder, for purposes of operating
vessels in the U.S. coastwise trade (collectively, the "MARITIME LAWS") (with
any amendments to the Maritime Laws relating to the citizenship of U.S. vessel
owners or operators of coastwise trade vessels being deemed incorporated herein
by reference).
The General Partner may impose restrictions on the transfer of Partnership
Interests if a subsequent Opinion of Counsel determines that such restrictions
are necessary to avoid a significant risk of the Partnership or the MLP becoming
taxable as a corporation or otherwise to be taxed as an entity for federal
income tax purposes. The restrictions may be imposed by making such amendments
to this Agreement as the General Partner may determine to be necessary or
appropriate to impose such restrictions.
ARTICLE V
CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
Section 5.1 INITIAL CONTRIBUTIONS. In connection with the
formation of the Partnership under the Delaware Act, the General Partner made an
initial Capital Contribution to the Partnership in the amount of $0.10 in
exchange for an interest in the Partnership and was admitted as General Partner,
and the MLP made an initial Capital Contribution to the Partnership in the
amount of $999.90 in exchange for an interest in the Partnership and was
admitted as a Limited Partner.
Section 5.2 CONTRIBUTIONS PURSUANT TO THE CONTRIBUTION AGREEMENT.
(a) Contributions and conveyances (by merger and otherwise) of cash
and assets (and specified liabilities) have been made to the Partnership,
pursuant to the Contribution Agreement and as agreed to by the MLP, the General
Partner and their affiliates.
(b) Following the foregoing transactions, the General Partner owns a
0.01% Partnership Interest as General Partner and the MLP owns a 99.99%
Partnership Interest as a Limited Partner.
Section 5.3 ADDITIONAL CAPITAL CONTRIBUTIONS. With the consent of
the General Partner, any Limited Partner may, but shall not be obligated to,
make additional Capital Contributions to the Partnership. Contemporaneously with
the making of any Capital Contributions by a Limited Partner, in addition to
those provided in Sections 5.1 and 5.2, the General Partner shall be obligated
to make an additional Capital Contribution to the Partnership in an amount equal
to 0.01/99.99 multiplied by the amount of the additional Capital Contribution
then made by such Limited Partner. Except as set forth in the immediately
preceding sentence and in Article XII, the General Partner shall not be
obligated to make any additional Capital Contributions to the Partnership.
Section 5.4 INTEREST AND WITHDRAWAL. No interest shall be paid by
the Partnership on Capital Contributions. No Partner or Assignee shall be
entitled to the withdrawal or return of its Capital Contribution, except to the
extent, if any, that distributions made pursuant to this Agreement or upon
termination of the Partnership may be considered as such by law and then only to
the extent provided for in this Agreement. Except to the extent expressly
provided
14
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.
Section 5.5 LOANS FROM PARTNERS. Loans by a Partner to the
Partnership shall not constitute Capital Contributions. If any Partner shall
advance funds to the Partnership in excess of the amounts required hereunder to
be contributed by it to the capital of the Partnership, the making of such
excess advances shall not result in any increase in the amount of the Capital
Account of such Partner. The amount of any such excess advances shall be a debt
obligation of the Partnership to such Partner and shall be payable or
collectible only out of the Partnership assets in accordance with the terms and
conditions upon which such advances are made.
Section 5.6 ISSUANCES OF ADDITIONAL PARTNERSHIP SECURITIES.
(a) The Partnership may issue additional Partnership Securities and
options, rights, warrants and appreciation rights relating to the Partnership
Securities for any Partnership purpose at any time and from time to time to such
Persons for such consideration and on such terms and conditions as shall be
established by the General Partner in its sole discretion. The issuance by the
Partnership of Partnership Securities or rights, warrants or appreciation rights
in respect thereof shall be deemed an amendment to this Agreement.
(b) Each additional Partnership Security authorized to be issued by
the Partnership pursuant to Section 5.6(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 General Partner in 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 each Partnership Security
will be issued, evidenced by certificates and assigned or transferred; (vii) the
method for determining Percentage Interests as to such Partnership Security; and
(viii) the right, if any, of each such Partnership Security to vote on
Partnership matters, including matters relating to the relative designations,
preferences, rights, powers and duties of such Partnership Security.
(c) The General Partner is hereby authorized and directed to take all
actions that it deems necessary or appropriate in connection with (i) each
issuance of Partnership Securities and options, rights, warrants and
appreciation rights relating to Partnership Securities pursuant to this Section
5.6, (ii) the admission of Additional Limited Partners and (iii) all additional
issuances of Partnership Securities. The General Partner is further authorized
and directed to specify the relative rights, powers and duties of the holders of
the Partnership Interests or other Partnership Securities being so issued. The
General Partner shall do all things necessary to comply with the Delaware Act
and is authorized and directed to do all things it deems necessary or advisable
in connection with any future issuance of Partnership Securities,
15
including compliance with any statute, rule, regulation or guideline of any
federal, state or other governmental agency and with Maritime Laws.
Section 5.7 LIMITED PREEMPTIVE RIGHTS. Except as provided in
Section 5.3, no Person shall have preemptive, preferential or other similar
rights with respect to (a) additional Capital Contributions; (b) issuance or
sale of any class or series of Partnership Interests, whether unissued, held in
the treasury or hereafter created; (c) issuance of any obligations, evidences of
indebtedness or other securities of the Partnership convertible into or
exchangeable for, or carrying or accompanied by any rights to receive, purchase
or subscribe to, any such Partnership Interests; (d) issuance of any right of
subscription to or right to receive, or any warrant or option for the purchase
of, any such Partnership Interests; or (e) issuance or sale of any other
securities that may be issued or sold by the Partnership.
Section 5.8 FULLY PAID AND NON-ASSESSABLE NATURE OF LIMITED PARTNER
INTERESTS. All Limited Partner Interests issued pursuant to, and in accordance
with the requirements of, this Article V shall be fully paid and non-assessable
Limited Partner Interests, except as such non-accessibility may be affected by
Section 17-607 of the Delaware Act.
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
Section 6.1 ALLOCATIONS. The items of income, gain, loss and
deduction that are recognized by the Partnership for federal, state, or local
income tax purposes shall be allocated among the Partners in proportion to their
respective Percentage Interests or as required by applicable law as determined
by the General Partner.
Section 6.2 DISTRIBUTIONS.
(a) Within 45 days following the end of each Quarter commencing with
the Quarter ending on March 31, 2004, 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 in accordance with their respective Percentage Interests. The
immediately preceding sentence shall not require any distribution of cash if and
to the extent such distribution would be prohibited by applicable law or by any
loan agreement, security agreement, mortgage, debt instrument or other agreement
or obligation to which the Partnership is a party or by which it is bound or its
assets are subject. All distributions required to be made under this Agreement
shall be made subject to Section 17-607 of the Delaware Act.
(b) Notwithstanding Section 6.2(a), in the event of the dissolution
and liquidation of the Partnership, all receipts received during or after the
Quarter in which the Liquidation Date occurs, other than from borrowings
described in (a)(ii) of the definition of Available Cash, shall be applied and
distributed solely in accordance with, and subject to the terms and conditions
of, Section 12.4.
(c) The General Partner shall have the discretion to treat taxes paid
by the Partnership on behalf of, or amounts withheld with respect to, all or
less than all of the Partners, as a distribution of Available Cash to such
Partners.
16
(d) Each Partner agrees to subordinate any distributions that such
Partner is entitled to receive pursuant to Section 6.2 or 12.4 to the prior
payment of any amounts due on the MARAD Guaranteed Indebtedness; provided that
the foregoing does not restrict the ability of the Partnership to make
distributions of Available Cash pursuant to Section 6.2 to the extent otherwise
permitted by the terms of the MARAD Guaranteed Indebtedness. In the event and
during the continuation of a default or event of default under the MARAD
Guaranteed Indebtedness, each Partner agrees to subordinate any distributions
that such Partner is entitled to receive pursuant to Section 6.2 or 12.4 and any
other amounts owed such Partner by the Partnership to the prior payment of any
amounts due on the MARAD Guaranteed Indebtedness.
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
Section 7.1 MANAGEMENT.
(a) The General Partner shall conduct, direct and manage all
activities of the Partnership. Except as otherwise expressly provided in this
Agreement, all management powers over the business and affairs of the
Partnership shall be exclusively vested in the General Partner, and no Limited
Partner or Assignee shall have any management power over the business and
affairs of the Partnership. In addition to the powers now or hereafter granted a
general partner of a limited partnership under applicable law or that are
granted to the General Partner under any other provision of this Agreement, the
General Partner, subject to Section 7.3, shall have full power and authority to
do all things and on such terms as it, in its sole discretion, may deem
necessary or appropriate to conduct the business of the Partnership, to exercise
all powers set forth in Section 2.5 and to effectuate the purposes set forth in
Section 2.4, including the following:
(i) the making of any expenditures, the lending or
borrowing of money, the assumption or guarantee of, or other contracting
for, indebtedness and other liabilities, the issuance of evidences of
indebtedness, including indebtedness that is convertible into a Partnership
Interest, and the incurring of any other obligations;
(ii) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other agencies
having jurisdiction over the business or assets of the Partnership;
(iii) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the assets of the
Partnership or the merger or other combination of the Partnership with or
into another Person (the matters described in this clause (iii) being
subject, however, to any prior approval that may be required by Section
7.3);
(iv) the use of the assets of the Partnership (including
cash on hand) for any purpose consistent with the terms of this Agreement,
including the financing of the conduct of the operations of the MLP and any
member of the Partnership Group; subject to Section 7.6, the lending of
funds to other Persons (including the MLP and any member of the Partnership
Group); the repayment or guarantee of obligations of the MLP or any
17
member of the Partnership Group and the making of capital contributions to
any member of the Partnership Group;
(v) the negotiation, execution and performance of any
contracts, conveyances or other instruments (including instruments that
limit the liability of the Partnership under contractual arrangements to
all or particular assets of the Partnership, with the other party to the
contract to have no recourse against the General Partner or its assets
other than its interest in the Partnership, even if same results in the
terms of the transaction being less favorable to the Partnership than would
otherwise be the case);
(vi) the distribution of Partnership cash (subject to
Section 6.2);
(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, limited
liability companies or other relationships subject to the restrictions set
forth in Section 2.4;
(x) the control of any matters affecting the rights and
obligations of the Partnership, including the bringing and defending of
actions at law or in equity and otherwise engaging in the conduct of
litigation, arbitration or mediation 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
(i) the undertaking of any action in connection with the
Partnership's participation in its Subsidiaries as the sole member or
stockholder.
(b) Notwithstanding any other provision of this Agreement, the MLP
Agreement, the Delaware Act or any applicable law, rule or regulation, each of
the Partners and the Assignees and each other Person who may acquire an interest
in the Partnership hereby (i) approves, ratifies and confirms the execution,
delivery and performance by the parties thereto of this Agreement, the
Underwriting Agreement, the Omnibus Agreement, the Contribution Agreement and
the other agreements and documents described in or filed as exhibits to the
Registration Statement that are related to the transactions contemplated by the
Registration Statement; (ii) agrees that the General Partner (on its own or
through any officer of the Partnership) is authorized to execute, deliver and
perform the agreements referred to in clause (i) of this sentence, as
applicable, and the other agreements, acts, transactions and matters described
in or contemplated by the Registration Statement on behalf of the Partnership
without any further act, approval or vote of the Partners or the Assignees or
the other Persons who may acquire an
18
interest in the Partnership; and (iii) agrees that the execution, delivery or
performance by the General Partner, the MLP, any Group Member or any Affiliate
of any of them, of this Agreement or any agreement authorized or permitted under
this Agreement (including the exercise by the General Partner or any Affiliate
of the General Partner of the rights accorded pursuant to Article XV), shall not
constitute a breach by the General Partner of any duty that the General Partner
may owe the Partnership or the Limited Partners or any other Persons under this
Agreement (or any other agreements) or of any duty stated or implied by law or
equity.
Section 7.2 CERTIFICATE OF LIMITED PARTNERSHIP. The General
Partner has caused the Certificate of Limited Partnership to be filed with the
Secretary of State of the State of Delaware as required by the Delaware Act. The
General Partner shall use all reasonable efforts to cause to be filed such other
certificates or documents as may be determined by the General Partner in its
sole discretion to be reasonable and necessary or appropriate for the formation,
continuation, qualification and operation of a limited partnership (or a
partnership in which the limited 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 General
Partner in its sole discretion to be reasonable and necessary or appropriate,
the General Partner shall file amendments to and restatements of the Certificate
of Limited Partnership and do all things to maintain the Partnership as a
limited partnership (or a partnership or other entity in which the limited
partners have limited liability) under the laws of the State of Delaware or of
any other state in which the Partnership may elect to do business or own
property. Subject to the terms of Section 3.4(a), the General Partner shall not
be required, before or after filing, to deliver or mail a copy of the
Certificate of Limited Partnership, any qualification document or any amendment
thereto to any Limited Partner or Assignee.
Section 7.3 RESTRICTIONS ON THE GENERAL PARTNER'S AUTHORITY.
(a) The General Partner may not, without written approval of the
specific act by the Limited Partners or by other written instrument executed and
delivered by the Limited Partners subsequent to the date of this Agreement, take
any action in contravention of this Agreement, including, except as otherwise
provided in this Agreement, (i) committing any act that would make it impossible
to carry on the ordinary business of the Partnership; (ii) possessing
Partnership property, or assigning any rights in specific Partnership property,
for other than a Partnership purpose; (iii) admitting a Person as a Partner;
(iv) amending this Agreement in any manner; or (v) transferring its General
Partner Interest (except as otherwise allowed in Section 4.2).
(b) Except as provided in Articles XII and XIV, the General Partner
may not sell, exchange or otherwise dispose of all or substantially all of the
Partnership's assets in a single transaction or a series of related transactions
(including by way of merger, consolidation or other combination) or approve on
behalf of the Partnership the sale, exchange or other disposition of all or
substantially all of the assets of the Partnership, without the approval of the
Limited Partners; provided, however that this provision shall not preclude or
limit the General Partner's ability to mortgage, pledge, hypothecate or ▇▇▇▇▇ ▇
▇▇▇▇, encumbrance or security interest in all or substantially all of the assets
of the Partnership and shall not apply to any forced sale of any or all of the
assets of the Partnership pursuant to the foreclosure of, or other realization
upon, any such encumbrance.
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Section 7.4 REIMBURSEMENT OF THE GENERAL PARTNER.
(a) Except as provided in this Section 7.4 and elsewhere in this
Agreement, the General Partner shall not be compensated for its services as
general partner of the Partnership or as general partner or managing member of
any Group Member.
(b) The General Partner shall be reimbursed on a monthly basis, or
such other reasonable basis as the General Partner may determine in its sole
discretion, for (i) all direct and indirect expenses it incurs or payments it
makes on behalf of the Partnership (including salary, bonus, incentive
compensation and other amounts paid to any Person including Affiliates of the
General Partner to perform services for the Partnership or for the General
Partner in the discharge of its duties to the Partnership), and (ii) all other
necessary or appropriate expenses allocable to the Partnership or otherwise
reasonably incurred by the General Partner in connection with operating the
Partnership's business (including expenses allocated to the General Partner by
its Affiliates). The General Partner shall determine the expenses that are
allocable to the Partnership in any reasonable manner determined by the General
Partner in its sole discretion. Reimbursements pursuant to this Section 7.4
shall be in addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 7.7.
(c) Subject to Section 5.7, the General Partner, in its sole
discretion and without the approval of the Limited Partners (who shall have no
right to vote in respect thereof), may propose and adopt on behalf of the
Partnership employee benefit plans, employee programs and employee practices, or
cause the Partnership to issue Partnership Interests in connection with or
pursuant to any employee benefit plan, employee program or employee practice
maintained or sponsored by the General Partner or any of its Affiliates, in each
case for the benefit of employees of the General Partner, any Group Member or
any Affiliate, or any of them, in respect of services performed, directly or
indirectly, for the benefit of the Partnership Group. Expenses incurred by the
General Partner in connection with any such plans, programs and practices shall
be reimbursed in accordance with Section 7.4(b). Any and all obligations of the
General Partner under any employee benefit plans, employee programs or employee
practices adopted by the General Partner as permitted by this Section 7.4(c)
shall constitute obligations of the General Partner hereunder and shall be
assumed by any successor General Partner approved pursuant to Section 11.1 or
11.2 or the transferee of or successor to all of the General Partner's General
Partner Interest pursuant to Section 4.2.
Section 7.5 OUTSIDE ACTIVITIES.
(a) After the Closing Date, the General Partner, for so long as it is
the General Partner of the Partnership, (i) agrees that its sole business will
be to act as the general partner of the Partnership and a general partner or
managing member, as the case may be, of any other partnership or limited
liability company of which the Partnership is, directly or indirectly, a partner
or member, and to undertake activities that are ancillary or related thereto,
and (ii) shall not engage in any business or activity or incur any debts or
liabilities except in connection with or incidental to (A) its performance as
general partner of the Partnership or one or more Group Members or as described
in or contemplated by the Registration Statement or (B) the acquiring, owning or
disposing of debt or equity securities in any Group Member.
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(b) Except as specifically restricted by Section 7.5(a), the Omnibus
Agreement and any other agreement between an Indemnitee and a Group Member, each
Indemnitee (other than the General Partner) shall have the right to engage in
businesses of every type and description and other activities for profit and to
engage in and possess an interest in other business ventures of any and every
type or description, whether in businesses engaged in or anticipated to be
engaged in by the MLP or any Group Member, independently or with others,
including business interests and activities in direct competition with the
business and activities of the MLP or any Group Member, and none of the same
shall constitute a breach of this Agreement or any duty express or implied by
law to the MLP or any Group Member or any Partner or Assignee. Neither the MLP,
any Group Member, any Limited Partner nor any other Person shall have any rights
by virtue of this Agreement, the MLP Agreement, the limited liability company or
partnership agreements of any other Group Member or the partnership relationship
established hereby or thereby in any business ventures of any Indemnitee.
(c) Subject to the terms of Section 7.5(a), Section 7.5(b) and the
Omnibus Agreement, but otherwise notwithstanding anything to the contrary in
this Agreement, (i) the engaging in competitive activities by any Indemnitee
(other than the General Partner) in accordance with the provisions of this
Section 7.5 is hereby approved by the Partnership and all Partners, (ii) it
shall be deemed not to be a breach of the General Partner's fiduciary duty or
any other obligation of any type whatsoever of the General Partner for the
Indemnitees (other than the General Partner) to engage in such business
interests and activities in preference to or to the exclusion of the Partnership
and (iii) except as set forth in the Omnibus Agreement, the Indemnitees shall
have no obligation to present business opportunities to the Partnership.
(d) The General Partner and any of its Affiliates may acquire Units
or other MLP securities and, except as otherwise provided in this Agreement,
shall be entitled to exercise all rights relating to such Units or MLP
securities.
(e) The term "Affiliates" when used in Section 7.5(a) and Section
7.5(d) with respect to the General Partner shall not include (i) any Group
Member or any Subsidiary of the MLP or any Group Member or (ii) FS Private
Investments LLC and its affiliated funds, any subsequent funds managed by ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or funds managed by an entity controlled by
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
(f) Anything in this Agreement to the contrary notwithstanding, to
the extent that provisions of Sections 7.7, 7.8, 7.9, 7.10 or other Sections of
this Agreement purport or are interpreted to have the effect of restricting the
fiduciary duties that might otherwise, as a result of Delaware or other
applicable law, be owed by the General Partner to the Partnership and its
Limited Partners, or to constitute a waiver or consent by the Limited Partners
to any such restriction, such provisions shall be inapplicable and have no
effect in determining whether the General Partner has complied with its
fiduciary duties in connection with determinations made by it under this Section
7.5.
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Section 7.6 LOANS FROM THE GENERAL PARTNER; LOANS OR CONTRIBUTIONS
FROM THE PARTNERSHIP; CONTRACTS WITH AFFILIATES; CERTAIN RESTRICTIONS ON THE
GENERAL PARTNER.
(a) The General Partner or any of its Affiliates may lend to the MLP
or any Group Member, and the MLP or any Group Member may borrow from the General
Partner or any of its Affiliates, funds needed or desired by the MLP or the
Group Member for such periods of time and in such amounts as the General Partner
may determine; provided, however, that in any such case the lending party may
not charge the borrowing party interest at a rate greater than the rate that
would be charged the borrowing party or impose terms less favorable to the
borrowing party 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 General
Partner or any of its Affiliates (other than the MLP or another Group Member).
The Partnership may lend or contribute to any Group Member, and any Group Member
may borrow from the Partnership, funds on terms and conditions established in
the sole discretion of the General Partner; provided, however, that the
Partnership may not charge the Group Member interest at a rate less than the
rate that would be charged to the Group Member (without reference to the General
Partner's financial abilities or guarantees) by unrelated lenders on comparable
loans. The foregoing authority shall be exercised by the General Partner in its
sole discretion and shall not create any right or benefit in favor of any Group
Member or any other Person.
(b) The General Partner may itself, or may enter into an agreement
with the MLP General Partner or any of its Affiliates to, render services to a
Group Member or to the General Partner in the discharge of its duties as general
partner of the Partnership. Any services rendered to a Group Member by the
General Partner, the MLP General Partner or any of their Affiliates shall be on
terms that are fair and reasonable to the Partnership; PROVIDED, HOWEVER, that
the requirements of this Section 7.6(b) shall be deemed satisfied as to (i) any
transaction approved by Special Approval, (ii) any transaction, the terms of
which are no less favorable to the Partnership 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(b).
(c) 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.
(d) Neither the General Partner nor any of its Affiliates shall sell,
transfer or convey any property to, or purchase any property from, the
Partnership, directly or indirectly, except pursuant to transactions that are
fair and reasonable to the Partnership; PROVIDED, HOWEVER, that the requirements
of this Section 7.6(d) shall be deemed to be satisfied as to (i) the
22
transactions effected pursuant to Sections 5.2 and 5.3, the Contribution
Agreement and any other transactions described in or contemplated by the
Registration Statement, (ii) any transaction approved by Special Approval, (iii)
any transaction, the terms of which are no less favorable to the Partnership
than those generally being provided to or available from unrelated third
parties, or (iv) any transaction that, taking into account the totality of the
relationships between the parties involved (including other transactions that
may be particularly favorable or advantageous to the Partnership Group), is
equitable to the Partnership.
(e) The General Partner and its Affiliates will have no obligation to
permit any Group Member to use any facilities or assets of the General Partner
and its Affiliates, except as may be provided in contracts entered into from
time to time specifically dealing with such use, nor shall there be any
obligation on the part of the General Partner or its Affiliates to enter into
such contracts.
(f) Without limitation of Sections 7.6(a) through 7.6(e), and
notwithstanding anything to the contrary in this Agreement, the existence of the
conflicts of interest described in the Registration Statement are hereby
approved by all Partners.
Section 7.7 INDEMNIFICATION.
(a) To the fullest extent permitted by law but subject to the
limitations expressly provided in this Agreement, all Indemnitees shall be
indemnified and held harmless by the Partnership from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest, settlements or
other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, in which
any Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, by reason of its status as an Indemnitee; PROVIDED, that in each case
the Indemnitee acted in good faith and in a manner that such Indemnitee
reasonably believed to be in, or (in the case of a Person other than the General
Partner) not opposed to, the best interests of the Partnership and, with respect
to any criminal proceeding, had no reasonable cause to believe its conduct was
unlawful; PROVIDED, FURTHER, no indemnification pursuant to this Section 7.7
shall be available to the General Partner with respect to its obligations
incurred pursuant to the Underwriting Agreement or the Contribution Agreement
(other than obligations incurred by the General Partner on behalf of the
Partnership). The 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 Partner shall not be personally liable for such indemnification
and shall have no obligation to contribute or loan any monies or property to the
Partnership to enable it to effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including legal
fees 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
23
amount if it shall be determined that the Indemnitee is not entitled to be
indemnified as authorized in this Section 7.7.
(c) The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, both as to actions in the Indemnitee's capacity as an Indemnitee and
as to actions in any other capacity (including any capacity under the
Underwriting Agreement), and shall continue as to an Indemnitee who has ceased
to serve in such capacity and shall inure to the benefit of the heirs,
successors, assigns and administrators of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the
General Partner or its Affiliates for the cost of) insurance, on behalf of the
General Partner, its Affiliates and such other Persons as the General Partner
shall determine, against any liability that may be asserted against or expense
that may be incurred by such Person in connection with the Partnership's
activities or such Person's activities on behalf of the Partnership, regardless
of whether the Partnership would have the power to indemnify such Person against
such liability under the provisions of this Agreement.
(e) For purposes of this Section 7.7, the Partnership shall be deemed
to have requested an Indemnitee to serve as fiduciary of an employee benefit
plan whenever the performance by it of its duties to the Partnership also
imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute "fines" within the meaning of Section 7.7(a); and action taken
or omitted by it with respect to any employee benefit plan in the performance of
its duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
that is in, or not opposed to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(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
24
arising from or relating to matters occurring, in whole or in part, prior to
such amendment, modification or repeal, regardless of when such claims may arise
or be asserted.
Section 7.8 LIABILITY OF INDEMNITEES.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, no Indemnitee shall be liable for monetary damages to the
Partnership, the Limited Partners, the Assignees or any other Persons who have
acquired interests in the Partnership or MLP 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 its obligations and duties as General Partner set
forth in Section 7.1(a), the General Partner may exercise any of the powers
granted to it by this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its agents, and the General Partner
shall not be responsible for any misconduct or negligence on the part of any
such agent appointed by the General Partner in good faith.
(c) To the extent that, at law or in equity, an Indemnitee has duties
(including fiduciary duties) and liabilities relating thereto to the Partnership
or to the Partners, the General Partner and any other Indemnitee acting in
connection with the Partnership's business or affairs shall not be liable to the
Partnership or to any Partner for its good faith reliance on the provisions of
this Agreement. 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 to the Partnership, the Limited Partners, the
General Partner, and the Partnership's and General Partner's directors, officers
and employees 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.
Section 7.9 RESOLUTION OF CONFLICTS OF INTEREST.
(a) Unless otherwise expressly provided in this Agreement or the MLP
Agreement, whenever a potential conflict of interest exists or arises between
the General Partner or any of its Affiliates, on the one hand, and the
Partnership, the MLP, any Partner or any Assignee, on the other, any resolution
or course of action by the General Partner or its Affiliates in respect of such
conflict of interest shall be permitted and deemed approved by all Partners, and
shall not constitute a breach of this Agreement, of the MLP Agreement, of any
agreement contemplated herein or therein, or of any duty stated or implied by
law or equity, if the resolution or course of action is, or by operation of this
Agreement is deemed to be, fair and reasonable to the Partnership. The General
Partner shall be authorized but not required in connection with its resolution
of such conflict of interest to seek Special Approval of 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
25
Approval (as long as the material facts known to the General Partner or any of
its Affiliates regarding any proposed transaction were disclosed to the
Conflicts 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 General Partner may also adopt a resolution or course
of action that has not received Special Approval. The General Partner (including
the Conflicts 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
General Partner (including the Conflicts Committee) determines in its sole
discretion to be relevant, reasonable or appropriate under the circumstances.
Nothing contained in this Agreement, however, is intended to nor shall it be
construed to require the General Partner (including the Conflicts Committee) to
consider the interests of any Person other than the Partnership. In the absence
of bad faith by the General Partner, the resolution, action or terms so made,
taken or provided by the General Partner with respect to such matter shall not
constitute a breach of this Agreement or any other agreement contemplated herein
or a breach of any standard of care or duty imposed herein or therein or, 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 the General Partner or any of its Affiliates is permitted
or required to make a decision (i) in its "sole discretion" or "discretion,"
that it deems "necessary or appropriate" or "necessary or advisable" or under a
grant of similar authority or latitude, except as otherwise provided herein, the
General Partner or such Affiliate shall be entitled to consider only such
interests and factors as it desires and shall have no duty or obligation to give
any consideration to any interest of, or factors affecting, the Partnership, the
MLP, any Limited Partner or any Assignee, (ii) it may make such decision in its
sole discretion (regardless of whether there is a reference to "sole discretion"
or "discretion") unless another express standard is provided for, or (iii) in
"good faith" or under another express standard, the General Partner or such
Affiliate shall act under such express standard and shall not be subject to any
other or different standards imposed by this Agreement, the MLP Agreement, any
other agreement contemplated hereby or under the Delaware Act or any other law,
rule or regulation. In addition, any actions taken by the General Partner or
such Affiliate consistent with the standards of "reasonable discretion" set
forth in the definition of Available Cash shall not constitute a breach of any
duty of the General Partner to the Partnership or the Limited Partners. The
General Partner 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 the
General Partner shall be deemed to constitute a breach of any duty of the
General Partner to the Partnership or the Limited Partners by reason of the fact
that the purpose or effect of such borrowing is directly or indirectly to (A)
enable distributions to the General Partner or its Affiliates to exceed 0.01% of
the total amount distributed to all Partners or (B) hasten the
26
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 Limited Partner hereby authorizes the General Partner, on
behalf of the Partnership as a partner or member of a Group Member, to approve
of actions by the general partner or managing member of such Group Member
similar to those actions permitted to be taken by the General Partner pursuant
to this Section 7.9.
Section 7.10 OTHER MATTERS CONCERNING THE GENERAL PARTNER.
(a) The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion (including an Opinion of Counsel) of such Persons as to matters
that the General Partner reasonably believes to be within such Person's
professional or expert competence shall be conclusively presumed to have been
done or omitted in good faith and in accordance with such opinion.
(c) The General Partner shall have the right, in respect of any of
its powers or obligations hereunder, to act through any of its duly authorized
officers, a duly appointed attorney or attorneys-in-fact or the duly authorized
officers of the Partnership.
(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 Partner to act under this Agreement or any other agreement contemplated
by this Agreement and to make any decision pursuant to the authority prescribed
in this Agreement, so long as such action is reasonably believed by the General
Partner to be in, or not inconsistent with, the best interests of the
Partnership.
Section 7.11 RELIANCE BY THIRD PARTIES. Notwithstanding anything to
the contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner and any officer of the General
Partner authorized by the General Partner to act on behalf of and in the name of
the Partnership has full power and authority to encumber, sell or otherwise use
in any manner any and all assets of the Partnership and to enter into any
authorized contracts on behalf of the Partnership, and such Person shall be
entitled to deal with the General Partner or any such officer as if it were the
Partnership's sole party in interest, both legally and beneficially. Each
Limited Partner hereby waives any and all defenses or other remedies that may be
available against such Person to contest, negate or disaffirm any action of
27
the General Partner or any such officer in connection with any such dealing. In
no event shall any Person dealing with the General Partner or any such officer
or its representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the necessity or expedience
of any act or action of the General Partner or any such officer or its
representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (a) at the time of the execution and
delivery of such certificate, document or instrument, this Agreement was in full
force and effect, (b) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on
behalf of the Partnership and (c) such certificate, document or instrument was
duly executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.
ARTICLE VIII
BOOKS, RECORDS AND ACCOUNTING
Section 8.1 RECORDS AND ACCOUNTING. The General Partner shall keep
or cause to be kept at the principal office of the Partnership appropriate books
and records with respect to the Partnership's business, including all books and
records necessary to provide to the Limited Partners any information required to
be provided pursuant to Section 3.4(a). Any books and records maintained by or
on behalf of the Partnership in the regular course of its business, including
books of account and records of Partnership proceedings, may be kept on, or be
in the form of, computer disks, hard drives, punch cards, magnetic tape,
photographs, micrographics or any other information storage device; PROVIDED,
that the books and records so maintained are convertible into clearly legible
written form within a reasonable period of time. The books of the Partnership
shall be maintained, for financial reporting purposes, on an accrual basis in
accordance with U.S. GAAP.
Section 8.2 FISCAL YEAR. The fiscal year of the Partnership shall
be a fiscal year ending December 31.
ARTICLE IX
TAX MATTERS
Section 9.1 DISREGARDED ENTITY. For federal income tax purposes,
the Partnership is intended to be disregarded as an entity separate from the MLP
pursuant to Treas. Reg. 301.7701-3.
Section 9.2 TAX RETURNS. The Partnership shall timely file any
returns of the Partnership that are required for federal, state or local income
tax purposes on the basis of the accrual method and a taxable year ending on
December 31.
Section 9.3 TAX ELECTIONS. The General Partner shall determine
whether the Partnership should make any elections permitted under state or local
law.
Section 9.4 TAX CONTROVERSIES. Subject to the provisions hereof,
the General Partner is authorized and required to represent the Partnership (at
the Partnership's expense) in connection with all examinations of the
Partnership's affairs by state or local tax authorities to
28
the extent permitted by applicable law, including resulting administrative and
judicial proceedings, and to expend Partnership funds for professional services
and costs associated therewith. Each Partner agrees to cooperate with the
General Partner and to do or refrain from doing any or all things reasonably
required by the General Partner to conduct such proceedings.
Section 9.5 WITHHOLDING. Notwithstanding any other provision of
this Agreement, the General Partner is authorized to take any action that it
determines in its discretion to be necessary or appropriate to cause the
Partnership and other Group Members to comply with any withholding requirements
established under federal, state or local law. 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, the amount withheld may at the discretion of the
General Partner be treated by the Partnership as a distribution of cash pursuant
to Section 6.3 in the amount of such withholding from such Partner.
ARTICLE X
ADMISSION OF PARTNERS
Section 10.1 ADMISSION OF PARTNERS. Upon the consummation of the
transfers and conveyances described in Section 5.2, the General Partner shall be
the sole general partner of the Partnership and the MLP shall be the sole
limited partner of the Partnership.
Section 10.2 ADMISSION OF SUBSTITUTED LIMITED PARTNERS. By transfer
of a Limited Partner Interest in accordance with Article IV, the transferor
shall be deemed to have given the transferee the right to seek admission as a
Substituted Limited Partner subject to the conditions of, and in the manner
permitted under, this Agreement. A transferor of a Limited Partner Interest
shall, however, only have the authority to convey to a purchaser or other
transferee (a) the right to negotiate such Limited Partner Interest to a
purchaser or other transferee and (b) the right to request admission as a
Substituted Limited Partner to such purchaser or other transferee in respect of
the transferred Limited Partner Interests. Each transferee of a Limited Partner
Interest shall be an Assignee and be deemed to have applied to become a
Substituted Limited Partner with respect to the Limited Partner Interests so
transferred to such Person. Such Assignee shall become a Substituted Limited
Partner (x) at such time as the General Partner consents thereto, which consent
may be given or withheld in the 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 remain an Assignee. An Assignee shall
have an interest in the Partnership equivalent to that of a Limited Partner with
respect to allocations and distributions, including liquidating distributions,
of the Partnership. With respect to voting rights attributable to Limited
Partner Interests that are held by Assignees, the General Partner shall be
deemed to be the Limited Partner with respect thereto and shall, in exercising
the voting rights in respect of such Limited Partner Interests on any matter,
vote such Limited Partner Interests at the written direction of the Assignee. If
no such written direction is received, such Partnership Interests will not be
voted. An Assignee shall have no other rights of a Limited Partner.
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Section 10.3 ADMISSION OF ADDITIONAL LIMITED PARTNERS.
(a) A Person that is a U.S. Citizen (other than the General Partner,
the MLP or a Substituted Limited Partner) who makes a Capital Contribution to
the Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the General
Partner:
(i) evidence of acceptance in form satisfactory to the
General Partner of all of the terms and conditions of this Agreement,
including the power of attorney granted in Section 2.6, and
(ii) such other documents or instruments as may be required
in the discretion of the General Partner to effect such Person's admission
as an Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section 10.3, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's discretion. The admission of any Person as an Additional Limited
Partner shall become effective on the date upon which the name of such Person is
recorded as such in the books and records of the Partnership, following the
consent of the General Partner to such admission.
Section 10.4 ADMISSION OF SUCCESSOR OR TRANSFEREE GENERAL PARTNER. A
successor General Partner approved pursuant to Section 11.1 or Section 11.2 or
the transferee of or successor to all of the General Partner's Partnership
Interest pursuant to Section 4.2 who is proposed to be admitted as a successor
General Partner shall, subject to compliance with the terms of Section 11.3, if
applicable, be admitted to the Partnership as the General Partner, effective
immediately prior to the withdrawal or removal of the predecessor or
transferring General Partner pursuant to Section 11.1 or Section 11.2 or the
transfer of the General Partner Interest pursuant to Section 4.2; PROVIDED,
HOWEVER, that no such successor shall be admitted to the Partnership until
compliance with the terms of Section 4.2 has occurred and such successor has
executed and delivered such other documents or instruments as may be required to
effect such admission. Any such successor shall, subject to the terms hereof,
carry on the business of the members of the Partnership Group without
dissolution.
Section 10.5 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED
PARTNERSHIP. To effect the admission to the Partnership of any Partner, the
General Partner shall take all steps necessary and appropriate under the
Delaware Act to amend the records of the Partnership to reflect such admission
and, if necessary, to prepare as soon as practicable an amendment to this
Agreement and, if required by law, the General Partner shall prepare and file an
amendment to the Certificate of Limited Partnership, and the General Partner may
for this purpose, among others, exercise the power of attorney granted pursuant
to Section 2.6.
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ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
Section 11.1 WITHDRAWAL OF THE GENERAL PARTNER.
(a) The General Partner shall be deemed to have withdrawn from the
Partnership upon the occurrence of any one of the following events (each such
event herein referred to as an "Event of Withdrawal");
(i) The General Partner voluntarily withdraws from the
Partnership by giving written notice to the other Partners;
(ii) The General Partner transfers all of its rights as
General Partner pursuant to Section 4.2;
(iii) The General Partner is removed pursuant to Section
11.2;
(iv) The General Partner (A) makes a general assignment for
the benefit of creditors; (B) files a voluntary bankruptcy petition for
relief under Chapter 7 of the United States Bankruptcy Code; (C) files a
petition or answer seeking for itself a liquidation, dissolution or similar
relief (but not a reorganization) under any law; (D) files an answer or
other pleading admitting or failing to contest the material allegations of
a petition filed against the General Partner in a proceeding of the type
described in clauses (A)-(C) of this Section 11.1(a)(iv); or (E) seeks,
consents to or acquiesces in the appointment of a trustee (but not a
debtor-in-possession), receiver or liquidator of the General Partner or of
all or any substantial part of its properties;
(v) A final and non-appealable order of relief under
Chapter 7 of the United States Bankruptcy Code is entered by a court with
appropriate jurisdiction pursuant to a voluntary or involuntary petition by
or against the General Partner; or
(vi) (A) in the event the General Partner is a corporation,
a certificate of dissolution or its equivalent is filed for the General
Partner, or 90 days expire after the date of notice to the General Partner
of revocation of its charter without a reinstatement of its charter, under
the laws of its state of incorporation; (B) in the event the General
Partner is a partnership or limited liability company, the dissolution and
commencement of winding up of the General Partner; (C) in the event the
General Partner is acting in such capacity by virtue of being a trustee of
a trust, the termination of the trust; (D) in the event the General Partner
is a natural person, his death or adjudication of incompetency; and (E)
otherwise in the event of the termination of the General Partner.
If an Event of Withdrawal specified in Section 11.1(a)(iv), (v) or (vi)(A),
(B), (C) or (E) occurs, the withdrawing General Partner shall give notice to the
Limited Partners within 30 days after such occurrence. The Partners hereby agree
that only the Events of Withdrawal described in this Section 11.1 shall result
in the withdrawal of the General Partner from the Partnership.
(b) Withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal shall not constitute a breach of this
Agreement under the
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following circumstances: (i) at any time during the period beginning on the
Closing Date and ending at 12:00 midnight, Eastern Standard Time, on December
31, 2013, the General Partner voluntarily withdraws by giving at least 90 days'
advance notice of its intention to withdraw to the Limited Partners; PROVIDED
that prior to the effective date of such withdrawal, the withdrawal is approved
by the Limited Partners and the General Partner delivers to the Partnership an
Opinion of Counsel ("Withdrawal Opinion of Counsel") that such withdrawal
(following the selection of the successor General Partner) would not result in
the loss of the limited liability of any Limited Partner or of the limited
partners of the MLP or cause the Partnership or the MLP to be treated as an
association taxable as a corporation or otherwise to be taxed as an entity for
federal income tax purposes (to the extent not previously treated as such); (ii)
at any time after 12:00 midnight, Eastern Standard Time, on December 31, 2013,
the General Partner voluntarily withdraws by giving at least 90 days' advance
notice to the Limited Partners, such withdrawal to take effect on the date
specified in such notice; (iii) at any time that the General Partner ceases to
be the General Partner pursuant to Section 11.1(a)(ii) or (iii). If the General
Partner gives a notice of withdrawal pursuant to Section 11.1(a)(i) hereof, the
Limited Partners may, prior to the effective date of such withdrawal, elect a
successor General Partner that is a U.S. Citizen. If, prior to the effective
date of the General Partner's withdrawal, a successor is not selected by the
Limited Partners as provided herein or the Partnership does not receive a
Withdrawal Opinion of Counsel, the Partnership shall be dissolved in accordance
with Section 12.1. Any successor General Partner elected in accordance with the
terms of this Section 11.1 shall be subject to the provisions of Section 10.4.
Section11.2 REMOVAL OF THE GENERAL PARTNER. The General Partner may
be removed by the MLP, provided that the MLP has, prior to such removal, elected
a successor general partner for the Partnership that is a U.S. Citizen. The
admission of any such successor General Partner to the Partnership shall be
subject to the provisions of Section 10.4.
Section 11.3 INTEREST OF DEPARTING PARTNER.
(a) The Partnership Interest of the Departing Partner departing as a
result of withdrawal or removal pursuant to Section 11.1 or 11.2 shall be
purchased by the successor to the Departing Partner for an amount in cash equal
to the fair market value of such Partnership Interest, such amount to be
determined and payable as of the effective date of the Departing Partner's
departure. Such purchase shall be a condition to the admission to the
Partnership of the successor as the General Partner. Any successor General
Partner shall indemnify the Departing Partner as to all debts and liabilities of
the Partnership arising on or after the effective date of the withdrawal or
removal of the Departing Partner.
For purposes of this Section 11.3(a), the fair market value of the
Departing Partner's General Partner Interest shall be determined by agreement
between the Departing Partner and its successor or, failing agreement within 30
days after the effective date of such Departing Partner's departure, by an
independent investment banking firm or other independent expert selected by the
Departing Partner and its successor, which, in turn, may rely on other experts,
and the determination of which shall be conclusive as to such matter. If such
parties cannot agree upon one independent investment banking firm or other
independent expert within 45 days after the effective date of such departure,
then the Departing Partner shall designate an independent investment banking
firm or other independent expert, the Departing Partner's
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successor shall designate an independent investment banking firm or other
independent expert, and such firms or experts shall mutually select a third
independent investment banking firm or independent expert, which third
independent investment banking firm or other independent expert shall determine
the fair market value of the General Partner Interest of the Departing Partner.
In making its determination, such third independent investment banking firm or
other independent expert may consider the value of the Partnership's assets, the
rights and obligations of the Departing Partner and other factors it may deem
relevant.
(b) The Departing Partner shall be entitled to receive all
reimbursements due such Departing Partner pursuant to Section 7.4, including any
employee-related liabilities (including severance liabilities), incurred in
connection with the termination of any employees employed by such Departing
Partner for the benefit of the Partnership.
Section 11.4 WITHDRAWAL OF A LIMITED PARTNER. Without the prior
written consent of the General Partner, which may be granted or withheld in its
sole discretion, and except as provided in Section 4.3, no Limited Partner shall
have the right to withdraw from the Partnership.
ARTICLE XII
DISSOLUTION AND LIQUIDATION
Section 12.1 DISSOLUTION. The Partnership shall not be dissolved by
the admission of Substituted Limited Partners or Additional Limited Partners or
by the admission of a successor General Partner in accordance with the terms of
this Agreement. Upon the removal or withdrawal of the General Partner, if a
successor General Partner is elected pursuant to Section 11.1 or 11.2, the
Partnership shall not be dissolved and such successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
(subject to Section 12.2) its affairs shall be wound up, upon:
(a) an Event of Withdrawal of the General Partner as provided in
Section 11.1(a) (other than Section 11.1(a)(ii)), unless a successor is elected
and a Withdrawal Opinion of Counsel is received as provided in Section 11.1(b)
or 11.2 and such successor is admitted to the Partnership pursuant to Section
10.4;
(b) an election to dissolve the Partnership by the General Partner
that is approved by all of the Limited Partners;
(c) the entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Delaware Act;
(d) the sale of all or substantially all of the assets and properties
of the Partnership Group; or
(e) the dissolution of the MLP.
Notwithstanding anything to the contrary in this Agreement, so long as
any MARAD Guaranteed Indebtedness is outstanding:
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(i) Neither the Partnership nor the General Partner shall
take any action within its control that would result in a dissolution of
the Partnership pursuant to Section 12.1 unless the Limited Partners have
prior thereto taken action to reconstitute the Partnership and continue the
business of the Partnership after such dissolution in accordance with
Section 12.2.
(ii) The MLP will not exercise any right to remove the
General Partner pursuant to Section 11.2 unless it has first elected a
successor General Partner in accordance with such section such that the
removal will not cause a dissolution of the Partnership pursuant to Section
12.1.
Section 12.2 CONTINUATION OF THE BUSINESS OF THE PARTNERSHIP AFTER
DISSOLUTION. Upon dissolution of the Partnership following an Event of
Withdrawal caused by the withdrawal or removal of the General Partner as
provided in Section 11.1(a)(i) or (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, all of the Limited Partners may elect to
reconstitute the Partnership and continue its business on the same terms and
conditions set forth in this Agreement by forming a new limited partnership on
terms identical to those set forth in this Agreement and having as a general
partner a Person that is a U.S. Citizen approved by a majority in interest of
the Limited Partners. In addition, upon dissolution of the Partnership pursuant
to Section 12.1(e), if the MLP is reconstituted pursuant to Section 12.2 of the
MLP Agreement, the reconstituted MLP may, within 180 days after such event of
dissolution, acting alone, regardless of whether there are any other Limited
Partners, elect to reconstitute the Partnership in accordance with the
immediately preceding sentence. Upon any such election by the Limited Partners
or the MLP, as the case may be, all Partners shall be bound thereby and shall be
deemed to have approved same. Unless such an election is made within the
applicable time period as set forth above, the Partnership shall conduct only
activities necessary to wind up its affairs. If such an election is so made,
then:
(a) the reconstituted Partnership shall continue unless earlier
dissolved in accordance with this Article XII;
(b) if the successor General Partner is not the former General
Partner, then the interest of the former General Partner shall be purchased by
the successor General Partner; and
(c) all necessary steps shall be taken to cancel this Agreement and
the Certificate of Limited Partnership and to enter into and, as necessary, to
file, a new partnership agreement and certificate of limited partnership, and
the successor General Partner may for this purpose exercise the powers of
attorney granted the General Partner pursuant to Section 2.6; PROVIDED, that the
right to approve a successor General Partner and to reconstitute and to continue
the business of the Partnership shall not exist and may not be exercised unless
the Partnership has received an Opinion of Counsel that (x) the exercise of the
right would not result in the loss of limited liability of the Limited Partners
or any limited partner of the MLP and (y) neither the Partnership, the
reconstituted limited partnership, the MLP nor any Group Member would be treated
as an association taxable as a corporation or otherwise be taxable as an entity
for federal income tax purposes (to the extent not previously treated as such)
upon the exercise of such right to continue.
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Section 12.3 LIQUIDATOR. Upon dissolution of the Partnership, unless
the Partnership is continued under an election to reconstitute and continue the
Partnership pursuant to Section 12.2, the General Partner shall select one or
more Persons to act as Liquidator. The Liquidator (if other than the General
Partner) shall be entitled to receive such compensation for its services as may
be approved by a majority of the Limited Partners. The Liquidator (if other than
the General Partner) shall agree not to resign at any time without 15 days'
prior notice and may be removed at any time, with or without cause, by notice of
removal approved by a majority in interest of the Limited Partners. Upon
dissolution, removal or resignation of the Liquidator, a successor and
substitute Liquidator (who shall have and succeed to all rights, powers and
duties of the original Liquidator) shall within 30 days thereafter be approved
by at least a majority in interest of the Limited Partners. The right to approve
a successor or substitute Liquidator in the manner provided herein shall be
deemed to refer also to any such successor or substitute Liquidator approved in
the manner herein provided. Except as expressly provided in this Article XII,
the Liquidator approved in the manner provided herein shall have and may
exercise, without further authorization or consent of any of the parties hereto,
all of the powers conferred upon the General Partner under the terms of this
Agreement (but subject to all of the applicable limitations, contractual and
otherwise, upon the exercise of such powers, other than the limitation on sale
set forth in Section 7.3(b)) 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.
Section 12.4 LIQUIDATION. The Liquidator shall proceed to dispose of
the assets of the Partnership, discharge its liabilities, and otherwise wind up
its affairs in such manner and over such period as 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 or distribution of all or some of
the Partnership's assets would be impractical or would cause undue loss to the
Partners. The Liquidator may, 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 the Liquidator as compensation for serving in such capacity
(subject to the terms of Section 12.3) and amounts owed to Partners otherwise
than in respect of their distribution rights under Article VI. With respect to
any liability that is contingent, conditional or unmatured or is otherwise not
yet due and payable, the Liquidator shall either settle such claim for such
amount as it thinks appropriate or establish a reserve of cash or other assets
to provide for its payment. When paid, any unused portion of the reserve shall
be distributed as additional liquidation proceeds.
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(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 their Percentage Interests.
Section 12.5 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP.
Upon the completion of the distribution of Partnership cash and property as
provided in Section 12.4 in connection with the liquidation of the Partnership,
the Partnership shall be terminated and the Certificate of Limited Partnership,
and all qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware, shall be canceled and such other
actions as may be necessary to terminate the Partnership shall be taken.
Section 12.6 RETURN OF CONTRIBUTIONS. The General Partner shall not
be personally liable for, and shall have no obligation to contribute or loan any
monies or property to the Partnership to enable it to effectuate, the return of
the Capital Contributions of the Limited Partners, or any portion thereof, it
being expressly understood that any such return shall be made solely from
Partnership assets.
Section 12.7 WAIVER OF PARTITION. To the maximum extent permitted by
law, each Partner hereby waives any right to partition of the Partnership
property.
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT
Section 13.1 AMENDMENT TO BE ADOPTED SOLELY BY THE GENERAL PARTNER.
Each Partner agrees that the General Partner, without the approval of any
Partner or Assignee, may amend any provision of this Agreement and execute,
swear to, acknowledge, deliver, file and record whatever documents may be
required in connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the
principal place of business of the Partnership, the registered agent of the
Partnership or the registered office of the Partnership;
(b) admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement;
(c) a change that, in the sole discretion of the 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 no
Group Member will be treated as an association taxable as a corporation or
otherwise taxed as an entity for federal income tax purposes (to the extent not
previously treated as such);
(d) a change that, in the discretion of the General Partner, (i) does
not adversely affect the Limited Partners (including any particular class of
Partnership Interests as compared to other classes of Partnership Interests) in
any material respect, (ii) is necessary or advisable to (A) satisfy any
requirements, conditions or guidelines contained in any opinion, directive,
order, ruling or regulation of any federal or state agency or judicial authority
or contained in any federal or state statute (including the Delaware Act) or (B)
facilitate the trading
36
of limited partner interests of the MLP (including the division of any class or
classes of outstanding limited partner interests of the MLP into different
classes to facilitate uniformity of tax consequences within such classes of
limited partner interests of the MLP) or comply with any rule, regulation,
guideline or requirement of any National Securities Exchange on which such
limited partner interests are or will be listed for trading, compliance with any
of which the General Partner determines in its discretion to be in the best
interests of the MLP and the limited partners of the MLP, (iii) is required to
effect the intent expressed in the Registration Statement or the intent of the
provisions of this Agreement or is otherwise contemplated by this Agreement or
(iv) is required to conform the provisions of this Agreement with the provisions
of the MLP Agreement as the provisions of the MLP Agreement may be amended,
supplemented or restated from time to time;
(e) a change in the fiscal year or taxable year of the Partnership
and any changes that, in the discretion of the 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 General Partner shall so determine, a change in
the definition of "Quarter" and the dates on which distributions are to be made
by the Partnership;
(f) an amendment that is necessary, in the Opinion of Counsel, to
prevent the Partnership, or the General Partner or its members, directors,
officers, trustees or agents from in any manner being subjected to the
provisions of the Investment Company Act of 1940, as amended, the Investment
Advisers Act of 1940, as amended, or "plan asset" regulations adopted under the
Employee Retirement Income Security Act of 1974, as amended, regardless of
whether such are substantially similar to plan asset regulations currently
applied or proposed by the United States Department of Labor;
(g) any amendment expressly permitted in this Agreement to be made by
the General Partner acting alone;
(h) an amendment effected, necessitated or contemplated by a Merger
Agreement approved in accordance with Section 14.3;
(i) an amendment that, in the discretion of the 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;
(j) a merger or conveyance pursuant to Section 14.3(d); or
(k) any other amendments substantially similar to the foregoing.
Section 13.2 AMENDMENT PROCEDURES.
(a) Except with respect to amendments of the type described in
Section 13.1 and subject to the additional requirements in Section 13.2(b), all
amendments to this Agreement shall be made in accordance with the following
requirements: Amendments to this Agreement may be proposed only by or with the
consent of the General Partner, which consent may be given
37
or withheld in its sole discretion. A proposed amendment shall be effective upon
its approval by the Limited Partners.
(b) [Reserved]
Section 13.3 PROHIBITED AMENDMENTS. Notwithstanding any provision in
this Agreement to the contrary, neither the General Partner nor the Limited
Partners may amend any provision of this Agreement in violation of the terms of
the MARAD Guaranteed Indebtedness so long as the MARAD Guaranteed Indebtedness
remains outstanding.
ARTICLE XIV
MERGER
Section 14.1 AUTHORITY. The Partnership may merge or consolidate
with one or more corporations, limited liability companies, business trusts or
associations, real estate investment trusts, common law trusts or unincorporated
businesses, including a general partnership or limited partnership, formed under
the laws of the State of Delaware or any other state of the United States of
America, pursuant to a written agreement of merger or consolidation ("Merger
Agreement") in accordance with this Article XIV.
Section 14.2 PROCEDURE FOR MERGER OR CONSOLIDATION. Merger or
consolidation of the Partnership pursuant to this Article XIV requires the prior
approval of the General Partner. If the General Partner shall determine, in the
exercise of its discretion, to consent to the merger or consolidation, the
General Partner shall approve the Merger Agreement, which shall set forth:
(a) the names and jurisdictions of formation or organization of each
of the business entities proposing to merge or consolidate;
(b) the name and jurisdiction of formation or organization of the
business entity that is to survive the proposed merger or consolidation (the
"Surviving Business Entity");
(c) the terms and conditions of the proposed merger or consolidation;
(d) the manner and basis of exchanging or converting the equity
securities of each constituent business entity for, or into, cash, property or
general or limited partner interests, rights, securities or obligations of the
Surviving Business Entity; and (i) if any general or limited partner interests,
securities or rights of any constituent business entity are not to be exchanged
or converted solely for, or into, cash, property or general or limited partner
interests, rights, securities or obligations of the Surviving Business Entity,
the cash, property or general or limited partner interests, rights, securities
or obligations of any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity) that the holders of such general or
limited partner interests, securities or rights are to receive in exchange for,
or upon conversion of their general or limited partner interests, securities or
rights, and (ii) in the case of securities represented by certificates, upon the
surrender of such certificates, which cash, property or general or limited
partner interests, rights, securities or obligations of the Surviving Business
Entity or any general or limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity), or evidences thereof, are to be
delivered;
38
(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 Partner.
Section 14.3 APPROVAL BY LIMITED PARTNERS OF MERGER OR
CONSOLIDATION.
(a) Except as provided in Section 14.3(d), the General Partner, upon
its approval of the Merger Agreement, shall direct that the Merger Agreement be
submitted to a vote of the Limited Partners, whether at a special meeting or by
written consent, in either case in accordance with the requirements of Article
XIII. A copy or a summary of the Merger Agreement shall be included in or
enclosed with the notice of a special meeting or the written consent.
(b) Except as provided in Section 14.3(d), the Merger Agreement shall
be approved upon receiving the affirmative vote or consent of the Limited
Partners.
(c) Except as provided in Section 14.3(d), after such approval by
vote or consent of the Limited Partners, and at any time prior to the filing of
the certificate of merger pursuant to Section 14.4, the merger or consolidation
may be abandoned pursuant to provisions therefor, if any, set forth in the
Merger Agreement.
(d) Notwithstanding anything else contained in this Article XIV or in
this Agreement, the General Partner is permitted, in its discretion, without
Limited Partner approval, to merge the Partnership or any Group Member into, or
convey all of the Partnership's assets to, another limited liability entity that
shall be newly formed and shall have no assets, liabilities or operations at the
time of such Merger other than those it receives from the Partnership or other
Group Member if (i) the General Partner has received an Opinion of Counsel that
the merger or conveyance, as the case may be, would not result in the loss of
the limited liability of any Limited Partner or any limited partner in the MLP
or cause the Partnership or the MLP to be treated as an association taxable as a
corporation or otherwise to be taxed as an entity for federal income tax
purposes (to the extent not previously treated as such), (ii) the sole purpose
of such merger or conveyance is to effect a mere change in the legal form of the
Partnership into another limited liability entity and (iii) the governing
instruments of the new entity provide the Limited Partners and the General
Partner with substantially the same rights and obligations as are herein
contained.
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Section 14.4 CERTIFICATE OF MERGER. Upon the required approval by
the General Partner and the Limited Partners of a Merger Agreement, a
certificate of merger shall be executed and filed with the Secretary of State of
the State of Delaware in conformity with the requirements of the Delaware Act.
Section 14.5 EFFECT OF MERGER.
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the
business entities that has merged or consolidated, and all property, real,
personal and mixed, and all debts due to any of those business entities and
all other things and causes of action belonging to each of those business
entities, shall be vested in the Surviving Business Entity and after the
merger or consolidation shall be the property of the Surviving Business
Entity to the extent they were of each constituent business entity;
(ii) the title to any real property vested by deed or
otherwise in any of those constituent business entities shall not revert
and is not in any way impaired because of the merger or consolidation;
(iii) all rights of creditors and all liens on or security
interests in property of any of those constituent business entities shall
be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent
business entities shall attach to the Surviving Business Entity and may be
enforced against it to the same extent as if the debts, liabilities and
duties had been incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this Article shall
not be deemed to result in a transfer or assignment of assets or liabilities
from one entity to another.
ARTICLE XV
GENERAL PROVISIONS
Section 15.1 ADDRESSES AND NOTICES. Any notice, demand, request,
report or proxy materials required or permitted to be given or made to a Partner
or Assignee under this Agreement shall be in writing and shall be deemed given
or made when delivered in person or when sent by first class United States mail
or by other means of written communication to the Partner or Assignee at the
address appearing on the books and records of the Partnership. Any notice to the
Partnership shall be deemed given if received by the General Partner at the
principal office of the Partnership designated pursuant to Section 2.3. The
General Partner may rely and shall be protected in relying on any notice or
other document from a Partner, Assignee or other Person if believed by it to be
genuine.
Section 15.2 FURTHER ACTION. The parties shall execute and deliver
all documents, provide all information and take or refrain from taking action as
may be necessary or appropriate to achieve the purposes of this Agreement.
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Section 15.3 BINDING EFFECT. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assigns.
Section 15.4 INTEGRATION. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto.
Section 15.5 CREDITORS. None of the provisions of this Agreement
shall be for the benefit of, or shall be enforceable by, any creditor of the
Partnership, except the Secretary with respect to MARAD Guaranteed Indebtedness.
Section 15.6 WAIVER. No failure by any party to insist upon the
strict performance of any covenant, duty, agreement or condition of this
Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute waiver of any breach of any other covenant, duty, agreement or
condition.
Section 15.7 COUNTERPARTS. This Agreement may be executed in
counterparts, all of which together shall constitute an agreement binding on all
the parties hereto, notwithstanding that all such parties are not signatories to
the original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto, independently of the
signature of any other party.
Section 15.8 APPLICABLE LAW. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware, without
regard to the principles of conflicts of law.
Section 15.9 INVALIDITY OF PROVISIONS. If any provision of this
Agreement is or becomes invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
Section 15.10 CONSENT OF PARTNERS. Each Partner hereby expressly
consents and agrees that, whenever in this Agreement it is specified that an
action may be taken upon the affirmative vote or consent of less than all of the
Partners, such action may be so taken upon the concurrence of less than all of
the Partners and each Partner shall be bound by the results of such action.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
GENERAL PARTNER:
K-SEA OLP GP, LLC
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President and Chief Executive
Officer
LIMITED PARTNER:
K-SEA TRANSPORTATION
PARTNERS L.P.
By: K-Sea General Partner L.P.
By: K-Sea General Partner GP LLC
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
as Sole Member
42