EXHIBIT 10.40
JONAH GAS GATHERING COMPANY
AGREEMENT OF PARTNERSHIP
DATED: JUNE 20, 1996
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.01 Act.................................................................1
1.02 Additional Partner..................................................1
1.03 Admission Agreement.................................................1
1.04 Affiliate...........................................................1
1.05 Agreement and Partnership Agreement.................................2
1.06 Assignee............................................................2
1.07 Bankrupt Partner....................................................2
1.08 Book Adjustments....................................................2
1.09 Book Value..........................................................2
1.10 Business Day........................................................2
1.11 Capital Account.....................................................2
1.12 Capital Contribution................................................2
1.13 Code................................................................3
1.14 Commitment..........................................................3
1.15 Contributing Partners...............................................3
1.16 Default Interest Rate...............................................3
1.17 Delinquent Partner..................................................3
1.18 Disposition.........................................................3
1.19 Dissociation........................................................3
1.20 Dissociated Partner.................................................3
1.21 Distribution........................................................3
1.22 Effective Date......................................................4
1.23 Entity..............................................................4
1.24 Expansion...........................................................4
1.25 Fiscal Year.........................................................4
1.26 GAAP................................................................4
1.27 Initial Contribution................................................4
1.28 Initial Partners....................................................4
1.29 Jonah Field Gathering System........................................4
1.30 Liquidating Distribution............................................4
1.31 Majority of the Partners............................................4
1.32 Majority of the Remaining Partners..................................5
1.33 Management Committee................................................5
1.34 Management Right....................................................5
1.35 Managing Partner....................................................5
1.36 Money...............................................................5
1.37 Net Losses and Net Profits..........................................5
1.38 Nonrecourse Liabilities.............................................5
1.39 Notice..............................................................6
1.40 Operating Agreement.................................................6
1.41 Operator............................................................6
1.42 Partner.............................................................6
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1.43 Partner Minimum Gain................................................6
1.44 Partner Nonrecourse Liability.......................................6
1.45 Partnership.........................................................6
1.46 Partnership Interest................................................6
1.47 Partnership Minimum Gain............................................6
1.48 Partnership Nonrecourse Liability...................................7
1.49 Partnership Property................................................7
1.50 Person..............................................................7
1.51 Proceeding..........................................................7
1.52 Property............................................................7
1.53 Regulations.........................................................7
1.54 Related Person......................................................7
1.55 Remaining Partners..................................................7
1.56 Reserves............................................................8
1.57 Revaluation.........................................................8
1.58 Revaluation Date....................................................8
1.59 Revaluation Event...................................................8
1.60 Sharing Ratio.......................................................8
1.61 Substitute Partner..................................................8
1.62 Taxable Year........................................................8
1.63 Taxing Jurisdiction.................................................8
ARTICLE II
FORMATION OF PARTNERSHIP
2.01 Formation...........................................................8
2.02 Filings.............................................................9
2.03 Name................................................................9
2.04 Principal Place of Business.........................................9
2.05 Term................................................................9
2.06 Bank Accounts.......................................................9
ARTICLE III
BUSINESS OF PARTNERSHIP
ARTICLE IV
ACCOUNTING AND RECORDS
4.01 Records to be Maintained...........................................10
4.02 Reports to Partners................................................11
ARTICLE V
MANAGING PARTNER AND RIGHTS AND DUTIES OF PARTNERS
5.01 Management Rights..................................................11
5.02 Managing Partner...................................................12
5.03 Authority of Managing Partner to Bind the Partnership..............12
5.04 Compensation of Managing Partner...................................12
5.05 Managing Partner's Standard of Care................................12
5.06 Indemnification....................................................13
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5.07 Representations and Warranties.....................................13
5.08 Notice of Claims...................................................13
ARTICLE VI
MANAGEMENT COMMITTEE
6.01 Establishment of Committee.........................................13
6.02 Powers and Duties of Management Committee..........................14
6.03 Authority to Vote..................................................14
6.04 Notice of Meeting..................................................14
6.05 Contents of Meeting Notice.........................................14
6.06 Location of Meetings...............................................15
6.07 Managing Partner's Duties for Meetings.............................15
6.08 Voting Procedure...................................................15
6.09 Record of Votes....................................................15
6.10 Minutes............................................................15
6.11 Voting by Notice...................................................15
6.12 Effect of Vote.....................................................16
ARTICLE VII
CONFLICTS OF INTEREST
7.01 Partnership Opportunities..........................................16
7.02 Self Dealing.......................................................16
ARTICLE VIII
CAPITAL CONTRIBUTIONS
8.01 Initial Contributions..............................................17
8.02 Additional Contributions...........................................17
8.03 Enforcement of Commitments.........................................17
8.04 Maintenance of Capital Accounts....................................18
8.05 Distribution of Assets.............................................18
8.06 Sale or Exchange of Interest.......................................18
8.07 Revaluation of Partnership Property................................19
8.08 Compliance with Section 704(b) of the Code.........................19
8.09 Non-Consent Operations.............................................19
ARTICLE IX
ALLOCATION AND DISTRIBUTIONS
9.01 Allocations of Net Profits and Net Losses from Operations..........20
9.02 Partnership Minimum Gain Chargeback................................21
9.03 Partner Minimum Gain Chargeback....................................21
9.04 Qualified Income Offset............................................21
9.05 Interim Distributions..............................................22
9.06 Distributions......................................................22
ARTICLE X
TAXES
10.01 Tax Returns........................................................22
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10.02 Tax Matters Partner................................................22
10.03 Information Request by TMP.........................................23
10.04 TMP Agreements with IRS............................................23
10.05 Inconsistent Treatment of Partnership Item.........................23
10.06 Requests for Administrative Adjustment.............................23
10.07 Judicial Proceedings...............................................24
10.08 Elections..........................................................24
10.09 Taxes of Taxing Jurisdictions......................................24
ARTICLE XI
DISPOSITION OF PARTNERSHIP INTERESTS
11.01 Disposition........................................................25
11.02 Right of First Refusal.............................................25
11.03 Dispositions Not in Compliance With This Article Void..............26
ARTICLE XII
DISSOCIATION OF A PARTNER
12.01 Dissociation.......................................................27
12.02 Purchase of Dissociated Partner's Partnership Interest.............27
12.03 Purchase Price of Dissociated Partner's Partnership Interest.......27
12.04 Damages. 28
ARTICLE XIII
ADMISSION OF ASSIGNEES AND ADDITIONAL PARTNERS
13.01 Rights of Assignees................................................28
13.02 Admission of Substitute Partners...................................28
13.03 Admission of Additional Partners...................................28
ARTICLE XIV
DISSOLUTION AND WINDING UP
14.01 Dissolution........................................................29
14.02 Effect of Dissolution..............................................29
14.03 Distribution of Assets on Dissolution..............................29
ARTICLE XV
AMENDMENT
ARTICLE XVI
MISCELLANEOUS PROVISIONS
16.01 Entire Agreement...................................................30
16.02 Rights of Creditors and Third Parties Under Partnership Agreement..30
16.03 Notices. 30
16.04 Application of Wyoming Law.........................................30
16.05 Entire Agreement...................................................31
16.06 Waiver of Action for Partition.....................................31
16.07 Counterparts.......................................................31
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THIS AGREEMENT OF PARTNERSHIP is executed this 20th day of June, 1996,
by and between Green River Pipeline Limited Liability Company ("Green River"), a
Wyoming limited liability company with a business address of ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and Jonah Pipeline Company ("Jonah"), a Michigan
corporation, with a business address of ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
WHEREAS, Green River and Jonah are the owners of the Jonah Field Gas
Gathering System which is comprised of the real and personal property described
on Exhibit "A-1" attached hereto, said property being hereinafter referred to as
the "Jonah Field Gathering System"; and
WHEREAS, the parties desire to form a general partnership (the
"Partnership") under the Wyoming Uniform Partnership Act, Wyoming Statutes
Annotated, Sections ▇▇-▇▇-▇▇▇, et seq. as the same may be amended from time to
time (the "Act") for the purposes of owning and operating the Jonah Field
Gathering System and for such other purposes hereinafter set forth;
NOW, THEREFORE, in consideration of the agreements and obligations of
the parties set forth herein and for other good and valuable consideration, the
receipt, sufficiency, adequacy and fairness of which being hereby acknowledged,
the parties hereby agree as follows.
ARTICLE I
DEFINITIONS
The following terms used in the Agreement shall (unless otherwise
expressly provided herein) have the following meanings:
1.01 ACT.
"Act" means the Wyoming Uniform Partnership Act, Wyo. Stats. ▇▇▇.
Sections ▇▇-▇▇-▇▇▇, et seq., as amended from time to time. Reference to any
section of the Act shall be deemed to refer to a similar provision in any
amendment to the Act.
1.02 ADDITIONAL PARTNER.
A Partner other than an Initial Partner or a Substitute Partner who has
acquired a Partnership Interest from the Partnership.
1.03 ADMISSION AGREEMENT.
The Agreement governing the admission of an Additional Partner into the
Partnership.
1.04 AFFILIATE.
The term "Affiliate" shall mean when used with reference to a specified
Person any Person which controls the specified Person, which is controlled by
the specified Person, or which
is under common control with the specified Person. Control means the power to
exercise, directly or indirectly, more than fifty percent (50%) of the voting
rights of an Entity.
1.05 AGREEMENT AND PARTNERSHIP AGREEMENT.
"Agreement and "Partnership Agreement" means this Agreement of
Partnership, as originally executed and as amended or restated from time to
time, as the context requires.
1.06 ASSIGNEE.
"Assignee" means a person who has acquired from a Partner, in
accordance with the terms of this Agreement, a beneficial interest in the
Partnership's Profits, Losses, Credits, or Distributions, but who is not a
Substitute Partner.
1.07 BANKRUPT PARTNER.
A Partner who: (1) has become the subject of an Order for Relief under
the United States Bankruptcy Code, (2) has initiated, either in an original
proceeding or by way of answer in any state insolvency or receivership
proceeding, an action for liquidation arrangement, composition, readjustment,
dissolution, or similar relief.
1.08 BOOK ADJUSTMENTS.
Adjustments with respect to the Book Value of Partnership Property for
depreciation, depletion, amortization, and gain or loss, as computed in
accordance with Section 1.704-1(b)(2)(iv)(g) of the Regulations.
1.09 BOOK VALUE.
With respect to Property contributed to the Partnership, the fair
market value of the Property at the time of Contribution as adjusted by Book
Adjustments; with respect to Partnership Property which has been Revalued, the
fair market value of such Partnership Property as adjusted by Book Adjustments.
1.10 BUSINESS DAY.
Any day other than Saturday, Sunday or any legal holiday observed in
the States of Wyoming or Michigan.
1.11 CAPITAL ACCOUNT.
The account maintained for a Partner or Assignee determined in
accordance with Article VIII.
1.12 CAPITAL CONTRIBUTION.
"Capital Contribution" means the total amount of contributions by all
the Partners, of any class of Partners or any one Partner, as the case may be
(or the predecessor holders of the interests of such Partner or Partners), to
the capital of the Partnership in cash, property or
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services for an interest in the Partnership, valued at fair market value without
deduction of selling, organization or other expenses; and shall include all such
contributions to the capital of the Partnership whenever made.
1.13 CODE.
"Code" means the Internal Revenue Code of 1986, as amended, or any
corresponding provision or provisions of succeeding laws.
1.14 COMMITMENT.
The obligation of a Partner or Assignee to make a Capital Contribution
in the future.
1.15 CONTRIBUTING PARTNERS.
Partners making Capital Contributions as a result of the failure of a
Delinquent Partner to perform a Commitment as described in Article VIII.
1.16 DEFAULT INTEREST RATE.
A floating rate equal to the prime rate quoted by Norwest Bank
Colorado, N.A., plus three percent (3%).
1.17 DELINQUENT PARTNER.
A Partner or Assignee who has failed to meet the Commitment of that
Partner or Assignee.
1.18 DISPOSITION.
Any sale, assignment, transfer, exchange, mortgage, pledge, grant,
hypothecation, or other transfer, absolute or as security or encumbrance
(including dispositions by operation of law).
1.19 DISSOCIATION.
Any action which causes a Person to cease to be Partner as described in
Article XII hereof.
1.20 DISSOCIATED PARTNER.
A Person who has ceased to be Partner as a result of Dissociation in
Article XII hereof.
1.21 DISTRIBUTION.
"Distribution" means any cash or property which the Partnership
distributes to a Partner in its capacity as a Partner.
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1.22 EFFECTIVE DATE.
"Effective Date" means June 20, 1996 at 12:01 A.M., Rocky Mountain
Time.
1.23 ENTITY.
"Entity" means any general partnership, limited partnership,
corporation, joint venture, trust, business trust, cooperative, association,
limited liability company, limited liability partnership or any other
organization recognized by the law of Wyoming.
1.24 EXPANSION.
"Expansion" shall mean any extension of the Jonah Field Gathering
System to include acquisition or construction of additional gathering or
delivery points and any increase in the capacity of said System to deliver
natural gas through compression, the use of more or larger pipelines or
otherwise.
1.25 FISCAL YEAR.
"Fiscal Year" means the Partnership's fiscal year, which shall end on
December 31.
1.26 GAAP.
"GAAP" shall mean generally accepted accounting principles as
prescribed from time to time by the Financial Accounting Standards Board.
1.27 INITIAL CONTRIBUTION.
The Contribution agreed to be made by the Initial Partners as described
in Article VIII.
1.28 INITIAL PARTNERS.
Those persons identified on Exhibit "A" attached hereto and made a part
hereof by this reference who have executed this Partnership Agreement.
1.29 JONAH FIELD GATHERING SYSTEM.
"Jonah Field Gathering System" means that real and personal property
described on Exhibit "A-1" attached hereto.
1.30 LIQUIDATING DISTRIBUTION.
A Distribution made as consideration for a Partnership Interest.
1.31 MAJORITY OF THE PARTNERS.
One or more Partners having Sharing Ratios in excess of one-half of the
Sharing Ratios of all the Partners entitled to vote on, consent to, or approve a
particular matter. Assignees shall not be considered Partners entitled to vote
for the purpose of determining a majority. In the case
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of a Partner who has disposed of that Partner's entire Partnership Interest to
an Assignee, but has not ceased to be a Partner as provided below, the Sharing
Ratio of such Assignee shall be considered in determining a Majority of the
Partners and such Partner's vote or consent shall be determined by such Sharing
Ratio.
1.32 MAJORITY OF THE REMAINING PARTNERS.
Remaining Partners having Sharing Ratios equal to more than one-half of
the Sharing Ratios of all the Remaining Partners entitled to vote on, consent
to, or approve a particular matter. Assignees shall not be considered Partners
entitled to vote for the purpose of determining a Majority of Remaining
Partners. In the case of a Remaining Partner who has disposed of that Partner's
entire Partnership Interest to an Assignee, but has not ceased to be a Partner
as provided below, the Sharing Ratio of such Assignee shall be considered in
determining a Majority of the Remaining Partners and such Remaining Partner's
vote or consent shall be determined by such Sharing Ratio.
1.33 MANAGEMENT COMMITTEE. The committee composed of the
representatives of the Partners and established pursuant to Article VI for the
purpose of managing the Partnership.
1.34 MANAGEMENT RIGHT.
The right of a Partner to participate in the management of the
Partnership, including the rights to information and to consent or approve
actions of the Partnership.
1.35 MANAGING PARTNER.
"Managing Partner" shall be that Partner designated by the Management
Committee to manage the Partnership's business.
1.36 MONEY.
Cash or other legal tender of the United States, or any obligation that
is immediately reducible to legal tender without delay or discount. Money shall
be considered to have a fair market value equal to its face amount.
1.37 NET LOSSES AND NET PROFITS.
The losses, deductions, income and gains of the Partnership shall be
determined in accordance with Section 703(a) of the Code.
1.38 NONRECOURSE LIABILITIES.
Nonrecourse liabilities include Partnership Nonrecourse Liabilities and
Partner Nonrecourse Liabilities.
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1.39 NOTICE.
Notice shall be in writing and given as provided in Article XVI below.
1.40 OPERATING AGREEMENT.
"Operating Agreement" shall mean that agreement between ▇▇▇▇▇▇▇ Oil
Company and the Partnership providing for the day-to-day operation of the Jonah
Field Gathering System, and any successor agreement.
1.41 OPERATOR.
"Operator" shall be the Person designated to operate the Jonah Field
Gathering System pursuant to the terms of the Operating Agreement.
1.42 PARTNER.
An Initial Partner, Substituted Partner or Additional Partner,
including, unless the context expressly indicates to the contrary, the Managing
Partner and, for purposes of Articles VIII and IX only, an Assignee.
1.43 PARTNER MINIMUM GAIN.
An amount determined pursuant to Regulation 1.704-2(g). Partner Minimum
Gain and increases and decreases in Partner Minimum Gain are intended to be
computed in accordance with Section 704 of the Code and the Regulations issued
thereunder, as the same may be issued and interpreted from time to time.
1.44 PARTNER NONRECOURSE LIABILITY.
"Partner Nonrecourse Liability" shall be as defined in Regulation
1.704-2(b)(4).
1.45 PARTNERSHIP.
"Partnership" means the Partnership created by this Agreement.
1.46 PARTNERSHIP INTEREST.
The rights of a Partner or, in the case of an Assignee, the rights of
the assigning Partner in Distributions (liquidating or otherwise) and
allocations of the profits, losses, gains, deductions, and credits of the
Partnership.
1.47 PARTNERSHIP MINIMUM GAIN.
An amount determined pursuant to Regulation 1.704-2(d).
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1.48 PARTNERSHIP NONRECOURSE LIABILITY.
A Partnership Liability to the extent that no Partner or Related Person
bears the economic risk of loss (as defined in Section 1.752-2 of the
Regulations) with respect to the liability.
1.49 PARTNERSHIP PROPERTY.
Any Property owned by the Partnership.
1.50 PERSON.
"Person" means any individual or Entity, and the heirs, executors,
administrators, legal representatives, successors and assigns of such Person
where the context so admits.
1.51 PROCEEDING.
Any judicial or administrative trial, hearing or other activity, civil,
criminal or investigative, the result of which may be that a court, arbitrator,
or governmental agency may enter a judgment, order, decree, or other
determination which, if not appealed and reversed, would be binding upon the
Partnership, a Partner or other Person subject to the jurisdiction of such
court, arbitrator, or governmental agency.
1.52 PROPERTY.
Any property real or personal, tangible or intangible (including
goodwill), including Money and any legal or equitable interest in such property,
but excluding services and promises to perform services in the future.
1.53 REGULATIONS.
Except where the context indicates otherwise, the permanent and
temporary regulations of the Department of the Treasury under the Code as such
regulations may be lawfully changed from time to time.
1.54 RELATED PERSON.
A person having a relationship to a Partner that is described in
Section 1.752-4(b) of the Regulations.
1.55 REMAINING PARTNERS.
In the event of the Dissociation of a Partner, all of the Partners at
the time of such Dissociation other than the Partner who has dissociated. In the
event of a Partner who has any potential conflict of interest or transaction
between a Partner and the Partnership, the Partners not having the potential
conflict of interest or participating in the transaction. In the event of the
transfer of a Partnership Interest, all of the Partners other than the
transferring Partner.
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1.56 RESERVES.
"Reserves" means, with respect to any fiscal period, funds set aside or
amounts allocated during such period to reserves which shall be maintained in
amounts reasonably deemed sufficient by the Managing Partner for working capital
or to pay taxes, insurance, debt service or other costs or expenses incident to
the ownership or operation of the Partnership business.
1.57 REVALUATION.
The adjustment to the Book Value of Partnership Property as provided in
Section 8.07 of this Partnership Agreement.
1.58 REVALUATION DATE.
The date on which a Revaluation Event occurs.
1.59 REVALUATION EVENT.
(1) a Contribution (other than a de minimis amount, (2) a Liquidating
Distribution (other than a de minimis amount), or (3) a Liquidation of the
Partnership.
1.60 SHARING RATIO.
With respect to any Partner, a fraction (expressed as a percentage),
the numerator of which is the total of the Partner's Capital Account and the
denominator is the total of all Capital Accounts of all Partners and Assignees.
1.61 SUBSTITUTE PARTNER.
An Assignee who has been admitted to all of the rights of a Partner
pursuant to this Partnership Agreement.
1.62 TAXABLE YEAR.
The taxable year of the Partnership as determined pursuant to Section
706 of the Code.
1.63 TAXING JURISDICTION.
Any state, local, or foreign government that collects tax, interest or
penalties, however designated, on any Partner's share of the income or gain
attributable to the Partnership.
ARTICLE II
FORMATION OF PARTNERSHIP
2.01 FORMATION.
The parties hereby form and create a general partnership under and
pursuant to the Act.
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2.02 FILINGS.
The Partners shall promptly sign a Statement of Partnership Authority
pursuant to Section 303 of the Act and shall cause the Statement to be filed
with the Wyoming Secretary of State and a certified copy of said filing to be
recorded in the records of Sublette County, Wyoming, pursuant to Wyoming
Statutes Annotated, Section ▇▇-▇▇-▇▇▇.
2.03 NAME.
The name of the Partnership is Jonah Gas Gathering Company, with such
changes or variations as the Managing Partner may consider necessary or
advisable to comply with the requirements of law or regulatory bodies in any
jurisdiction in which the Partnership may do business.
2.04 PRINCIPAL PLACE OF BUSINESS.
The principal place of business of the Partnership shall be at ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or at any other location as may hereafter be
determined by the Managing Partner. The Managing Partner shall promptly notify
each of the Partners of any change in the principal place of business of the
Partnership. The Partnership's agent for service of process shall be ▇▇▇▇ ▇.
▇▇▇▇▇▇ at the foregoing address.
2.05 TERM.
The term of the Partnership shall be from the Effective Date and shall
continue in full force and effect until December 31, 2026, unless (i) the
Partners unanimously agree to extend the term of the Partnership for a longer
duration, or (ii) the Partnership is earlier dissolved in accordance with the
provisions of this Agreement.
2.06 BANK ACCOUNTS.
All funds received by the Partnership which are not distributed to the
Partners shall be deposited in one or more accounts to be established in the
name of the Partnership by the Managing Partner. All disbursements of
Partnership funds shall be from such accounts upon the signature of the Managing
Partner or its authorized representative. Partnership funds shall not be
commingled with the funds of any other person, and shall not be used except for
the business of the Partnership.
ARTICLE III
BUSINESS OF PARTNERSHIP
The business of the Partnership shall be to acquire, hold, improve,
develop, and operate the Jonah Field Gathering System and such other facilities
as may be useful for the gathering, treating, processing, and transportation of
natural gas and the various products derived therefrom from ▇▇▇▇▇ located in the
Jonah Field Area (said area comprising: all of Townships 27 North through ▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇; all of Townships 27 North through 29 North, Ranges 108
and 109 West; all of Township 30 North, Range 109 West; and all of Section 36 in
Township 30 North, Range 108 West), Sublette County, Wyoming, to one or more
delivery points owned by
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parties other than the Partnership. Said delivery points may include gas
processing plants, pipelines or end user facilities and to do all things and
exercise all powers authorized under the Act which may be necessary, convenient
or incidental to such purpose, including, without limitation:
(a) entering into partnership or joint venture agreements,
right-of-way easements, operating agreements providing for operation of
the Jonah Field Gathering System or the various elements thereof,
construction contracts, gas gathering and gas processing agreements, or
other agreements;
(b) establishing an office and retaining employees and
independent contractors;
(c) establishing bank accounts; and
(d) exercising such powers of eminent domain as may be
accorded to the Partnership under applicable law.
ARTICLE IV
ACCOUNTING AND RECORDS
4.01 RECORDS TO BE MAINTAINED.
The Managing Partner shall maintain the following Partnership records
at its principal office, all of which will be open to inspection and copying by
any Partner:
(a) a current list of the full name and last known business
address of each Partner;
(b) copies of this Agreement including all amendments thereto;
(c) copies of the Partnership's federal and state income tax
returns and reports, if any, until all audit periods have expired;
(d) financial statements of the Partnership for each
accounting year of the Partnership which shall be prepared in
accordance with GAAP; and
(e) writing or other data compilation from which information
can be obtained through retrieval devices into reasonably usable form
setting forth the following: The amount of cash and a description and
statement of the agreed value of the other property or services
contributed by each Partner and which each Partner has agreed to
contribute.
The Managing Partner shall also maintain, or cause the Operator to maintain, all
Partnership invoices, receipts, vouchers and other business records pertaining
to any period which is subject to audit by any governmental authority. Said
records shall be maintained at Managing Partner's or Operator's principal place
of business and shall be made available for inspection and audit as provided in
the Operating Agreement.
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4.02 REPORTS TO PARTNERS.
The Managing Partner shall provide the Partners with the following
Partnership reports at monthly and annual intervals: income statement, balance
sheet, capital account statement and comparison of actual revenues and expenses
with amounts budgeted. Said statements shall be prepared in accordance with
GAAP. The Managing Partner shall also furnish to any Partner upon request such
additional information as to the Partnership's activities as may be reasonably
requested from time to time by any Partner.
ARTICLE V
MANAGING PARTNER AND RIGHTS AND DUTIES OF PARTNERS
5.01 MANAGEMENT RIGHTS.
All Partners who are not Dissociated Partners shall be entitled to vote
through their respective representatives on the Management Committee on all
matters affecting the Partnership which are not delegated to the Managing
Partner hereunder. Except as otherwise provided in this Partnership Agreement,
any action taken by the Management Committee shall require the consent or
affirmative vote, either in writing or at a meeting of the Management Committee,
of a Majority of the Partners. The following decisions shall require the vote of
two (2) or more Partners having Sharing Ratios totaling not less than
seventy-five percent (75%):
(a) The borrowing of funds by the Partnership;
(b) The pledging of Partnership Property for the repayment of
any indebtedness other than purchase money liens for materials and
equipment procured by the Partnership in the ordinary course of its
business;
(c) Any capital expenditure by the Partnership exceeding
$250,000.
(d) The execution or amendment of any contract pursuant to
which the Partnership will reasonably be anticipated to expend or
collect more than $100,000 during any period of twelve (12) consecutive
months;
(e) To voluntarily dissolve the Partnership before the
expiration of the Partnership's term;
(f) To admit an Additional Partner into the Partnership;
(g) To dispose of any Partnership Property having a value of
more than $100,000;
(h) To continue the Partnership after the dissociation of a
Partner from the Partnership;
(i) Amend or modify the Operating Agreement;
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(j) To determine or modify compensation paid to any Partner or
Affiliate thereof;
(k) Require additional Capital Contributions from the Partners
and approve budgets submitted by Operator; and
(l) To remove and replace the Managing Partner which may be
done with or without cause; provided, however, that the removal and
replacement of the Managing Partner may be done upon the vote of a
Majority of the Remaining Partners if such removal is for cause.
The decisions of the Partners shall be binding on all of the Partners.
5.02 MANAGING PARTNER.
There shall be one (1) Managing Partner. Green River shall act as the
initial Managing Partner. Any Partner acting as Managing Partner shall serve in
such capacity until the earliest of:
(a) The Dissociation of such Partner;
(b) The Resignation of such Managing Partner; or
(c) Removal of such Managing Partner.
The function of the Managing Partner shall be to implement the decisions of the
Management Committee, to act as the Partnership's chief executive officer and to
keep the Partners informed as to all aspects of the Partnership's business.
5.03 AUTHORITY OF MANAGING PARTNER TO BIND THE PARTNERSHIP.
Only the Managing Partner and those agents of the Partnership
authorized by the Managing Partner shall have the authority to bind the
Partnership. No Partner who is not either the Managing Partner or otherwise
authorized as an agent shall take any action to bind the Partnership, and each
Partner shall indemnify the Partnership for any costs or damages incurred by the
Partnership as a result of the unauthorized action of such Partner.
5.04 COMPENSATION OF MANAGING PARTNER.
The Managing Partner shall be reimbursed all reasonable out-of-pocket
expenses incurred in managing the Partnership, but shall not be entitled to any
compensation.
5.05 MANAGING PARTNER'S STANDARD OF CARE.
Managing Partner also has fiduciary duties as do all Partners. In
discharging its duties, the Managing Partner shall be fully protected in relying
in good faith upon the records required to be maintained under this Agreement
and upon such information, opinions, reports or statements by any of its other
Partners, or agents, or by any other person, as to matters the Managing Partner
reasonably believes are within such other person's professional or expert
12
competence and who has been selected with reasonable care by or on behalf of the
Partnership, including information, opinions, reports or statements as to the
value and amount of the assets, liabilities, profits or losses of the
Partnership or any other facts pertinent to the existence and amount of assets
from which distributions to Partners might properly be paid.
5.06 INDEMNIFICATION.
The Partnership shall indemnify Managing Partner and each of the other
Partners, and their respective directors, officers, agents and employees, said
parties being hereinafter referred to as "Indemnitees", for all costs, losses,
liabilities, and damages paid or accrued by such parties in connection with the
business of the Partnership except insofar as such items are the result of the
Indemnitee's gross negligence, bad faith or ultra ▇▇▇▇▇ acts.
5.07 REPRESENTATIONS AND WARRANTIES.
Each Partner, and in the case of an Entity, the person(s) executing
this Partnership Agreement on behalf of the Entity, hereby represents and
warrants to the Partnership and each other Partner that: (a) if that Partner is
an Entity, that it is duly organized, validly existing, and in good standing
under the law of its state of organization and that it has full organizational
power to execute and agree to this Partnership Agreement to perform its
obligations hereunder; (b) that the Partner is acquiring its interest in the
Partnership for the Partner's own account as an investment and without an intent
to distribute the interest; (c) the Partner acknowledges that the interests have
not been registered under the Securities Act of 1933 or any state securities
laws, and may not be resold or transferred by the Partner without appropriate
registration or the availability of an exemption from such requirements.
5.08 NOTICE OF CLAIMS.
Any Partner receiving notice of any claim against the Partnership or
any Partnership Property shall give prompt written notice to Managing Partner
and to each of the other Partners specifying the nature of the claim, the amount
and all other relevant facts concerning the same.
ARTICLE VI
MANAGEMENT COMMITTEE
6.01 ESTABLISHMENT OF COMMITTEE.
To provide for the overall management of the Partnership and the
Project, there is established a Management Committee composed of representatives
of each Partner. Each Partner, including, without limitation, the Managing
Partner, shall appoint one (1) representative and one (1) alternate
representative to serve on the Management Committee. Each Partner shall as soon
as possible after the date of this Agreement give notice in writing to the other
Partners of the name and address of its representative and alternate
representative to serve on the Management Committee. Each Partner shall have the
right to change its representative and alternate at any time by giving proper
notice to such effect to the other Partners.
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6.02 POWERS AND DUTIES OF MANAGEMENT COMMITTEE.
The Management Committee shall have the power and duty to exercise
exclusive managerial authority on behalf of the Partnership to the extent that
such authority is not delegated to, or performed by, Operator under the
Operating Agreement.
6.03 AUTHORITY TO VOTE.
The representative of a Partner (including, without limitation, the
Managing Partner), or in his absence his alternate representative, shall be
authorized to represent and bind such Partner with respect to any matter which
is within the powers of the Management Committee and is properly brought before
the Management Committee. Each such representative shall have a vote equal to
the Sharing Ratio of the Partner such person represents. Each alternate
representative shall be entitled to attend all Management Committee meetings but
shall have no vote at such meetings except in the absence of the representative
for whom he is the alternate. In addition to the representative and alternate
representative, each Partner may also bring to any Management Committee meetings
such technical and other advisors as it may deem appropriate.
6.04 NOTICE OF MEETING.
(A) Managing Partner may call a meeting of the Management Committee by
giving notice to each of the Partners at least fifteen (15) days in advance of
such meeting.
(B) Any Partner may request a meeting of the Management Committee by
giving proper notice to all the other Partners. Upon receiving such request,
Managing Partner shall call such meeting for a date not less than ten (10)
Business Days nor more than thirty (30) Calendar Days after receipt of the
request.
(C) The notice periods as above may only be waived with the unanimous
consent of all the Partners.
6.05 CONTENTS OF MEETING NOTICE.
(A) Each notice of a meeting of the Management Committee as provided by
Managing Partner shall contain:
(1) The date, time and location of the meeting; and
(2) An agenda of the matters and proposals to be considered
and/or voted upon.
(B) A Partner, by notice to the other Partners given not less than five
(5) Business Days prior to a meeting, may add additional matters to the agenda
for a meeting.
(C) On the request of a Partner, and with the unanimous consent of all
Partners, the Management Committee may consider at a meeting a proposal not
contained in such meeting agenda.
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6.06 LOCATION OF MEETINGS.
All meetings of the Management Committee shall be held at the
Partnership's principal place of business in Casper, Wyoming, or elsewhere in
the United States as may be decided by the Management Committee.
6.07 MANAGING PARTNER'S DUTIES FOR MEETINGS.
With respect to meetings of the Management Committee, Managing
Partner's duties shall include, but not be limited to:
(1) Timely preparation and distribution of the agenda;
(2) Organization and conduct of the meeting; and
(3) Preparation of a written record or minutes of each
meeting.
6.08 VOTING PROCEDURE.
Except as otherwise expressly provided in Section 5.01 of this
Agreement, all decisions, approvals and other actions of the Management
Committee on all proposals coming before it under this Agreement shall be
decided by the affirmative vote of a Majority of the Partners, provided that a
quorum of the Partners is represented at the meeting at which such vote is
taken. A quorum of the Partners shall be one (1) or more Partners having in the
aggregate Sharing Ratios totaling more than fifty percent (50%).
6.09 RECORD OF VOTES.
Managing Partner shall make a record of each proposal voted on and the
results of such voting at each Management Committee meeting. Each representative
shall sign and be provided a copy of such record at the end of such meeting and
it shall be considered the final record of the decisions of the Management
Committee.
6.10 MINUTES.
Managing Partner shall provide each Partner with a copy of the minutes
of the Management Committee meeting within fifteen (15) days after the end of
the meeting. Each Partner shall have fifteen (15) days after receipt of such
minutes to give notice of its objections to the minutes to the secretary. A
failure to give notice specifying objection to such minutes within said fifteen
(15) day period shall be deemed to be approval of such minutes.
6.11 VOTING BY NOTICE.
(A) In lieu of a meeting, Managing Partner may submit any proposal for
a decision of the Management Committee by giving each representative proper
notice describing the proposal so submitted. Each Party shall communicate its
vote by proper notice to Managing Partner and to each of the other members of
the Management Committee within ten (10) calendar days after receipt of
Operator's notice.
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(B) Any member of the Management Committee may by notice delivered to
Managing Partner and to all other members of the Management Committee within
five (5) days of receipt of Operator's notice request that the proposal be
decided at a meeting rather than by notice. In such an event, that proposal
shall be decided at a meeting duly called for that purpose.
(C) Any Partner failing to communicate its vote in a timely manner
shall be deemed to have voted against such proposal.
(D) If a meeting is not requested, then at the expiration of the
appropriate time period, Managing Partner shall give each Member of the
Management Committee a confirmation notice stating the tabulation and results of
the vote.
6.12 EFFECT OF VOTE.
All decisions taken by the Management Committee pursuant to this
Article shall be conclusive and binding on all the Partners.
ARTICLE VII
CONFLICTS OF INTEREST
7.01 PARTNERSHIP OPPORTUNITIES.
It is expressly understood and agreed that any Partner shall have the
right to acquire and operate natural gas processing and transmission facilities
outside of the Jonah Field Area for its own individual account without the prior
consent of the Partnership or any other Partner. Notwithstanding the foregoing,
nothing herein shall authorize any Partner to compete with the Partnership or to
diminish any Partner's duty of loyalty to the Partnership and the other Partners
under the Act.
7.02 SELF DEALING.
A Partner does not violate a duty or obligation to the Partnership
merely because the Partner's conduct furthers the Partner's own interest. A
Partner may lend money to and transact other business with the Partnership so
long as such dealings are fully disclosed in writing to all Partners in advance,
are approved by a majority of the Remaining Partners and are on an arm's length
basis. No transaction with the Partnership shall be voidable solely because a
Partner has a direct or indirect interest in the transaction if either the
transaction is fair to the Partnership or a majority of the Remaining Partners,
knowing the material facts of the transaction and the Partner's interest,
authorize, approve, or ratify the transaction. The Partners specifically ratify
and approve of the Operating Agreement attached hereto as Exhibit "B" pursuant
to which the Partnership will engage ▇▇▇▇▇▇▇ Oil Company to operate the Jonah
Field Gathering System.
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ARTICLE VIII
CAPITAL CONTRIBUTIONS
8.01 INITIAL CONTRIBUTIONS.
Each Initial Partner shall make the Contribution described for that
Partner on Exhibit "A" at the time and on the terms specified on Exhibit "A" and
shall perform that Partner's Commitment. If no time for the Contribution is
specified, the Contributions shall be made upon the execution of this Agreement.
The value of the Contributions shall be as set forth on Exhibit "A". No interest
shall accrue on any Contribution and no Partner shall have the right to withdraw
or be repaid any Contribution except as provided in this Partnership Agreement.
Each Additional Partner shall make the Contribution and shall perform the
Commitment described in the Admission Agreement. The value of the Additional
Partner's Contribution and the time for making such contribution shall be set
forth in the Admission Agreement.
8.02 ADDITIONAL CONTRIBUTIONS.
In addition to the Initial Contributions and Commitments, the
Management Committee may, upon the vote prescribed in Section 5.01 above,
determine from time to time that additional contributions are needed to enable
the Partnership to conduct its business, thereby increasing the Commitment of
each Partner by an amount equal to such Partner's Sharing Ratio multiplied by
the amount of such additional Capital Contribution. In the event of such a
determination, the Managing Partner shall give Notice to all Partners in writing
at least thirty (30) calendar days prior to the date on which such contribution
is due. Such Notice shall set forth the amount of additional contribution
needed, the purpose for which the contribution is needed, and the date by which
the Partners should contribute. Each Partner shall thereupon be obligated to
contribute a proportionate share of such additional contribution as provided in
the Notice.
8.03 ENFORCEMENT OF COMMITMENTS.
In the event any Partner (a "Delinquent Partner") fails to perform the
Delinquent Partner's Commitment, the Managing Partner shall give the Delinquent
Partner a Notice of the failure to meet the Commitment. If the Delinquent
Partner fails to perform the Commitment (including any costs associated with the
Commitment and interest on such obligation at the Default Interest Rate) within
ten (10) Business Days of the giving of Notice, the Remaining Partners may take
such action, including but not limited to enforcing the Commitment in the court
of appropriate jurisdiction in the state in which the Principal Office is
located or the state of the Delinquent Partner's address as reflected in this
Partnership Agreement. Each Partner expressly agrees to the jurisdiction of such
court but only for the enforcement of Commitments. The Remaining Partners may
elect to contribute the amount of the Delinquent Partner's Commitment which is
in default, each such Partner contributing that portion of the amount in default
which is equal to its Sharing Ratio divided by the sum of the Sharing Ratio of
all Remaining Partners. Those Partners who make such a contribution ("the
Contributing Partners") shall be entitled to treat the amounts contributed
pursuant to this section as a loan from the Contributing Partners to the
Delinquent Partner bearing interest at the Default Interest Rate and secured by
the Delinquent Partner's interest in the Partnership. Until they are fully
repaid, the Contributing Partners shall be entitled to all Distributions to
which the Delinquent Partner would
17
have been entitled. Notwithstanding the foregoing, no Commitment or other
obligation to make an additional contribution may be enforced by a creditor of
the Partnership or other person other than the Partnership and the Contributing
Partners unless the Delinquent Partner expressly consents to such enforcement or
to the assignment of the obligation to such creditor.
8.04 MAINTENANCE OF CAPITAL ACCOUNTS.
The Partnership shall establish and maintain a Capital Account for each
Partner and Assignee. Each Partner's Capital Account shall be increased by: (1)
the amount of any Money actually contributed by the Partner to the capital of
the Partnership, (2) the fair market value of any Property (other than Money)
contributed, as determined by the Partnership and the Contributing Partner at
arm's length at the time of contribution (net of liabilities assumed by the
Partnership or subject to which the Partnership takes such Property, within the
meaning of Section 752 of the Code), and (3) the Partner's share of Net Profits
and of any separately allocated items of income or gain except adjustments to
income and gain as a result of a Revaluation or in connection with Property
Contributed in the manner described in Section 1.704-1(b)(2)(iv)(g) to reflect
the difference between the Book Value and the adjusted basis of Partnership
Property, but excluding allocations of income and gain described in Section
1.704-1(b)(4)(i) of the Regulations under which such difference is reflected for
tax purposes). Each Partner's Capital Account shall be decreased by (1) the
amount of any money distributed to the Partner by the Partnership, (2) the fair
market value of any Property distributed to the Partner, as determined by the
Partnership and the Partner receiving the Distribution at arm's length at the
time of Distribution (net of liabilities of the Partnership assumed by the
Partner or subject to which the Partner takes such Property within the meaning
of Section 752 of the Code), and (3) the Partner's share of Net Losses and of
any separately allocated items of Net Loss (including adjustments for
depreciation, depletion, amortization, and loss as a result of a Revaluation or
in connection with Property contributed in the manner described in Section
1.704-1(b)(2)(iv)(g) to reflect the difference between the Book Value and the
adjusted basis of Partnership Property, but excluding allocations of
depreciation, depletion, amortization, and loss described in Section
1.704-1(b)(4)(i) of the Regulations under which such difference is reflected for
tax purposes).
8.05 DISTRIBUTION OF ASSETS.
If the Partnership at any time distributes any Partnership Property
(other than money) in-kind to any Partner, the Capital Account of each Partner
shall be adjusted to account for that Partner's allocable share (as determined
under Article below) of the Net Profits or Net Losses that would have been
realized by the Partnership had it sold the assets that were distributed at
their respective fair market values immediately prior to their distribution.
8.06 SALE OR EXCHANGE OF INTEREST.
In the event of a sale or exchange of some or all of a Partnership
Interest, the Capital Account of the Transferring Partner shall become the
Capital Account of the Assignee, to the extent it relates to the portion of the
Partnership Interest Transferred.
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8.07 REVALUATION OF PARTNERSHIP PROPERTY.
The Capital Accounts of the Partners shall be increased or decreased to
reflect a revaluation of Partnership Property (including intangible assets such
as goodwill) on the Partnership's books in connection with a Revaluation Event.
Upon such Revaluation: (1) the Book Value of Partnership Property shall be
adjusted based on the fair market value of Partnership Property (taking Section
7701(g) of the Code into account) on the Revaluation Date; (2) the unrealized
income, gain, loss, or deduction inherent in such Partnership Property (that has
not been reflected in the Capital Accounts previously) would be allocated among
the Partners as if there were a taxable disposition of such Partnership property
for such fair market value on the Revaluation Date.
8.08 COMPLIANCE WITH SECTION 704(b) OF THE CODE.
The provisions of this Article as they relate to the maintenance of
Capital Accounts are intended, and shall be construed, and, if necessary,
modified to cause the allocations of profits, losses, income, gain and credit
pursuant to Article VIII to have substantial economic effect under the
Regulations promulgated under Section 704(b) of the Code, in light of the
Distributions made pursuant to Articles IX and XIV and the Contributions made
pursuant to this Article VIII.
8.09 NON-CONSENT OPERATIONS.
Any Partner may propose an Expansion of the Jonah Field Gathering
System by written notice (the "Expansion Proposal") to the Managing Partner
specifying all pertinent information in reasonable detail, including, without
limitation: the work to be done, the time for construction, the impact of the
construction upon the existing operation of the Jonah Field Gathering System,
the estimated cost of the Expansion and the economic benefits to be derived by
the Partnership therefrom. Promptly upon receipt of such proposal, the Managing
Partner shall call a meeting of the Management Committee to consider whether
additional Capital Contributions shall be authorized for such purpose. If such
Capital Contributions are authorized by the Management Committee, the Expansion
Proposal shall be implemented and the approved Capital Contributions shall
become part of each Partner's Commitment. In the event additional Capital
Contributions or other funding measures to finance the Expansion Proposal are
not approved by the Management Committee within thirty (30) days after the
proposal has been first submitted to the Managing Partner, (the last day of such
period or such earlier date on which the Expansion Proposal may be formally
rejected by the Management Committee being hereinafter referred to as the
"Rejection Date"), any Partner or Partners (the "Consenting Partners") may
undertake or cause the Partnership to undertake the Expansion as follows:
(a) Internal Expansions. To the extent that the proposed Expansion
involves increasing the capacity of the Jonah Field Gathering System (the
"System") to gather gas from those ▇▇▇▇▇ which are then connected to the System
(an "Internal Expansion"), the Consenting Partners shall have the right for a
period of thirty (30) days after the Rejection Date to deliver their
unconditional and irrevocable agreement to contribute sufficient funds to the
Partnership to enable the Partnership to complete the proposed Expansion. The
Partnership shall upon receipt of such Commitment commence construction of the
Expansion and complete the same in accordance with the original Expansion
Proposal. Notwithstanding anything in this Agreement
19
to the contrary, the Sharing Ratios of the Partners shall not be adjusted to
reflect any Capital Contributions made pursuant to this paragraph 8.09(a);
provided, however, that all revenues accruing to the Partnership after the
Expansion has been placed in service shall be allocated and distributed among
the Partners as if their Sharing Ratios were so adjusted until the Consenting
Partners have in the aggregate been allocated and have received out of such
revenues an amount (the "Internal Expansion Cost Recovery Amount") the present
value of which, discounted from the date received to the date of the earliest
unrecovered Capital Contribution made pursuant to this paragraph at an annual
rate of fifteen percent (15%), is equal to one hundred and twenty-five percent
(125%) of all costs incurred by the Partnership in connection with such
Expansion. All Partnership revenues thereafter accruing to the Partnership shall
be allocated and distributed among all Partners in accordance with their
respective Sharing Ratios as the same may be determined without regard to the
provisions of this Section 8.09. Notwithstanding anything in Article IX to the
contrary, all items of Partnership income and expenses allocable to the
Consenting Partners pursuant to this Section 8.09 shall also be allocated to
them for federal and state income tax purposes in the manner provided in this
section.
(b) External Expansions. To the extent that a proposed Expansion
involves an Expansion other than an Internal Expansion as described in paragraph
8.09(a) above (an "External Expansion"), the Consenting Partners shall have the
option for a period of one hundred eighty (180) days after the Rejection Date to
commence construction of the External Expansion at their own expense and for
their account in such manner as they may agree; provided, however, that upon the
successful completion thereof said facilities and all easements and other
appurtenances held in connection therewith shall be conveyed by the Consenting
Partners to all Partners in undivided shares in accordance with the respective
Sharing Ratios, said conveyance to be made free and clear of all liens and
encumbrances except for the right of the Consenting Partners to recover from all
of the revenues attributable to such property an amount (the "External Expansion
Cost Recovery Amount") the present value of which, discounted from the date
received to the date of the earliest unrecovered cost hereunder at an annual
rate of fifteen percent (15%), is equal to one hundred and twenty-five percent
(125%) of all costs incurred by the Consenting Partners in connection with such
Expansion. Each of the Partners shall upon receipt of such conveyance convey all
of its right, title and interest in said property to the Partnership subject to
the right of the Consenting Partners to receive the External Expansion Cost
Recovery Amount as provided above. Notwithstanding anything herein to the
contrary, the Partnership and those Partners other than the Consenting Partners
shall have the right to elect not to receive a conveyance of the External
Expansion property hereunder.
ARTICLE IX
ALLOCATION AND DISTRIBUTIONS
9.01 ALLOCATIONS OF NET PROFITS AND NET LOSSES FROM OPERATIONS.
Except as may be required by Section 704(c) of the Code, and Section
8.09(a) and Sections 9.02, 9.03, and 9.04 of this Article IX, net profits, net
losses, and other items of income, gain, loss, deduction and credit shall be
apportioned among the Partners in proportion to their respective Sharing Ratios.
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9.02 PARTNERSHIP MINIMUM GAIN CHARGEBACK.
If there is a net decrease in Partnership Minimum Gain for a Taxable
Year, each Partner must be allocated items of income and gain for that Taxable
Year equal to that Partner's share of the net decrease in Partnership Minimum
Gain. A Partner's share of the net decrease in Partnership Minimum Gain is the
amount of the total net decrease multiplied by the Partner's percentage share of
the Partnership Minimum Gain at the end of the immediately preceding Taxable
Year. A Partner's share of any decrease in Partnership Minimum Gain resulting
from a Revaluation of Partnership Property equals the increase in the Partner's
Capital Account attributable to the Revaluation to the extent the reduction in
minimum gain is caused by the Revaluation. A Partner is not subject to the
Partnership Minimum Gain Chargeback Requirement to the extent the Partner's
share of the net decrease in Partnership Minimum Gain is caused by a guarantee,
refinancing, or other change in the debt instrument causing it to become
partially or wholly a Recourse Liability or a Partner Nonrecourse Liability, and
the Partner bears the economic risk of loss (within the meaning of Section
1.752-2 of the Regulations) for the newly guaranteed, refinanced, or otherwise
changed liability.
9.03 PARTNER MINIMUM GAIN CHARGEBACK.
If during a Taxable Year there is a net decrease in Partner Minimum
Gain, any Partner with a share of that Partner Minimum Gain ("partner minimum
gain" as determined under Section 1.704-2(i)(5) of the Regulations) as of the
beginning of that Taxable Year must be allocated items of income and gain for
that Taxable Year (and, if necessary, for succeeding Taxable Years) equal to
that Partner's share of the net decrease in the Partnership's Minimum Gain. A
Partner's share of the net decrease in Partner Minimum Gain is determined in a
manner consistent with the provisions of Section 1.704-2(g)(2) of the
Regulations. A Partner is not subject to this Partner Minimum Gain Chargeback,
however, to the extent the net decrease in Partner Minimum Gain arises because
the liability ceases to be Partner Nonrecourse Liability due to a conversion,
refinancing, or other change in the debt instrument that causes it to become
partially or wholly a Partnership Nonrecourse Liability. The amount that would
otherwise be subject to the Partner Minimum Gain Chargeback is added to the
Partner's share of Partnership Minimum Gain. In addition, rules consistent with
those applicable to Partnership Minimum Gain shall be applied to determine the
shares of Partner Minimum Gain and Partner Minimum Gain Chargeback to the extent
provided under the Regulations issued pursuant to Section 704(b) of the Code.
9.04 QUALIFIED INCOME OFFSET.
Notwithstanding any provision of this Partnership Agreement to the
contrary (other than Sections 9.02 and 9.03 above), in the event that a deficit
in a Partner's Capital Account is created or increased (taking into account any
allocations, adjustments, or distributions described in Section
1.704-1(b)(2)(ii)(d)(4), (5), or (6)) in excess of such Partner's share of
Partnership Minimum Gain and Partner Minimum Gain, plus any amount that the
Partner is obligated to restore to the Partnership, such Partner will be
allocated items of income and gain (consisting of a pro rata portion of each
item of partnership income and gain for such year) in an amount and manner
sufficient to offset such Offsettable Decrease as quickly as possible.
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9.05 INTERIM DISTRIBUTIONS.
From time to time, the Management Committee shall determine to what
extent, if any, the Partnership's cash on hand exceeds the current and
anticipated needs, including, without limitation, needs for operating expenses,
debt service, acquisitions, Reserves, and mandatory Distributions, if any. To
the extent such excess exists, the Managing Partner shall cause Distributions to
be made to the Partners in accordance with their Sharing Ratios. Such
distributions shall be in cash or Property or partly in both, as determined by
the Management Committee. All interim distributions which, when made, exceed the
recipient Partner's basis in that Partner's Partnership Interest shall be
considered advances or drawings against the Partner's distributive share of net
income. To the extent it is determined at the end of the Taxable Year of the
Partnership that the recipient Partner has not been allocated net income that
equals or exceeds the total of such advances or drawings for such year, the
recipient Partner shall be obligated to restore any such advances or drawings to
the Partnership. Notwithstanding the foregoing sentence, the Partner will not be
required to restore such advances or drawings to the extent that, on the last
day of the Taxable Year, the recipient Partner's basis in the Partner's interest
in the Partnership has increased from the time of such advance of drawing.
9.06 DISTRIBUTIONS.
The Management Committee shall have the authority to determine the
extent to which cash is available for distribution to the Partners and Managing
Partner shall cause the distribution all such cash to the Partners on at least a
quarterly basis in accordance with their respective Sharing Ratios.
ARTICLE X
TAXES
10.01 TAX RETURNS.
The Tax Matters Partner ("TMP") shall cause the preparation and filing
of all required federal and state partnership income tax returns. In preparing
such returns, the TMP shall use its best efforts and in doing so shall incur no
liability to any other Partners or Assignee with regard to such returns. Not
less than sixty (60) days prior to the due date (including extensions), the TMP
shall submit to each Partner a copy of the return as proposed for review. Each
Partner agrees to furnish to the TMP not later than March 1 of each year such
information relating to the operations conducted under this Agreement during the
immediately preceding calendar year as may be required for the proper
preparation of such returns and capital accounts. The Partners agree that the
filing date for any return shall be extended at the request of any Partner.
10.02 TAX MATTERS PARTNER.
The Managing Partner shall be the initial tax matters partner ("TMP")
as defined in Internal Revenue Code ("Code" or "I.R.C.") Section 6231(a)(7). In
the event of any change in the TMP, the Partner serving as TMP for a given
Taxable Year shall continue as TMP with respect to all matters concerning such
year. The TMP for a given Taxable Year shall continue as TMP with respect to all
matters concerning such year. The TMP and other Partners shall use their best
efforts to comply with responsibilities outlined in this section and in Code
Sections 6222 through 6233
22
and 6050K (including any Treasury Regulations promulgated thereunder) and in
doing so shall incur no liability to any other Partner. Notwithstanding TMP's
obligation to use its best efforts in the fulfillment of its responsibilities,
TMP shall not be required to incur any expenses for the preparation for, or
pursuance of administrative or judicial proceedings, unless all of the Partners
agree on a method for sharing such expenses.
10.03 INFORMATION REQUEST BY TMP.
The Partners and any Assignee shall furnish TMP within two (2) weeks
from the receipt of the request with such information (including information
specified in Code Sections 6230(e) and 6050K) as TMP may reasonably request to
permit it to provide the Internal Revenue Service with sufficient information
for purposes of Code Sections 6230(e) and 6050K.
10.04 TMP AGREEMENTS WITH IRS.
The TMP shall not agree to any extension of the statute of limitations
for making assessments on behalf of any other Partner or Assignee without first
obtaining the written consent of that Partner or Assignee. The TMP shall not
bind any other Partner or Assignee to a settlement agreement in tax audits
without obtaining the written concurrence of any such Partner or Assignee. Any
other Partner or Assignee who enters into a settlement agreement with the
Secretary of the Treasury with respect to any Partnership items, as defined by
Code Section 6231(a)(3), shall notify the other Partners and any Assignee of
such settlement agreement and its terms within ninety (90) days from the date of
settlement.
10.05 INCONSISTENT TREATMENT OF PARTNERSHIP ITEM.
If any Partner or Assignee intends to file a notice of inconsistent
treatment under Code Section 6222(b), such party shall, prior to the filing of
such notice, notify the TMP of such intent and the manner in which the Partner's
or Assignee's intended treatment of a Partnership item is (or may be)
inconsistent with the treatment of that item by the Partnership. Within one (1)
week of receipt, the TMP shall remit copies of such notification to other
Partners and Assignees. If any inconsistency notice is filed solely because of a
Partner or Assignee not having received a Schedule K-1 in time for filing of its
income tax return, the TMP need not be notified.
10.06 REQUESTS FOR ADMINISTRATIVE ADJUSTMENT.
No Partner nor any Assignee shall file a request pursuant to Code
Section 6227 for an administrative adjustment of Partnership items for any
Partnership Taxable Year without first notifying all other Partners and
Assignees. If all other Partners and Assignees agree with the requested
adjustment, the TMP shall file the request for administrative adjustment on
behalf of the Partnership. If unanimous consent is not obtained within thirty
(30) days from such notice, or within the period required to timely file the
request for administrative adjustment, if shorter, any Partner or Assignee,
including the TMP, may file a request for administrative adjustment on its own
behalf.
23
10.07 JUDICIAL PROCEEDINGS.
Any Partner or Assignee intending to file a petition under Code Section
6225 or Code Section 6228, or any other Code section with respect to any
Partnership item, or other tax matters involving the Partnership, shall notify
the other Partners and Assignees, prior to such filing, of such intention and
the nature of the contemplated proceeding. In the case where the TMP is the
Partner intending to file such petition, such notice shall be given within a
reasonable time to allow the other Partners and Assignees to participate in the
choosing of the forum in which such petition will be filed. If the Partners and
Assignees do not agree on the appropriate forum, then the appropriate forum
shall be decided by a vote of majority of the Partners. Each Partner shall have
a vote in accordance with its Sharing Ratio as of the end of the year under
audit. If a majority cannot agree, the TMP shall choose the forum. If any
Partner or Assignee intends to seek review of any court decision rendered as a
result of such a proceeding, such party shall notify the other Partners and
Assignees prior to seeking such review.
10.08 ELECTIONS.
For both income and single business tax return and capital account
purposes, the Partnership shall elect:
(a) to use the maximum allowable accelerated tax method and
the shortest permissible tax life for depreciation purposes,
(b) to use the accrual method of accounting,
(c) to report income on a calendar year basis,
(d) to deduct currently all research and experimental
expenditures,
(e) to amortize start-up expenditures and organizational costs
over a 60-month period,
(f) the optional adjustment to the basis of Partnership
Property under Code Section 754 in the event of a distribution of
Partnership Property or a transfer of a Partnership Interest, and
(g) such other elections as may be approved by a Majority of
the Partners based upon their Sharing Ratios as of the end of the
Taxable Year for which the election is made.
10.09 TAXES OF TAXING JURISDICTIONS.
To the extent that the laws of any Taxing Jurisdiction requires, each
Partner and Assignee (or such Partners as may be required by the Taxing
Jurisdiction) will submit an agreement indicating that the Partner will make
timely income tax payments to the Taxing Jurisdiction and that the Partner (or
Assignee) accepts personal jurisdiction of the Taxing Jurisdiction with regard
to the collection of income taxes attributable to the Partner's (or Assignee's)
income, and interest, and penalties assessed on such income. If the Partner (or
Assignee) fails to provide such
24
agreement, the Partnership may withhold and pay over to such Taxing Jurisdiction
the amount of tax, penalty and interest determined under the laws of the Taxing
Jurisdiction with respect to such income. Any such payments with respect to the
income of a Partner (or Assignee) shall be treated as a distribution for
purposes of Article IX.
ARTICLE XI
DISPOSITION OF PARTNERSHIP INTERESTS
11.01 DISPOSITION.
Any Partner or Assignee may dispose of all or a portion of the
Partner's or Assignee's Partnership Interest upon compliance with this Section
11.01 and the requirements of Section 11.02, if applicable. No Partnership
Interest shall be disposed of:
(a) if such disposition, alone or when combined with other
transactions, would result in a termination of the Partnership within
the meaning of Section 708 of the Code;
(b) without an opinion of counsel satisfactory to the Managing
Partner that such assignment is subject to an effective registration
under, or exempt from the registration requirements of, the applicable
state and federal securities laws;
(c) unless and until the Partnership receives from the
Assignee such information and agreements that the Managing Partner may
reasonably require, including but not limited to any taxpayer
identification number and any agreement that may be required by any
Taxing Jurisdiction.
Notwithstanding anything herein to the contrary, no transferee of a Partnership
Interest shall be admitted into the Partnership as a Partner except as provided
in Article XIII.
11.02 RIGHT OF FIRST REFUSAL.
(a) Notice of Proposed Sale and Offer to Remaining Partners. In the
event any Partner or Assignee desires to sell all or any portion of its
Partnership Interest, such party being hereinafter referred to as the "Selling
Party", the Selling Party shall give the Managing Partner written notice
specifying the extent of the Partnership Interest to be sold (the "Offered
Interest") and all of the terms and conditions of the proposed sale. The
Managing Partner shall promptly give written notice of the terms of such
proposal to each of the Remaining Partners. Each of the Remaining Partners shall
have twenty (20) days after receipt of such notice within which to elect, by
delivering written notice of such election to Managing Partner, to purchase its
proportionate share of the Offered Interest on the terms specified in the
Selling Party's offer. In the event fewer than all of the Remaining Partners
elect to do so, Managing Partner shall notify those Partners electing to
participate in such purchase (the "Purchasing Partners") of the extent to which
the Offered Interest remains available for purchase and each of said Partners
shall have the right for a period of five (5) days after receipt of such notice
within which to elect to purchase a proportionate share of such remaining
interest by giving written notice of such election to Managing Partner. In the
event the Purchasing Partners fail to elect to purchase all of the Offered
Interest during said five-day period, Managing Partner shall reoffer that
portion of
25
the Offered Interest still available for purchase among those Purchasing
Partners last electing to participate in the purchase of the Offered Interest
for a period of five (5) days in the manner above provided.
(b) Election to Purchase or Reject Offered Interest. In the event the
Purchasing Partners elect to purchase all of the Offered Interest, Managing
Partner shall give prompt written notice to the Selling Party and to each of the
Purchasing Partners specifying that portion of Offered Interest to be purchased
by each Purchasing partner and said Partners shall, within sixty (60) days after
receipt of such notice, purchase and the Selling Party shall sell the Offered
Interest on the terms specified in the offer. Notwithstanding anything herein to
the contrary, in the event the Purchasing Partners fail to elect to purchase all
of the Offered Interest, they shall not have the right to purchase any part of
the same hereunder and Managing Partner shall notify the Selling Party of the
Remaining Partners' election not to purchase the Offered Interest.
(c) Effect of Reelection of Offered Interest. For a period of ninety
(90) days after its receipt of notice rejecting its offer to sell its
Partnership Interest, the Selling Party shall have the right to sell the Offered
Interest to any third party on the terms set forth in the above Notice;
provided, however, that such sale shall, nevertheless, be subject to the
provisions of Article XI of this Partnership Agreement. In the event the Selling
Party desires to sell all or any part of the Offered Interest more than ninety
(90) days after the same has been offered to and rejected by the other Partners
or at any time on terms which are different in any material respect from those
previously offered to the Remaining Partners, such interest shall again be
offered to the Remaining Partners in the manner provided above.
(d) Allocation of Preferential Right Among Remaining Partners. For
purposes of this Section 11.02, a Partner's proportionate share of the Offered
Interest shall be equal to such Partner's Sharing Ratio divided by the sum of
the Sharing Ratios of all Partners having the right to participate in the
acquisition of the Offered Interest. Similarly, in the event a portion of the
Offered Interest is reoffered to the Purchasing Partners for a period of five
(5) days, each Purchasing Partner's proportionate share of the interest being
reoffered shall be equal to such Partner's Sharing Ratio divided by the sum of
the Sharing Ratios of all Partners to whom such interest is being reoffered.
(e) Miscellaneous. The provisions of this paragraph shall not apply to
the creation of a lien on any Partnership Interest but shall apply to any sale
incident to the foreclosure of any such lien. The Partnership Interest of any
Assignee shall be subject to the provisions of this section but no Assignee
shall have the right to participate in the purchase of an Offered Interest
hereunder, and any Remaining Partner which has conveyed all or a portion of its
Partnership Interest to an Assignee hereunder shall be deemed to own the Sharing
Ratio of its Assignee for purposes of this Section 11.02.
11.03 DISPOSITIONS NOT IN COMPLIANCE WITH THIS ARTICLE VOID.
Any attempted Disposition of a Partnership Interest, or any part
thereof, other than in accordance with Sections 11.01 and 11.02 shall be, and is
declared to be, null and void ab initio.
26
ARTICLE XII
DISSOCIATION OF A PARTNER
12.01 DISSOCIATION.
Except upon the transfer of a Partner's entire Partnership Interest and
the admission of such Partner's transferee into the Partnership as a Substitute
Partner, a Partner shall not have the right to voluntarily retire, dissociate or
withdraw from the Partnership. A Person shall cease to be a Partner upon the
happening of any of the following events:
(a) the Partner's becoming a Bankrupt Partner;
(b) in the case of a Partner that is a separate Entity other
than a corporation, the dissolution and commencement of winding up of
the separate Entity;
(c) in the case of a Partner that is a corporation, the filing
of a certificate of dissolution, or its equivalent, for the corporation
or the revocation of its charter;
(d) the transfer of all of a Partner's Partnership Interest to
an Assignee and the admission of the Assignee as a Substitute Partner;
or
(e) any other event of Dissociation under the Act.
12.02 PURCHASE OF DISSOCIATED PARTNER'S PARTNERSHIP INTEREST.
Upon the Dissociation of a Partner by reason other than Section
12.01(d), when and if the Remaining Partners elect to continue the business of
the Partnership, a Majority of the Remaining Partners shall, subject to the
provisions of the Act, elect one of the two following provisions:
(a) The Dissociated Partner's Partnership Interest shall be
purchased by the Partnership for a purchase price equal to the
aggregate fair market value of the Partner's Interest determined
according to the provisions of Section 12.03. The purchase price of
such interest shall be paid by the Partnership to the Dissociated
Partner in cash within sixty (60) days of determination of the
aggregate fair market value or, at the Partnership's option, said debt
may be evidenced by a promissory note bearing interest at a fixed
annual rate equal to the prime rate then being charged by Norwest Bank
Colorado, N.A., which shall in the absence of prepayment (which shall
be permitted at any time without penalty) be due and payable upon the
earlier of (i) expiration of five years or (ii) the sale or other
disposition of all of the Partnership's Property; or
(b) The Dissociated Partner, or assignee of Dissociated
Partner's Partnership Interest, shall hold the Dissociated Partner's
Partnership Interest as an Assignee.
12.03 PURCHASE PRICE OF DISSOCIATED PARTNER'S PARTNERSHIP INTEREST.
The fair market value of a Partner's Interest to be purchased by the
Partnership pursuant to Section 12.02 shall be determined by agreement between
the Dissociated Partner (or the
27
assignee of the Dissociated Partner's Partnership Interest, as the case may be)
and the Partnership, which agreement is subject to approval by a Majority of the
Remaining Partners. For this purpose, the fair market value of the Dissociated
Partner's Partnership Interest shall be computed as the amount which could
reasonably be expected to be realized by such Partner upon the sale of the
Partnership's Property in the ordinary course of business at the time of
Dissociation. If the Dissociated Partner (or the assignee of the Dissociated
Partner's Partnership Interest, as the case may be) and the Partnership cannot
agree upon the fair market value of such Partnership Interest within thirty (30)
days, the fair market value thereof shall be determined by appraisal, the
Partnership and the terminated Partner each to choose one appraiser and the two
appraisers so chosen to choose a third appraiser. The decision of a majority of
the appraisers as to the fair market value of such Partnership Interest shall be
final and binding and may be enforced by legal proceedings. The Dissociated
Partner and the Partnership shall each compensate the appraiser appointed by it
and the compensation of the third appraiser shall be borne equally by such
parties.
12.04 DAMAGES.
The provision set forth herein shall not affect any claim for damages
the Partnership may have against the Dissociated Partner if such Dissociation is
in violation of this Partnership Agreement. The Partnership shall have the right
to offset any payments due under this Article by any damages that the
Partnership may incur as a result of a Dissociation of a Partner in
contravention of this Partnership Agreement.
ARTICLE XIII
ADMISSION OF ASSIGNEES AND ADDITIONAL PARTNERS
13.01 RIGHTS OF ASSIGNEES.
The Assignee of a Partnership Interest has no right to participate in
the management of the business and affairs of the Partnership or to become a
Partner. The Assignee is only entitled to receive the Distributions and return
of capital, and to be allocated the Net Profits and Net Losses attributable the
Partnership Interest.
13.02 ADMISSION OF SUBSTITUTE PARTNERS. An Assignee of a Partnership
Interest shall be admitted as a Substitute Partner and admitted to all the
rights of the Partner who initially assigned the Partnership Interest, only with
the approval, which may be withheld in their sole and absolute discretion, of a
Majority of the Remaining Partners.
13.03 ADMISSION OF ADDITIONAL PARTNERS.
The Partners may admit Additional Partners and determine the Capital
Contribution of such Partners.
28
ARTICLE XIV
DISSOLUTION AND WINDING UP
14.01 DISSOLUTION.
The Partnership shall be dissolved and its affairs wound up, upon the
first to occur of the following events:
(a) the expiration of the Term;
(b) the written consent of two or more Partners having Sharing
Ratios totaling seventy-five percent (75%) or more;
(c) the Dissociation of any Partner, unless the business of
the Partnership is continued with the consent of two or more Remaining
Partners holding Sharing Ratios totaling at least seventy-five percent
(75%) of the Sharing Ratios of all the Remaining Partners determined as
of the date of the dissociation.
14.02 EFFECT OF DISSOLUTION.
Upon dissolution, a Majority of the Remaining Partners shall designate
one of the Partners to act as the Liquidator of the Partnership. The Partnership
shall cease carrying on as distinguished from the winding up of the
Partnership's business, but the Partnership is not terminated, but continues
until the winding up of the affairs of the Partnership is completed. The
Liquidator shall have exclusive authority to wind up the Partnership's business
and distribute the Partnership's assets.
14.03 DISTRIBUTION OF ASSETS ON DISSOLUTION.
Upon the winding up of the Partnership, the Partnership's Property
shall be distributed by the Liquidator in the following manner:
(a) to creditors of the Partnership, including Partners who
are creditors, to the extent permitted by law, in satisfaction of
Partnership Liabilities;
(b) Partners in accordance with positive Capital Account
balances taking into account all Capital Account adjustments for the
Partnership's taxable year in which the liquidation occurs. Liquidation
proceeds shall be paid within sixty (60) days of the end of the
Partnership's taxable year or, if later, within ninety (90) days after
the date of liquidation. Such distributions shall be in cash or
Property or partly in both, as determined by the Managing Partner.
Unless otherwise agreed, each such class of Property distributed shall
be distributed proportionately among the Partners in accordance with
their respective capital account balances as above provided.
29
ARTICLE XV
AMENDMENT
Amendment or Modification of Partnership Agreement.
This Partnership Agreement may be amended or modified from time to time
only by a written instrument executed by two (2) or more Partners having Sharing
Ratios totaling at least seventy-five percent (75%), but, without the written
consent of each Partner adversely affected thereby (the Affected Partner), no
amendment of this Partnership Agreement shall be made that: (i) increases the
obligations of the Affected Partner to make contributions, (ii) alters the
allocation to the Affected Partner for tax purposes of any items of income,
gain, loss, deduction or credit, or (iii) alters the manner of computing the
distributions of the Affected Partner. Notwithstanding any other provision of
this Partnership Agreement, the provisions of this Article may not be amended
without the consent of all Partners.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
16.01 ENTIRE AGREEMENT.
This Partnership Agreement represents the entire agreement among all
the Partners and between the Partners and the Partnership.
16.02 RIGHTS OF CREDITORS AND THIRD PARTIES UNDER PARTNERSHIP
AGREEMENT.
This Partnership Agreement is entered into among the Partnership and
the Partners for the exclusive benefit of the Partnership, the Partners, and
their successors and assignees. This Partnership Agreement is expressly not
intended for the benefit of any creditor of the Partnership or any other person.
Except and only to the extent provided by applicable statute, no such creditor
or third party shall have any rights under this Partnership Agreement, Admission
Agreement or any agreement between the Partnership and any Partner with respect
to any Capital Contribution or otherwise.
16.03 NOTICES.
Any notice, demand or communication required or permitted to be given
by any provision of this Agreement shall be deemed to have been sufficiently
given or served for all purposes if delivered personally in writing to the party
to whom the same is directed or, if sent by private overnight delivery service
or registered or certified mail, postage and charges prepaid, or by facsimile,
addressed to such party's address as shown on Exhibit "A" of this Agreement. Any
such notice shall be deemed to be given only on the date of receipt by the
notified party. Any Partner may change its address for notice purposes by giving
each of the other Partners at least ten (10) days prior written notice of such
change.
16.04 APPLICATION OF WYOMING LAW.
This Agreement, and the application or interpretation hereof, shall be
governed exclusively by its terms and by the laws of the State of Wyoming.
30
16.05 ENTIRE AGREEMENT.
This Agreement sets forth all of the promises, agreements, conditions,
understandings, warranties and representations among the parties hereto with
respect to the Partnership.
16.06 WAIVER OF ACTION FOR PARTITION.
Each of the parties hereto irrevocably waives during the term of the
Partnership any right that it may have to maintain any action for partition with
respect to any property owned by the Partnership.
16.07 COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
document.
31
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
JONAH PIPELINE COMPANY, GREEN RIVER PIPELINE LIMITED
a Michigan corporation LIABILITY COMPANY, a Wyoming
limited liability company
By: /s/ ▇▇▇▇▇▇▇ ▇. Dooham By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------ ---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇, President of
Attorney-in-Fact ▇▇▇▇▇▇▇ Oil Company, Manager
STATE OF COLORADO )
CITY AND ) ss.
COUNTY OF DENVER )
SUBSCRIBED AND SWORN to before me by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as
Attorney-in-Fact for Jonah Pipeline Company, a Michigan corporation, on behalf
of the corporation, this 19th day of June, 1996.
WITNESS MY HAND AND OFFICIAL SEAL.
My Commission Expires:
10/5/1998 /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------- ------------------------------------
Notary Public
Address: 1775 ▇▇▇▇▇▇▇, #1400
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
STATE OF COLORADO )
CITY AND ) ss.
COUNTY OF DENVER )
SUBSCRIBED AND SWORN to before me by ▇▇▇▇ ▇. ▇▇▇▇▇▇ as President of
▇▇▇▇▇▇▇ Oil Company, Manager, on behalf of Green River Pipeline Limited
Liability Company, this 19th day of June, 1996.
WITNESS MY HAND AND OFFICIAL SEAL.
My Commission Expires:
10/5/1998 /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------- ---------------------------------
Notary Public
Address: ▇▇▇▇ ▇▇▇▇▇▇▇, #▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ASSIGNMENT OF PARTNERSHIP INTERESTS
This ASSIGNMENT OF PARTNERSHIP INTERESTS (the "Assignment Agreement")
is made and entered into as of September 28th, 2001, by and among Green River
Pipeline, LLC, a Wyoming limited liability company ("Green River"), ▇▇▇▇▇▇▇ Oil
Company, a Wyoming corporation ("MOC"), TEPPCO GP, Inc., a Delaware corporation
("TGP"), and TEPPCO Midstream Companies, L.P., a Delaware limited partnership
("TMC").
WITNESSETH:
WHEREAS, Green River and MOC own 100% of the Partnership Interests (as
defined in the Partnership Agreement, which is hereinafter defined) of Jonah Gas
Gathering Company, a Wyoming general partnership (the "Company"), pursuant to
the Jonah Gas Gathering Company Agreement of Partnership dated June 20, 1996
(the "Partnership Agreement") entered into by and between Green River and Jonah
Pipeline Company, whose interest therein was previously acquired by MOC;
WHEREAS, Green River, MOC and TEPPCO Partners, L.P., a Delaware limited
partnership ("TEPPCO"), entered into that certain Purchase and Sale Agreement
dated September 7, 2001 (the "Purchase and Sale Agreement"), in which Green
River and MOC agreed to sell and convey to TEPPCO, and TEPPCO agreed to purchase
from Green River and MOC, 100% of the Partnership Interests;
WHEREAS, TEPPCO has agreed to assign the right to acquire 0.001% of the
Partnership Interests to TGP and the right to acquire 99.999% of the Partnership
Interests to TMC pursuant to an Assignment and Assumption of Contract Rights of
even date herewith; and
WHEREAS, Green River, MOC, TGP and TMC desire to enter into this
Assignment Agreement to effect and evidence the conveyance by Green River and
MOC to TGP to 0.001% of the Partnership Interests and to TMC of 99.999% of the
Partnership Interests.
NOW, THEREFORE, in consideration of the mutual covenants herein and
other good and valuable consideration payable under and pursuant to the Purchase
and Sale Agreement, the receipt and sufficiency of which is hereby acknowledged,
the undersigned do hereby agree to the following:
(1) Assignment. (a) Effective as of the Effective Date (as
defined in the Purchase and Sale Agreement), Green River
and MOC hereby assign to (i) TGP, its successors and
assigns, and TGP hereby accepts and assumes all of Green
River's and MOC's right, title and interest in and to,
0.001% of their respective Partnership Interests in the
Company and (ii) TMC, its successors and assigns, and TMC
hereby accepts and assumes all of Green River's and MOC's
right, title and interest in and to, 99.999% of their
respective Partnership Interests in the Company.
(b) Upon consummation of the assignment set forth above in
Section 1(a), each of TGP and TMC shall be admitted as s
Substitute Partner of the Company.
(2) Assumption and Release. TGP and TMC shall (i) assume all
obligations under the Partnership Agreement attributable
to time periods after the Effective Date; and (ii) release
MOC and Green River, their successors, assigns and
affiliates from any rights or claims under or pursuant to
the Partnership Agreement that may be due or owing, or
that may be attributable to time periods on or prior to
the Effective Date.
(3) Governing Law. This Assignment Agreement shall be governed
by and interpreted in accordance with the laws of the
State of Wyoming without giving effect to principles
thereof relating to conflicts of law rules that would
direct the application of the laws of another
jurisdiction.
(4) Continuing Obligation. The parties to this Assignment
Agreement acknowledge and agree that nothing in this
Assignment Agreement shall be deemed to relieve,
supersede, restrict, impair or diminish any obligations
contained in the Purchase and Sale Agreement of Green
River and MOC to TEPPCO nor of TEPPCO to Green River and
MOC.
(5) Modification; Waiver. This Assignment Agreement shall not
be modified or waived except by an instrument signed by
the parties to this Assignment Agreement.
(6) Counterparts. This Assignment Agreement may be executed in
counterparts, each of which shall be deemed an original
and all of which, taken together, shall be deemed to
constitute one and the same instrument.
(7) Purchase and Sale Agreement. This Assignment Agreement is
subject to the terms of the Purchase and Sale Agreement.
[signatures on following page]
IN WITNESS WHEREOF, this Assignment Agreement has been signed by a duly
authorized officer of each of the parties as of the date first above written.
GREEN RIVER PIPELINE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President of Fort ▇▇▇▇▇▇▇
Consolidated Royalties, Inc.
Member of Green River Pipeline,
LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President of ▇▇▇▇▇▇▇ Oil Company,
Member of Green River Pipeline,
LLC
▇▇▇▇▇▇▇ OIL COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
TEPPCO GP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Agent and Attorney-in-Fact
TEPPCO MIDSTREAM COMPANIES, L.P., BY
TEPPCO GP, INC., ITS GENERAL PARTNER
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Agent and Attorney-in-Fact