EXHIBIT 3.B.2
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF EL PASO ENERGY PARTNERS, L.P.
DATED AS OF FEBRUARY 19, 1993,
AS AMENDED AND RESTATED THROUGH
AUGUST 31, 2000
(INCLUDING, FOR THE PURPOSES OF THIS FILING,
AMENDMENTS DATED NOVEMBER 27, 2002,
MAY 5, 2003, MAY 16, 2003,
JULY 23, 2003 AND AUGUST 21, 2003)
TABLE OF CONTENTS
ARTICLE I ORGANIZATIONAL MATTERS..................................................................................1
1.1 Formation.......................................................................................1
1.2 Name............................................................................................1
1.3 Registered Office; Principal Office.............................................................2
1.4 Power of Attorney...............................................................................2
1.5 Term............................................................................................4
1.6 Possible Restrictions on Transfer...............................................................4
1.7 Series A Common Unit Terminology................................................................4
ARTICLE II DEFINITIONS............................................................................................5
ARTICLE III PURPOSE..............................................................................................20
3.1 Purpose and Business...........................................................................20
3.2 Powers.........................................................................................20
ARTICLE IV CAPITAL CONTRIBUTIONS.................................................................................20
4.1 Initial Contributions..........................................................................20
4.2 Return of Initial Contributions................................................................21
4.3 Contribution by the General Partner and the Initial Limited Partner............................21
4.4 Issuance of Additional Units and Other Securities..............................................21
4.5 Limited Preemptive Rights......................................................................25
4.6 Capital Accounts...............................................................................25
4.7 Interest.......................................................................................27
4.8 No Withdrawal..................................................................................28
4.9 Loans from Partners............................................................................28
4.10 No Fractional Units............................................................................28
4.11 Partnership Interest Adjusting Events..........................................................28
ARTICLE V ALLOCATIONS AND DISTRIBUTIONS..........................................................................29
5.1 Allocations for Capital Account Purposes.......................................................29
5.2 Allocations for Tax Purposes...................................................................38
5.3 Requirement and Characterization of Distributions..............................................40
5.4 Distributions During Series A Preference Unit Preference Period................................40
5.5 Distributions With Respect to Calendar Quarters After the Series A Preference Unit
Preference Period..............................................................................42
5.6 Conversion of Series A Preference Units........................................................46
5.7 Distributions of Cash from Interim Capital Transactions........................................46
5.8 Definitions....................................................................................47
5.9 Adjustments to Minimum Quarterly Distribution Levels, Target Levels, Unrecovered
Capital, Series B Preference Unit Amounts and Certain Other Provisions.........................51
5.10 Reserve Amount.................................................................................52
5.11 Special Distributions..........................................................................52
ARTICLE VI MANAGEMENT AND OPERATION OF BUSINESS..................................................................53
6.1 Management.....................................................................................53
6.2 Certificate of Limited Partnership.............................................................54
6.3 Restrictions on General Partner's Authority....................................................55
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6.4 Reimbursement of the General Partner...........................................................56
6.5 Outside Activities.............................................................................57
6.6 Loans to and from the General Partner; Contracts with Affiliates...............................58
6.7 Indemnification................................................................................59
6.8 Liability of Indemnitees.......................................................................61
6.9 Resolution of Conflict of Interest.............................................................61
6.10 Other Matters Concerning the General Partner...................................................63
6.11 Title to Partnership Assets....................................................................63
6.12 Purchase or Sale of Preference Units...........................................................64
6.13 Reliance by Third Parties......................................................................64
6.14 Registration Rights of the General Partner and its Affiliates..................................64
ARTICLE VII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS...........................................................66
7.1 Limitation of Liability........................................................................66
7.2 Management of Business.........................................................................67
7.3 Outside Activities.............................................................................67
7.4 Return of Capital..............................................................................67
7.5 Rights of Limited Partner Relating to the Partnership..........................................67
ARTICLE VIII BOOK, RECORDS, ACCOUNTING AND REPORTS...............................................................68
8.1 Records and Accounting.........................................................................68
8.2 Fiscal Year....................................................................................68
8.3 Reports........................................................................................68
ARTICLE IX TAX MATTERS...........................................................................................69
9.1 Preparation of Tax Return......................................................................69
9.2 Tax Elections..................................................................................69
9.3 Tax Controversies..............................................................................69
9.4 Organizational Expenses........................................................................70
9.5 Withholding....................................................................................70
9.6 Entity-Level Taxation..........................................................................70
9.7 Entity-Level Deficiency Collections............................................................70
9.8 Opinions of Counsel............................................................................71
ARTICLE X UNIT CERTIFICATE.......................................................................................71
10.1 Unit Certificates..............................................................................71
10.2 Registration, Registration of Transfer and Exchange............................................71
10.3 Mutilated, Destroyed, Lost or Stolen Certificates..............................................71
10.4 Record Holder..................................................................................72
ARTICLE XI TRANSFER OF INTERESTS.................................................................................73
11.1 Transfer.......................................................................................73
11.2 Transfer of General Partner's Partnership Interest.............................................73
11.3 Transfer of Units..............................................................................74
11.4 Restrictions on Transfers......................................................................74
11.5 Citizenship Certificates; Non-citizen Assignees................................................74
11.6 Redemption of Interests........................................................................75
ARTICLE XII ADMISSION OF PARTNERS................................................................................77
12.1 Admission of Initial Limited Partners..........................................................77
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12.2 Admission of Substituted Limited Partners......................................................77
12.3 Admission of Successor General Partner.........................................................78
12.4 Admission of Additional Limited Partners.......................................................78
12.5 Amendment of Agreement and Certificate of Limited Partnership..................................78
ARTICLE XIII WITHDRAWAL OR REMOVAL OF PARTNERS...................................................................78
13.1 Withdrawal of the General Partner..............................................................78
13.2 Removal of the General Partner.................................................................80
13.3 Interest of Departing Partner and Successor General Partner....................................80
13.4 Withdrawal of Limited Partners.................................................................82
ARTICLE XIV DISSOLUTION AND LIQUIDATION..........................................................................82
14.1 Dissolution....................................................................................82
14.2 Continuation of the Business of the Partnership after Dissolution..............................82
14.3 Liquidation....................................................................................83
14.4 Distributions in Kind..........................................................................84
14.5 Cancellation of Certificate of Limited Partnership.............................................85
14.6 Reasonable Time for Winding Up.................................................................85
14.7 Return of Capital..............................................................................85
14.8 Capital Account Restoration....................................................................85
14.9 Waiver of Partition............................................................................85
ARTICLE XV AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE.............................................85
15.1 Amendments to be Adopted Solely by General Partner.............................................85
15.2 Amendment Procedures...........................................................................86
15.3 Amendment Requirement..........................................................................87
15.4 Meetings.......................................................................................88
15.5 Notice of a Meeting............................................................................88
15.6 Record Date....................................................................................88
15.7 Adjournment....................................................................................88
15.8 Waiver of Notice; Approval of Meeting; Approval of Minutes.....................................89
15.9 Quorum.........................................................................................89
15.10 Conduct of Meeting.............................................................................89
15.11 Action Without a Meeting.......................................................................90
15.12 Voting and Other Rights........................................................................90
ARTICLE XVI MERGER...............................................................................................91
16.1 Authority......................................................................................91
16.2 Procedure for Merger or Consolidation..........................................................91
16.3 Approval by Limited Partner of Merger or Consolidation.........................................92
16.4 Certificate of Merger..........................................................................92
16.5 Effect of Merger...............................................................................92
ARTICLE XVII RIGHT TO ACQUIRE UNITS..............................................................................93
17.1 Right to Redeem Preference Units...............................................................93
17.2 Right to Acquire Units.........................................................................94
17.3 Notice of Election to Redeem or Acquire Units..................................................94
17.4 Surrender of Unit Certificates.................................................................96
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ARTICLE XVIII GENERAL PROVISIONS.................................................................................96
18.1 Addresses and Notices..........................................................................96
18.2 Titles and Captions............................................................................97
18.3 Pronouns and Plurals...........................................................................97
18.4 Further Action.................................................................................97
18.5 Binding Effect.................................................................................97
18.6 Integration....................................................................................97
18.7 Creditors......................................................................................97
18.8 Waiver.........................................................................................97
18.9 Counterparts...................................................................................97
18.10 Applicable Law.................................................................................98
18.11 Invalidity of Provisions.......................................................................98
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SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
EL PASO ENERGY PARTNERS, L.P.
This Second Amended and Restated Agreement of Limited Partnership of El
Paso Energy Partners, L.P., amended and restated effective as of August 31, 2000
(including, for the purposes of this filing, amendments dated November 27, 2002,
May 5, 2003, May 16, 2003, July 23, 2003 and August 21, 2003), is entered into
by and among El Paso Energy Partners Company, a
Delaware corporation, as the
General Partner, and the Limited Partners, together with any other Persons who
become Partners in the Partnership as provided herein. In consideration of the
covenants, conditions and agreements contained herein, the parties hereto hereby
agree as follows:
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 Formation. The General Partner and the Organizational Limited
Partner have previously formed this Partnership as a limited partnership
pursuant to the provisions of the
Delaware Act. The General Partner and the
Organizational Limited Partner amended and restated the original Agreement of
Limited Partnership of El Paso Energy Partners, L.P. (formerly known as
Leviathan Gas Pipeline Partners, L.P.) in its entirety by entering into the
Amended and Restated Agreement of Limited Partnership dated as of February 19,
1993 (the "February 1993 Partnership Agreement"). The February 1993 Partnership
Agreement was amended by: Amendment No. 1 dated December 31, 1996, which
effected a split of the then outstanding Units; Amendment No. 2 dated June 1,
1999, which lowered the percentage of outstanding Units necessary to remove the
General Partner in connection with the Partnership's acquisition from El Paso
Energy Corporation an additional interest in Viosca ▇▇▇▇▇ Gathering Company; and
Amendment No. 3 dated November 30, 1999, which dealt with the change in the
Partnership's and the General Partner's names. The General Partner and the
Limited Partners hereby amend and restate, and replace in its entirety, the
February 1993 Partnership Agreement, as amended prior to the Second Restatement
Date, with this Second Amended and Restated Agreement of Limited Partnership of
El Paso Energy Partners, L.P. The changes effected by this second amendment and
restatement include: (i) incorporating the changes made by Amendments No. 1-3 to
the February 1993 Partnership Agreement; (ii) authorizing and issuing the Series
B Preference Units in connection with the Partnership's acquisition of the
Crystal storage facilities; and (iii) making certain corrections and
clarifications. Subject to the provisions of this Agreement, the General Partner
and the Limited Partners hereby continue the Partnership as a limited
partnership pursuant to the provisions of the
Delaware Act. Except as expressly
provided to the contrary in this Agreement, the rights and obligations of the
Partners and the administration, dissolution and termination of the Partnership
shall be governed by the
Delaware Act. The Partnership Interest of each Partner
shall be personal property for all purposes.
1.2 Name. The name of the Partnership shall be "El Paso Energy
Partners, L.P." (formerly known as Leviathan Gas Pipeline Partners, L.P.). The
Partnership's business may be conducted under any other name or names deemed
necessary or appropriate by the General Partner, including, without limitation,
the name of the General Partner or any Affiliate thereof. The words "Limited
Partnership," "L.P.," "Ltd." or similar words or letters shall be included in
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the Partnership's name where necessary for the purposes of complying with the
laws of any jurisdiction that so requires. The General Partner in its sole
discretion may change the name of the Partnership at any time and from time to
time and shall notify the Limited Partners of such change in the next regular
communication to Limited Partners.
1.3 Registered Office; Principal Office. Unless and until changed by
the General Partner, the registered office of the Partnership in the State of
Delaware shall be located at Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the registered agent for
service of process on the Partnership in the State of
Delaware at such
registered office shall be The Corporation Trust. The principal office of the
Partnership and the address of the General Partner shall be the El Paso
Building, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or such other place as
the General Partner may from time to time designate by notice to the Limited
Partners. The Partnership may maintain offices at such other place or places
within or outside the State of
Delaware as the General Partner deems advisable.
1.4 Power of Attorney.
(a) Each Limited Partner and each Assignee hereby constitutes and
appoints each of the General Partner and, if a Liquidator shall have been
selected pursuant to Section 14.3, the Liquidator severally (and any successor
to either thereof by merger, transfer, assignment, election or otherwise) and
each of their respective authorized officers and attorneys-in-fact with full
power of substitution, as his true and lawful agent and attorney-in-fact with
full power and authority in his name, place and ▇▇▇▇▇ to:
(i) execute, swear to, acknowledge, deliver, file and record
in the appropriate public offices (A) all certificates, documents and
other instruments (including, without limitation, this Agreement and
the Certificate of Limited Partnership and all amendments or
restatements thereof) that the General Partner or the Liquidator deems
necessary or appropriate to form, qualify or continue the existence or
qualification of the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) in
the State of
Delaware and in all other jurisdictions in which the
Partnership may conduct business or own property, (B) all certificates,
documents and other instruments that the General Partner or the
Liquidator deems necessary or appropriate to reflect, in accordance
with its terms, any amendment, change, modification or restatement of
this Agreement, (C) all certificates, documents and other instruments
(including, without limitation, conveyances and a certificate of
cancellation) that the General Partner or the Liquidator deems
necessary or appropriate to reflect the dissolution and liquidation of
the Partnership pursuant to the terms of this Agreement, (D) all
certificates, documents and other instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant
to, or other events described in, Article XI, Article XII, Article XIII
or Article XIV or the Capital Contribution of any Partner, (E) all
certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of any class or
series of Units or other securities issued pursuant to Section 4.4 and
(F) all certificates documents and other instruments (including,
without limitation, agreements and a certificate of merger) relating to
a merger or consolidation of the Partnership pursuant to Article XVI;
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(ii) execute, swear to, acknowledge, deliver, file and record
all ballots, consents, approval waivers, certificates and other
instruments necessary or appropriate, in the sole discretion of the
General Partner or the Liquidator, to make, evidence, give, confirm or
ratify any vote, consent, approval, agreement or other action that is
made or given by the Partners hereunder or is consistent with the terms
of this Agreement or is necessary or appropriate, in the sole
discretion of the General Partner or the Liquidator, to effectuate the
terms or intent of this Agreement, provided, that when required by
Section 15.3 or any other provision of this Agreement that establishes
a percentage of the Limited Partners or of the Limited Partners of any
class or series required to take any action, the General Partner or the
Liquidator may exercise the power of attorney made in this Section
1.4(a)(ii) only after the necessary vote, consent or approval of the
Limited Partners or of the Limited Partners of such class or series;
(iii) sign, execute and file with the Department of Interior
(including any bureau, office or other unit thereof, whether in
Washington, D.C., or in the field, or any officer or employee thereof),
as well as with any other federal or state agencies, departments,
bureaus, offices or authorities, any documents or instruments related
to the Partnership or its business which the General Partner in its
sole discretion determines should be filed, including, without
limitation, (A) any and all offers to lease and leases of or with
respect to (including amendments, modifications, supplements, renewals
and exchanges thereof) any lands under the jurisdiction of the United
States or any state (including, without limitation, lands within the
public domain, acquired lands and Indian lands) under any act or
regulation which provides for the leasing thereof; (B) all statements
of interest and holdings on behalf of the Partnership or the Partners;
(C) any other statements, notices or communications now or hereafter
required or permitted to be filed under any law, rule or regulation of
the United States or any state, including, without limitation, the
Minerals Land Leasing Act of 1920, as amended, 30 U.S.C. Section 181 et
seq., the Mineral Leasing Act for Acquired Lands of 1947, as amended,
30 U.S.C. Section 351 et seq., the Right-of-Way Leasing Act of 1930, 30
U.S.C. Section 301 et seq., and the Outer Continental Shelf Lands Act
of 1953, 43 U.S.C. Section 1331 et seq., relating to the leasing of
lands for oil and gas exploration or development; and (D) any request
for approval of assignments or transfers of oil and gas leases, any
utilization or pooling agreements and any other documents relating to
lands under the jurisdiction of the United States or any state;
Nothing contained in this Section 1.4(a) shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article XV, or
as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest and it shall survive and not be
affected by the subsequent death, incompetency, disability, incapacity,
dissolution, bankruptcy or termination of any Limited Partner or Assignee and
the transfer of all or any portion of such Limited Partner's or Assignee's
Partnership Interest and shall extend to such Limited Partners or Assignee's
heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or the Liquidator acting in good faith pursuant to such power of
attorney; and each such Limited Partner or Assignee hereby waives
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any and all defenses that may be available to contest, negate or disaffirm the
action of the General Partner or the Liquidator taken in good faith under such
power of attorney. Each Limited Partner or Assignee shall execute and deliver to
the General Partner or the Liquidator, within 15 days after receipt of the
General Partner's or the Liquidator's request therefor, such further
designations, powers of attorney and other instruments as the General Partner or
the Liquidator deems necessary to effectuate this Agreement and the purposes of
the Partnership.
1.5 Term. The Partnership commenced upon the filing of the Certificate
of Limited Partnership in accordance with the
Delaware Act and shall continue in
existence until the termination of the Partnership in accordance with the
provisions of Article XIV.
1.6 Possible Restrictions on Transfer. Notwithstanding anything to the
contrary contained in this Agreement, in the event of (i) the enactment (or
imminent enactment) of any legislation, (ii) the publication of any temporary or
final regulation by the Treasury Department ("Treasury Regulation"), (iii) any
ruling by the Internal Revenue Service or (iv) any judicial decision that in any
such case, in the Opinion of Counsel, would result in the taxation of the
Partnership for federal income tax purposes as a corporation or would otherwise
subject the Partnership to being taxed as an entity for federal income tax
purposes, then, either (a) the General Partner may impose such restrictions on
the transfer of Units or Partnership Interests as may be required in the Opinion
of Counsel to prevent the Partnership from being taxed as a corporation or
otherwise being taxed as an entity for federal income tax purposes, including,
without limitation, making any amendments to this Agreement as the General
Partner in its sole discretion may determine to be necessary or appropriate to
impose such restrictions, provided, that any such amendment to this Agreement
that would result in the delisting or suspension of trading of any class or
series of Units or other Partnership Securities on any National Securities
Exchange or national securities market on which such class or series of Units or
other Partnership Securities are then traded must be approved by the holders of
at least 66?% of the Outstanding securities of such class or series or (b) upon
the recommendation of the General Partner and the approval of the holders of at
least 66?% of all Outstanding Voting Units, the Partnership may be converted
into and reconstituted as a trust or any other type of legal entity (the "New
Entity") in the manner and on other terms so recommended and approved. In such
event, the business of the Partnership shall be continued by the New Entity and
the Outstanding Units and other Partnership Securities shall be converted into
equity interests of the New Entity in the manner and on the terms so recommended
and approved. Notwithstanding the foregoing, no such reconstitution shall take
place unless the Partnership shall have received an Opinion of Counsel to the
effect that the liability of the Limited Partners for the debts and obligations
of the New Entity shall not, unless such Limited Partners take part in the
control of the business of the New Entity, exceed that which otherwise had been
applicable to such Limited Partners as limited partners of the Partnership under
the
Delaware Act.
1.7 Series A Common Unit Terminology. For the avoidance of confusion,
the Units referred to herein as "Series A Common Units" are the Units referred
to in the February 1993 Partnership Agreement as "Common Units." The Units
referred to herein as "Series A Common Units" shall be referred to publicly, and
shall be reflected on the relevant Unit certificate, as "Common Units" until
such time (which time may or may not occur) as the Partnership authorizes and
issues a second class or series of Common Units. As used herein, except where
the context would otherwise require (including where the rights and preferences
of the holders of
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Series C Units are different, as described in Section 4.4(g)), references to
"Series A Common Units" shall be deemed to include the Series C Units as defined
in Section 4.4(g).
ARTICLE II
DEFINITIONS
The following definitions shall, for all purposes, unless otherwise
clearly indicated to the contrary, be applied to the terms used in this
Agreement:
"1996 Split Date" means December 31, 1996.
"Additional Limited Partner" means a Person admitted to the Partnership
as a Limited Partner pursuant to Section 12.4 and who is shown as such on the
books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each taxable year of the Partnership, (a)
increased by any amounts that such Partner is obligated to restore under the
standards set by Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed
obligated to restore under Treasury Regulation Sections 1.704-2(g)(1) and
1.704-2(i)(5)), and (b) decreased by (i) the amount of all losses and deductions
that as of the end of such taxable year, are reasonably expected to be allocated
to such Partner in subsequent years under Sections 704(e)(2) and 706(d) of the
Code and Treasury Regulation Section 1.751-1(b)(2)(ii), and (ii) the amount of
all distributions that as of the end of such taxable year, are reasonably
expected to be made to such Partner in subsequent years in accordance with the
terms of this Agreement or otherwise to the extent they exceed offsetting
increases to such Partner's Capital Account that are reasonably expected to
occur during (or prior to) the year in which such distributions are reasonably
expected to be made (other than increases as a result of a minimum gain
chargeback pursuant to Section 5.1(e)(i) or 5.1(e)(ii)). The foregoing
definition of Adjusted Capital Account is intended to comply with the provisions
of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith. The Adjusted Capital Account in respect of a Unit or any
other Partnership Security shall be the amount which such Adjusted Capital
Account would be if such Unit or other Partnership Security was the only
interest in the Partnership held by a Limited Partner.
"Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Section 4.6(d)(i) or 4.6(d)(ii). Once an Adjusted
Property is deemed distributed by, and recontributed to, the Partnership for
federal income tax purposes upon a termination thereof pursuant to Section 708
of the Code, such property shall thereafter constitute a Contributed Property
until the Carrying Value of such property is further adjusted pursuant to
Section 4.6(d)(i) or 4.6(d)(ii) hereof.
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly Controls, is Controlled by or is under common Control
with, the Person in question.
"Agreed Allocation" means any allocation made pursuant to Section
5.1(a), (b), (d) or (e).
"Agreed Value" of any Contributed Property means the fair market value
of such property or other consideration at the time of contribution as
determined by the General Partner
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using such reasonable method of valuation as it may adopt. The General Partner
shall, in its sole discretion, use such method as it deems reasonable and
appropriate to allocate the aggregate Agreed Value of Contributed Properties
contributed to the Partnership in a single or integrated transaction among such
properties on a basis proportional to their fair market value.
"Agreement" means this Second Amended and Restated Agreement of Limited
Partnership of El Paso Energy Partners, L.P., (including any exhibits, schedules
or other attachments) as it may be further amended, supplemented, restated or
otherwise modified from time to time.
"Argo" means Argo, L.L.C., a Delaware limited liability company.
"Argo I" means Argo I, L.L.C., a Delaware limited liability company.
"Argo II" means Argo II, L.L.C., a Delaware limited liability company.
"Assignee" means (a) a Person to whom one or more Units have been
transferred in a manner permitted under this Agreement and who has executed and
delivered a Transfer Application as required by this Agreement but who has not
become a Substituted Limited Partner or (b) a Non-citizen Assignee.
"Available Cash" has the meaning assigned to such term in Section
5.8(a).
"Book-Tax Disparity" means with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Section 4.6 and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
"Business Day" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States or the
States of New York or Texas shall not be regarded as a Business Day.
"Capital Account" means the capital account maintained for any Partner
pursuant to Section 4.6.
"Capital Contribution" means any cash, cash equivalents or the Net
Agreed Value of Contributed Property that a Partner contributes (or is deemed to
contribute) to the Partnership pursuant to Section 4.1, 4.3, 4.4, 4.6(c) or
13.3(c).
"Carrying Value" means (a) with respect to a Contributed Property, the
Agreed Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions charged to the Partners' Capital
Accounts, and (b) with respect to any other Partnership property, the adjusted
basis of such property for federal income tax purposes, all as of the time of
determination. The Carrying Value of any property shall be adjusted from time to
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time in accordance with Sections 4.6(d)(i) and 4.6(d)(ii) and to reflect
changes, additions or other adjustments to the Carrying Value for dispositions
and acquisitions of Partnership properties, as deemed appropriate by the General
Partner.
"Cash from Interim Capital Transactions" has the meaning assigned to
such term in Section 5.8(b).
"Cash from Operations" has the meaning assigned to such term in Section
5.8(c).
"Cause" means a court of competent jurisdiction has entered a final
non-appealable judgment finding the General Partner liable for actual fraud,
gross negligence or willful or wanton misconduct in its capacity as general
partner of the Partnership.
"Certificate" means a certificate, substantially in the form of Exhibit
▇-▇, ▇-▇ or A-3 to this Agreement or in such other forms as may be adopted by
the General Partner in its sole discretion, issued by the Partnership evidencing
ownership of one or more Series A Preference Units, Series A Common Units, or
Series B Preference Units, respectively, or a certificate, in such form as may
be adopted by the General Partner in its sole discretion, issued by the
Partnership evidencing ownership of one or more other Partnership Securities.
"Certificate of Limited Partnership" means the certificate of limited
partnership filed with the Secretary of State of the State of Delaware as
referenced in Section 6.2, as such Certificate has been amended through the
Second Restatement Date and may be amended or restated from time to time.
"Charter Documents" means the certificate of formation, certificate of
incorporation, certificate of limited partnership, bylaws, limited liability
company agreement and/or
limited partnership agreement, as applicable, of each
relevant Person, as they may be amended, supplemented, restated or otherwise
modified from time to time.
"Citizenship Certification" means a properly completed certificate in
such form as may be specified by the General Partner by which an Assignee or a
Limited Partner certifies that he (and if he is a nominee holding for the
account of another Person, that to the best of his knowledge such other Person)
is an Eligible Citizen.
"Closing Date" has the meaning assigned to such term in the
Underwriting Agreement, being February 19, 1993.
"Closing Price" has the meaning assigned to such term in Section 17.2.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Combined Interest" has the meaning assigned to such term in Section
13.3(a).
7
"Common Unit" means a Unit having the rights and obligations specified
with respect to Series A Common Units, or any other class or series of Common
Units hereafter existing, in this Agreement.
"Company" means El Paso Energy Partners Company (formerly known as
Leviathan Gas Pipeline Company), a Delaware corporation.
"Contributed Property" means each property or other asset in such form
as may be permitted by the Delaware Act, including intangible property generally
but excluding cash, contributed to the Partnership (or deemed contributed to the
Partnership on termination and reconstitution thereof pursuant to Section 708 of
the Code or otherwise). Once the Carrying Value of a Contributed Property is
adjusted pursuant to Section 4.6(d), such property shall no longer constitute
Contributed Property for purposes of Section 5.1, but shall be deemed Adjusted
Property for such purposes.
"Contributing Partner" means each Partner contributing (or deemed to
have contributed on termination and reconstitution of the Partnership pursuant
to Section 708 of the Code or otherwise) a Contributed Property.
"Control" (including its derivatives) means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person whether through ownership of voting securities, by contract
or otherwise.
"Conveyance Agreement" means the Contribution, Conveyance and
Assumption Agreement dated as of February 19, 1993, among the Company, the
Partnership and the Operating Companies, as in existence on that date.
"Crystal Merger Agreement" means the Agreement and Plan of Merger dated
as of August 28, 2000, among the Partnership, El Paso Partners Acquisition,
L.L.C., Crystal Holding, Inc., and Crystal Gas Storage, Inc., providing for the
issuance of Series B Preference Units, among other things.
"Current Market Price" has the meaning assigned to such term in Section
17.2.
"Deepwater Holdings" means Deepwater Holdings, L.L.C., a Delaware
limited liability company.
"Delaware Act" means the Delaware Revised Uniform Limited Partnership
Act, 6 Del. C. Sections 17-101, et seq., as amended, supplemented or restated
from time to time, and any successor to such statute.
"Delos" means Delos Offshore Company, L.L.C., a Delaware limited
liability company.
"Demand Registrations" has the meaning assigned to such term in Section
6.14(a).
"Departing Partner" means a former General Partner, from and after the
effective date of any withdrawal or removal of such former General Partner
pursuant to Section 13.1 or 13.2.
8
"Discretionary Allocation" means any allocation of an item of income,
gain, deduction, or loss pursuant to the provisions of Section 5.1(e)(iii).
"East Breaks" means East Breaks Gathering Company, L.L.C., a Delaware
limited liability company.
"Economic Risk of Loss" has the meaning set forth in Treasury
Regulation Section 1.752-2(a).
"Eligible Citizen" means a Person qualified to own interests in real
property in jurisdictions in which the Partnership or an Operating Company does
business or proposes to do business from time to time, and whose status as a
Limited Partner or Assignee does not or would not subject the Partnership or an
Operating Company to a substantial risk of cancellation or forfeiture of any of
its properties or any interest therein. As of the Closing Date, "Eligible
Citizen" means (a) a citizen of the United States, (b) an association (including
a partnership, joint tenancy and tenancy in common) organized or existing under
the laws of the United States or any state or territory thereof, all of the
members of which are citizens of the United States or (c) a corporation
organized under the laws of the United States or of any state or territory
thereof, of which corporation, to the best of its knowledge, not more than five
percent of the voting stock, or of all the stock, is owned or controlled by
citizens of countries that deny to United States citizens privileges to own
stock in corporations holding oil and gas leases similar to the privileges of
non-United States citizens to own stock in corporations holding an interest in
oil and gas leases on federal lands.
"EP Acquisition" means El Paso Partners Acquisition, L.L.C., a Delaware
limited liability company.
"EP Deepwater" means El Paso Energy Partners Deepwater, L.L.C., a
Delaware limited liability company.
"EP Finance" means El Paso Energy Partners Finance Corporation, a
Delaware corporation.
"EP Operating" means El Paso Energy Partners Operating Company, L.L.C.,
a Delaware limited liability company.
"EP Transport" means El Paso Energy Partners Oil Transport, L.L.C., a
Delaware limited liability company.
"Event of Withdrawal" has the meaning assigned to such term in Section
13.1(a).
"▇▇▇▇▇ Bank" means ▇▇▇▇▇ Bank Gathering Company, L.L.C., a Delaware
limited liability company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
supplemented, restated or otherwise modified from time to time, and any
successor to such statute.
9
"February 1993 Partnership Agreement" has the meaning assigned to such
term in Section 1.1.
"First Target Distribution" has the meaning assigned to such term in
Section 5.8(d).
"Flextrend" means Flextrend Development Company, L.L.C., a Delaware
limited liability company.
"General Partner" means the Company, and its successors as general
partner of the Partnership.
"Green Canyon" means Green Canyon Pipe Line Company, L.P., a Delaware
limited partnership (formerly a Delaware limited liability company).
"HIOS" means High Island Offshore System, L.L.C., a Delaware limited
liability company.
"HIOS" means High Island Offshore System, a Delaware general
partnership.
"Incentive Distribution" means any amount of cash distributed to the
General Partner, in its capacity as general partner of the Partnership, pursuant
to paragraphs (e), (f) and (g) of Section 5.4 and paragraphs (a)(v)-(vii), and
(b)(v)-(vii) of Section 5.5 which exceeds an amount equal to 1.0% of the
aggregate amount of cash then being distributed pursuant to each such provision.
"Indemnitee" means the General Partner, any Departing Partner, any
Person who is or was an Affiliate of the General Partner or any Departing
Partner, any Person who is or was an officer, director, employee, partner, agent
or trustee of the General Partner or any Departing Partner or any such
Affiliate, or any Person who is or was serving at the request of the General
Partner or any Departing Partner or any such Affiliate as a director, officer,
employee, partner, agent or trustee of another Person.
"Initial Limited Partners" means the Organizational Limited Partner and
the Underwriters, unless the context shall otherwise require.
"Initial Unit Price" means with respect to Series A Preference Units
and Series A Common Units, the initial price per Series A Preference Unit at
which the Underwriters offered the Series A Preference Units to the public for
sale as set forth on the cover page of the prospectus first issued at or after
the time the Registration Statement filed in connection with the sale of Series
A Preference Units contemplated by the Underwriting Agreement first became
effective and, with respect to any other class or series of Units, the price per
Unit at which such class or series of Units is initially sold by the
Partnership, as determined by the General Partner in its sole discretion. The
Initial Unit Price for the Series A Preference Units is (a) prior to the 1996
Split Date, $20.50 per Unit and (b) on and after the 1996 Split Date, $10.25 per
Unit, in each such case subject to adjustment as provided in this Agreement. The
Initial Unit Price with respect to the Series B Preference Units is the Series B
Preference Unit Face Value.
"Interim Capital Transaction" has the meaning assigned to such term in
Section 5.8(e).
10
"Issue Price" means the price at which a Unit is purchased from the
Partnership, less any sales commission or underwriting discount charged to the
Partnership. The Issue Price for the Series A Preference Units is (a) prior to
the 1996 Split Date, $19.065 per Unit and (b) on and after the 1996 Split Date,
$9.5325 per Unit, in each such case subject to adjustment as provided in this
Agreement.
"Joint Venture" means any Person other than an Operating Company in
which the Partnership owns (directly or indirectly, of record or beneficially)
stock, membership interest or other equity interests, the holder of which is
generally entitled to vote for the election of the board of directors or other
governing body of such Person, that has the power to elect more than 20% but
less than a majority of the board of directors or other governing body,
including (as of the Second Restatement Date) POPCO, Nemo, Deepwater Holdings,
West Cam, Stingray, UTOS, Western Gulf, HIOS, East Breaks, Neptune, Ocean
Breeze, Manta Ray Offshore and Nautilus.
"Limited Partner" means each Initial Limited Partner, each Substituted
Limited Partner, each Additional Limited Partner and any Departing Partner upon
the change of its status from General Partner to Limited Partner pursuant to
Section 13.3 and solely for purposes of Article IV, Article V and Article VI and
Sections 14.3 and 14.4, shall include an Assignee.
"Liquidator" means the General Partner or other Person approved
pursuant to Section 14.3 who performs the functions described therein.
"Liquidity Condition" means the requirement that, at the end of the
90-day period following the Series A Preference Unit Conversion Date (or, if
applicable, the first or second anniversary thereof), after giving effect to the
conversion of all Series A Preference Units as to which a Series A Preference
Unit Conversion Election Notice has been timely received by the General Partner,
there would be at least 2,000 holders of 100 or more Series A Common Units.
"Manta Ray Gathering" means Manta Ray Gathering Company, L.L.C., a
Delaware limited liability company.
"Manta Ray Offshore" means Manta Ray Offshore Gathering Company,
L.L.C., a Delaware limited liability company.
"Merger Agreement" has the meaning assigned to such term in Section
16.1.
"Minimum Gain Attributable to Partner Nonrecourse Debt" means that
amount determined in accordance with the principles of Treasury Regulation
Section 1.704-2(i)(3).
"Minimum Quarterly Distribution" has the meaning assigned to such term
in Section 5.8(f).
"Moray" means Moray Pipeline Company, L.L.C., a Delaware limited
liability company.
"National Securities Exchange" means an exchange registered with the
Securities and Exchange Commission under Section 6(a) of the Exchange Act.
11
"Nautilus" means Nautilus Pipeline Company, L.L.C., a Delaware limited
liability company.
"Nemo" means Nemo Gathering Company, LLC, a Delaware limited liability
company.
"Neptune" means Neptune Pipeline Company, L.L.C., a Delaware limited
liability company
"Net Agreed Value" means (a) in the case of any Contributed Property,
the Agreed Value of such property reduced by any liabilities either assumed by
the Partnership upon such contribution or to which such property is subject when
contributed, and (b) in the case of any property distributed to a Partner or
Assignee by the Partnership, the Partnership's Carrying Value of such property
at the time such property is distributed reduced by any indebtedness either
assumed by such Partner or Assignee upon such distribution or to which such
property is subject at the time of distribution as determined under Section 752
of the Code.
"Net Income" has the meaning assigned to such term in Section 5.8(g).
"Net Loss" has the meaning assigned to such term in Section 5.8(h).
"Net Termination Gain" has the meaning assigned to such term in Section
5.8(i).
"Net Termination Loss" has the meaning assigned to such term in Section
5.8(j).
"New Entity" has the meaning assigned to such term in Section 1.6.
"Non-citizen Assignee" means a Person who the General Partner has
determined in its sole discretion does not constitute an Eligible Citizen and as
to whose Partnership Interest the General Partner has become the Substituted
Limited Partner, pursuant to Section 11.5.
"Nonrecourse Built-in Gain" meant with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 5.2(b)(i)(A),
5.2(b)(ii)(A) or 5.2(b)(iii) if such properties were disposed of in a taxable
transaction in full satisfaction of such liabilities and for no other
consideration.
"Nonrecourse Deductions" means any and all items of loss, deduction or
expenditure (described in Section 705(a)(2)(B) of the Code) that in accordance
with the principles of Treasury Regulation Section 1.704-2(b)(1), are
attributable to a Nonrecourse Liability.
"Nonrecourse Liability" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(3).
"Notice of Election to Purchase" has the meaning assigned to such term
in Section 17.3(b).
"Notice of Election to Redeem" has the meaning assigned to such term in
Section 17.3(a).
12
"Ocean Breeze" means Ocean Breeze Pipeline Company, L.L.C., a Delaware
limited liability company
"Operating Company" means any Affiliate that the Partnership both (i)
Controls and (ii) owns (beneficially or of record), directly or indirectly,
stock, membership interest or other equity interests, the holder of which is
generally entitled to vote for the election of the board of directors or other
governing body of such Affiliate, that has the power to elect at least a
majority of the board of directors or other governing body of such Person,
including (as of the Second Restatement Date) Argo, Argo I, Argo II, Delos, EP
Deepwater, EP Finance, EP Operating, EP Transport, EP Acquisition, ▇▇▇▇▇ Bank,
Flextrend, Green Canyon, Manta Ray Gathering, Moray, Poseidon, Sailfish, Tarpon,
VK, VK Deepwater and VK Main Pass.
"Opinion of Counsel" means a written opinion of counsel (who may be
regular counsel to the Partnership or the General Partner) acceptable to the
General Partner.
"Organizational Limited Partner" means ▇▇▇▇▇▇ ▇. ▇▇▇▇ in his capacity
as the organizational limited partner of the Partnership pursuant to this
Agreement in its form on February 19, 1993.
"Outstanding" means, with respect to the Units or other Partnership
Securities, as the case may be, all Units or other Partnership Securities of
such class or series, as the case may be, that are issued by the Partnership and
reflected as outstanding on the Partnership's books and records as of the date
of determination.
"Partner" means a General Partner or a Limited Partner and Assignees
thereof, if applicable.
"Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" means any and all items of loss,
deduction or expenditure (including any expenditure described in Section
705(a)(2)(B) of the Code) that in accordance with the principles of Treasury
Regulation Section 1.704-2(i)(2), are attributable to a Partner Nonrecourse
Debt.
"Partnership" means El Paso Energy Partners, L.P. (formerly known as
Leviathan Gas Pipeline Partners, L.P.), a Delaware limited partnership governed
by this Agreement, and any successor thereto.
"Partnership Assets" means, initially, all of the assets and rights of
the Company transferred to an Operating Company as set forth in the Conveyance
Agreement and, thereafter, all assets of the Partnership whether tangible or
intangible and whether real, personal or mixed.
"Partnership Inception" means the Closing Date.
"Partnership Interest" means the interest of a Partner in the
Partnership, which, in the case of a Limited Partner or an Assignee, shall be
expressed in terms of Units or other Partnership Securities, or a combination
thereof, as the case may be.
13
"Partnership Interest Adjusting Event" means any subdivision or
combination of the issued Units or other Partnership Securities, whether by
reason of any dividend, split, recapitalization, reorganization, merger,
consolidation, spinoff, combination or other similar change.
"Partnership Minimum Gain" means the amount determined pursuant to the
provisions of Treasury Regulation Section 1.704-2(d).
"Partnership Securities" has the meaning assigned to such term in
Section 4.4(a).
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"Person" means an individual or an entity, including, without
limitation, a corporation, partnership, limited liability company, trust,
unincorporated organization, governmental entity, association or other entity.
"POPCO" means Poseidon Oil Pipeline Company, L.L.C. a Delaware limited
liability company.
"Poseidon" means Poseidon Pipeline Company, L.L.C., a Delaware limited
liability company.
"Preference Unit" means any Series A Preference Unit, Series B
Preference Unit or other Unit of any class or series of Preference Units
hereafter existing.
"Preference Unit Combined Capital Amount" means, with respect to any
date of determination, the sum of (i) the quotient of (x) the Series A
Preference Unit Capital Amount divided by (y) the number of Series A Preference
Units Outstanding on such date and (ii) the Series B Preference Unit Liquidation
Value on such date.
"Preference Unit Sharing Ratios" means the Series A Preference Unit
Sharing Ratio and the Series B Preference Unit Sharing Ratio.
"Purchase Date" means the date determined by the General Partner, an
Affiliate of the General Partner or the Partnership, as the case may be, as the
date for purchase of all Outstanding Units (other than Units owned by the
General Partner and its Affiliates) pursuant to Article XVII.
"Rate" has the meaning assigned to such term in Section 9.6.
"Recaptured Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Section 734 or 743 of the
Code) upon the disposition of any property or asset of the Partnership, which
gain is characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"Record Date" means the date established by the General Partner for
determining (a) the identity of Limited Partners (or Assignees if applicable)
entitled to notice of, or to vote at any
14
meeting of Limited Partners or entitled to vote by ballot or give approval of
Partnership action in writing without a meeting or entitled to exercise rights
in respect of any action of Limited Partners or (b) the identity of Record
Holders entitled to receive any report or distribution.
"Record Holder" means (i) with respect to the Series A Preference Units
and the Series A Common Units, the Person in whose name such Unit is registered
on the books of the Transfer Agent as of the opening of business on a particular
Business Day and (ii) with respect to any other Partnership Security, the Person
in whose name such security is registered on the books of the transfer agent for
such security or the Partnership, as applicable.
"Redeemable Units" means any Units for which a redemption notice has
been given, and has not been withdrawn, under Section 11.6.
"Redemption Date" has the meaning assigned to such term in Section
17.3(a).
"Registration Statement" means the Registration Statement on Form S-1
(Registration No. 33-55642), as it has been and as it may be amended or
supplemented from time to time, filed by the Partnership with the Securities and
Exchange Commission under the Securities Act to register the offering and sale
of Preference Units in the Series A Preference Unit Initial Offering.
"Required Allocations" means any allocation (or limitation imposed on
any allocation) of an item of income, gain, deduction or loss pursuant to (a)
the proviso-clauses of Sections 5.1(c)(i)(B), 5.1(c)(i)(C), 5.1(c)(i)(D), and
Sections 5.1(c)(ii)(B), 5.1(c)(ii)(C) and 5.1(c)(ii)(D) or (b) Section 5.1(e),
such allocations (or limitations thereon) being directly or indirectly required
by the Treasury Regulations promulgated under Section 704(b) of the Code.
"Reserve Amount" means a reserve, to be funded and maintained by the
Partnership, consisting of the aggregate cash on hand in the Partnership and the
Operating Companies at the Partnership Inception, on a combined basis, increased
by net cash proceeds to the Partnership from the exercise by the Underwriters of
the over-allotment option which shall be deemed to occur for purposes of
distribution of the Reserve Amount at the Partnership Inception. The General
Partner, in its sole discretion, may increase or decrease the Reserve Amount,
from time to time, after the Partnership Inception.
"Residual Gain" or "Residual Loss" means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of a Contributed Property
or Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 5.2(b)(i)(A) or 5.2(b)(ii)(A), to eliminate Book-Tax
Disparities.
"Revolving Credit Facility" means a revolving credit facility for a
maximum amount of $50 million which the Partnership has entered into with a
syndicate of commercial banks.
"Sailfish" means Sailfish Pipeline Company, L.L.C., a Delaware limited
liability company.
"Second Restatement Date" means August 31, 2000.
15
"Second Target Distribution" has the meaning assigned to such term in
Section 5.8(k).
"Securities Act" means the Securities Act of 1933, as amended,
supplemented, restated or otherwise modified from time to time, and any
successor to such statute.
"Series A Common Unit" means a Unit having the rights and obligations
specified with respect to Series A Common Units in this Agreement (previously
referred to only as a Common Unit).
"Series A Preference Unit" means a Unit having the rights and
obligations specified with respect to Series A Preference Units in this
Agreement (previously referred to only as a Preference Unit).
"Series A Preference Unit Capital Amount" means, with respect to any
date of determination, the aggregate Capital Account balance for all holders of
Series A Preference Units.
"Series A Preference Unit Conversion Election Notice" has the meaning
assigned to such term in Section 5.6(b).
"Series A Preference Unit Conversion Opportunity Notice" has the
meaning assigned to such term in Section 5.6(b).
"Series A Preference Unit Conversion Date" means the first date that is
at the end of a calendar quarter on or after March 31, 1998 upon which (i) there
shall be no Series A Preference Unit Cumulative Deficiency, (ii) the Partnership
shall have distributed Available Cash constituting Cash from Operations of not
less than $2.40 per Unit (adjusted, since the Closing Date, for any
distributions of Available Cash from Interim Capital Transactions and in
accordance with Sections 5.9 and 9.6), excluding amounts paid to holders of
Series A Preference Units in respect of Series A Preference Unit Deficiencies,
in respect of the Series A Preference Units during each of the three immediately
preceding consecutive non-overlapping twelve-month periods, and (iii) the sum of
all amounts distributed in respect of Series A Common Units during each of the
same three consecutive non-overlapping twelve-month periods is not less than
$2.40 (adjusted for any distributions of Available Cash from Interim Capital
Transactions and in accordance with Sections 5.9 and 9.6) per Series A Common
Unit.
"Series A Preference Unit Cumulative Deficiency" has the meaning
assigned to such term in Section 5.8(l).
"Series A Preference Unit Deficiency" has the meaning assigned to such
term in Section 5.8(m).
"Series A Preference Unit Initial Offering" means the initial offering
of Series A Preference Units to the public, as described in the Registration
Statement.
"Series A Preference Unit Preference Period" means the period
commencing upon the Closing Date and ending on the date determined under
Sections 5.6(c) and 5.6(d).
16
"Series A Preference Unit Sharing Ratio" means, with respect to any
date of determination, the quotient derived by dividing the Series A Preference
Unit Capital Amount on such date by the Preference Unit Combined Capital Amount
on such date.
"Series B Preference Unit" means a Unit having the rights and
obligations specified with respect to Series B Preference Units in this
Agreement.
"Series B Preference Unit Accretion Amount" means, for each Outstanding
Series B Preference Unit on each relevant Series B Preference Unit Accretion
Date, an amount equal to the product of (i) the average Series B Preference Unit
Liquidation Value during the period beginning on the later of the Series B
Preference Unit Issuance Date or the day immediately following the most recent
Series B Preference Unit Accretion Date and ending on (and including) the
relevant Series B Preference Unit Accretion Date and (ii) (A) prior to the
Series B Preference Unit Preference Date, 0.05 and (B) on and after the Series B
Preference Unit Preference Date, 0.06.
"Series B Preference Unit Accretion Date" means, as applicable, each
June 30 and December 31 of each calendar year occurring after the Series B
Preference Unit Issuance Date, and, with respect to any Series B Preference Unit
that is redeemed, the date upon which such Series B Preference Unit is redeemed
..
"Series B Preference Unit Deficiency" means, for any Series B
Preference Unit, with respect to any date of determination, the positive
difference (if any) between (i) the sum of all Series B Preference Unit
Accretion Amounts for such Unit from the Series B Preference Unit Issuance Date
through the relevant date of determination less (ii) the sum of all
distributions paid in respect of such Unit from the Series B Preference Unit
Issuance Date through the relevant date of determination.
"Series B Preference Unit Discretionary Distribution Amount" has the
meaning assigned to such term in Section 5.3.
"Series B Preference Unit Face Value" means $1,000 per Series B
Preference Unit, as adjusted for Partnership Interest Adjusting Events and
distributions of Cash from Interim Capital Transactions pursuant to Section 5.7
or distributions in connection with the dissolution or liquidation of the
Partnership theretofore made in respect of such Unit.
"Series B Preference Unit Issuance Date" means August 30, 2000.
"Series B Preference Unit Liquidation Value" means, for any Outstanding
Series B Preference Unit, with respect to any date of determination, an amount
equal to the sum of (i) the Series B Preference Unit Face Value and (ii) the
Series B Preference Unit Deficiency on such date.
"Series B Preference Unit Preference Date" means the first day of the
calendar quarter immediately following the calendar quarter that includes August
29, 2010.
"Series B Preference Unit Sharing Ratio" means, with respect to any
date of determination, the quotient derived by dividing the aggregate Series B
Preference Unit
17
Liquidation Value for all Series B Preference Units on such date by the
Preference Unit Combined Capital Amount on such date.
"Special Approval" means approval of a majority of the members of the
Conflicts and Audit Committee of the Partnership.
"Stingray" means Stingray Pipeline Company, L.L.C., a Delaware limited
liability company (formerly a Delaware general partnership).
"Stingray Holding" means Stingray Holding, L.L.C., a Delaware limited
liability company.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 12.2 in place of and with
all the rights of a Limited Partner and who is shown as a Limited Partner on the
books and records of the Partnership.
"Surviving Business Entity" has the meaning assigned to such term in
Section 16.2(b).
"Tarpon" means Tarpon Transmission Company, a Texas corporation.
"Termination Capital Transaction" has the meaning assigned to such term
in Section 5.8(n).
"Third Target Distribution" has the meaning assigned to such term in
Section 5.8(o).
"Trading Day" has the meaning assigned to such term in Section 17.2.
"Transfer Agent" means ChaseMellon Shareholder Services LLC or such
bank, trust company or other Person (including, without limitation, the General
Partner or one of its Affiliates) as shall be appointed from time to time by the
Partnership to act as registrar and transfer agent for the Units or any
applicable Partnership Securities.
"Transfer Application" means an application and agreement for transfer
of Units in the form set forth on the back of a Unit Certificate or in a form
substantially to the same effect in a separate instrument.
"Treasury Regulation" has the meaning assigned to such term in Section
1.6.
"Underwriter" means each Person named as an underwriter in the
Underwriting Agreement who purchased Units pursuant thereto.
"Underwriting Agreement" means the Underwriting Agreement dated
February 11, 1993, among the Underwriters, the Partnership, the Operating
Companies and the General Partner providing for the purchase of Series A
Preference Units by such Underwriter.
"Unit" means a Partnership Interest of a Limited Partner or Assignee in
the Partnership representing a fractional part of the Partnership Interests of
all Limited Partners and Assignees.
18
"Unit Certificate" means a certificate or certificates in such form as
may be hereafter adopted by the General Partner in its sole discretion issued by
the Partnership evidencing ownership of one or more Units.
"Unitholder" means a Person who is the holder of a Unit on the records
of the Partnership.
"Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a) the fair
market value of such property as of such date over (b) the Carrying Value of
such property as of such date (prior to any adjustment to be made pursuant to
Section 4.6(d) as of such date). In determining such Unrealized Gain, the
aggregate cash amount and fair market value of all Partnership Assets shall be
determined by the General Partner using such reasonable method of valuation as
it may adopt. The General Partner shall allocate such aggregate value among the
assets of the Partnership (in such manner as it determines in its sole
discretion to be reasonable) to arrive at a fair market value- for individual
properties.
"Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a) the Carrying
Value of such property as of such date (prior to any adjustment to be made
pursuant to Section 4.6(d) as of such date) over (b) the fair market value of
such property as of such date. In determining such Unrealized Loss, the
aggregate cash amount and fair market value of all Partnership Assets shall be
determined by the General Partner using such reasonable method of valuation as
it may adopt. The General Partner shall allocate such aggregate value among the
assets of the Partnership (in such manner as it determines in its sole
discretion to be reasonable) to arrive at a fair market value for individual
properties.
"Unrecovered Capital" means, with respect to any date of determination,
the Initial Unit Price, less the sum of all distributions made up to (and
including) such date in respect of a Unit that was sold in the initial offering
of such Units constituting, and which for purposes of determining the priority
of such distribution is treated as constituting, Cash from Interim Capital
Transactions and of any distributions of cash (or the Net Agreed Value of any
distributions in kind) in connection with the dissolution and liquidation of the
Partnership theretofore made in respect of a Unit that was sold in the initial
offering of such Units.
"UTOS" means UT Offshore System, L.L.C., a Delaware limited liability
company (formerly a Delaware general partnership).
"VK" means Viosca ▇▇▇▇▇ Gathering Company, a Delaware general
partnership.
"VK Deepwater" means VK Deepwater Gathering Company, L.L.C., a Delaware
limited liability company.
"VK Main Pass" means VK-Main Pass Gathering Company, L.L.C., a Delaware
limited liability company.
"Voting Units" means, depending on the context in which it is used, (i)
with respect to matters on which Units are expressly granted the right to vote
in this Agreement, any Series A
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Preference Units, Series A Common Units and any other Units issued after the
Second Restatement Date with voting rights similar to those of Series A Common
Units, and excluding any Units or other Partnership Securities not expressly
granted such voting rights in this Agreement (such as Series B Preference
Units), or (ii) with respect to a particular matter that is subject to the vote
of security holders, any Units or other Partnership Securities which this
Agreement or the Delaware Act expressly grant the right to vote on such matter.
"West Cam" means West Cameron Dehydration Company, L.L.C., a Delaware
limited liability company.
"Western Gulf" means Western Gulf Holdings, L.L.C., a Delaware limited
liability company.
"Withdrawal Opinion of Counsel" has the meaning assigned to such term
in Section 13.1(b).
ARTICLE III
PURPOSE
3.1 Purpose and Business. The purpose and nature of the business to be
conducted by the Partnership shall be (i) to serve as the managing member of
each of the initial Operating Companies and, in connection therewith, to
exercise all of the rights and powers conferred upon the Partnership as the
managing member of the Operating Companies pursuant to their Charter Documents
or otherwise, (ii) to engage directly in, or to enter into any partnership,
joint venture or similar arrangement to engage in, any business activity that
lawfully may be conducted by a limited partnership organized pursuant to the
Delaware Act and, in connection therewith, to exercise all of the rights and
powers conferred upon the Partnership pursuant to the agreements relating to
such business activity, (iii) to do anything necessary or appropriate to the
foregoing (including, without limitation, the making of capital contributions or
loans to the Operating Companies or in connection with its involvement in the
activities referred to in clause (ii) of this sentence), and (iv) to engage in
any other business activity as permitted under Delaware law. The General Partner
has no obligation or duty to the Partnership, the Limited Partners or the
Assignees to propose or approve, and in its sole discretion may decline to
propose or approve, the conduct by the Partnership of any business.
3.2 Powers. The Partnership shall be empowered to do any and all acts
and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and business
described in Section 3.1 and for the protection and benefit of the Partnership.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 Initial Contributions. To form the Partnership under the Delaware
Act the General Partner has made an initial Capital Contribution to the
Partnership in the amount of $10 for an interest in the Partnership and has been
admitted as the General Partner of the Partnership, and the Organizational
Limited Partner has made a Capital Contribution to the Partnership in the
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amount of $990 for an interest in the Partnership and has been admitted as the
Organizational Limited Partner of the Partnership.
4.2 Return of Initial Contributions. As of the Closing Date, after
giving effect to (i) the transactions contemplated by Section 4.3 and (ii) the
admission to the Partnership of the Initial Limited Partners in accordance with
this Agreement, the interest in the Partnership of the Organizational Limited
Partner shall be terminated, the $10 Capital Contribution by the General Partner
and the $990 Capital Contribution by the Organizational Limited Partner as
initial Capital Contributions shall be refunded and the interest of the
Organizational Limited Partner as a Limited Partner of the Partnership shall be
terminated and withdrawn. Ninety-nine percent (99%) of any interest or other
profit that may have resulted from the investment or other use of such initial
Capital Contributions shall be allocated and distributed to the Organizational
Limited Partner, and the balance thereof shall be allocated and distributed to
the General Partner.
4.3 Contribution by the General Partner and the Initial Limited
Partner.
(a) On the Closing Date, the General Partner shall, as set forth in the
Conveyance Agreement, contribute, transfer, convey, assign and deliver to the
Partnership or the Operating Companies, as a Capital Contribution, those assets
subject to such obligations as are described in the Conveyance Agreement in
consideration for the continuation of its 1.0% general partner interest in the
Partnership and 3,570,000 Series A Common Units.
(b) Subject to completion of the Capital Contributions referred to in
Section 4.3(a), on the Closing Date, each Underwriter shall contribute and
deliver to the Partnership, as a Capital Contribution, cash in an amount equal
to the Issue Price per Unit multiplied by the number of Series A Preference
Units specified in the Underwriting Agreement to be purchased by such
Underwriter on the Closing Date. In exchange for such Capital Contribution, the
Partnership shall issue Series A Preference Units to each Underwriter on whose
behalf such Capital Contribution is made in an amount equal to the quotient
obtained by dividing (x) the cash contribution to the Partnership by or on
behalf of such Underwriter by (y) the Issue Price per Unit. Upon receipt of such
Capital Contribution and a completed Transfer Application, each Underwriter
shall be admitted to the Partnership as an Initial Limited Partner in respect of
the Series A Preference Units so issued to it.
(c) To the extent that the Underwriters' over-allotment option is
exercised, each Underwriter exercising such option shall contribute and deliver
to the Partnership cash in an amount equal to the Issue Price per Unit
multiplied by the number of Series A Preference Units to be purchased by such
Underwriter from the Partnership pursuant to the over-allotment option at the
"Option Closing Date," as such term is used in the Underwriting Agreement. In
exchange for such Capital Contribution, the Partnership shall issue Series A
Preference Units to each Underwriter on whose behalf such Capital Contribution
is made in an amount equal to the quotient obtained by dividing (x) the cash
contribution to the Partnership by or on behalf of such Underwriter by (y) the
Issue Price per Unit. The Partnership is expressly authorized to purchase up to
393,750 Series A Common Units from the General Partner at the Issue Price per
Unit in connection with the exercise of the over-allotment option by the
Underwriters.
4.4 Issuance of Additional Units and Other Securities.
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(a) Subject to Section 4.4(c), the General Partner is hereby authorized
to cause the Partnership to issue, in addition to the Series A Preference Units
and Series A Common Units issued pursuant to Section 4.3, such additional Series
A Preference Units or other Units (including, specifically, Series A Common
Units issuable upon conversion of Series A Preference Units as contemplated by
Section 5.6), or classes or series thereof, or options, rights, warrants or
appreciation rights relating thereto, or any other type of equity security that
the Partnership may lawfully issue, any unsecured or secured debt obligations of
the Partnership or debt obligations of the Partnership convertible into any
class or series of equity securities of the Partnership (collectively,
"Partnership Securities"), for any Partnership purpose, at any time or from time
to time, to the Partners or to other Persons for such consideration and on such
terms and conditions as shall be established by the General Partner in its sole
discretion, all without the approval of any Limited Partners. The General
Partner shall have sole discretion, subject to the guidelines set forth in this
Section 4.4 and the requirements of the Delaware Act, in determining the
consideration and terms and conditions with respect to any future issuance of
Partnership Securities. The additional Series A Preference Units to be issued
pursuant to this Section 4.4 are in addition to the Series A Preference Units
issuable upon exercise of the Underwriters' over-allotment option, in accordance
with the Underwriting Agreement.
(b) Notwithstanding any provision of this Agreement to the contrary,
additional Partnership Securities to be issued by the Partnership pursuant to
this Section 4.4 shall be issuable from time to time in one or more classes, or
one or more series of any of such classes, with such designations, preferences
and relative, participating, optional or other special rights, powers and
duties, including, without limitation, rights, powers and duties senior to
existing classes and series of Partnership Securities (except as provided in
Section 4.4(c)), all as shall be fixed by the General Partner in the exercise of
its sole and complete discretion, subject to Delaware law and Section 4.4(c),
including, without limitation (i) the allocations of items of Partnership
income, gain, loss, deduction and credit to each such class or series of
Partnership Securities; (ii) the right of each such class or series of
Partnership Securities to share in Partnership distributions; (iii) the rights
of each such class or series of Partnership Securities upon dissolution and
liquidation of the Partnership; (iv) whether such class or series of additional
Partnership Securities is redeemable by the Partnership and, if so, the price at
which, and the terms and conditions upon which such class or series of
additional Partnership Securities may be redeemed by the Partnership; (v)
whether such class or series of additional Partnership Securities is issued with
the privilege of conversion and, if so, the rate at which, and the terms and
conditions upon which, such class or series of Partnership Securities may be
converted into any other class or series of Partnership Securities; (vi) the
terms and conditions upon which each such class or series of Partnership
Securities will be issued, evidenced by Certificates (as applicable) and
assigned or transferred; and (vii) the right, if any, of each such class or
series of Partnership Securities to vote on Partnership matters, including,
without limitation, matters relating to the relative rights, preferences and
privileges of each such class or series.
(c) Notwithstanding the terms of Sections 4.4(a) and 4.4(b), so long as
any Series A Preference Units or Series B Preference Units are Outstanding, the
issuance by the Partnership of any Partnership Interests shall be subject to the
following restrictions and limitations:
(i) During the Series A Preference Unit Preference Period, the
Partnership shall not (A) issue an aggregate of more than 5,000,000
(10,000,000 on and after the
22
1996 Split Date) additional Series A Preference Units or other
Partnership Interests which are pari passu with Series A Preference
Units (in addition to those issued, if any, pursuant to the exercise of
the Underwriters' over allotment option) or (B) issue any other
Partnership Interests having rights to distributions or in liquidation
ranking prior to the Series A Preference Units, in each case without
the prior approval of holders of at least 66?% of the Outstanding
Series A Preference Units;
(ii) After the Series A Preference Unit Preference Period, the
Partnership may not issue securities with rights as to distributions
and allocations or liquidation ranking prior to (as distinguished from
pari passu with) the Series A Preference Units without the approval of
holders of at least 66?% of the Outstanding Series A Preference Units
and the approval of holders of at least 66?% of the Outstanding Series
B Preference Units (including those held by the General Partner and its
Affiliates);
(iii) Upon the issuance of any Units or other Partnership
Securities by the Partnership pursuant to this Section 4.4, the General
Partner shall be required to make additional Capital Contributions to
the Partnership or convert a number of Partnership Securities owned by
the General Partner into General Partner interests such that the
General Partner shall at all times have a balance in its Capital
Account equal to 1.0% of the total positive Capital Account balances of
all Partners; and
(iv) After the Series B Preference Unit Issuance Date, the
Partnership may not issue securities with rights as to distributions
and allocations or liquidation ranking prior to (as distinguished from
pari passu with) the Series B Preference Units without the approval of
holders of at least 66?% of the Outstanding Series B Preference Units
(including those held by the General Partner and its Affiliates).
(d) The General Partner is hereby authorized and directed to take all
actions that it deem necessary or appropriate in connection with each issuance
of Units or other Partnership Securities pursuant to Section 4.4(a) to amend
this Agreement in any manner that it deem necessary or appropriate to provide
for each such issuance, to admit Additional Limited Partners in connection
therewith and to specify the relative rights, powers and duties of the holders
of the Units or other Partnership Securities being so issued.
(e) Subject to the terms of Sections 4.4(c) and 6.4(c), the General
Partner is authorized to cause the issuance of Partnership Securities pursuant
to any employee benefit plan for the benefit of employees responsible for the
operations of the Partnership or the Operating Companies maintained or sponsored
by the General Partner, the Partnership, the Operating Companies or any
Affiliate of any of them.
(f) The General Partner shall do all things necessary to comply with
the Delaware Act and is authorized and directed to do all things it deems to be
necessary or advisable in connection with any future issuance of Partnership
Securities, including, without limitation, compliance with any statute, rule,
regulation or guideline of any federal state or other governmental agency or any
National Securities Exchange on which the Units or other Partnership Securities
are listed for ruling.
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(g) Series C Units. A new series of Units, designated "Series C Units,"
has been established by the Partnership with the following characteristics:
(i) Voting. Except to the extent expressly provided in this
Agreement (including Section 15.3(c)) or as expressly required by the
Delaware Act, Limited Partners holding Series C Units do not have the
right to vote in respect of such Units, either with other holders of
Units or as a class or series, with respect to any matter.
(ii) Allocations and Distributions. The Series C Units will
receive allocations of income, gains, losses and deductions, and
distributions of cash (including liquidating distributions), pari passu
with the Series A Common Units (except for and after giving effect to
the special allocations set forth in Sections 5.1(e) and 5.1(e), except
as follows:
(A) After April 30, 2003, holder(s) of a majority of
the then-Outstanding Series C Units will have the right to
demand (a "Conversion Demand") that the General Partner submit
to a vote of the holders of Outstanding Series A Common Units
the conversion (the "Conversion") of each Series C Unit into
one Series A Common Unit, which must be approved by the
minimum number of Series A Common Units as is required by the
New York Stock Exchange at the time of the vote ("Conversion
Approval"). If Conversion Approval has occurred, the General
Partner shall effect the Conversion as promptly as practicable
thereafter.
(B) If the Conversion Approval has not occurred
within 120 days after the Conversion demand is delivered to
the General Partner (for any reason, including failure to
schedule or conduct the vote of the holders of Series A Common
Units, failure to obtain the requisite Conversion Approval
from the holders of Series A Common Units or otherwise), then,
for each subsequent distribution of Available Cash to the
Limited Partners holding Series A Common Units and the Limited
Partners holding Series C Units, the distributed amount shall
be allocated among such Limited Partner as follows:
(1) until and through April 29, 2004,
allocate between the Series C Units and Series A
Common Units such that the Limited Partners holding
Series C Units receive a distribution in respect of
each Series C Unit that is 105% of the distribution
received by the Limited Partners holding Series A
Common Units in respect of each Series A Common Unit;
(2) from April 30, 2004 until and through
April 29, 2005, allocated between the Series C Units
and Series A Common Units such that the Limited
Partners holding Series C Units receive a
distribution in respect of each Series C Unit that is
110% of the distribution received by the Limited
Partners holding Series A Common Units in respect of
each Series A Common Unit; and
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(3) from April 30, 2005, allocated between
the Series C Units and Series A Common Units such
that the Limited Partners holding Series C Units
receive a distribution in respect of each Series C
Unit that is 115% of the distribution received by the
Limited Partners holding Series A Common Units in
respect of each Series A Common Unit.
(C) Any adjustment to the allocation of distributed
amounts pursuant to Section 4.4(g)(ii)(B) shall be matched by
corresponding adjustments to the allocation of income, gains,
losses and deductions among the Limited Partners holding
Series A Common Units and the Limited Partners holding Series
C Units.
(iii) Except to the extent set forth to the contrary in this
Section 4.4(g), the holders of the Series C Units shall have the same
rights and preferences as the holders of the Series A Common Units.
4.5 Limited Preemptive Rights. Except as provided in Section
4.4(c)(iii), no Person shall have any preemptive, preferential or other similar
right with respect to (a) additional Capital Contributions; (b) issuance or sale
of any class or series of Units or other Partnership Securities, whether
unissued, held in the treasury or hereafter created; (c) issuance of any
obligations, evidences of indebtedness or other securities of the Partnership
convertible into or exchangeable for, or carrying or accompanied by any rights
to receive, purchase or subscribe to, any such Units or other Partnership
Securities; (d) issuance of any right of subscription to or right to receive, or
any warrant or option for the purchase of, any such Units or other Partnership
Securities; or (e) issuance or sale of any other securities that may be issued
or sold by the Partnership. The General Partner shall have the right, which it
may from time to time assign in whole or in part to any of its Affiliates, to
purchase Units or other Partnership Securities from the Partnership whenever,
and on the same terms that, the Partnership issues Units or other Partnership
Securities to Persons other than the General Partner and its Affiliates, to the
extent necessary to maintain the percentage interests of the General Partner and
its Affiliates of the applicable class or series of Partnership Interest equal
to that which existed immediately prior to the issuance of such Units or other
Partnership Securities.
4.6 Capital Accounts.
(a) The Partnership shall maintain for each Partner (or a beneficial
owner of Units held by a nominee in any case in which the nominee has furnished
the identity of such owner to the Partnership in accordance with Section 6031(c)
of the Code or any other method acceptable to the General Partner in its sole
discretion) a separate Capital Account in accordance with the rules of Treasury
Regulation Section 1.704-1(b)(2)(iv). Such Capital Account shall be increased by
(i) the amount of all Capital Contributions made by such Partner to the
Partnership pursuant to this Agreement and (ii) all items of Partnership income
and gain (including, without limitation, income and gain exempt from tax)
computed in accordance with Section 4.6(b) and allocated to such Partner
pursuant to Sections 4.2 and 5.1 and decreased by (x) the amount of cash or Net
Agreed Value of all distributions of cash or property made to such Partner
pursuant to this Agreement and (y) all items of Partnership deduction and loss
computed in accordance with Section 4.6(b) and allocated to such Partner
pursuant to Section 5.1.
25
(b) For purposes of computing the amount of any item of income, gain,
loss or deduction to be reflected in the Partners' Capital Accounts, the
determination, recognition and classification of any such item shall be the same
as its determination, recognition and classification for federal income tax
purposes (including, without limitation, any method of depreciation, cost
recovery or amortization used for that purpose), provided, that:
(i) Solely for purposes of this Section 4.6, the Partnership
shall be treated as owning directly its proportionate share (as
determined by the General Partner based upon the provisions of the
Charter Documents) of (x) all property owned by the non-corporate
Operating Companies and Joint Ventures and (y) the fair market value of
the stock of the corporate Operating Companies and Joint Ventures.
(ii) All fees and other expenses incurred by the Partnership
to promote the sale of (or to sell) a Partnership Interest that can
neither be deducted nor amortized under Section 709 of the Code, if
any, shall, for purposes of Capital Account maintenance, be treated as
an item of deduction at the time such fees and other expenses are
incurred and shall be allocated among the Partners pursuant to Section
5.1.
(iii) Except as otherwise provided in Treasury Regulation
Section 1.704-1(b)(2)(iv)(m), the computation of all items of income,
gain, loss and deduction shall be made without regard to any election
under Section 754 of the Code which may be made by the Partnership and,
as to those items described in Section 705(a)(1)(B) or 705(a)(2)(B) of
the Code, without regard to the fact that such items are not includable
in gross income or are neither currently deductible nor capitalized for
federal income tax purposes.
(iv) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the
adjusted basis of such property as of such date of disposition were
equal in amount to the Partnership's Carrying Value with respect to
such property as of such date.
(v) In accordance with the requirements of Section 704(b) of
the Code, any deductions for depreciation, cost recovery or
amortization attributable to any Contributed Property shall be
determined as if the adjusted basis of such property on the date it was
acquired by the Partnership were equal to the Agreed Value of such
property. Upon an adjustment pursuant to Section 4.6(d) to the Carrying
Value of any Partnership property subject to depreciation, cost
recovery or amortization, any further deductions for such depreciation,
cost recovery or amortization attributable to such property shall be
determined (A) as if the adjusted basis of such property were equal to
the Carrying Value of such property immediately following such
adjustment and (B) using a rate of depreciation cost recovery or
amortization derived from the same method and useful life (or, if
applicable, the remaining useful life) as is applied for federal income
tax purposes; provided, however, that if the asset has a zero adjusted
basis for federal income tax purposes, depreciation, cost recovery or
amortization deductions shall be determined using any reasonable method
that the General Partner may adopt.
26
(vi) If the Partnership's adjusted basis in depreciable or
cost recovery property is reduced for federal income tax purposes
pursuant to Section 48(q)(1) or 48(q)(3) of the Code, the amount of
such reduction shall, solely for purposes hereof, be deemed to be an
additional depreciation or cost recovery deduction in the year such
property is placed in service and shall be allocated among the Partners
pursuant to Section 5.1. Any restoration of such basis pursuant to
Section 48(q)(2) of the Code shall, to the extent possible, be
allocated in the year of such restoration as an item of income pursuant
to Section 5.1.
(c) A transferee of a Partnership Interest shall succeed to a pro rata
portion of the Capital Account of the transferor relating to the Partnership
Interest so transferred; provided, however, that if the transfer causes a
termination of the Partnership under Section 708(b)(1)(B) of the Code, the
Partnership's properties shall be deemed to have been distributed in liquidation
of the Partnership to the Partners (including any transferee of a Partnership
Interest that is a party to the transfer causing such termination) pursuant to
Sections 14.3 and 14.4 and recontributed by such Partners in reconstitution of
the Partnership. Any such deemed distribution shall be treated as an actual
distribution for purposes of this Section 4.6. In such event the Carrying Values
of the Partnership properties shall be adjusted immediately prior to such deemed
distribution pursuant to Section 4.6(d)(ii) and such Carrying Values shall then
constitute the Agreed Values of such properties upon such deemed contribution to
the reconstituted Partnership. The Capital Accounts of such reconstituted
Partnership shall be maintained in accordance with the principles of this
Section 4.6.
(d) (i) Consistent with the provisions of Treasury Regulation Section
1.704-1(b)(2)(iv)(f), on an issuance of additional Units for cash or Contributed
Property or the conversion of the General Partner's Partnership Interest to
Units pursuant to Section 13.3(b), the Capital Accounts of all Partners and the
Carrying Value of each Partnership property immediately prior to such issuance
shall be adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as if such Unrealized
Gain or Unrealized Loss had been recognized on an actual sale of each such
property immediately prior to such issuance and had been allocated to the
Partners at such time pursuant to Section 5.1.
(i) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), immediately prior to any distribution to a
Partner of any Partnership property (other than a distribution of cash
that is not in redemption or retirement of a Partnership Interest), the
Capital Accounts of all Partners and the Carrying Value of each
Partnership property shall be adjusted upward or downward to reflect
any Unrealized Gain or Unrealized Loss attributable to such Partnership
property, as if such Unrealized Gain or Unrealized Loss had been
recognized in a sale of such property immediately prior to such
distribution for an amount equal to its fair market value, and had been
allocated to the Partners, at such time, pursuant to Section 5.1.
4.7 Interest. No interest shall be paid by the Partnership on Capital
Contributions or on balances in Partners' Capital Accounts.
27
4.8 No Withdrawal. No Partner shall be entitled to withdraw any part of
its Capital Contributions or its Capital Account or to receive any distribution
from the Partnership, except as provided in this Agreement.
4.9 Loans from Partners. Loans by a Partner to the Partnership shall
not constitute Capital Contributions. If any Partner shall advance funds to the
Partnership in excess of the amounts required hereunder to be contributed by it
to the capital of the Partnership, the making of such excess advances shall not
result in any increase in the amount of the Capital Account of such Partner. The
amount of any such excess advances shall be a debt obligation of the Partnership
to such Partner and shall be payable or collectible only out of the Partnership
Assets in accordance with the terms and conditions upon which such advances are
made.
4.10 No Fractional Units. No fractional Units shall be issued by the
Partnership.
4.11 Partnership Interest Adjusting Events.
(a) Subject to Section 4.11(d), the General Partner may effect a
Partnership Interest Adjusting Event, including a pro rata distribution of Units
or other Partnership Securities to all Record Holders thereof or a subdivision
or combination of Units or other Partnership Securities; provided, however, that
subject to Section 4.11(d), after any such Partnership Interest Adjusting Event,
each Partner shall have the same ownership interest in the Partnership as before
such Partnership Interest Adjusting Event.
(b) Whenever such a Partnership Interest Adjusting Event is declared,
the General Partner shall select a Record Date for such Partnership Interest
Adjusting Event at least 20 days prior to such Record Date. The Record Date
shall be as of a date not less than 10 days prior to the date of the notice to
the Record Holders of such Partnership Interest Adjusting Event. The General
Partner also may cause a firm of independent public accountants selected by it
to calculate the number of Units to be held by each Record Holder after giving
effect to such Partnership Interest Adjusting Event. The General Partner shall
be entitled to rely on any certificate provided by such firm as conclusive
evidence of the accuracy of such calculation.
(c) Promptly following any such Partnership Interest Adjusting Event,
the General Partner may cause Unit Certificates to be issued to the Record
Holders of Units as of the applicable Record Date representing the new number of
Units held by such Record Holders, or the General Partner may adopt such other
procedures as it may deem appropriate to reflect such Partnership Interest
Adjusting Event; provided, however, that if any such Partnership Interest
Adjusting Event results in a smaller total number of Units Outstanding, the
General Partner shall require, as a condition to the delivery to a Record Holder
of such new Unit Certificate, the surrender of any Unit Certificate held by such
Record Holder immediately prior to such Record Date.
(d) The Partnership shall not issue fractional Units upon any
Partnership Interest Adjusting Event. If a Partnership Interest Adjusting Event
would result in the issuance of fractional Units but for the provision of
Section 4.10 and this Section 4.11(d), each fractional Unit shall be rounded to
the nearest whole Unit (and a 0.5 Unit shall be rounded to the next higher
Unit).
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ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
5.1 Allocations for Capital Account Purposes. For purposes of
maintaining the Capital Accounts and in determining the rights of the Partners
among themselves, the Partnership's items of income, gain, loss and deduction
(computed in accordance with Section 4.6(b)) shall be allocated among the
Partners in each taxable year (or portion thereof) as provided herein below.
(a) Net Income. After giving effect to the allocations in Section 4.2
and the special allocations set forth in Sections 5.1(e) and 5.1(e), all
remaining items of income, gain, loss and deduction taken into account in
computing Net Income for such taxable period shall be allocated in the same
manner as such Net Income is allocated hereunder, which Net Income shall be
allocated as follows:
(i) First, 100% to the General Partner until the aggregate Net
Income allocated to the General Partner pursuant to this Section
5.1(a)(i) for the current taxable year and all previous taxable years
is equal to the aggregate Net Losses allocated to the General Partner
pursuant to Sections 5.1(c)(i)(D) and 5.1(c)(ii)(D) for all previous
taxable years;
(ii) Second, 1% to the General Partner and 99% to the Limited
Partners holding Series A Preference Units and Series B Preference
Units (allocated between each such series and among the Limited
Partners holding Preference Units of each such series as provided below
in this Section 5.1(a)(ii)) until the aggregate Net Income allocated to
any Series A Preference Unit or Series B Preference Unit pursuant to
this Section 5.1(a)(ii) for the current taxable year and all previous
taxable years is equal to the aggregate Net Losses allocated to any
Series A Preference Unit or Series B Preference Unit pursuant to
Sections 5.1(c)(i)(C) and 5.1(c)(ii)(C) for all previous taxable years.
As between the Limited Partners holding Series A Preference Units and
the Limited Partners holding Series B Preference Units, any
distributions under this Section 5.1(a)(ii) shall be allocated in
proportion to the Net Losses allocated to one of each such Units
pursuant to Sections 5.1(c)(i)(C) and 5.1(c)(ii)(C) for all previous
taxable years, and as among the Limited Partners holding a particular
series of Preference Units, such distributions shall be allocated in
the proportion that the respective number of Preference Units in such
series held by them bears to the total number of Preference Units in
such series then Outstanding;
(iii) Third, 99% to the Limited Partners holding Series A
Common Units, in the proportion that the respective number of Series A
Common Units held by them bears to the total number of Series A Common
Units then Outstanding, and 1% to the General Partner until the
aggregate Net Income allocated to any Series A Common Unit pursuant to
this Section 5.1(a)(iii) for the current taxable year and all previous
taxable years is equal to the to the aggregate Net Losses allocated to
any Series A Common Unit pursuant to Sections 5.1(c)(i)(B) and
5.1(c)(ii)(B) for all previous years; and
29
(iv) Fourth, the balance, if any, 1% to the General Partner
and 99% to the Limited Partners, which allocations to such Limited
Partners shall be made (x) first, to the Limited Partners holding
Series A Preference Units and Series B Preference Units (allocated
between each such series and among the Limited Partners holding
Preference Units of each such series as provided below in this Section
5.1(a)(iv)) until the total amount allocated in respect of any Series B
Preference Unit under this Section 5.1(a)(iv) during the period from
the Series B Preference Unit Issuance Date through the date of such
allocation is equal to the total of all Series B Preference Unit
Discretionary Distribution Amounts made during such period in respect
thereof pursuant to Section 5.5(a), and (y) then, to Limited Partners
holding Series A Preference Units and Series A Common Units, in the
proportion that the respective number of Series A Preference Units and
Series A Common Units, as applicable, held by them bears to the total
number of Series A Preference Units and Series A Common Units then
Outstanding. As between the Limited Partners holding Series A
Preference Units and the Limited Partners holding Series B Preference
Units, any distributions under this Section 5.1(a)(iv) shall be
allocated based on the Preference Unit Sharing Ratios, and as among the
Limited Partners holding a particular series of Preference Units, such
distributions shall be allocated in the proportion that the respective
number of Preference Units in such series held by them bears to the
total number of Preference Units in such series then Outstanding; and
(b) Net Losses. After giving effect to the special allocations set
forth in Sections 5.1(d) and 5.1(e), all remaining items of income, gain, loss
and deduction taken into account in computing Net Losses for such taxable period
shall be allocated in the same manner as such Net Losses are allocated
hereunder, which Net Losses shall be allocated as follows:
(i) While any Series A Preference Units are Outstanding.
During any period in which any Series A Preference Units are
outstanding:
(A) First, 1% to the General Partner and 99% to the
Limited Partners holding Series A Common Units, Series A
Preference Units and Series B Preference Units (allocated
between each such series and among the Limited Partners
holding Units of each such series as provided below in this
Section 5.1(b)(i)(A)) until Net Losses are allocated to each
Unit pursuant to this Section 5.1(b)(i)(A) for the current
taxable year and all previous taxable years in an amount equal
to the Net Income allocated to such Unit pursuant to Section
5.1(a)(iv) for all previous taxable years. As among the
Limited Partners holding each of the Series A Common Units,
Series A Preference Units and Series B Preference Units, any
distributions under this Section 5.1(b)(i)(A) shall be
allocated in proportion to the Net Income allocated to one of
each such Units pursuant to Section 5.1(a)(iv) for all
previous taxable years, and as among the Limited Partners
holding a particular series of Units, such distributions shall
be allocated in the proportion that the respective number of
Units in such series held by them bears to the total number of
Units in such series then Outstanding;
(B) Second, 1% to the General Partner and 99% to the
Limited Partners holding Series A Common Units, in the
proportion that the respective number of Series A Common Units
held by them bears to the total number of Series A
30
Common Units then Outstanding, provided that Net Losses shall
not be allocated pursuant to this Section 5.1(b)(ii) to the
extent that such allocation would cause any Limited Partner to
have a deficit balance in its Adjusted Capital Account at the
end of such taxable period (or increase any existing deficit
balance in its Adjusted Capital Account);
(C) Third, 1% to the General Partner and 99% to the
Limited Partners holding Series A Preference Units and Series
B Preference Units (allocated between each such series and
among the Limited Partners holding Units of each such series
as provided below in this Section 5.1(b)(i)(C)), provided that
Net Losses shall not be allocated pursuant to this Section
5.1(b)(i) to the extent that such allocation would cause any
Limited Partner to have a deficit balance in its Adjusted
Capital Account at the end of such taxable period (or increase
any existing deficit balance in its Adjusted Capital Account).
As among the Limited Partners holding the Series A Preference
Units and the Limited Partners holding the Series B Preference
Units, any distributions under this Section 5.1(b)(i)(C) shall
be allocated based on their respective Preference Unit Sharing
Ratios, and as among the Limited Partners holding a particular
series of Units, such distributions shall be allocated in the
proportion that the respective number of Units in such series
held by them bears to the total number of Units in such series
then Outstanding; and
(D) Fourth, the balance, if any, 100% to the General
Partner.
(ii) While no Series A Preference Units are Outstanding.
During any period in which no Series A Preference Units are
outstanding:
(A) First, 1% to the General Partner and 99% to the
Limited Partners holding Series A Common Units and Series B
Preference Units (allocated between each such series and among
the Limited Partners holding Units of each such series as
provided below in this Section 5.1(b)(ii)(A)) until Net Losses
are allocated to each Unit pursuant to this Section
5.1(b)(ii)(A) for the current taxable year and all previous
taxable years in an amount equal to the Net Income allocated
to such Unit pursuant to Section 5.1(a)(iv) for all previous
taxable years. As among the Limited Partners holding the
Series A Common Units and the Limited Partners holding the
Series B Preference Units, any distributions under this
Section 5.1(b)(ii)(A) shall be allocated in proportion to the
amounts of Net Income allocated to the Limited Partners
holding such Units pursuant to Section 5.1(a)(iv) for all
previous taxable years, and as among the Limited Partners
holding a particular series of Units, such distributions shall
be allocated in the proportion that the respective number of
Units in such series held by them bears to the total number of
Units in such series then Outstanding;
(B) Second, 1% to the General Partner and 99% to the
Limited Partners holding Series A Common Units, in the
proportion that the respective number of Series A Common Units
held by them bears to the total number of Series A Common
Units then Outstanding, provided that Net Losses shall not be
allocated
31
pursuant to this Section 5.1(b)(ii)(B) to the extent that such
allocation would cause any Limited Partner holding Series A
Common Units to have a deficit balance in its Adjusted Capital
Account at the end of such taxable year (or increase any
existing deficit balance in its Adjusted Capital Account); and
(C) Third, 1% to the General Partner and 99% to the
Limited Partners holding Series B Preference Units in the
proportion that the respective number of Series B Preference
Units held by them bears to the total number of Series B
Preference Units then Outstanding, provided that Net Losses
shall not be allocated pursuant to this Section 5.1(b)(i)(C)
to the extent that such allocation would cause any Limited
Partner holding Series B Preference Units to have a deficit
balance in its Adjusted Capital Account at the end of such
taxable year (or increase any existing deficit balance in its
Adjusted Capital Account balance); and
(D) Fourth, the balance, if any, 100% to the General
Partner.
(c) Net Termination Gains and Losses. After giving effect to the
allocations in Section 4.2 and the special allocations set forth in Sections
5.1(e) and 5.1(e), all items of income, gain, loss and deduction taken into
account in computing Net Termination Gain or Net Termination Loss for such
taxable period shall be allocated in the same manner as such Net Termination
Gain or Net Termination Loss is allocated hereunder. All allocations under this
Section 5.1(d) shall be made after Capital Account balances have been adjusted
by all other allocations provided under this Section 5.1 and after all
distributions of Available Cash provided under Sections 5.4 and 5.5 have be made
with respect to such taxable period.
(i) If a Net Termination Gain is recognized, such Net
Termination Gain shall be allocated between the General Partner and the
Limited Partners in the following manner (and the Adjusted Capital
Accounts of the Partners shall be increased by the amount so allocated
in each of the following subclauses, in the order listed, before an
allocation is made pursuant to the next succeeding subclause):
(A) first, to each Partner having a deficit balance
in its Adjusted Capital Account in the proportion that such
deficit balance bears to the total deficit balances in the
Adjusted Capital Accounts of all Partners, until each such
Partner has been allocated Net Termination Gain equal to any
such deficit balance in its Adjusted Capital Account;
(B) second, 99% to the Limited Partners holding
Series A Preference Units and Series B Preference Units
(allocated between each such series and among the Limited
Partners holding Preference Units of each such series as
provided below in this Section 5.1(d)(i)(B)) and 1.0% to the
General Partner until the Adjusted Capital Account in respect
of each Series A Preference Unit and Series B Preference Unit
then Outstanding is equal to, as applicable, (aa) the sum of
the Unrecovered Capital in respect of such Series A Preference
Unit plus any then Series A Preference Unit Cumulative
Deficiency or (bb) the Series B Preference Unit Liquidation
Value. As between the Limited Partners holding Series A
Preference Units and the Limited Partners holding Series B
Preference
32
Units, any allocation under this Section 5.1(d)(i)(B) shall be
made based on the Preference Unit Sharing Ratios, and as among
the Limited Partners holding a particular series of Preference
Units, such distributions shall be allocated in the proportion
that the respective number of Preference Units in such series
held by them bears to the total number of Preference Units in
such series then Outstanding;
(C) third, 99% to Limited Partners holding Series A
Common Units, in the proportion that the respective number of
Series A Common Units held by them bears to the total number
of Series A Common Units then Outstanding, and 1.0% to the
General Partner until the Adjusted Capital Account in respect
of each Series A Common Unit then Outstanding is equal to the
Unrecovered Capital with respect to such Series A Common Unit;
(D) fourth, (aa) if the Net Termination Gain is
recognized prior to the termination of the Series A Preference
Unit Preference Period, 99% to all Limited Partners holding
Series A Preference Units and Series A Common Units, in the
proportion that the respective number of such Units held by
them bears to the total number of such Units then Outstanding,
or (bb) if the Net Termination Gain is recognized following
the termination of the Series A Preference Unit Preference
Period, 99% to all Limited Partners holding Series A Common
Units, in the proportion that the respective number of Series
A Common Units held by them bears to the total number of
Series A Common Units then Outstanding, and 1% to the General
Partner, until there has been allocated an amount per Series A
Common Unit equal to (yy) the excess of the First Target
Distribution per Unit over the Minimum Quarterly Distribution
for each quarter of the Partnership's existence, less (zz) the
amount per Unit of any distributions in respect of such Series
A Common Units (including any distributions in respect of such
Series A Common Units prior to conversion of such Units from
Series A Preference Units) pursuant to Sections 5.4 and 5.5;
(E) fifth, (aa) if the Net Termination Gain is
recognized prior to the termination of the Series A Preference
Unit Preference Period, 85.87% to all Limited Partners holding
Series A Preference Units and Series A Common Units, in the
proportion that the respective number of such Units held by
them bears to the total number of such Units then Outstanding,
or (bb) if the Net Termination Gain is recognized following
the termination of the Series A Preference Unit Preference
Period, 85.87% to all Limited Partners holding Series A Common
Units, in the proportion that the respective number of Series
A Common Units held by them bears to the total number of
Series A Common Units then Outstanding, and 14.13% to the
General Partner, until there has been allocated an amount per
relevant Unit equal to (yy) the excess of the Second Target
Distribution per Unit over the First Target Distribution per
Unit for each quarter of the Partnership's existence, less
(zz) the amount per Unit of any distributions in respect of
such Series A Common Units (including any distributions in
respect of such Series A Common Units prior to conversion of
such Units from Series A Preference Units) pursuant to
Sections 5.4 and 5.5;
33
(F) sixth, (aa) if the Net Termination Gain is
recognized prior to the termination of the Series A Preference
Unit Preference Period, 75.77% to all Limited Partners holding
Series A Preference Units and Series A Common Units, in the
proportion that the respective number of such Units held by
them bears to the total number of such Units then Outstanding,
or (bb) if the Net Termination Gain is recognized following
the termination of the Series A Preference Unit Preference
Period, 75.77% to all Limited Partners holding Series A Common
Units, in the proportion that the respective number of Series
A Common Units held by them bears to the total j number of
Series A Common Units then Outstanding, and 24.23% to the
General Partner, until there has been allocated an amount per
relevant Unit equal to (yy) the excess of the Second Target
Distribution per Unit over the First Target Distribution per
Unit for each quarter of the Partnership's existence, less
(zz) the amount per Unit of any distributions in respect of
such Series A Common Units (including any distributions in
respect of such Series A Common Units prior to conversion of
such Units from Series A Preference Units) pursuant to
Sections 5.4 and 5.5; and
(G) seventh, the balance, if any, (aa) if the Net
Termination Gain is recognized prior to the termination of the
Series A Preference Unit Preference Period, 50.51% to all
Limited Partners holding Series A Preference Units and Series
A Common Units, in the proportion that the respective number
of such Units held by them bears to the total number of such
Units then Outstanding, or (bb) if the Net Termination Gain is
recognized following the termination of the Series A
Preference Unit Preference Period, to all Limited Partners
holding Series A Common Units, in the proportion that the
respective number of Series A Common Units held by them bears
to the total number of Series A Common Units then Outstanding,
and 49.49% to the General Partner.
(ii) if a Net Termination Loss is recognized, such Net
Termination Loss shall be allocated to the Partners in the following
manner:
(A) first, to all Partners in proportion to the
positive balances in their Adjusted Capital Accounts (or, if
subsequent to the Series A Preference Unit Preference Period,
100% to the Limited Partners holding Series A Preference Units
and Series B Preference Units, in proportion to the positive
balances in their Adjusted Capital Accounts) until the
Adjusted Capital Accounts of holders of Series A Preference
Units are reduced to the amount of their Unrecovered Capital
plus any arrearages with respect thereto and the Adjusted
Capital Accounts of holders of Series B Preference Units are
reduced to their Series B Preference Unit Liquidation Value;
(B) second, 1% to the General Partner and 99% to the
Limited Partners holding Series A Common Units, in proportion
to, and to the extent of, the positive balances in their
Adjusted Capital Accounts until all such balances are reduced
to zero;
34
(C) third, 100% to the Limited Partners holding
Series A Preference Units and Series B Preference Units, in
proportion to, and to the extent of, the positive balances in
their Adjusted Capital Accounts until all such balances are
reduced to zero; and
(D) fourth, the balance, if any, 100% to the General
Partner.
(d) Special Allocations. Notwithstanding any other provisions of this
Section 5.1 (other than Section 5.1(e)), the following special allocation shall
be made for such taxable period:
(i) Priority Allocations. (A) If the amount of cash or the Net
Agreed Value of any property distributed (except cash or property
distributed pursuant to Section 14.3 or 14.4) to any Limited Partner
during a taxable year is greater (on a per Unit basis) than the amount
of cash or the Net Agreed Value of property distributed to the other
Limited Partners (on a per Unit basis), then (1) each Limited Partner
receiving such greater cash or property distribution shall be allocated
gross income in an amount equal to the product of (x) the amount by
which the distribution (on a per Unit basis) to such Limited Partner
exceeds the distribution (on a per Unit basis) to the Limited Partners
receiving the smallest distribution and (y) the number of Units owned
by the Limited Partner receiving the greater distribution and (2) the
General Partner shall be allocated gross income in an amount equal to
one-ninety-ninth (1/99) of the sum of the amounts allocated in clause
(1) above.
(B) All or a portion of the remaining items of
Partnership gross income or gain for the taxable period if
any, shall be allocated 100% to the General Partner (or its
assignee) until the aggregate amount of such items allocated
to the General Partner (or its assignee) under this paragraph
(d)(i)(B) for the current taxable period and all previous
taxable periods is equal to the cumulative amount of all
Incentive Distributions declared before the end of the current
taxable period and made to the General Partner (or its
assignee) from the Closing Date to a date 45 days after the
end of the current taxable period.
(ii) Nonrecourse Liabilities. For purposes of Treasury
Regulation Section 1.752-3(a)(3), the Partners agree that Nonrecourse
Liabilities of the Partnership in excess of the sum of (A) the amount
of Partnership Minimum Gain and (B) the total amount of Nonrecourse
Built-in Gain shall be allocated among the Partners 49.49% to the
General Partner and 50.51% to all Limited Partners in the proportion
that the respective number of Units held by them bears to the total
number of Units then outstanding.
(iii) Discretionary Allocation. (A) Notwithstanding any other
provision of Section 5.1(a), (b) or (d), the Agreed Allocations shall
be adjusted so that to the extent possible, the net amount of items of
income, gain, loss and deduction allocated to the Partner pursuant to
the Required Allocations and the Agreed Allocation, together, shall be
equal to the net amount of such item that would have been allocated to
each such Partner under the Agreed Allocations had there been no
Required Allocations; provided,
35
however, that for purposes of applying this Section 5.1(e)(iii)(A), it
shall be assumed that all chargebacks pursuant to Sections 5.1(e)(i)
and (ii) have occurred.
(B) The General Partner shall have reasonable
discretion, with respect to each taxable year, to (1) apply
the provisions of Section 5.1(e)(iii)(A) in whatever fashion
as is most likely to minimize the economic distortions that
might otherwise result from the Required Allocations, and (2)
divide all allocations pursuant to Section 5.1(e)(iii)(A)
among the Partners in a manner that is likely to minimize such
economic distortions.
(e) Required Allocations. Notwithstanding any other provision of this
Section 5.1, the following special allocations shall be made for such taxable
period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding the
other provisions of this Section 5.1, except as provided in Treasury
Regulation Sections 1.704 2(f)(2) through (5), if there is a net
decrease in Partnership Minimum Gain during any Partnership taxable
period, each Partner shall be allocated items of Partnership income and
gain for such period (and, if necessary, subsequent periods) in the
manner and amounts provided in Treasury Regulation Sections 1.704
2(f)(6), 1.704 2(g)(2) and 1.704 2(j)(2)(i), or any successor
provisions. For purposes of this Section 5.1(e), each Partner's
Adjusted Capital Account balance shall be determined, and the
allocation of income or gain required hereunder shall be effected,
prior to the application of any other allocations pursuant to this
Section 5.1 with respect to such taxable period (other than an
allocation pursuant to Sections 5.1(e)(v) or 5.1(e)(vi)).
(ii) Chargeback of Minimum Gain Attributable to Partner
Nonrecourse Debt. Notwithstanding the other provisions of this Section
5.1 (other than 5.1(e)(i)), except as provided in Treasury Regulation
Section 1.704 2(i)(4), if there is a net decrease in Minimum Gain
Attributable to Partner Nonrecourse Debt during any Partnership taxable
period any Partner with a share of Minimum Gain Attributable to Partner
Nonrecourse Debt at the beginning of such taxable period shall be
allocated items of Partnership income and gain for such period (and if
necessary, subsequent periods) in the manner and amounts provided in
Treasury Regulation Sections 1.704 2(i)(4) and 1.704 2(j)(2)(ii), or
any successor provisions. For purposes of this Section 5.1, such
Partner's Adjusted Capital Account balance shall be determined and the
allocation of income or gain required hereunder shall be effected,
prior to the application of any other allocations pursuant to this
Section 5.1(e), other than Section 5.1(e)(i) (and other than an
allocation pursuant to Sections 5.1(e)(v) or 5.1(e)(vi)), with respect
to such taxable period.
(iii) Qualified Income Offset. In the event any Limited
Partner unexpectedly receives adjustments, allocations or distributions
described in Treasury Regulation Section 1.704 1(b)(2)(ii)(d)(4), 1.704
1(b)(2)(ii)(d)(5), or 1.704 1(b)(2)(ii)(d)(6), items of Partnership
income and gain shall be specifically allocated to such Partner in an
amount and manner sufficient to eliminate, to the extent required by
the Treasury Regulations promulgated under Section 704(b) of the Code,
the deficit balance if any, in its Adjusted Capital Account created by
such adjustments, allocations or distributions as quickly as
36
possible unless such deficit balance is otherwise eliminated pursuant
to Section 5.1(e)(i) or 5.1(e)(ii).
(iv) Gross Income Allocations.
(A) In the event any Partner has a deficit balance in
its Adjusted Capital Account at the end of any Partnership
taxable period, such Partner shall be specifically allocated
items of Partnership gross income and gain in the amount of
such excess as quickly as possible; provided, that an
allocation pursuant to this Section 5.1(e)(iv)(A) shall be
made only if and to the extent that such Partner would have a
deficit balance in its Adjusted Capital Account after all
other allocations provided in this Section 5.1 have been
tentatively made as if this Section 5.1(e)(iv)(A) was not in
this Agreement.
(B) If at the end of any Partnership taxable period,
after all other allocations provided in this Section 5.1 have
been tentatively made as if this Section 5.1(e)(iv)(B) was not
in this Agreement, the total amount allocated in respect of
any Series B Preference Unit under Section 5.1(a)(iv) during
the period from the Series B Preference Unit Issuance Date
through the date of such allocation is less than the total of
all amounts distributed in respect of such Series B Preference
Unit made during such period pursuant to Sections 5.5(a) and
(b), then the Limited Partners holding Series B Preference
Units shall be specifically allocated, as quickly as possible
(but after the requirements of Section 5.1(e)(iv)(A) have been
met), items of Partnership gross income and gain such that the
total amount allocated in respect of any Series B Preference
Unit under Section 5.1(a)(iv) during the period from the
Series B Preference Unit Issuance Date through the date of
such allocation is equal to the total of all amounts
distributed in respect of such Series B Preference Unit during
such period pursuant to Sections 5.5(a) and (b).
(v) Nonrecourse Deductions. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in the same manner as
Net Income is allocated pursuant to Section 5.1(a)(iv). If the Managing
General Partner determines in its good faith discretion that the
Partnership's Nonrecourse Deductions must be allocated in a different
ratio to satisfy the safe harbor requirements of the Treasury
Regulations promulgated under Section 704(b) of the Code, the General
Partner is authorized, upon notice to the Limited Partners, to revise
the prescribed ratio to the numerically closest ratio which does
satisfy such requirements.
(vi) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to the
Partner that bears the Economic Risk of Loss for such Partnership
Nonrecourse Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Treasury Regulation Section 1.704 2(i).
If more than one Partner bears the Economic Risk of Loss with respect
to a Partner Nonrecourse Debt such Partner Nonrecourse Deductions
attributable thereto shall be allocated between or among such Partners
in accordance with the ratios in which they share such Economic Risk of
Loss.
37
5.2 Allocations for Tax Purposes.
(a) Except as otherwise provided herein, for federal income tax
purposes, each item of income, gain, loss and deduction which is recognized by
the Partnership for federal income tax purposes shall be allocated among the
Partners in the same manner as its correlative item of "book," income, gain,
loss or deduction is allocated pursuant to Section 5.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated for
federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in the
manner provided under Section 704(c) of the Code that takes into
account the variation between the Agreed Value of such property and its
adjusted basis at the time of contribution; and (B) except as otherwise
provided in Section 5.2(b)(iii), any item of Residual Gain or Residual
Loss attributable to a Contributed Property shall be allocated among
the Partners in the same manner as its correlative item of "book" gain
or loss is allocated pursuant to Section 5.1.
(ii) (A) In the case of an Adjusted Property, such items shall
(1) first, be allocated among the Partners in a manner consistent with
the principles of Section 704(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to such property and
the allocations thereof pursuant to Section 4.6(d)(i) or (ii), and (2)
second, in the event such property was originally a Contributed
Property, be allocated among the Partners in a manner consistent with
Section 5.2(b)(i)(A); and (B) except as otherwise provided in Section
5.2(b)(iii), any item of Residual Gain or Residual Loss attributable to
an Adjusted Property shall be allocated among the Partners in the same
manner as its correlative item of "book" gain or loss is allocated
pursuant to Section 5.1.
(iii) Any items of income, gain, loss or deduction otherwise
allocable under Section 5.2(b)(i)(B) or 5.2(b)(ii)(B) shall be subject
to allocation by the General Partner in a manner designed to eliminate,
to the maximum extent possible, Book-Tax Disparities in a Contributed
Property or Adjusted Property otherwise resulting from the application
of the "ceiling" limitation (under Section 704(c) of the Code or
Section 704(c) principles) to the allocations provided under Section
5.2(b)(i)(A) or 5.2(b)(ii)(A).
(c) For the proper administration of the Partnership or for the
preservation of uniformity of the Units (or any class or classes thereof), the
General Partner shall have sole discretion to (i) adopt such conventions as it
deems appropriate in determining the amount of depreciation amortization and
cost recovery deductions; (ii) make special allocations for federal income tax
purposes of income (including, without limitation, gross income) or deductions;
and (iii) amend the provisions of this Agreement as appropriate (x) to reflect
the proposal or promulgation of Treasury Regulations under Section 704(b) or
Section 704(c) of the Code or (y) otherwise to preserve or achieve uniformity of
the Units (or any class or classes thereof). The General Partner may adopt such
conventions, make such allocations and make such amendments to this Agreement as
provided in this Section 5.2(c) only if such conventions, allocations or
38
amendments would not have a material adverse effect on the Partners, the holders
of any class or classes of Units issued and Outstanding of the Partnership, and
if such allocations are consistent with the principles of Section 704 of the
Code.
(d) The General Partner in its sole discretion may determine to
depreciate the portion of an adjustment under Section 743(b) of the Code
attributable to unrealized appreciation in any Adjusted Property (to the extent
of the unamortized Book-Tax Disparity) using a predetermined rate derived from
the depreciation method and useful life applied to the Partnership's common
basis of such property, despite the inconsistency of such approach with Proposed
Treasury Regulation Section 1.168 2(n) and Treasury Regulation Section 1.167(c)
1(a)(6). If the General Partner determines that such reporting position cannot
reasonably be taken, the General Partner may adopt a depreciation convention
under which all purchasers acquiring Units in the same month would receive
depreciation, based upon the same applicable rate as if they had purchased a
direct interest in the Partnership's property. If the General Partner chooses
not to utilize such aggregate method the General Partner may use any other
reasonable depreciation convention to preserve the uniformity of the intrinsic
tax characteristics of any Units that would not have a material adverse effect
on the Limited Partners or the Record Holders of any class or classes of Units.
In addition, for purposes of computing the adjustments under Section 743(b) of
the Code, the General Partner shall be authorized (but not required) (i) to
adopt a convention whereby the price paid by a transferee of Units will be
deemed to be the lowest quoted trading price of the Units on any National
Securities Exchange on which such Units are traded during the calendar month in
which such transfer is deemed to occur pursuant to Section 5.2(g) without regard
to the actual price paid by such transferee and (ii) to treat the amount of any
Section 743(b) adjustment with respect to properties of the non-corporate
Operating Companies and Joint Ventures as being equal to the Section 743(b)
adjustment attributable to the partnership interest in such Operating Companies
and Joint Ventures.
(e) Any gain allocated to the Partners upon the sale or other taxable
disposition of any Partnership asset shall, to the extent possible, after taking
into account other required allocations of gain pursuant to this Section 5.2 be
characterized as Recapture Income in the same proportions and to the same extent
as such Partners (or their predecessors in interest) have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.
(f) All items of income, gain, loss, deduction and credit recognized by
the Partnership for federal income tax purposes and allocated to the Partners in
accordance with the provisions hereof shall be determined without regard to any
election under Section 754 of the Code which may be made by the Partnership;
provided, however, that such allocations once made, shall be adjusted as
necessary or appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
(g) Each item of Partnership income, gain, loss and deduction
attributable to a transferred Partnership Interest of the General Partner or to
transferred Units shall, for federal income tax purposes, be determined on an
annual basis and prorated on a monthly basis and shall be allocated to the
Partners as of the close of the New York Stock Exchange on the last day of the
preceding month; provided, however, that (i) except as otherwise provided in
clause (ii), such items for the period beginning on the Closing Date and ending
on the last day of the month in
39
which the Closing Date occurs shall be allocated to Partners as of the close of
the New York Stock Exchange on the last day of that it month or (ii) if the
Underwriters' over-allotment option is exercised, such items for the period
beginning on the Closing Date and ending on the last day of the month in which
the Option Closing Date (as defined in the Underwriting Agreement) occurs shall
be allocated to the Partners as of the close of the New York Stock Exchange on
the last day of that month; and provided further, that gain or loss on a sale or
other disposition of any assets of the Partnership other than in the ordinary
course of business shall be allocated to the Partners as of the opening of the
New York Stock Exchange on the first Business Day of the month in which such
gain or loss is recognized for federal income tax purposes. The General Partner
may revise, alter or otherwise modify such methods of allocation as it
determines necessary to the extent permitted or required by Section 706 of the
Code and the regulations or ruling promulgated thereunder.
(h) Allocations that would otherwise be made to a Limited Partner under
the provisions of this Article V shall instead be made to the beneficial owner
of Units held by a nominee in any case in which the nominee has furnished the
identity of such owner to the Partnership in accordance with Section 6031(c) of
the Code or any other method acceptable to the General Partner in its sole
discretion.
5.3 Requirement and Characterization of Distributions. Within 45 days
following the end of each calendar quarter, an amount equal to 100% of Available
Cash with respect to such quarter (or period) shall be distributed in accordance
with this Article V by the Partnership to the Partners, as of the Record Date
for such distribution selected by the General Partner in its reasonable
discretion. The immediately preceding sentence shall not modify in any respect
the provisions of Section 4.2 regulating the distribution of any interest or
other profit on the initial Contributions referred to therein. All amounts of
Available Cash distributed by the Partnership on any date from any source (other
than amounts paid or distributed pursuant to Section 4.2) shall be deemed to be
Cash from Operations until the aggregate amount of all Available Cash
theretofore distributed by the Partnership to Partners pursuant to Sections 5.4
and 5.5 equals the aggregate amount of all Cash from Operations of the
Partnership from the Partnership Inception through the end of the calendar
quarter immediately preceding such distribution. Any remaining amounts of
Available Cash distributed by the Partnership on such date (other than amounts
paid or distributed pursuant to Section 4.2) shall, except as otherwise provided
in Section 5.7, be deemed to be Cash from Interim Capital Transactions. With
respect to any calendar quarter included in the period beginning on (and
including) the day immediately following the last day of the Series A Preference
Unit Preference Period and ending on (and including) the day immediately prior
to the Series B Preference Unit Preference Date, the General Partner may decide
(in its sole discretion) to make a distribution in respect of each Series B
Preference Unit then Outstanding (the amount of such distribution (a "Series B
Preference Unit Discretionary Distribution Amount"); provided, however, that the
Series B Preference Unit Discretionary Distribution Amount for any such calendar
quarter shall not exceed an amount equal to the Series B Preference Unit
Deficiency on the last day of such calendar quarter.
5.4 Distributions During Series A Preference Unit Preference Period.
Available Cash with respect to any calendar quarter within the Series A
Preference Unit Preference Period that is deemed to be Cash from Operations
pursuant to the provisions of Section 5.3 or 5.7 and,
40
to the extent necessary to make the payments in subsection (a) below, the
Reserve Amount shall be applied as follows:
(a) First, 99% to all Limited Partners holding Series A Preference
Units, in the proportion that the respective number of Series A Preference Units
held by them bears to the total number of Series A Preference Units then
Outstanding, and 1.0% to the General Partner until there has been distributed in
respect of each Series A Preference Unit then Outstanding an amount equal to the
Minimum Quarterly Distribution;
(b) Second, 99% to all Limited Partners holding Series A Preference
Units, in the proportion that the respective number of Series A Preference Units
held by them bears to the total number of Series A Preference Units then
Outstanding, and 1.0% to the General Partner until there has been distributed in
respect of each Series A Preference Unit then Outstanding an amount equal to any
Series A Preference Unit Cumulative Deficiency existing on the last day of such
quarter;
(c) Third, 99% to all Limited Partners holding Series A Common Units,
in the proportion that the respective number of Series A Common Units held by
them bears to the total number of Series A Common Units then Outstanding, and
1.0% to the General Partner until there has been distributed in respect of each
Series A Common Unit then outstanding an amount equal to the Minimum Quarterly
Distribution;
(d) Fourth, 99% to all Limited Partners holding Series A Preference
Units and Series A Common Units, in the proportion that the respective number of
such Units held by them bears to the number of such Units then Outstanding, and
1.0% to the General Partner until there has been distributed in respect of each
such Unit then Outstanding an amount equal to the excess of the First Target
Distribution over the Minimum Quarterly Distribution;
(e) Fifth, 85.87% to all Limited Partners holding Series A Preference
Units and Series A Common Units, in the proportion that the respective number of
such Units held by them bears to the number of such Units then Outstanding and
14.13% to the General Partner until there has been distributed in respect of
each such Unit then Outstanding an amount equal to the excess of the Second
Target Distribution over the First Target Distribution; and
(f) Sixth, 75.77% to all Limited Partners holding Series A Preference
Units and Series A Common Units, in the proportion that the respective number of
such Units held by them bears to the number of such Units then Outstanding, and
24.23% to the General Partner until there has been distributed in respect of
each such Unit then Outstanding an amount equal to the excess of the Third
Target Distribution over the Second Target Distribution; and
(g) Seventh, 50.51% to all Limited Partners holding Series A Preference
Units and Series A Common Units, in the proportion that the respective number of
such Units held by them bears to the number of such Units then Outstanding, and
49.49% to the General Partner,
provided, however, that if the Minimum Quarterly Distribution, the First Target
Distribution, the Second Target Distribution and the Third Target Distribution
have been reduced to zero pursuant to Section 5.9(a)(ii), then distributions of
Available Cash that is deemed to be Cash from Operations with respect to any
quarter will be made in accordance with Section 5.4(g) above.
41
5.5 Distributions With Respect to Calendar Quarters After the Series A
Preference Unit Preference Period.
(a) Distributions With Respect to Calendar Quarters After the Series A
Preference Unit Preference Period and Before the Series B Preference Unit
Preference Date. Available Cash with respect to any calendar quarter included in
the period beginning on (and including) the day immediately following the Series
A Preference Unit Preference Period and ending on (and including) the day
immediately before the Series B Preference Unit Preference Date that is deemed
to be Cash from Operations pursuant to the provisions of Section 5.3 or 5.7 and,
to the extent necessary to make the payments in subsection (i) below, the
Reserve Amount shall be applied as follows:
(i) First, 99% to all Limited Partners holding Series A
Preference Units and Series B Preference Units (allocated between each
such series and among the Limited Partners holding Preference Units of
each such series as provided below in this Section 5.5(a)(i)) and 1.0%
to the General Partner until there has been distributed in respect of
each Series A Preference Unit then Outstanding an amount equal to the
Minimum Quarterly Distribution. As between the Limited Partners holding
Series A Preference Units and the Limited Partners holding Series B
Preference Units, any distributions under this Section 5.5(a)(i) shall
be allocated (x) first, based on the Preference Unit Sharing Ratios
until there has been distributed in respect of each Series B Preference
Unit then Outstanding an amount up to (but not in excess of) the Series
B Preference Unit Discretionary Distribution Amount and (y) then, 100%
to the Series A Preference Units. As among the Limited Partners holding
a particular series of Preference Units, such distributions shall be
allocated in the proportion that the respective number of Preference
Units in such series held by them bears to the total number of
Preference Units in such series then Outstanding;
(ii) Second, 99% to all Limited Partners holding Series A
Preference Units and Series B Preference Units (allocated between each
such series and among the holders of each such series as provided below
in this Section 5.5(a)(ii)) and 1.0% to the General Partner until there
has been distributed in respect of each Series A Preference Unit then
Outstanding a total amount under this Section 5.5(a) equal to the sum
of the Minimum Quarterly Distribution and any Series A Preference Unit
Cumulative Deficiency existing on the last day of such calendar
quarter. As between the Limited Partners holding Series A Preference
Units and the Limited Partners holding Series B Preference Units, any
distributions under this Section 5.5(a)(ii) shall be allocated (x)
first, based on the Preference Unit Sharing Ratios until there has been
distributed in respect of each Series B Preference Unit then
Outstanding a total amount under this Section 5.5(a) up to (but not in
excess of) the Series B Preference Unit Discretionary Distribution
Amount on the last day of such calendar quarter, and (y) then, 100% to
the Series A Preference Units. As among the Limited Partners holding a
particular series of Preference Units, such distributions shall be
allocated in the proportion that the respective number of Preference
Units in such series held by them bears to the total number of
Preference Units in such series then Outstanding;
42
(iii) Third, 99% to all Limited Partners holding Series B
Preference Units, in the proportion that the respective number of
Series B Preference Units held by them bears to the total number of
Series B Preference Units then Outstanding, and 1.0% to the General
Partner until there has been distributed in respect of each Series B
Preference Unit then Outstanding a total amount pursuant to this
Section 5.5(a) equal to the Series B Preference Unit Discretionary
Distribution Amount for such calendar quarter;
(iv) Fourth, 99% to all Limited Partners holding Series A
Common Units, in the proportion that the respective number of Series A
Common Units held by them bears to the total number of Series A Common
Units then Outstanding, and 1.0% to the General Partner until there has
been distributed in respect of each Series A Common Unit then
Outstanding an amount equal to the Minimum Quarterly Distribution;
(v) Fifth, 99% to all Limited Partners holding Series A Common
Units, in the proportion that the respective number of Series A Common
Units held by them bears to the total number of Series A Common Units
then Outstanding, and 1.0% to the General Partner until there has been
distributed in respect of each Series A Common Unit then Outstanding an
amount equal to the excess of the First Target Distribution over the
Minimum Quarterly Distribution;
(vi) Sixth, 85.87% to all Limited Partners holding Series A
Common Units, in the proportion that the respective number of Series A
Common Units held by them bears to the total number of Series A Common
Units then Outstanding, and 14.13% to the General Partner until there
has been distributed in respect of each Series A Common Unit then
Outstanding an amount equal to the excess of the Second Target
Distribution over the First Target Distribution;
(vii) Seventh, 75.77% to all Limited Partners holding Series A
Common Units, in the proportion that the respective number of Series A
Common Units held by them bears to the number of Series A Common Units
then Outstanding, and 24.23% to the General Partner until there has
been distributed in respect of each Series A Common Unit then
Outstanding an amount equal to the excess of the Third Target
Distribution over the Second Target Distribution; and
(viii) Eighth, 50.51% to all Limited Partners holding Series A
Common Units, in the proportion that the respective number of Series A
Common Units held by them bears to the total number of Series A Common
Units then Outstanding, and 49.49% to the General Partner,
provided, however, that (x) if the Minimum Quarterly Distribution, the First
Target Distribution, the Second Target Distribution and the Third Target
Distribution have been reduced to zero pursuant to Section 5.9(a)(ii), then the
Series A Preference Units will receive no further distributions, shall be
treated as if they had been redeemed and shall cease to be Outstanding for all
purposes; and therefore, distributions of Available Cash that is deemed to be
Cash from Operations with respect to any quarter will be made in accordance with
Sections 5.5(a)(iii)-(vii) above and (y) if the Series B Preference Unit
Liquidation Value has been reduced to zero pursuant to Section 5.9(a)(ii), then
the Series B Preference Units will receive no further
43
distributions, shall be treated as if they had been redeemed and shall cease to
be Outstanding for all purposes; and therefore, distributions of Available Cash
that is deemed to be Cash from Operations with respect to any quarter will be
made in accordance with Sections 5.5(a)(vii) above.
(b) Distributions With Respect to Calendar Quarters After the Series A
Preference Unit Preference Period and On or After the Series B Preference Unit
Preference Date. Available Cash with respect to any calendar quarter included in
the period beginning on (and including) the Series B Preference Unit Preference
Date that is deemed to be Cash from Operations pursuant to the provisions of
Section 5.3 or 5.7 and, to the extent necessary to make the payments in
subsection (i) below, the Reserve Amount shall be applied as follows:
(i) First, 99% to all Limited Partners holding Series A
Preference Units and Series B Preference Units (allocated between each
such series and among the holders of each such series as provided below
in this Section 5.5(b)(i)) and 1.0% to the General Partner until there
has been distributed in respect of each Series A Preference Unit then
Outstanding an amount equal to the Minimum Quarterly Distribution. As
between the Limited Partners holding Series A Preference Units and the
Limited Partners holding Series B Preference Units, any distributions
under this Section 5.5(b)(i) shall be allocated (x) first, based on the
Preference Unit Sharing Ratio until there has been distributed in
respect of each Series B Preference Unit then outstanding an amount up
to (but not in excess of) any Series B Preference Unit Deficiency
existing on the last day of such quarter, and (y) then, 100% to the
Series A Preference Units. As among the Limited Partners holding a
particular series of Preference Units, such distributions shall be
allocated in the proportion that the respective number of Preference
Units in such series held by them bears to the total number of
Preference Units in such series then Outstanding;
(ii) Second, 99% to all Limited Partners holding Series A
Preference Units and Series B Preference Units (allocated between each
such series and among the holders of each such series as provided below
in this Section 5.5(b)(ii)) and 1.0% to the General Partner until there
has been distributed in respect of each Series A Preference Unit then
Outstanding a total amount under this Section 5.5(b) equal to the sum
of the Minimum Quarterly Distribution and any Series A Preference Unit
Cumulative Deficiency existing on the last day of such quarter. As
between the Limited Partners holding Series A Preference Units and the
Limited Partners holding Series B Preference Units, any distributions
under this Section 5.5(b)(ii) shall be allocated (x) first, based on
the Preference Unit Sharing Ratio until there has been distributed in
respect of each Series B Preference Unit then outstanding an amount up
to (but not in excess of) the Series B Preference Unit Deficiency on
the last day of such calendar quarter, and (y) then, 100% to the Series
A Preference Units. As among the Limited Partners holding a particular
series of Preference Units, such distributions shall be allocated in
the proportion that the respective number of Preference Units in such
series held by them bears to the total number of Preference Units in
such series then Outstanding;
(iii) Third, 99% to all Limited Partners holding Series B
Preference Units, in the proportion that the respective number of
Series B Preference Units held by them bears
44
to the total number of Series B Preference Units then Outstanding, and
1.0% to the General Partner until there has been distributed in respect
of each Series B Preference Unit then Outstanding a total amount under
this Section 5.5(b) equal to the Series B Preference Unit Deficiency
for such calendar quarter;
(iv) Fourth, 99% to all Limited Partners holding Series A
Common Units, in the proportion that the respective number of Series A
Common Units held by them bears to the total number of Series A Common
Units then Outstanding, and 1.0% to the General Partner until there has
been distributed in respect of each Series A Common Unit then
Outstanding an amount equal to the Minimum Quarterly Distribution;
(v) Fifth, 99% to all Limited Partners holding Series A Common
Units, in the proportion that the respective number of Series A Common
Units held by them bears to the total number of Series A Common Units
then Outstanding, and 1.0% to the General Partner until there has been
distributed in respect of each Series A Common Unit then Outstanding an
amount equal to the excess of the First Target Distribution over the
Minimum Quarterly Distribution;
(vi) Sixth, 85.87% to all Limited Partners holding Series A
Common Units, in the proportion that the respective number of Series A
Common Units held by them bears to the total number of Series A Common
Units then Outstanding, and 14.13% to the General Partner until there
has been distributed in respect of each Series A Common Unit then
Outstanding an amount equal to the excess of the Second Target
Distribution over the First Target Distribution;
(vii) Seventh, 75.77% to all Limited Partners holding Series A
Common Units, in the proportion that the respective number of Series A
Common Units held by them bears to the number of Series A Common Units
then Outstanding, and 24.23% to the General Partner until there has
been distributed in respect of each Series A Common Unit then
Outstanding an amount equal to the excess of the Third Target
Distribution over the Second Target Distribution; and
(viii) Eighth, 50.51% to all Limited Partners holding Series A
Common Units, in the proportion that the respective number of Series A
Common Units held by them bears to the total number of Series A Common
Units then Outstanding, and 49.49% to the General Partner,
provided however, that (x) if the Minimum Quarterly Distribution, the First
Target Distribution, the Second Target Distribution and the Third Target
Distribution have been reduced to zero pursuant to Section 5.9(a)(ii), then the
Series A Preference Units will receive no further distributions, shall be
treated as if they had been redeemed and shall cease to be Outstanding for all
purposes; and therefore, distributions of Available Cash that is deemed to be
Cash from Operations with respect to any quarter will be made in accordance with
Section 5.5(b)(iii)-(vii) above and (y) if the Series B Preference Unit
Liquidation Value has been reduced to zero pursuant to Section 5.9(a)(ii), then
the Series B Preference Units will receive no further distributions, shall be
treated as if they had been redeemed and shall cease to be Outstanding for all
purposes; and therefore, distributions of Available Cash that is deemed to be
Cash from Operations with respect to any quarter will be made in accordance with
Sections 5.5(b)(vii) above.
45
5.6 Conversion of Series A Preference Units.
(a) From and after the end of the Series A Preference Unit Preference
Period, the Series A Preference Units shall cease to participate with the Common
Units in any distributions of Available Cash constituting Cash from Operations
in excess of the Minimum Quarterly Distribution and any Series A Preference Unit
Cumulative Deficiency.
(b) On or within 45 days following the Series A Preference Unit
Conversion Date and each of the first and second anniversaries thereof, the
General Partner shall give the holders of Series A Preference Units a written
notice (a "Series A Preference Unit Conversion Opportunity Notice"), to the
effect that, for a 90-day period commencing upon the mailing of such notice, the
holders of all Series A Preference Units shall have the right, subject to the
satisfaction of the Liquidity Condition, to convert their Series A Preference
Units into a like number of Common Units, effective as of the date of the Series
A Preference Unit Conversion Opportunity Notice, by delivering to the General
Partner a written notice of their election to convert (the "Series A Preference
Unit Conversion Election Notice"); provided, however, that any Series A
Preference Units as to which a Series A Preference Unit Conversion Election
Notice is not received during such 90-day period will remain as Series A
Preference Units. On or before the Series A Preference Unit Conversion Date, or
the first or second anniversary thereof, if applicable, the General Partner
shall file an application to list the Common Units to be issued upon such
conversion on the New York Stock Exchange ("NYSE") and shall pursue such
application in good faith.
(c) If the Liquidity Condition is satisfied following the giving of any
Series A Preference Unit Conversion Opportunity Notice, the conversion will
become effective and the Series A Preference Unit Preference Period will end as
of the date of the Series A Preference Unit Conversion Opportunity Notice. If
the Liquidity Condition is not satisfied following the giving of any Series A
Preference Unit Conversion Opportunity Notice and the holders of less than a
majority of the outstanding Series A Preference Units elect to convert, no
Series A Preference Units will be converted and the Series A Preference Unit
Preference Period will end as of the date of such Series A Preference Unit
Conversion Opportunity Notice. If the holders of at least a majority of the
outstanding Series A Preference Units elect to convert following the giving of
any Series A Preference Unit Conversion Opportunity Notice, but the Liquidity
Condition is not satisfied, the Series A Preference Unit Preference Period shall
not end.
(d) Notwithstanding the foregoing, the Series A Preference Unit
Preference Period and the General Partner's obligation to give additional Series
A Preference Unit Conversion Opportunity Notices, shall end, if not sooner ended
pursuant to Section 5.6(c), as of the date of the third Series A Preference Unit
Conversion Opportunity Notice.
5.7 Distributions of Cash from Interim Capital Transactions. Available
Cash that is deemed to be Cash from Interim Capital Transactions shall be
distributed, unless the provisions of Section 5.3 require otherwise, 99% to all
Limited Partners holding Series A Common Units, Series A Preference Units Series
B Preference Units (allocated between each such series and
46
among the holders of each such series as provided below in this Section 5.7) and
1.0% to the General Partner until (a) a hypothetical holder of a Series A
Preference Unit acquired at the time of the Series A Preference Unit Initial
Offering has received with respect to each Series A Preference Unit, from
Partnership Inception through such date, distributions of Available Cash that
are deemed to be Cash from Interim Capital Transactions in an aggregate amount
per Series A Preference Unit equal to the Initial Unit Price, and (b) a
hypothetical holder of a Series B Preference Unit has received with respect to
each Series B Preference Unit, from the Series B Preference Unit Issuance Date
through such date, distributions of Available Cash that are deemed to be Cash
from Interim Capital Transactions in an aggregate amount per Series B Preference
Unit equal to the Series B Preference Unit Liquidation Value. Thereafter, all
Available Cash shall be distributed as if it were Cash from Operations and shall
be distributed in accordance with Section 5.4 or 5.5, whichever is applicable.
As among the Limited Partners holding Series A Common Units, Series A Preference
Units and Series B Preference Units, any distributions under this Section 5.7
shall be allocated based on the Combined Unit Sharing Ratios. As among the
Limited Partners holding a particular series of Units, such distributions shall
be allocated in the proportion that the respective number of Units in such
series held by them bears to the total number of Units in such series then
Outstanding.
5.8 Definitions. As used herein,
(a) "Available Cash" means, with respect to any calendar quarter:
(i) the sum of:
(A) all cash receipts of the Partnership during such
quarter from all sources (including distributions of cash
received from the Operating Companies); and
(B) any reduction in reserves (including the Reserve
Amount) established in prior quarters;
(ii) less the sum of.
(A) all cash disbursements of the Partnership during
such quarter (excluding cash distribution to Unitholders and
to the General Partner, but including, for example,
disbursements for taxes of the Partnership as an entity, debt
service and capital expenditures);
(B) the amount of any voluntary addition to the
Reserve Amount;
(C) any reserves established and the amount of any
additions to such reserves in such quarter and in such amounts
as the General Partner determines to be necessary or
appropriate in its reasonable discretion (x) to provide for
the proper conduct of the business of the Partnership or the
Operating Companies (including reserves for future capital
expenditures) or (y) to provide funds for distributions with
respect to any of the next four calendar quarters, in addition
to the Reserve Amount; and
47
(D) any other reserves established in such quarter in
such amounts as the General Partner determines in its
reasonable discretion to be necessary because the distribution
of such amounts would be prohibited by applicable law or by
any loan agreement, security agreement, mortgage, debt
instrument or other agreement or obligation to which the
Partnership is a party or by which it is bound or its assets
are subject.
Taxes paid by the Partnership on behalf of, or amounts withheld with
respect to, any of the Partners shall not be considered cash disbursements of
the Partnership which reduce "Available Cash," but shall be deemed to be a
distribution of Available Cash to such Partners. Alternatively, in the
discretion of the General Partner, such taxes (if pertaining to all Partners)
may be considered to be cash disbursements of the Partnership which reduce
"Available Cash," but shall not deemed to be a distribution of Available Cash to
such Partners. Notwithstanding the foregoing, "Available Cash" shall not include
any cash receipts or reductions in reserves or take into account any
disbursements made or reserves established after commencement of the dissolution
and liquidation of the Partnership.
Distributions of Available Cash will be characterized as either
distributions of Cash from Operations or Cash from Interim Capital Transactions.
All Available Cash distributed by the Partnership on any date from any source
will be treated as if it were a distribution of Cash from Operations until the
sum of all distributions of Available Cash treated as Cash from Operations is
equal to the sum of (i) the balance of the Reserve Account at Partnership
Inception and (ii) the aggregate amount of all Cash from Operations generated by
the Partnership since Partnership Inception through the end of the prior
calendar quarter, any remaining Available Cash distributed on such date will be
treated as if it were a distribution of Cash from Interim Capital Transactions,
except as otherwise set forth herein.
(b) "Cash from Interim Capital Transactions" means at any date such
amounts of Available Cash as are deemed to be Cash from Interim Capital
Transactions pursuant to Section 5.3;
(c) "Cash from Operations" means, at any date but prior to commencement
of the dissolution and liquidation of the Partnership, on a cumulative basis:
(i) the sum of:
(A) the cash balance of the Partnership and the
Operating Companies at the Partnership Inception after all
transactions contemplated on the Closing Date, including the
Reserve Amount, plus
(B) all cash receipts of the Partnership and the
Operating Companies from their operations (excluding any cash
proceeds from any Interim Capital Transactions or from any
sale, transfer or disposition of assets after commencement of
the dissolution and liquidation of the Partnership) during the
period from the Partnership Inception through such date;
(ii) less the sum of:
48
(A) all cash operating expenditures of the
Partnership and the Operating Companies during such period,
including, without limitation, taxes imposed on the
Partnership or the Operating Companies as an entity,
(B) all cash debt service payments of the Partnership
and the Operating Companies during such period (other than
payments or prepayments of principal and premiums required by
reason of loan agreements (including covenants and default
provisions therein) or by lenders, in each case in connection
with the sales or other dispositions of assets or made in
connection with refinancings or refundings of indebtedness,
provided that any payment or prepayment of principal, whether
or not then due, may be determined at the election and in the
discretion of the General Partner, to be refunded or
refinanced by any indebtedness incurred or to be incurred by
the Partnership or the Operating Companies simultaneously with
or within 180 days prior to or after such payment or
prepayment to the extent of the principal amount of such
indebtedness so incurred),
(C) all cash capital expenditures of the Partnership
and the Operating Companies during such period (other than (x)
any cash capital expenditure made for the purpose of
materially increasing the capacity of the Operating Companies'
pipelines and facilities (considered as a whole and assuming
normal operating conditions, including downtime and
maintenance), and not in connection with scheduled maintenance
activities, over the capacity of such pipelines and facilities
existing immediately prior to such capital expenditure and (y)
any cash expenditures made in payment of transaction expenses
relating to Interim Capital Transactions),
(D) any reserves outstanding as of such date which
are required, or the General Partner determines in its
reasonable discretion to be necessary or appropriate to
provide for the future cash payment of items of the type
referred to in clauses (AA) through (CC) of this sentence, and
(E) any reserves (other than the Reserve Amount)
outstanding as of such date that the General Partner
determines to be necessary or appropriate in its reasonable
discretion to provide funds for distributions on a
consolidated basis and after elimination of intercompany items
and the Company's non-managing interest in the Operating
Companies.
Taxes paid by the Partnership on behalf of, or amounts withheld with
respect to, any of the Partners shall not be considered cash operating
expenditures of the Partnership which reduce "Cash from Operations," but shall
be deemed to be a distribution of Available Cash to such Partners.
Alternatively, in the discretion of the General Partner, such taxes (if
pertaining to all Partners) may be considered to be cash disbursements of the
Partnership which reduce "Cash from Operations," but shall not be deemed to be a
distribution of Available Cash to such Partners.
49
(d) "First Target Distribution" means $0.65 ($0.325 on and after the
1996 Split Date) per Unit per calendar quarter (or, with respect to the period
commencing on the Closing Date and ending on March 31, 1993, the product of
$0.65 multiplied by a fraction of which the numerator is the number of days in
such period and of which the denominator is 90), subject to adjustment in
accordance with Sections 5.9 and 9.6;
(e) "Interim Capital Transactions" means (i) borrowings, refinancings
or refundings of indebtedness and sales of debt securities (other than for
working capital purposes and for items purchased on open account in the ordinary
course of business) by the Partnership or the Operating Companies, (ii) sales of
equity interests by the Partnership or the Operating Companies and (iii) sales
or other voluntary or involuntary dispositions of any assets of the Partnership
or the Operating Companies (other than (x) sales or other dispositions of
inventory in the ordinary course of business, (y) sales or other dispositions of
other current assets including amounts receivable or (z) sales or other
dispositions of assets as a part of normal retirements or replacements), in each
case prior to the commencement of the dissolution and liquidation of the
Partnership;
(f) "Minimum Quarterly Distribution" means $0.55 ($0.275 on and after
the 1996 Split Date) per Unit (as adjusted for Partnership Interest Adjusting
Events) per calendar quarter (or, with respect to the period commencing on the
Closing Date and ending on March 31, 1993, the product of $0.55 (as adjusted for
Partnership Interest Adjusting Events) multiplied by a fraction of which the
numerator is the number of days in such period and of which the denominator is
90), subject to adjustment in accordance with Sections 5.9 and 9.6;
(g) "Net Income" means, for any taxable period, the excess, if any, of
the Partnership's items of income and gain (other than those items attributable
to dispositions constituting Termination Capital Transactions) for such taxable
period over the Partnership's items of loss and deduction (other than these
items attributable to dispositions constituting Termination Capital
Transactions) for such taxable period. The items included in the calculation of
Net Income shall be determined in accordance with Section 4.6(b) and shall not
include any items specially allocated under Section 5.1(e) or 5.1(e). Once an
item of income, gain, loss or deduction that has been included in the initial
computation of Net Income is subject to a Required Allocation or a Discretionary
Allocation, the applicable Net Income or Net Loss shall be recomputed without
regard to such item. For purposes of Sections 5.1(a) and 5.1(b), in determining
whether Net Income has been allocated to any Unit or any Partner (as the case
may be) for any previous taxable period, any Unrealized Gain or Unrealized Loss
allocated pursuant to Section 4.6(d) shall be treated as item of gain or loss in
computing Net Income;
(h) "Net Loss" means, for any taxable period, the excess, if any, of
the Partnership's items of loss and deduction (other than those items
attributable to dispositions constituting Termination Capital Transactions) for
such taxable period over the Partnership's items of income and gain (other than
those items attributable to dispositions constituting Termination Capital
Transactions) for such taxable period. The items included in the calculation of
Net Loss shall be determined in accordance with Section 4.6(b) and shall not
include any items specifically allocated under Section 5.1(e) or 5.1(e). Once an
item of income, gain, loss or deduction that has been included in the initial
computation of Net Loss is subjected to a Required Allocation or a Discretionary
Allocation, the applicable Net Income or Net Loss shall be recomputed without
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regard to such item. For purposes of Sections 5.1(a) and 5.1(b), in determining
whether Net Losses have been allocated to any Unit or any Partner (as the case
may be) for any previous taxable period any Unrealized Gain or Unrealized Loss
allocated pursuant to Section 4.6(d) shall be treated as an item of gain or loss
in computing Net Losses;
(i) "Net Termination Gain" means, for each Partnership year or shorter
period the sum, if positive, of all items of gain or loss recognized by the
Partnership from Termination Capital Transactions and all items of income, gain,
loss and deduction (as determined in accordance with Section 4.6(b)) recognized
by the Partnership after the time in which the Partnership has dissolved and can
no longer be continued pursuant to Section 14.2;
(j) "Net Termination Loss" means, for each Partnership year or shorter
period the sum, if negative, of all items of gain or loss recognized by the
Partnership from Termination Capital Transactions and all items of income, gain,
loss and deduction (as determined in accordance with Section 4.6(b)) recognized
by the Partnership after the time in which the Partnership has dissolved and can
no longer be continued pursuant to Section 14.2;
(k) "Second Target Distribution" means $0.75 ($0.375 on and after the
1996 Split Date) per Unit per calendar quarter (or, with respect to the period
commencing on the Closing Date and ending on March 31, 1993, the product of
$0.75 multiplied by a fraction of which the numerator is equal to the number of
days in such period and of which the denominator is 90), subject to adjustment
in accordance with Sections 5.9 and 9.6;
(l) "Series A Preference Unit Cumulative Deficiency" means, with
respect to any Series A Preference Unit, the excess of (a) the sum resulting
from adding together the Series A Preference Unit Deficiency as to such Series A
Preference Unit for each of the quarters ending prior to such quarter over (b)
the sum of any distributions theretofore made with respect to such Series A
Preference Unit pursuant to paragraph (b) of Section 5.4 and paragraph (b) of
Section 5.5;
(m) "Series A Preference Unit Deficiency" means, with respect to any
Series A Preference Unit, as to any calendar quarter, the excess of (a) the
Minimum Quarterly Distribution over (b) the sum of all Available Cash
distributed with respect to such Series A Preference Unit pursuant to paragraph
(a) of Section 5.4 or paragraphs (a) and (b) of Section 5.5, as applicable;
(n) "Termination Capital Transaction" means any sale, transfer or other
disposition of property of the Partnership, the Operating Companies or the Joint
Ventures occurring after the time in which the Partnership has dissolved and can
no longer be continued pursuant to Section 14.2; and
(o) "Third Target Distribution" means $0.85 ($0.425 on and after the
1996 Split Date) per Unit per calendar quarter (or, with respect to the period
commencing on the Closing Date and ending on March 31, 1993, the product of
$0.85 multiplied by a fraction of which the numerator is equal to the number of
days in such period and of which the denominator is 90), subject to adjustment
in accordance with Sections 5.9 and 9.6.
5.9 Adjustments to Minimum Quarterly Distribution Levels, Target
Levels, Unrecovered Capital, Series B Preference Unit Amounts and Certain Other
Provisions.
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(a) Adjustments of the Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution, Third Target Distribution, Unrecovered
Capital, Series B Preference Unit Face Value and Series B Preference Unit
Liquidation Value shall be made in the following circumstances: (i) the Minimum
Quarterly Distribution, First Target Distribution, Second Target Distribution,
Third Target Distribution, Unrecovered Capital, Series B Preference Unit Face
Value and Series B Preference Unit Liquidation Value shall be proportionately
adjusted in the event of any distribution, combination or subdivision (whether
effected by a distribution payable in Units or otherwise) of Units or other
Partnership Securities in accordance with Section 4.11; and (ii) in the event of
a distribution of Available Cash that is deemed to be Cash from Interim Capital
Transactions, the Minimum Quarterly Distribution, First Target Distribution,
Second Target Distribution and Third Target Distribution shall be
proportionately adjusted downward to equal the product obtained by multiplying
the otherwise applicable Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target Distribution, as the
same may have been previously adjusted by a fraction of which the numerator is
the Unrecovered Capital or Series B Preference Unit Face Value, as applicable,
immediately after giving effect to such distribution and the denominator is the
Unrecovered Capital or Series B Preference Unit Face Value, as applicable,
immediately prior to giving effect to such distribution.
(b) The Minimum Quarterly Distribution, First Target Distribution,
Second Target Distribution, Third Target Distribution and the amount distributed
under may be adjusted under the circumstances, and in the manner, set forth in
Section 9.6.
5.10 Reserve Amount. The Partnership shall establish the Reserve
Amount, consisting of the aggregate cash on hand in the Partnership and the
Operating Companies at Partnership Inception, on a combined basis, increased by
net cash proceeds to the Partnership from the exercise by the Underwriters of
the over-allotment option described in Section 4.3(c) hereof, which shall be
deemed to occur for purposes of determination of the Reserve Amount at
Partnership Inception. The Reserve Amount shall be an asset of the Partnership,
need not be maintained separate or apart from any other reserves, accounts or
assets of the Partnership and shall be utilized, in the sole discretion of the
General Partner, for any proper Partnership purpose, including but not limited
to stabilizing distributions to Unitholders, debt reduction, capital
expenditures, additional funding of the Reserve Amount or the establishment or
increase of other appropriate reserves. The General Partner, in its sole
discretion, may elect to retain in the Reserve Amount any balance therein and
may voluntarily increase or decrease the Reserve Amount, from time to time, and
need not justify such retention increase or decrease as being for any particular
Partnership purpose. The balance in the Reserve Amount shall be disregarded in
determining the need for or amounts of other reserves which the General Partner
is authorized to establish and maintain pursuant to this Agreement.
5.11 Special Distributions.
(a) On the Optional Closing Date (as defined in the Underwriting
Agreement), the General Partner shall surrender to the Partnership a number of
Common Units equal to the number of Series A Preference Units acquired by the
Underwriters in excess of 393,750 Series A Preference Units in exchange for a
per Unit distribution equal to the Issue Price per Unit.
52
(b) Distributions under this Section 5.11 shall not be considered to be
distributions or expenditures for purposes of this Article V, including
calculations of Available Cash, Cash from Operations or rights to other
distributions.
ARTICLE VI
MANAGEMENT AND OPERATION OF BUSINESS
6.1 Management.
(a) The General Partner shall conduct, direct and exercise full control
over all activities of the Partnership. Except as otherwise expressly provided
in this Agreement, all management powers over the business and affairs of the
Partnership shall be exclusively vested in the General Partner, and no Limited
Partner or Assignee shall have any right of control or management power over the
business and affairs of the Partnership. In addition to the powers now or
hereafter granted a general partner of a limited partnership under applicable
law or which are granted to the General Partner under any other provision of
this Agreement, the General Partner, subject to Section 6.3, shall have full
power and authority to do all things and on such terms as it, in its sole
discretion, may deem necessary or appropriate (i) to conduct the business of the
Partnership, to exercise all powers set forth in Section 3.2 and to effectuate
the purposes set forth in Section 3.1, including, without limitation, (A) the
making of any expenditures, the lending or borrowing of money, the assumption or
guarantee of, or other contracting for, indebtedness and other liabilities, the
issuance of evidences of indebtedness and the incurring of any other obligations
and the securing of same by mortgage, deed of trust or other lien or
encumbrance; (B) the making of tax, regulatory and other filings, or rendering
of periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Partnership; (C) the
acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or
exchange of any or all of the assets of the Partnership or the merger or other
combination of the Partnership with or into another Person (the matters
described in this clause (C) being subject however, to any prior approval that
may be required by Section 6.3); (D) the use of the assets of the Partnership
(including, without limitation, cash on hand) for any purpose consistent with
the terms of this Agreement including, without limitation, the financing of the
conduct of the operations of the Partnership or the Operating Companies, the
lending of funds to other Persons (including, without limitation, the Operating
Companies) and the repayment of obligations of the Partnership and the Operating
Companies and the making of capital contributions to the Operating Companies;
(E) the negotiation, execution and performance of any contracts, conveyances or
other instruments (including, without limitation, instruments that limit the
liability of the Partnership under contractual arrangements to all or particular
assets of the Partnership, with the other party to the contract to have no
recourse against the General Partner or its assets other than its interest in
the Partnership, even if same results in the terms of the transaction being less
favorable to the Partnership than would otherwise be the case); (F) the
distribution of Partnership cash; (G) the selection and dismissal of employees
and agents (including, without limitation, employees having titles such as
"president," "vice president," "secretary" and "treasurer") and agents, outside
attorneys, accountants, consultants and contractors and the determination of
their compensation and other terms of employment or hiring; (H) the maintenance
of insurance for the benefit of the Partners and the Partnership and the
Operating Companies (including, without limitation, the assets and operations of
the Partnership and the Operating Companies); (I) the formation of, or
acquisition of an interest in,
53
and the contribution of property to, any further limited or general
partnerships, joint ventures, corporations or other relationships (including,
without limitation, the acquisition of interest in, and the contributions of
property to, the Operating Companies from time to time); (J) the control of any
matters affecting the rights and obligations of the Partnership, including,
without limitation, the bringing and defending of actions at law or in equity
and otherwise engaging in the conduct of litigation and the incurring of legal
expense and the settlement of claims and litigation; (K) the indemnification of
any Person against liabilities and contingencies to the extent permitted by law;
(L) the entering into of listing agreements with the New York Stock Exchange and
any other securities exchange and the delisting of some or all of the Units
from, or requesting that trading be suspended on, any such exchange (subject to
any prior approval that may be required under Section 1.6); and (M) the
purchase, sale or other acquisition or disposition of Units and, subject to
Section 4.4(c), other Partnership securities; and (ii) to undertake any action
in connection with the Partnership's participation in the Operating Companies as
the managing member (including, without limitation, contributions or loans of
funds by the Partnership to the Operating Companies).
(b) Notwithstanding any other provision of this Agreement, the Charter
Documents of the Operating Companies and the Joint Ventures, the Delaware Act or
any applicable law, rule or regulation, each of the Partners and Assignees and
each other Person who may acquire an interest in Units hereby (i) approves,
ratifies and confirms the execution, delivery and performance by the parties
thereto of each of the agreements described in or filed as an exhibit to the
Registration Statement, specifically including, but not limited to, the
Revolving Credit Facility and the notes, security agreements and other documents
evidencing or securing the same or relating thereto, the Conveyance Agreement
and the deeds, assignments, bills of sale and other documents relating thereto,
the applicable Charter Documents, the Underwriting Agreement and the Management
Agreement (each such capitalized term having the meaning assigned thereto in the
Registration Statement); (ii) agrees that the General Partner is authorized to
execute, deliver and perform the agreements referred to in clause (i) of this
sentence and the other agreements, acts, transactions and matters described in
the Registration Statement on behalf of the Partnership without any further act,
approval or vote of the Partners or the Assignees or the other Persons who may
acquire an interest in Units; and (iii) agrees that none of the execution,
delivery or performance by the General Partner, the Partnership, the Operating
Companies or any Affiliate thereof of any agreement authorized or permitted
under this Agreement (including, without limitation, the exercise by the General
Partner or any Affiliate of the General Partner of the rights accorded pursuant
to Article XVII) shall constitute a breach by the General Partner of any duty
that the General Partner may owe the Partnership or the Limited Partners or the
Assignees or any other Persons under this Agreement or of any duty stated or
implied by law or equity.
6.2 Certificate of Limited Partnership. Prior to the Closing Date, the
General Partner caused the Certificate of Limited Partnership (in its form at
such time) to be filed with the Secretary of State of the State of Delaware as
required by the Delaware Act. The General Partner shall use all reasonable
efforts to cause to be filed such other certificates or documents as may be
determined by the General Partner in its sole discretion to be reasonable and
necessary or appropriate for the formation, continuation, qualification and
operation of a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware or any other state in
which the Partnership may elect to do business or own property. To the extent
54
that such action is determined by the General Partner in its sole discretion to
be reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate of Limited Partnership and do
all things to maintain the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) under the laws
of the State of Delaware or of any other state in which the Partnership may
elect to do business or own property. Subject to the terms of Section 7.5(a),
the General Partner shall not be required before or after filing, to deliver or
mail a copy of the Certificate of Limited Partnership, any qualification
document or any amendment thereto to any Limited Partner or Assignee.
6.3 Restrictions on General Partner's Authority.
(a) The General Partner may not, without written approval of the
specific act by all of the Limited Partners or by other written instrument
executed and delivered by all of the Limited Partners subsequent to the date of
this Agreement, take any action in contravention of this Agreement, including,
without limitation, (i) any act that would make it impossible to carry on the
ordinary business of the Partnership, except as otherwise provided in this
Agreement; (ii) possess Partnership property, or assign any rights in specific
Partnership property, for other than a Partnership purpose; (iii) admit a Person
as a Partner, except as otherwise provided in this Agreement; (iv) amend this
Agreement in any manner, except as otherwise provided in this Agreement or
applicable law; or (v) transfer its interest as general partner of the
Partnership, except as otherwise provided in this Agreement.
(b) Except as provided in Article XIV and Article XVI, the General
Partner may not sell, exchange or otherwise dispose of all or substantially all
of the Partnership's assets in a single transaction or a series of related
transactions (including by way of merger, consolidation or other combination
with any other Person) or approve on behalf of the Partnership the sale,
exchange or other disposition of all or substantially all of the assets of all
of the Operating Companies, taken as a whole, or of interests in the Operating
Companies, without the approval of the holders of record of at least 66 2/3% of
the Outstanding Series A Preference Units during the Series A Preference Unit
Preference Period and thereafter without the approval of the holders of at least
a majority of the Outstanding Voting Units; provided, however, that this
provision shall not preclude or limit the General Partner's ability to mortgage,
pledge, hypothecate or grant a security interest in all or substantially all of
the Partnership's assets or the Operating Companies assets and shall not apply
to any forced sale of any or all of the Partnership's assets or the Operating
Companies' assets pursuant to the foreclosure of, or other realization upon, any
such encumbrance. Without the approval of the holders of at least a majority of
the Outstanding Series A Preference Units during the Series A Preference Unit
Preference Period and thereafter without the approval of the holders of at least
a majority of the Outstanding Voting Units, the General Partner shall not, on
behalf of the Partnership, consent to any amendment to the Operating Companies'
Agreements that would adversely affect the Partnership as a member of the
Operating Companies. In no event shall all or substantially all of the
Partnership's assets be sold, exchanged or otherwise disposed of in a single
transaction or a series of related transactions (including by way of merger,
consolidation or other combination with any other Person) without the approval
of the General Partner.
(c) Unless approved by the affirmative vote of the holders of at least
66 2/3% of the Outstanding Voting Units, including the vote of a majority of the
Outstanding Series A
55
Preference Units, (other than Preference Units held by the General Partner and
its affiliates), the General Partner shall not take any action or refuse to take
any reasonable action the effect of which, if taken or not taken, as the case
may be, would be to cause the Partnership or, to the extent it would materially
and adversely affect the Limited Partners holding Units, the Operating Companies
to be taxable as a corporation or otherwise taxed as an entity for federal
income tax purpose; provided that this Section 6.3(c) shall not be construed to
apply to amendments to this Agreement (which are governed by Article XV) or
mergers or consolidations of the Partnership with any Person (which are governed
by Article XVI).
(d) At all times while serving as the general partner of the
Partnership, the General Partner shall not make any dividend or distribution on,
repurchase any shares of its stock, or take any other action within its control
if the effect of such dividend distribution, repurchase or other action (i)
would cause it hold less than 19% of the Outstanding Units and (ii) would be to
reduce its net worth below an amount necessary to receive an Opinion of Counsel
that the Partnership will be treated as a partnership for federal income tax
purposes.
(e) (i) Notwithstanding any other provision of this Agreement, the
General Partner is not authorized to institute or initiate on behalf of, or
otherwise cause, the Partnership or any of the Operating Companies to,
(A) make a general assignment for the benefit of
creditors;
(B) file a voluntary bankruptcy petition;
(C) file a petition seeking for the Partnership or
any of the Operating Companies a reorganization, arrangement,
composition, readjustment liquidation, dissolution or similar
relief under any law; or
(D) seek the appointment of a trustee, receiver or
liquidator of the Partnership or any of the Operating
Companies or of all or any substantial part of any of the
properties of any of them,
unless such action has been approved by all of the directors on the
General Partner's board of directors.
(ii) No provision of this Section 6.3(e) shall be amended,
altered, changed, repealed or rescinded in any respect unless such
amendment is approved by the written consent or the affirmative vote of
all of the directors on the General Partner's board of directors.
6.4 Reimbursement of the General Partner.
(a) Except as provided in this Section 6.4 and elsewhere in this
Agreement, the General Partner shall not be compensated for its services as
general partner of the Partnership.
(b) The General Partner shall be reimbursed on a monthly basis, or such
other basis as the General Partner may determine in its sole discretion, for (i)
all direct and indirect expenses it incurs or payments it makes on behalf of the
Partnership (including, without limitation,
56
amounts paid to any Person to perform services for the Partnership), and (ii)
that portion of the General Partner's or its Affiliates' legal, accounting,
investor communications, utilities, telephone, secretarial, travel,
entertainment, bookkeeping, reporting, data processing, office rent and other
office expenses (including, without limitation, overhead charges), salaries,
fees and other compensation and benefit expenses of employees, officers and
directors, insurance, other administrative or overhead expenses and all other
expenses, in each such case, necessary or appropriate to the conduct of the
Partnership's business and reasonably allocable to the Partnership or otherwise
incurred by the General Partner in connection with operating the Partnership's
business (including, without limitation, expenses allocated to the General
Partner by its Affiliates and payments made by the General Partner to DeepTech
pursuant to the Management Agreement dated as of July 1, 1992). Any accruals by
the General Partner of the expected cost of providing all forms of
post-retirement benefits to employees or former employees of the General Partner
and their beneficiaries and qualified dependents will be borne by the
Partnership, to the extent properly allocable thereto. The General Partner shall
determine the fees and expenses that are allocable to the Partnership in any
reasonable manner determined by the General Partner in its sole discretion. Such
reimbursements shall be in addition to any reimbursement to the General Partner
as a result of indemnification pursuant to Section 6.7.
(c) Subject to Section 4.4(c), the General Partner in its sole
discretion and without the approval of the Limited Partners may propose and
adopt, on behalf of the Partnership, employee benefit plans (including, without
limitation, plans involving the issuance of Units), for the benefit of employees
of the General Partner, the Partnership, the Operating Companies or any
Affiliate of any of them in respect of services performed directly or
indirectly, for the benefit of the Partnership or the Operating Companies.
6.5 Outside Activities.
(a) The General Partner agrees that so long as it is the General
Partner of the Partnership, it will not engage in or acquire, directly or
indirectly, any business that is in direct material competition with the
business of the Partnership, subject to the following exceptions:
(i) First, the Company may acquire any competitive business as
part of a larger acquisition, so long as 75% or more of the revenues of
the business acquired, in the Company's reasonable judgment, are not
derived from such competitive business, provided however, if it is
commercially and operationally practicable, the Company will use its
reasonable efforts to offer that portion of the competitive business to
the Partnership; and
(ii) Second, the Company may engage in or acquire any
competitive business if the same is first offered to the Partnership
and the Partnership declines by a majority vote of the outstanding
Units (excluding for this purpose any Units held by the General Partner
or any of its affiliates) to make such acquisition or engage in such
business.
(b) Except as otherwise expressly provided in Section 6.5(a), each
Indemnitee is free to engage in any business, including any business that is in
competition with the business of the Partnership. The General Partner and any
other Persons affiliated with the General Partner may acquire Units or other
Partnership Securities, in addition to those acquired by any of such
57
Persons on the Closing Date, and (except as the right to vote such Units or
other Partnership Securities may be expressly limited in this Agreement) shall
be entitled to exercise all rights of an Assignee or Limited Partner, as
applicable, relating to such Units or Partnership Securities, as the case may
be.
(c) Without limiting Sections 6.5(a) and 6.5(b), but notwithstanding
any other provision to the contrary in this Agreement, the competitive
activities of Indemnitees described in the Registration Statement are hereby
approved by all Partners and it shall not be deemed to be a breach of the
General Partner's fiduciary duty for the General Partner to permit an Indemnitee
to engage in a business opportunity in preference to or to the exclusion of the
Partnership.
6.6 Loans to and from the General Partner; Contracts with Affiliates.
(a) The General Partner or any Affiliate thereof may lend to the
Partnership or the Operating Companies, and the Partnership and the Operating
Partnership may borrow, funds needed or desired by the Partnership and the
Operating Companies for such periods of time as the General Partner may
determine and (b) the General Partner or any Affiliate thereof may borrow from
the Partnership or the Operating Companies, and the Partnership and the
Operating Companies may lend to the General Partner or any Affiliate thereof,
excess funds of the Partnership and the Operating Companies for such periods of
time and in such amounts as the General Partner may determine; provided,
however, that in either case the lending party may not charge the borrowing
party interest at a rate greater than the rate that would be charged the
borrowing party (without reference to the General Partner's financial abilities
or guarantees), by unrelated lenders on comparable loans. The borrowing party
shall reimburse the lending party for any costs (other than any additional
interest costs) incurred by it in connection with the borrowing of such funds.
For purpose of this Section 6.6(a) and Section 6.6(b), the term "Partnership"
shall include any Affiliate of the Partnership that is controlled by the
Partnership and the term "Operating Companies" shall include any Affiliate of
the Operating Companies that is controlled by the Operating Companies.
(b) The Partnership may lend or contribute to the Operating Companies,
and the Operating Companies may borrow, funds on terms and conditions
established in the sole discretion of the General Partner; provided, however,
that the Partnership may not charge the Operating Companies interest at a rate
greater than the rate that would be charged to the Operating Companies, (without
reference to the General Partner's financial abilities or guarantees), by
unrelated lenders on comparable loans. The foregoing authority shall be
exercised by the General Partner in its sole discretion and shall not create any
right or benefit in favor of the Operating Companies or any other Person.
(c) The General Partner may itself, or may enter into an agreement with
any of its Affiliates to, render services to the Partnership. Any service
rendered to the Partnership by the General Partner or any of its Affiliates
shall be on terms that are fair and reasonable to the Partnership; provided,
however, that the requirements of this Section 6.6(c) shall be deemed satisfied
as to any transaction the terms of which are no less favorable to the
Partnership than those generally being provided to or available from unrelated
third parties. The provisions of Section 6.4 shall apply to the rendering of
services described in this Section 6.6(c).
58
(d) The Partnership may transfer assets to joint venture, other
partnerships, corporations or other business entities in which it is or thereby
becomes a participant upon such terms and subject to such conditions as are
consistent with this Agreement and applicable law.
(e) Neither the General Partner nor any of its Affiliates shall sell,
transfer or convey any property to, or purchase any property from, the
Partnership, directly or indirectly, except pursuant to transactions that are
fair and reasonable to the Partnership; provided, however, that the requirements
of this Section 6.6(e) shall be deemed to be satisfied as to (i) the
transactions effected pursuant to Sections 4.2 and 4.3, the Conveyance Agreement
and any other transactions described in or contemplated by the Registration
Statement and (ii) as to any transaction the terms of which are no less
favorable to the Partnership than those generally being provided to or available
from unrelated third parties.
(f) The General Partner and its Affiliates shall have no obligation to
permit the Partnership or the Operating Companies to use any facilities of the
General Partner and its Affiliates, except as may be provided in contracts
entered into from time to time specifically dealing with such use, nor shall
there be any obligation of the General Partner or its Affiliates to enter into
such contracts.
(g) Without limitation of Section 6.6(a) through 6.6(f), and
notwithstanding anything to the contrary in this Agreement, the existence of the
conflicts of interest described in the Registration Statement are hereby
approved by all Partners.
6.7 Indemnification.
(a) To the fullest extent permitted by law but subject to the
limitations expressly provided in this Agreement, the General Partner, any
Departing Partner and any person who is or was an officer or director of the
General Partner or any Departing Partner shall be indemnified and held harmless
by the Partnership, and all other Indemnitees may be indemnified and held
harmless by the Partnership, to the extent deemed advisable by the General
Partner, from and against any and all losses, claims, damages, liabilities
(joint or several), expenses (including, without limitation, legal fees and
expenses), judgments, fines settlements and other amounts arising from any and
all claims, demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, in which any Indemnitee may be involved, or is
threatened to be involved, as a party or otherwise, by reason of its status as
(i) the General Partner, Departing Partner or any of their Affiliates, (ii) an
officer, director, employee, partner, agent or trustee of the General Partner,
any Departing Partner or any of their Affiliates or (iii) a Person serving at
the request of the Partnership in another entity in a similar capacity;
provided, that in each case the Indemnitee acted in good faith, in a manner
which such Indemnitee believed to be in, or not opposed to, the best interests
of the Partnership and, with respect to any criminal proceeding, had no
reasonable cause to believe its conduct was unlawful; provided further, no
indemnification pursuant to this Section 6.7 shall be available to the General
Partner with respect to its obligations incurred pursuant to the Underwriting
Agreement or the Conveyance Agreement (other than obligations incurred by the
General Partner on behalf of the Partnership or the Operating Companies). The
termination of any action, suit or proceeding by judgment, order settlement
conviction or upon a plea of nolo contendere, or its equivalent, shall not
create a presumption that the Indemnitee acted in a manner contrary to that
specified above. Any
59
indemnification pursuant to this Section 6.7 shall be made only out of the
assets of the Partnership, it being agreed that the General Partner shall not be
personally liable for such indemnification and shall have no obligation to
contribute or loan any monies or property to the Partnership to enable it to
effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including,
without limitation, reasonable legal fees and expenses) incurred by an
Indemnitee who is indemnified pursuant to Section 6.7(a) in defending any claim,
demand action, suit or proceeding shall from time to time, be advanced by the
Partnership prior to the final disposition of such claim, demand, action, suit
or proceeding upon receipt by the Partnership of an undertaking by or on behalf
of the Indemnitee to repay such amount if it shall be determined that the
Indemnitee is not entitled to be indemnified as authorized in this Section 6.7.
(c) The indemnification provided by this Section 6.7 shall be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, both as to actions in the Indemnities' capacity as (i) the General
Partner, a Departing Partner or an Affiliate thereof, (ii) an officer, director,
employee, partner, agent or trustee of the General Partner, any Departing
Partner or an Affiliate thereof or (iii) a Person serving at the request of the
Partnership in another entity in a similar capacity (including, without
limitation, any capacity under the Underwriting Agreement), and shall continue
as to an Indemnitee who has ceased to serve in such capacity and as to actions
in any other capacity and shall inure to the benefit of the heirs, successors,
assigns and administrators of the Indemnities.
(d) The Partnership may purchase and maintain (or reimburse the General
Partner or its Affiliates for the cost of) insurance, on behalf of the General
Partner and such other Persons as the General Partner shall determine, against
any liability that may be asserted against or expense that may be incurred by
such Person in connection with the Partnership's activities, whether or not the
Partnership would have the power to indemnify such Person against such
liabilities under the provisions of this Agreement.
(e) For purposes of this Section 6.7, the Partnership shall be deemed
to have requested an Indemnitee to serve as fiduciary of an employee benefit
plan whenever the performance by it of its duties to the Partnership also
imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
she constitute "fines" within the meaning of Section 6.7(a); and action taken or
omitted by it with respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is in, or not opposed to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 6.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
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(h) The provisions of this Section 6.7 are for the benefit of the
Indemnities, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 6.7 or any
other provision hereof shall in any manner terminate, reduce or impair the right
of any past, present or future Indemnitee to be indemnified by the Partnership,
nor the obligation of the Partnership to indemnify any such Indemnitee under and
in accordance with the provisions of this Section 6.7 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
6.8 Liability of Indemnitees.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, no Indemnitee shall be liable for monetary damage to the Partnership,
the Limited Partners, the Assignees or any other Persons who have acquired
interests in the Units, for losses sustained or liabilities incurred as a result
of any act or omission if such Indemnitee acted in good faith.
(b) Subject to its obligations and duties as General Partner set forth
in Section 6.1(a), the General Partner may exercise any of the powers granted to
it by this Agreement and perform any of the duties imposed upon it hereunder
either directly or by or through its agents, and the General Partner shall not
be responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.
(c) Any amendment, modification or repeal of this Section 6.8 or any
other provision hereof shall be prospective only and shall not in any way affect
the limitations on the liability to the Partnership and the Limited Partners of
the General Partner, its directors, officers and employees under this Section
6.8 as in effect immediately prior to such amendment, modification or repeal
with respect to claims arising from or relating to matters occurring, in whole
or in part, prior to such amendment, modification or repeal, regardless of when
such claims may arise or be asserted.
6.9 Resolution of Conflict of Interest.
(a) Unless otherwise expressly provided in this Agreement or an
Operating Companies Agreement, whenever a potential conflict of interest exists
or arise between the General Partner or any of its Affiliates, on the one hand,
and the Partnership, the Operating Companies, any Partner or any Assignee, on
the other hand, any resolution or course of action in respect of such conflict
of interest shall be permitted and deemed approved by all Partners, and shall
not constitute a breach of this Agreement, of the Charter Documents of any
Operating Company, of any agreement contemplated herein or therein, or of any
duty stated or implied by law or equity, if the resolution or course of action
is or, by operation of this Agreement, is deemed to be, fair and reasonable to
the Partnership. The General Partner shall be authorized, but not required in
connection with its resolution of such conflict of interest to seek Special
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Approval of a resolution of such conflict or course of action. Any conflict of
interest and any resolution of such conflict of interest shall be conclusively
deemed fair and reasonable to the Partnership if such conflict of interest or
resolution is (i) approved by Special Approval, (ii) on whole, on terms no less
favorable to the Partnership than those generally being provided to or available
from unrelated third parties or (iii) fair to the Partnership, taking into
account the totality of the relationships between the parties involved
(including other transactions that may be particularly favorable or advantageous
to the Partnership). The General Partner may also adopt a resolution or course
of action that has not received Special Approval. The General Partner (including
the Conflicts and Audit Committee in connection with Special Approval) shall be
authorized in connection with its determination of the "fair and reasonable"
nature of any transaction or arrangement and in its resolution of any conflict
of interest to consider (i) the relative interests of any party to such
conflict, agreement, transaction or situation and the benefits and burdens
relating to such interest; (ii) any customary or accepted industry practices and
any customary or historical dealings with a particular Person; (iii) any
applicable generally accepted accounting or engineering practices or principles;
and (iv) such additional factors as the General Partner or such Conflicts and
Audit Committee determines in its sole discretion to be relevant, reasonable or
appropriate under the circumstances. Nothing contained in this Agreement,
however, is intended to nor shall it be construed to require the General Partner
or such Conflicts and Audit Committee to consider the interests of any Person
other than the Partnership. In the absence of bad faith by the General Partner,
the resolution, action or terms so made, taken or provided by the General
Partner with respect to such matter shall not constitute a breach of this
Agreement or any other agreement contemplated herein or a breach of any standard
of care or duty imposed herein or therein or under the Delaware Act or any other
law, rule or regulation.
(b) Whenever this Agreement or any other agreement contemplated hereby
provides that the General Partner or any of its Affiliates is permitted or
required to make a decision (i) in its "sole discretion" or "discretion" that it
deems "necessary or appropriate" or under a grant of similar authority or
latitude, the General Partner or such Affiliate shall be entitled to consider
only such interests and factors as it desires and shall have no duty or
obligation to give any consideration to any interest of, or factors affecting,
the Partnership, the Operating Companies, any Limited Partner or any Assignee,
(ii) it may make such decision in its sole discretion (regardless of whether
there is a reference to "sole discretion" or "discretion") unless another
express standard is provided for, or (iii) a "good faith" or under another
express standard, the General Partner or such Affiliate shall act under such
express standard and shall not be subject to any other or different standards
imposed by this Agreement, the Charter Documents of any Operating Company, any
other agreement contemplated hereby or under the Delaware Act or any other law,
rule or regulation. In addition, any actions taken by the General Partner
consistent with the standards of "reasonable discretion" set forth in the
definitions of Available Cash or Cash from Operations shall not constitute a
breach of any duty of the General Partner to the Partnership or the Limited
Partners. During or after the Series A Preference Unit Preference Period, the
General Partner shall have no duty, express or implied, to sell or otherwise
dispose of any asset of the Operating Companies or of the Partnership, other
than in the ordinary course of business. No borrowing by the Partnership or the
Operating Companies or the approval thereof by the General Partner shall be
deemed to constitute a breach of any duty of the General Partner to the
Partnership or the Limited Partners by reason of the fact that the purpose or
effect of such borrowing is directly or indirectly to reduce or avoid the need
to draw upon the Reserve Amount to make Minimum Quarterly Distributions on the
Series A Preference Units, to make
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distributions up to the Series B Preference Unit Deficiency on the Series B
Preference Units, to permit distributions on Series A Common Units or to result
in or increase incentive distributions to the General Partner.
(c) Whenever a particular transaction, arrangement or resolution of a
conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transaction.
6.10 Other Matters Concerning the General Partner.
(a) The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request consent, order, bond, debenture, or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it and any act taken or omitted in reliance upon the
opinion (including, without limitation, an Opinion of Counsel) of such Persons
as to matters that the General Partner reasonably believes to be within such
Person's professional or expert competence shall be conclusively presumed to
have been done or omitted in good faith and in accordance with such opinion.
(c) The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers and a duly appointed attorney or attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform each and every act and duty that
is permitted or required to be done by the General Partner hereunder.
(d) Any standard of care and duty imposed by this Agreement or under
the Delaware Act or any applicable law, rule or regulation shall be modified
waived or limited as required to permit the General Partner to act under this
Agreement or any other agreement contemplated by this Agreement and to make any
decision pursuant to the authority prescribed in this Agreement, so long as such
action is reasonably believed by the General Partner to be in, or not
inconsistent with, the best interests of the Partnership.
6.11 Title to Partnership Assets. Title to Partnership Assets, whether
real, personal or mixed and whether tangible or intangible, shall be deemed to
be owned by the Partnership as an entity, and no Partner or Assignee,
individually or collectively, shall have any ownership interest in such
Partnership Assets or any portion thereof. Title to any or all of the
Partnership Assets may be held in the name of the Partnership, the General
Partner or one or more nominees, as the General Partner may determine. The
General Partner hereby declares and warrants that any Partnership assets for
which record title is held in the name of the General Partner shall be held by
the General Partner for the exclusive use and benefit of the Partnership in
accordance with the provisions of this Agreement; provided, however, that the
General Partner shall use its reasonable efforts to cause record title to such
assets (other than those assets in respect of which the General Partner
determines that the expense and difficulty of conveyancing makes transfer of
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record title to the Partnership impracticable) to be vested in the Partnership
as soon as reasonably practicable; provided, that prior to the withdrawal or
removal of the General Partner or as soon thereafter as practicable, the General
Partner will use reasonable efforts to effect the transfer of record title to
the Partnership and, prior to any such transfer, will provide for the use of
such assets in a manner satisfactory to the Partnership. All Partnership Assets
shall be recorded as the property of the Partnership in its books and records,
irrespective of the name in which record title to such Partnership assets are
held.
6.12 Purchase or Sale of Preference Units. The General Partner may
cause the Partnership to purchase or otherwise acquire Series A Preference
Units, so long as no Series A Preference Unit Cumulative Deficiency then exists,
and Series B Preference Units, at any time. As long as Preference Units are held
by the Partnership or the Operating Companies, such Preference Units shall not
be considered Outstanding for any purpose, except as otherwise provided herein.
The General Partner or any Affiliate of the General Partner may also purchase or
otherwise acquire and sell or otherwise dispose of Preference Units for its own
account, subject to the provisions of Article XI and Article XII.
6.13 Reliance by Third Parties. Notwithstanding anything to the
contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of the
Partnership and to enter into any contracts on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if it were the
Partnership's sole party in interest, both legally and beneficially. Each
Limited Partner hereby waives any and all defenses or other remedies that may be
available against such Person to contest, negate or disaffirm any action of the
General Partner in connection with any such dealing. In no event shall any
Person dealing with the General Partner or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to inquire
into the necessity or expedience of any act or action of the General Partner or
its representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (a) at the time of the execution and
delivery of such certificate, document or instrument, this Agreement was in full
force and effect, (b) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on
behalf of the Partnership and (c) such certificate, document or instrument was
duly executed and delivered in accordance with the terms and provisions of this
Agreement, and is binding upon the Partnership
6.14 Registration Rights of the General Partner and its Affiliates.
(a) If (i) the General Partner or any of its Affiliates (including for
purposes of this Section 6.14, Persons that are Affiliates on the Second
Restatement Date notwithstanding that they may later cease to be Affiliates)
hold Units or other Partnership Securities which it desires to sell and (ii)
Rule 144 of the Securities Act (or any successor rule or regulation to Rule 144)
is not available to enable the General Partner or such Affiliates to dispose of
the number of Units or other Partnership Securities it desires to sell at the
time it desires to do so without registration under the Securities Act, then
upon the request of the General Partner or any of its Affiliates, the
Partnership shall file with the Securities and Exchange Commission as promptly
as practicable
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after receiving such request, and use all reasonable efforts to cause to become
effective and remain effective for a reasonable period following its effective
date, a registration statement or statements under the Securities Act
registering the offering and sale of the number of Units or other Partnership
Securities specified in the request. All registrations requested pursuant to
this Section 6.14(a) are referred to as "Demand Registrations." The Partnership
may postpone for up to six months the filing or the effectiveness of a
registration statement pursuant to a Demand Registration if (i) the General
Partner or, (ii) if at the time a request for Demand Registration is submitted
to the Partnership the Person requesting registration is an Affiliate of the
General Partner, a majority of the independent directors of the General Partner,
determines in its good faith judgment that a postponement of the requested
registration for up to six months would be in the best interests of the
Partnership and its Partners due to a pending transaction, investigation or
other event. In connection with any Demand Registration, the Partnership shall
promptly prepare and file (x) such documents as may be necessary to register or
qualify the securities subject to such registration under the securities laws of
such states as the Persons requesting registration shall reasonably request;
provided, however, that no such qualification shall be required in any
jurisdiction where, as a result thereof, the Partnership would become subject to
general service of process or to taxation or qualification to do business as a
foreign corporation doing business in such jurisdiction, and (y) such documents
as may be necessary to apply for listing or to list the securities subject to
such registration on such National Securities Exchange as the Persons requesting
registration shall reasonably request and do any and all other acts and things
that may reasonably be necessary or advisable to enable such Persons to
consummate a public sale of such securities in such states. All costs and
expenses of any such Demand Registration and offering (other than the
underwriting discounts and commissions) shall be borne by the Partnership.
(b) If the Partnership shall at any time propose to file a registration
statement under the Securities Act for an offering of securities of the
Partnership for cash (other than an offering relating solely to an employee
benefit plan), the Partnership shall use all reasonable efforts to include such
number or amount of securities held by the General Partner and any of its
Affiliates in such registration statement as the General Partner or any of such
Affiliates shall request. All registrations requested pursuant to this Section
6.14(b) are referred to herein as "Piggyback Registrations." If the proposed
offering shall be an underwritten offering, then, in the event that the managing
underwriter of such offering advises the Partnership and General Partner or any
of such Affiliates in writing that in its opinion the inclusion of all or some
of the securities of the Persons requesting Piggyback Registration would
adversely and materially affect the success of the offering the Partnership
shall include in such offering only that number or amount, if any, of securities
of the Persons requesting Piggyback Registration which, in the opinion of the
managing underwriter, will not so adversely and materially affect the offering.
All costs and expenses of such registration and offering (other than
underwriting discounts and commissions attributable to securities registered by
the General Partner and its Affiliates) shall be borne by the Partnership.
(c) If underwriters are engaged in connection with any Demand or
Piggyback Registration, the Partnership shall provide indemnification,
representations, covenants, opinions and other assurance to the underwriters in
form and substance reasonably satisfactory to such underwriters. Further, in
addition to and not in limitation of the Partnership's obligation under Section
6.7, the Partnership shall, to the fullest extent permitted by law, indemnify
and hold
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harmless the General Partner or such other holder, its officers, directors and
each Person who controls the General Partner or such other holder (within the
meaning of the Securities Act) and any agent thereof (collectively, "Indemnified
Persons") against any losses, claims, demands, actions, causes of action,
assessments, damages, liabilities (joint or several), costs and expenses
(including, without limitation, interest penalties and reasonable attorneys'
fees and disbursements), resulting to, imposed upon, or incurred by an
Indemnified Person, directly or indirectly, under the Securities Act or
otherwise (hereinafter referred to in this Section 6.14(c) as a "claim" and in
the plural as "claims"), based upon, arising out of, or resulting from any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which any securities were registered under the
Securities Act or any state securities or Blue Sky laws, in any preliminary
prospectus (if used prior to the effective date of such registration statement),
or in any summary or final prospectus or in any amendment or supplement thereto
(if used during the period the Partnership is required to keep the registration
statement current), or arising out of, based upon or resulting from the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements made therein not misleading;
provided, however, that the Partnership shall not be liable to the extent that
any such claim arises out of, is based upon or results from an untrue statement
or alleged untrue statement or omission or alleged omission made in such
registration statement, such preliminary, summary or final prospectus or such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Partnership by or on behalf of such Indemnified
Person specifically for use in the preparation thereof.
(d) The provisions of Sections 6.14(a) and 6.14(b) shall continue to be
applicable with respect to the General Partner and any of its Affiliates after
the General Partner ceases to be a Partner of the Partnership, during a period
of two years subsequent to the effective date of such cessation and for so long
thereafter as is required for the General Partner or any of its Affiliates to
sell all of the Units or other Partnership Securities with respect to which the
General Partner or any of its Affiliates have requested during such two-year
period that a registration statement be filed; provided, however, that the
Partnership shall not be required to file successive registration statements
covering the same securities for which registration was demanded during such
two-year period. The provisions of Section 6.14(c) shall continue in effect
thereafter.
(e) Any request to register Partnership Securities pursuant to this
Section 6.14 shall (i) specify the Partnership Securities intended to be offered
and sold by the Person making the request, (ii) express such Person's present
intent to offer such shares for distribution, (iii) describe the nature or
method of the proposed offer and sale of Partnership Securities, and (iv)
contain the undertaking of such Person to provide all such information and
materials and take all action as may be required in order to permit the
Partnership to comply with all applicable requirements in connection with the
registration of such Partnership Securities.
ARTICLE VII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
7.1 Limitation of Liability. The Limited Partners and the
Organizational Limited Partner and the Assignees shall have no liability under
this Agreement except as expressly provided in this Agreement or the Delaware
Act.
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7.2 Management of Business. No Limited Partner or Assignee (other than
the General Partner, any of its Affiliates or any officer, director, employee
partner, agent or trustee of the General Partner or any of its Affiliates, in
its capacity as such, if such Person shall also be a Limited Partner or
Assignee) shall take part or otherwise participate in the operation, management
or control (within the meaning of the Delaware Act) of the Partnership's
business, transact any business in the Partnership's name or have the power to
sign documents for or otherwise bind the Partnership. The transaction of any
such business by the General Partner, any of its Affiliates or any officer,
director, employee, partner, agent or trustee of the General Partner or any of
its Affiliates, in its capacity as such, shall not affect, impair or eliminate
the limitations on the liability of the Limited Partners or Assignees under this
Agreement.
7.3 Outside Activities. Subject to the provisions of Section 6.5, which
shall continue to be applicable to the Persons referred to therein, regardless
of whether such Persons shall also be Limited Partners or Assignees, any Limited
Partner or Assignee shall be entitled to and may have business interests and
engage in business activities in addition to those relating to the Partnership,
including, without limitation, business interests and activities in direct
competition with the Partnership or the Operating Companies. Neither the
Partnership nor any of the other Partners or Assignees shall have any rights by
virtue of this Agreement in any business ventures of any Limited Partner or
Assignee.
7.4 Return of Capital. No Limited Partner shall be entitled to the
withdrawal or return of his Capital Contribution, except to the extent, if any,
that distributions made pursuant to this Agreement or upon termination of the
Partnership may be considered as such by law and then only to the extent
provided for in this Agreement. Except to the extent provided by Article V or as
otherwise expressly provided in this Agreement, no Limited Partner or Assignee
shall have priority over any other Limited Partner or Assignee either as to the
return of Capital Contributions or as to profits, losses or distributions. Any
such return shall be a compromise to which all Partners and Assignees agree
within the meaning of Section 17-502(b) of the Delaware Act.
7.5 Rights of Limited Partner Relating to the Partnership.
(a) In addition to other rights provided by this Agreement or by
applicable law, and except as limited by Section 7.5(b), each Limited Partner
shall have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon reasonable demand and at
such Limited Partner's own expense:
(i) to obtain true and full information regarding the status
of the business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of
the Partnership's federal, state and local tax returns for each year;
(iii) to have furnished to him, upon notification to the
General Partner, a current list of the name and last known business,
residence or mailing address of each Partner;
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(iv) to have furnished to him, upon notification to the
General Partner, a copy of this Agreement and the Certificate of
Limited Partnership and all amendments thereto;
(v) to obtain true and full information regarding the amount
of cash and description and statement of the Agreed Value of any other
Capital Contribution by each Partner and which each Partner has agreed
to contribute in the future, and the date on which each became a
Partner; and
(vi) to obtain such other information regarding the affairs of
the Partnership as is just and reasonable.
(b) Notwithstanding any other provision of this Agreement, the General
Partner may keep confidential from the Limited Partners and Assignees for such
period of time as the General Partner deems reasonable, any information that the
General Partner reasonably believes to be in the nature of trade secrets or
other information the disclosure of which the General Partner in good faith
believes is not in the best interests of the Partnership or could damage the
Partnership or the Operating Companies or that the Partnership or the Operating
Companies is required by law or by agreements with third parties to keep
confidential (other than agreements with Affiliates the primary purpose of which
is to circumvent the obligations set forth in this Section 7.5).
ARTICLE VIII
BOOK, RECORDS, ACCOUNTING AND REPORTS
8.1 Records and Accounting. The General Partner shall keep or cause to
be kept at the principal office of the Partnership appropriate books and records
with respect to the Partnership's business, including, without limitation, all
books and records necessary to provide to the Limited Partners any information,
lists and copies of documents required to be provided pursuant to Section
7.5(a). Any books and records maintained by or on behalf of the Partnership in
the regular course of its business, including, without limitation, the record of
the Record Holders and Assignees of Units or other Partnership Securities, books
of account and records of Partnership proceedings, may be kept on, or be in the
form of, computer disks, hard disks, punch cards, magnetic tape, photographs,
micrographics or any other information storage device, provided that the books
and records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained for financial reporting purposes, on an accrual basis in accordance
with generally accepted accounting principles.
8.2 Fiscal Year. The fiscal year of the Partnership shall be the
calendar year.
8.3 Reports.
(a) As soon as practicable, but in no event later than 120 days after
the close of each Partnership Year, the General Partner shall cause to be mailed
to each Record Holder of a Unit as of a date selected by the General Partner in
its sole discretion, an annual report containing financial statements of the
Partnership for such Partnership Year, presented in accordance with generally
accepted accounting principles, including a balance sheet and statements of
operations,
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Partners' equity and cash flows, such statements to be audited by a firm of
independent public accountants selected by the General Partner.
(b) As soon as practicable, but in no event later than 90 days after
the close of each calendar quarter except the last calendar quarter of each
Partnership Year, the General Partner shall cause to be mailed to each Record
Holder of a Unit, as of a date selected by the General Partner in its sole
discretion, a report containing unaudited financial statements of the
Partnership and such other information as may be required by applicable law,
regulation or rule of any National Securities Exchange on which the Units are
listed for trading or as the General Partner determines to be necessary or
appropriate.
ARTICLE IX
TAX MATTERS
9.1 Preparation of Tax Return. The General Partner shall arrange for
the preparation and timely filing of all returns of Partnership income, gains,
deductions, losses and other items required of the Partnership for federal and
state income tax purposes and shall use reasonable efforts to furnish, within 90
days of the close of each taxable year of the Partnership, the tax information
reasonably required by Unitholders for federal and state income tax reporting
purposes. The classification, realization and recognition of income, gain,
losses and deductions and other items shall be on the accrual method of
accounting for federal income tax purposes. The taxable year of the Partnership
shall be the calendar year.
9.2 Tax Elections. Except as otherwise provided herein, the General
Partner shall in its sole discretion, determine whether to make any available
election pursuant to the Code; provided, however, that the General Partner shall
make the election under Section 754 of the Code in accordance with applicable
regulations thereunder. The General Partner shall have the right to seek to
revoke any such election (including, without limitation, the election under
Section 754 of the Code) upon the General Partner's determination in its sole
discretion that such revocation is in the best interest of the Limited Partners
and Assignees. For purposes of computing the adjustments under Section 743(b) of
the Code, the General Partner shall be authorized (but not required), to adopt a
convention whereby the price paid by a transferee of Units will be deemed to be
the lowest quoted trading price of the Units on any National Securities Exchange
on which such Units are traded during the calendar month in which such transfer
is deemed to occur pursuant to Section 5.2(g) without regard to the actual price
paid by such transferee.
9.3 Tax Controversies. Subject to the provisions hereof, the General
Partner is designated the Tax Matters Partner (as defined in Section 6231 of the
Code), and is authorized and required to represent the Partnership (at the
Partnership's expense) in connection with all examinations of the Partnership's
affairs by tax authorities, including, without limitation, resulting
administrative and judicial proceedings, and to expend Partnership funds for
professional services and costs associated therewith. Each Partner and Assignee
agrees to cooperate with the General Partner and to do or refrain from doing any
or all things reasonably required by the General Partner to conduct such
proceedings.
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9.4 Organizational Expenses. The Partnership shall elect to deduct
expenses, if any, incurred by it in organizing the Partnership ratably over a
60-month period as provided in Section 709 of the Code.
9.5 Withholding. Notwithstanding any other provision of this Agreement,
the General Partner is authorized to take any action that it determines in its
sole discretion to be necessary or appropriate to cause the Partnership and the
Operating Companies to comply with any withholding requirements established
under the Code or any other federal, state or local law, including, without
limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of the Code. To the
extent that the Partnership is required to withhold and pay over to any taxing
authority any amount resulting from the allocation or distribution of income to
any Partner or Assignee (including, without limitation, by reason of Section
1446 of the Code), the amount withheld shall be treated as a distribution of
cash for purposes of Section 4.6(a) in the amount of such withholding from such
Partner.
9.6 Entity-Level Taxation. If legislation is enacted which causes the
Partnership to become treated as an association taxable as a corporation for
federal income tax purposes, then (a) with respect to any calendar quarter
thereafter, the Minimum Quarterly Distribution, First Target Distribution,
Second Target Distribution and Third Target Distribution, as the case may be,
shall be equal to the product of (i) each such distribution amount multiplied by
(ii) 1 minus the sum of (x) the expected effective federal income tax rate
applicable to the Partnership (expressed as a decimal) plus (y) the expected
effective overall state and local income tax rate applicable to the Partnership
(expressed as a decimal), in each case, for the taxable year in which such
quarter occurs (after taking into account the benefit of any deduction allowable
for federal income tax purposes with respect to the payment of state and local
income taxes) (the "Rate"); and (b) for purposes of determining the distributed
amount under clauses (ii) and (iii) of the definition of "Series A Preference
Unit Conversion Date," the amount of an actual distribution after such
legislation is effective shall be deemed to be the actual distribution divided
by the Rate.
9.7 Entity-Level Deficiency Collections. If the Partnership is required
by applicable law to pay any federal, state or local income tax on behalf of, or
withhold such amount with respect to, any Partner or Assignee or any former
Partner or Assignee (a) the General Partner shall cause the Partnership to pay
such tax on behalf of such Partner or Assignee or former Partner or Assignee
from the funds of the Partnership; (b) any amount so paid on behalf of, or
withheld with respect to, any Partner or Assignee shall be treated as a
distribution of cash to such Partner or Assignee for purposes of this Agreement,
including Section 4.6(a); and (c) to the extent any such Partner or Assignee
(but not a former Partner or Assignee) is not then entitled to such distribution
under this Agreement, the General Partner shall be authorized without the
approval of any Partner or Assignee, to amend this Agreement insofar as is
necessary to maintain the uniformity of intrinsic tax characteristics as to all
Units and to make subsequent adjustments to distributions in a manner which, in
the reasonable judgment of the General Partner, will make as little alteration
as practicable in the priority and amount of distributions otherwise applicable
under this Agreement and will not otherwise alter the distributions to which
Partners and Assignees are entitled under this Agreement. If the Partnership is
permitted (but not required) by applicable law to pay any such tax on behalf of
any Partner or Assignee or former Partner or Assignee, the General Partner shall
be authorized (but not required) to cause the Partnership to
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pay such tax from the funds of the Partnership and to take any action consistent
with this Section 9.7. The General Partner shall be authorized (but not
required) to take all necessary or appropriate actions to collect all or any
portion of a deficiency in the payment of any such tax that relates to prior
periods and that is attributable to Persons who were Limited Partners or
Assignee when such deficiencies arose, from such Persons.
9.8 Opinions of Counsel. Notwithstanding any other provision of this
Agreement, if the Partnership is taxable for federal income tax purposes as a
corporation or otherwise taxed for federal income tax purposes as an entity at
any time and, pursuant to the provisions of this Agreement, an Opinion of
Counsel would otherwise be required to the effect that an action will not cause
the Partnership to become so taxable as a corporation or other entity or to be
treated as an as association taxable as a corporation, such requirement for an
Opinion of Counsel shall be deemed automatically waived.
ARTICLE X
UNIT CERTIFICATE
10.1 Unit Certificates. Unit Certificates shall be executed on behalf
of the Partnership by any officer of either the General Partner or the
Partnership.
10.2 Registration, Registration of Transfer and Exchange.
(a) The General Partner shall cause to be kept on behalf of the
Partnership a register (the "Unit Register") in which, subject to such
reasonable regulations as it may prescribe and subject to the provisions of
Section 10.2(b), the General Partner will provide for the registration and the
transfer of Units. The Transfer Agent is hereby appointed registrar and transfer
agent for the purpose of registering and transferring Units as herein provided.
The Partnership shall not recognize transfers of Certificates representing Units
unless same are effected in the manner described in this Section 10.2. Upon
surrender for registration of transfer of any Units evidenced by a Certificate
and subject to the provisions of Section 10.2(b), the General Partner on behalf
of the Partnership will execute, and the Transfer Agent will countersign and
deliver, in the name of the holder or the designated transferee or transferees,
as required pursuant to the holder's instructions, one or more new Certificates
evidencing the same aggregate number of Units as was evidenced by the
Certificate so surrendered.
(b) Except as otherwise provided in Section 11.5, the Partnership shall
not recognize any transfer of Units until the Certificates (if applicable)
evidencing such Units are surrendered for registration of transfer and such
Certificates are accompanied by a Transfer Application duly executed by the
transferee (or the transferee's attorney-in-fact duly authorized in writing). No
charge shall be imposed by the Partnership for such transfer, provided, that, as
a condition to the issuance of any new Certificate under this Section 10.2, the
General Partner may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed with respect thereto.
10.3 Mutilated, Destroyed, Lost or Stolen Certificates.
(a) If any mutilated Certificate is surrendered to the Transfer Agent,
the General Partner on behalf of the Partnership shall execute, and upon its
request, the Transfer Agent shall
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countersign and deliver in exchange therefor, a new Certificate evidencing the
same number of Units as the Certificate so surrendered.
(b) The General Partner on behalf of the Partnership shall execute, and
upon its request, the Transfer Agent shall countersign and deliver a new
Certificate in place of any Certificate previously issued if the Record Holder
of the Certificate:
(i) makes proof by affidavit, in form and substance
satisfactory to the General Partner, that a previously issued
Certificate has been lost, destroyed or stolen;
(ii) requests the issuance of a new Certificate before the
Partnership has received notice that the Certificate has been acquired
by a purchaser for value in good faith and without notice of an adverse
claim;
(iii) if requested by the General Partner, delivers to the
Partnership a bond or such other form of security or indemnity as may
be required by the General Partner, in form and substance satisfactory
to the General Partner, with surety or sureties and with fixed or open
penalty as the General Partner may direct, in its sole discretion, to
indemnify the Partnership, the General Partner and the Transfer Agent
against any claim that may be made on account of the alleged loss,
destruction or theft of the Certificate; and
(iv) satisfies any other reasonable requirements imposed by
the General Partner.
If a Limited Partner or Assignee fails to notify the Partnership within a
reasonable time after he has notice of the loss, destruction or theft of a
Certificate, and a transfer of the Units represented by the Certificate is
registered before the Partnership, the General Partner or the Transfer Agent
receives such notification, the Limited Partner or Assignee shall be precluded
from making any claim against the Partnership, the General Partner or the
Transfer Agent for such transfer or for a new Certificate.
(c) As a condition to the issuance of any Certificate under this
Section 10.3, the General Partner may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including, without limitation, the fees and
expenses of the Transfer Agent) connected therewith.
10.4 Record Holder. In accordance with Section 10.2(b), the Partnership
shall be entitled to recognize the Record Holder as the Limited Partner or
Assignee with respect to any Common Units or Preference Units and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such Common Units or Preference Units on the part of any other Person, whether
or not the Partnership shall have actual or other notice thereof, except as
otherwise provided by law or any applicable rule, regulation, guideline or
requirement of any National Securities Exchange on which the Common Units or
Preference Units are listed for trading. Without limiting the foregoing, when a
Person (such as a broker, dealer, bank trust company or clearing corporation or
an agent of any of the foregoing) is acting as nominee, agent or in some other
representative capacity for another Person in acquiring and/or holding Common
Units or Preference Units, as between the Partnership on the one hand and such
other Persons on
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the other hand such representative Person (a) shall be the Limited Partner or
Assignee (as the case may be) of record and beneficially, (b) must execute and
deliver a Transfer Application and (c) shall be bound by this Agreement and
shall have the rights and obligations of a Limited Partner or Assignee (as the
case may be) hereunder and as provided for herein.
ARTICLE XI
TRANSFER OF INTERESTS
11.1 Transfer.
(a) The term "transfer," when used in this Article XI with respect to a
Partnership Interest, shall be deemed to refer to an appropriate transaction by
which the General Partner assigns its Partnership Interest as General Partner to
another Person or by which the holder of a Unit assigns such Unit to another
Person who is or becomes an Assignee and includes a sale, assignment, gift,
pledge, encumbrance, hypothecation, mortgage, exchange or any other disposition
by law or otherwise.
(b) No Partnership Interest shall be transferred in whole or in part,
except in accordance with the terms and conditions set forth in this Article XI.
Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article XI shall be null and void.
11.2 Transfer of General Partner's Partnership Interest.
(a) Except as set forth in this Section 11.2(a), the General Partner
may transfer all, but not less than all, of its Partnership Interest as the
general partner to a single transferee if, but only if, (i) at least a majority
of the Outstanding Voting Units (excluding for this purpose Units held by the
General Partner and its Affiliates) approve of such transfer and of the
admission of such transferee as general partner, (ii) the transferee agrees to
assume the rights and duties of the General Partner and be bound by the
provisions of this Agreement and the Operating Company Agreements, (iii) the
transferee certifies that it is an Eligible Citizen and (iv) the Partnership
receives an Opinion of Counsel that such transfer would not result in the loss
of limited liability of any Limited Partner or of the Partnership as a member of
the Operating Companies or cause the Partnership or the Operating Companies to
be taxable as a corporation or otherwise taxed as an entity for federal income
tax purposes. The foregoing notwithstanding, the General Partner is expressly
permitted to pledge its Partnership Interest as General Partner to secure the
obligations of the Partnership under the Revolving Credit Facility, as the same
may be amended, supplemented, replaced, refinanced or restated from time to
time, or any successor or subsequent loan agreement.
(b) Neither Section 11.2(a) nor any other provision of this Agreement
shall be construed to prevent (and all Partners do hereby consent to) (i) the
transfer by the General Partner of all of its Partnership Interest as a general
partner to an Affiliate or (ii) the transfer by the General Partner of all its
Partnership Interest as a general partner upon its merger or consolidation with
or other combination into any other Person or the transfer by it of all or
substantially all of its assets to another Person if, in the case of a transfer
described in either clause (i) or (ii) of this sentence, the rights and duties
of the General Partner with respect to the
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Partnership Interest so transferred are assumed by the transferee and the
transferee agrees to be bound by the provisions of this Agreement and the
Operating Companies Agreement; provided, that in either such case, such
transferee certifies that it is an Eligible Citizen, and furnishes to the
Partnership an Opinion of Counsel that such merger, consolidation, combination,
transfer or assumption will not result in a loss of limited liability of any
Limited Partner or of the Partnership as a member of the Operating Companies or
cause the Partnership or the Operating Companies to be taxable as a corporation
or otherwise taxed as an entity for federal income tax purpose. In the case of a
transfer pursuant to this Section 11.2(b), the transferee or successor (as the
case may be) shall be admitted to the Partnership as the General Partner
immediately prior to the transfer of the Partnership Interest, and the business
of the Partnership shall continue without dissolution.
11.3 Transfer of Units.
(a) Units may be transferred only in the manner described in Section
10.2. The transfer of any Units and the admission of any new Partner shall not
constitute an amendment to this Agreement.
(b) Until admitted as a Substituted Limited Partner pursuant to Article
XII, the Record Holder of a Unit shall be an Assignee in respect of such Unit.
Limited Partners may include custodians, nominees or any other individual or
entity in its own or any representative capacity.
(c) Each distribution in respect of Units shall be paid by the
Partnership, directly or through the Transfer Agent or through any other Person
or agent, only to the Record Holders thereof as of the Record Date set for the
distribution. Such payment shall constitute full payment and satisfaction of the
Partnership's liability in respect of such payment, regardless of any claim of
any Person who may have an interest in such payment by reason of an assignment
or otherwise.
(d) A transferee who has completed and delivered a Transfer Application
shall be deemed to have (i) requested admission as a Substituted Limited
Partner, (ii) agreed to comply with and be bound by and to have executed this
Agreement, (iii) represented and warranted that such transferee has the capacity
and authority to enter into this Agreement, and that such transferee is an
Eligible Citizen, (iv) made the powers of attorney set forth in this Agreement
and (v) given the consents and made the waivers contained in this Agreement.
11.4 Restrictions on Transfers. Notwithstanding the other provisions of
this Article XI, no transfer of any Common Unit or Preference Unit or interest
therein of any Limited Partner or Assignee shall be made if such transfer would
(a) violate the then applicable federal or state securities laws or rules and
regulations of the Securities and Exchange Commission, any state securities
commission or any other governmental authorities with jurisdiction over such
transfer, (b) cause the Partnership to be taxable as a corporation or otherwise
taxed as an entity for federal income tax purposes or (c) affect the
Partnership's existence or qualification as a limited partnership under the
Delaware Act.
11.5 Citizenship Certificates; Non-citizen Assignees.
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(a) At any time and from time to time a Limited Partner or Assignee
shall, within thirty days after a written request therefor by the General
Partner, furnish to the General Partner, an executed Citizenship Certification
or such other information concerning his nationality, citizenship or other
status (or, if the Limited Partner or Assignee is a nominee holding for the
account of another Person, the nationality, citizenship or other status of such
Person) as the General Partner may request. If a Limited Partner or Assignee
fails to furnish to the General Partner within the aforementioned 30-day period
such Citizenship Certification or other requested information or if upon receipt
of such Citizenship Certification or other requested information the General
Partner determines, with the advice of counsel, that a Limited Partner or
Assignee is not an Eligible Citizen, the Units owned by such Limited Partner or
Assignee shall be subject to redemption in accordance with the provisions of
Section 11.6. In addition, the General Partner may require that the status of
any such Limited Partner or Assignee be changed to that of a Non-citizen
Assignee, and, thereupon, the General Partner shall be substituted for such
Non-citizen Assignee as the Limited Partner in respect of his Units.
(b) The General Partner shall in exercising voting rights in respect of
Units held by it on behalf of Non-citizen Assignees, distribute the votes in the
same ratios as the votes of Limited Partners in respect of Units of the same
class other than those of Non-citizen Assignees are cast either for, against or
abstaining as to the matter.
(c) Upon dissolution of the Partnership, a Non-citizen Assignee shall
have no right to receive a distribution in kind pursuant to Section 14.4 but
shall be entitled to the cash equivalent thereof, and the General Partner shall
provide cash in exchange for an assignment of the Non-citizen Assignee's share
of the distribution in kind. Such payment and assignment shall be treated for
Partnership purposes as a purchase by the General Partner from the Non-citizen
Assignee of his Partnership Interest (representing his right to receive his
share of such distribution in kind).
(d) At any time after he can and does certify that he has become an
Eligible Citizen, a Non-citizen Assignee may, upon application to the General
Partner, request admission as a Substituted Limited Partner with respect to any
Units of such Non-citizen Assignee not redeemed pursuant to Section 11.6, and,
upon the Non-citizen Assignee's admission pursuant to Section 12.2, the General
Partner shall cease to be deemed to be the Limited Partner in respect of the
Non-citizen Assignee's Units.
11.6 Redemption of Interests.
(a) If at any time a Limited Partner or Assignee fails to furnish a
Citizenship Certification or other information requested within the 30-day
period specified in Section 11.5(a), or if upon receipt of such Citizenship
Certification or other information the General Partner determines, with the
advice of counsel, that a Limited Partner or Assignee is not an Eligible
Citizen, the Partnership may, unless the Limited Partner or Assignee establishes
to the satisfaction of the General Partner that such Limited Partner or Assignee
is an Eligible Citizen or has transferred his Units to a Person who furnishes a
Citizenship Certification to the General Partner prior to the date fixed for
redemption as provided below, redeem the Partnership Interest of such Limited
Partner or Assignee as follows:
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(i) The General Partner shall not later than the 30th day
before the date fixed for redemption, give notice of redemption to the
Limited Partner or Assignee, at his last address designated on the
records of the Partnership or the Transfer Agent, by registered or
certified mail, postage prepaid. The notice shall be deemed to have
been given when so mailed. The notice shall specify the Redeemable
Units, the date fixed for redemption, the place of payment, that
payment of the redemption price will be made upon surrender of the
Certification evidencing the Redeemable Units and that on and after the
date fixed for redemption no further allocations or distributions to
which the Limited Partner or Assignee would otherwise be entitled in
respect of the Redeemable Units will accrue or be made.
(ii) The aggregate redemption price for Redeemable Units shall
be an amount equal to the Current Market Price (the date of
determination of which shall be the date fixed for redemption) of Units
of the class to be so redeemed multiplied by the number of Units of
each such class included among the Redeemable Units. The redemption
price shall be paid in the sole discretion of the General Partner, in
cash or by delivery of a promissory note of the Partnership in the
principal amount of the redemption price, bearing interest at the rate
of 10% annually and payable in three equal annual installments of
principal together with accrued interest commencing one year after the
redemption date.
(iii) Upon surrender by or on behalf of the Limited Partner or
Assignee, at the place specified in the notice of redemption, of the
Certificate evidencing the Redeemable Units, duly endorsed in blank or
accompanied by an assignment duly executed in blank, the Limited
Partner or Assignee or his duly authorized representative shall be
entitled to receive the payment therefor.
(iv) After the redemption date, Redeemable Units shall no
longer constitute issued and Outstanding Units.
(b) The provisions of this Section 11.6 shall also be applicable to
Units held by a Limited Partner or Assignee as nominee of a Person determined to
be other than an Eligible Citizen.
(c) Nothing in this Section 11.6 shall prevent the recipient of a
notice of redemption from transferring his Units before the redemption date if
such transfer is otherwise permitted under this Agreement. Upon receipt of
notice of such a transfer, the General Partner shall withdraw the notice of
redemption; provided, the transferee of such Units certifies in the Transfer
Application that he is an Eligible Citizen. If the transferee fails to make such
certification, such redemption shall be effected from the transferee on the
original redemption date.
(d) If the Partnership is or becomes subject to any federal, state or
local law or regulation which, in the reasonable determination of the General
Partner, provides for the cancellation or forfeiture of any property in which
the Partnership or the Operating Companies have an interest, based on the
nationality (or other status) of the General Partner, whether or not in its
capacity as such, the Partnership may, unless the General Partner has furnished
a
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Citizenship Certification or transferred its Partnership Interest or Units to a
Person who furnishes a Citizenship Certification prior to the date fixed for
redemption, redeem the Partnership Interest or Interests of the General Partner
in the Partnership pursuant to Section 11.6(a), which redemption shall also
constitute redemption of the general partner interest of the general partner of
the Operating Companies. If such redemption includes a redemption of the
Combined Interest, the redemption price thereof shall be equal to the aggregate
sum of the Current Market Price (the date of determination for which shall be
the date fixed for redemption) of each class of Units then Outstanding in each
such case multiplied by the number of Units of such class into which the
Combined Interest would then be convertible under the terms of Section 13.3(b)
if the General Partner were to withdraw or be removed as the General Partner
(the date of determination for which shall be the date fixed for redemption).
The redemption price shall be paid in cash or by delivery of a promissory note
of the Partnership in the principal amount of the redemption price, bearing
interest at the rate of 10% annually and payable in three equal annual
installments of principal, together with accrued interests, commencing one year
after the redemption date.
ARTICLE XII
ADMISSION OF PARTNERS
12.1 Admission of Initial Limited Partners. Upon the issuance by the
Partnership of Common Units or Preference Units to the Underwriters as described
in Section 4.3(b) and the execution by each such party of a Transfer
Application, the General Partner shall admit the Underwriters to the Partnership
as Initial Limited Partners in respect of the Units.
12.2 Admission of Substituted Limited Partners. By transfer of a Unit
in accordance with Article XI, the transferor shall be deemed to have given the
transferee the right to seek admission as a Substituted Limited Partner subject
to the conditions of, and in the manner permitted under, this Agreement. A
transferor of a Certificate shall, however, only have the authority to convey to
a purchaser or other transferee who does not execute and deliver a Transfer
Application (i) the right to negotiate such Certificate to a purchaser or other
transferee and (ii) the right to transfer the right to request admission as a
Substituted Limited Partner to such purchaser or other transferee in respect of
the transferred Units. Each transferee of a Unit (including, without limitation,
any nominee holder or an agent acquiring such Unit for the account of another
Person) who executes and delivers a Transfer Application shall, by virtue of
such execution and delivery, be an Assignee and be deemed to have applied to
become a Substituted Limited Partner with respect to the Units so transferred to
such Person. Such Assignee shall become a Substituted Limited Partner (i) at
such time as the General Partner consents thereto, which consent may be given or
withheld in the General Partner's sole discretion, and (ii) when any such
admission is shown on the books and records of the Partnership. If such consent
is withheld such transferee shall be an Assignee. An Assignee shall have an
interest in the Partnership equivalent to that of a Limited Partner with respect
to allocations and distributions, including, without limitation, liquidating
distributions, of the Partnership. With respect to voting rights attributable to
Units that are held by Assignees, the General Partner shall be deemed to be the
Limited Partner with respect thereto and shall, in exercising the voting rights
in respect of such Units on any matter, vote such Units at the written direction
of the Assignee who is the Record Holder of such Units. If no such written
direction is received, such Units will not be voted. An Assignee shall have no
other rights of a Limited Partner.
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12.3 Admission of Successor General Partner. A successor General
Partner approved pursuant to Section 13.1 or 13.2 or the transferee of or
successor to all of the General Partner's Partnership Interest pursuant to
Section 11.2 who is proposed to be admitted as a successor General Partner shall
be admitted to the Partnership as the General Partner, effective immediately
prior to the withdrawal or removal of the General Partner pursuant to Section
13.1 or 13.2 or the transfer of the General Partner's Partnership Interest
pursuant to Section 11.2; provided, however, that no such successor shall be
admitted to the Partnership until compliance with the terms of Section 11.2 has
occurred. Any such successor shall carry on the business of the Partnership
without dissolution. In each case, the admission shall be subject to the
successor General Partner executing and delivering to the Partnership an
acceptance of all of the terms and conditions of this Agreement and such other
documents or instruments as may be requited to effect the admission.
12.4 Admission of Additional Limited Partners.
(a) A Person (other than the General Partner, an Initial Limited
Partner or a Substituted Limited Partner) who makes a Capital Contribution to
the Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the General
Partner (i) evidence of acceptance in form satisfactory to the General Partner
of all of the terms and conditions of this Agreement, including, without
limitation, the power of attorney granted in Section 1.4, (ii) a certification
that he is an Eligible Citizen and (iii) such other documents or instruments as
may be required in the discretion of the General Partner to effect such Person's
admission as an Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section 12.4, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's sole discretion. The admission of any Person as an Additional Limited
Partner shall become effective on the date upon which the name of such Person is
recorded on the books and records of the Partnership, following the consent of
the General Partner to such admission.
12.5 Amendment of Agreement and Certificate of Limited Partnership. To
effect the admission to the Partnership of any Partner, the General Partner
shall take all steps necessary and appropriate under the Delaware Act to amend
the records of the Partnership and if necessary, to prepare as soon as practical
an amendment of this Agreement and if required by law, to prepare and file an
amendment to the Certificate of Limited Partnership and may for this purpose,
among others, exercise the power of attorney granted pursuant to Section 1.4.
ARTICLE XIII
WITHDRAWAL OR REMOVAL OF PARTNERS
13.1 Withdrawal of the General Partner.
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(a) The General Partner shall be deemed to have withdrawn from the
Partnership upon the occurrence of any one of the following events (each such
event herein referred to as an "Event of Withdrawal"):
(i) the General partner voluntarily withdraws from the
Partnership by giving written notice to the other Partners;
(ii) the General Partner transfers all of its rights as
general partner pursuant to Section 11.2;
(iii) the General Partner is removed pursuant to Section 13.2;
(iv) the General Partner (A) makes a general assignment for
the benefit of creditors; (B) files a voluntary bankruptcy petition;
(C) files a petition or answer seeking for itself a reorganization,
arrangement, composition, readjustment liquidation, dissolution or
similar relief under any law; (D) files an answer or other pleading
admitting or failing to contest the material allegations of a petition
filed against the General Partner in a proceeding of the type described
in clauses (A) - (C) of this sentence; or (E) seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator of
the General Partner or of all or any substantial part of its
properties;
(v) a final and non-appealable judgment is entered by a court
with appropriate jurisdiction ruling that the General Partner is
bankrupt or insolvent or a final and non-appealable order for relief is
entered by a court with appropriate jurisdiction against the General
Partner, in each case under any federal or state bankruptcy or
insolvency laws as now or hereafter in effect; or
(vi) a certificate of dissolution or its equivalent is filed
for the General Partner, or 90 days expire after the date of notice to
the General Partner of revocation of its charter without a
reinstatement of its charter, under the laws of its state of
incorporation.
If an Event of Withdrawal specified in this Section 13.1(a)(iv), (v) or (vi)
occurs, the withdrawing General Partner shall give written notice to the Limited
Partners within 30 days after such occurrence. The Partners hereby agree that
only the Events of Withdrawal described in this Section 13.1 shall result in the
withdrawal of the General Partner from the Partnership.
(b) Withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal will not constitute a breach of this
Agreement under the following circumstances: (i) at any time during the period
prior to January 1, 2003, the General Partner voluntarily withdraws by giving at
least 90 days' advance notice of its intention to withdraw to the Limited
Partners; provided, that prior to the effective date of such withdrawal, the
withdrawal is approved by at least a majority of the Outstanding Voting Units
(excluding for this purpose Units held by the General Partner and its
Affiliates) and the General Partner provides to the Partnership an Opinion of
Counsel ("Withdrawal Opinion of Counsel") that following the election of a
successor General Partner, the General Partner's withdrawal would not result in
the loss of limited liability of any Limited Partner or of the Partnership as a
member of the Operating Companies or cause the Partnership or any Operating
Company to be taxable as a corporation or otherwise taxed as an entity for
federal income tax purposes; (ii) at any time after December 31,
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2002, the General Partner voluntarily withdraws by giving at least 90 days'
advance notice to the Limited Partners, such withdrawal to take effect on the
date specified in such notice; (iii) at any time that the General Partner ceases
to be a General Partner pursuant to Section 13.1(a)(ii) or is removed pursuant
to Section 13.2; or (iv) notwithstanding clause (i) of this sentence, at any
time that the General Partner voluntarily withdraws by giving at least 90 days'
advance notice of its intention to withdraw to the Limited Partners, such
withdrawal to take effect on the date specified in the notice, if at the time
such notice is given one Person and its Affiliates (other than the General
Partner and its Affiliates) own beneficially or of record or control at least
50% of the Outstanding Voting Units. The withdrawal of the General Partner from
the Partnership upon the occurrence of an Event of Withdrawal shall also
constitute the withdrawal of the general partner as a member of the Operating
Companies. If the General Partner gives a notice of withdrawal pursuant to
Section 13.1(a)(i), holders of at least a majority of such Outstanding Voting
Units (excluding for purposes of such determination Units owned by the General
Partner and its Affiliates) may, prior to the effective date of such withdrawal,
elect a successor General Partner. If, prior to the effective date of the
General Partner's withdrawal, a successor is not selected by the Limited
Partners as provided herein or the Partnership does not receive a Withdrawal
Opinion of Counsel, the Partnership shall be dissolved in accordance with
Section 14.1. If a successor General Partner is elected and a Withdrawal Opinion
of Counsel is rendered such successor shall be admitted (subject to Section
12.3) immediately prior to the effective time of the withdrawal or removal of
the Departing Partner and shall continue the business of the Partnership and the
Operating Companies without dissolution.
13.2 Removal of the General Partner. The General Partner may be removed
with or without Cause if such removal is approved by at least 66?% of the
Outstanding Voting Units (excluding for this purpose Units held by the General
Partner and its Affiliates). Any such action by such Limited Partners for
removal of the General Partner also must provide for the election of a new
General Partner by the holders of a majority of the Outstanding Voting Units
(excluding for this purpose Units held by the General Partner and its
Affiliates). Such removal shall be effective immediately following the admission
of the successor General Partner pursuant to Article XII. The right of such
Limited Partners to remove the General Partner shall not exist or be exercised
unless the Partnership has received an Opinion of Counsel opining as to the
matters covered by a Withdrawal Opinion of Counsel. Any such successor General
Partner shall be subject to the provisions of Section 12.3.
13.3 Interest of Departing Partner and Successor General Partner.
(a) In the event of (i) withdrawal of the General Partner under
circumstances where such withdrawal does not violate this Agreement or (ii)
removal of the General Partner by the Limited Partners under circumstances where
Cause does not exist, the Departing Partner shall, at its option exercisable
prior to the effective date of the departure of such Departing Partner, promptly
receive from its successor in exchange for its Partnership Interest as General
Partner an amount in cash equal to the fair market value of the Departing
Partner's Partnership Interest as General Partner, such amount to be determined
and payable as of the effective date of its departure. If the General Partner
withdraws under circumstances where such withdrawal violates this Agreement or
if the General Partner is removed by the Limited Partners under circumstances
where Cause exists, the General Partner's successor shall have the option
described in the immediately preceding sentence, and the Departing Partner shall
not have such option. In either
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case, if the successor acquires the Departing Partner's Partnership Interest as
General Partner, such successor General Partner, if requested by the Departing
Partner, must also acquire at such time each non-managing interest of such
Departing Partner or its Affiliate as a member of the Operating Companies, for
an amount in cash equal to the fair market value of such interest determined as
of the effective date of its departure. In either case, the Departing Partner
shall be entitled to receive all reimbursements due such Departing Partner
pursuant to Section 6.4, including, without limitation, any employee-related
liabilities (including, without limitation, severance liabilities), incurred in
connection with the termination of any employees employed by the General Partner
for the benefit of the Partnership or the Operating Companies. Subject to
Section 13.3(b), the Departing Partner shall, as of the effective date of its
departure, cease to share in any allocations or distributions with respect to
its Partnership Interest as the General Partner and Partnership income, gain,
loss deduction and credit will be prorated and allocated as set forth in Section
5.2(g).
For purposes of this Section 13.3(a), the fair market value of the
Departing Partner's Partnership Interest as General Partner and each
non-managing interest of such Departing Partner or its Affiliate, as the case
may be, as a member of the Operating Companies (collectively, the "Combined
Interest") shall be determined by agreement between the Departing Partner and
its successor or, failing agreement within 30 days after the effective date of
such Departing Partner's departure, by an independent investment banking firm or
other independent expert selected by the Departing Partner and its successor,
which, in turn, may rely on other experts and the determination of which shall
be conclusive as to such matter. If such parties cannot agree upon one
independent investment banking firm or other independent expert within 45 days
after the effective date of such departure, then the Departing Partner shall
designate an independent investment banking firm or other independent expert,
the Departing Partner's successor shall designate an independent investment
banking firm or other independent expert, and such firms or experts shall
mutually select a third independent investment banking firm or independent
expert, which shall determine the fair market value of the Combined Interest. In
making its determination, such independent investment banking firm or other
independent expert shall consider the then current trading price of Units on any
National Securities Exchange on which Units are then listed the value of the
Partnership's assets, the rights and obligations of the General Partner and
other factors it may deem relevant.
(b) If the Departing Partner's Partnership Interest as General Partner
is not acquired in the manner set forth in Section 13.3(a), the Departing
Partner and its Affiliate, to the extent applicable, shall become a Limited
Partner and their Partnership Interest as General Partner and, at their
election, their non-managing interest in the Operating Companies, shall be
converted into Units pursuant to a valuation made by an investment banking firm
or other independent expert selected pursuant to Section 13.3(a), without
reduction in such Partnership Interest (but subject to proportionate dilution by
reason of the admission of its successor). For purposes of this Agreement,
conversion of the General Partner's Partnership Interest to Units will be
characterized as if the General Partner contributed its Partnership Interest to
the Partnership in exchange for the newly issued Units. Any successor General
Partner shall indemnify the Departing Partner as to all debts and liabilities of
the Partnership arising on or after the date on which the Departing Partner
becomes a Limited Partner.
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(c) If the option described in Section 13.3(a) is not exercised by the
party entitled to do so, the successor General Partner shall at the effective
date of its admission to the Partnership, contribute to the capital of the
Partnership cash in an amount such that its Capital Account, after giving effect
to such contribution and any adjustments made to the Capital Accounts of all
Partners pursuant to Section 4.6(d)(i), shall be equal to one percent (1%) of
the Capital Accounts of all Partners. In such event, each successor General
Partner shall, subject to the following sentence, be entitled to such percentage
interest of all Partnership allocations and distributions and any other
allocations and distributions to which the Departing Partner was entitled. In
addition, such successor General Partner shall cause this Agreement to be
amended to reflect that, from and after the date of such successor General
Partner's admission, the successor General Partner's interest in all Partnership
distributions and allocations shall be 1%, and that of the Unitholders shall be
99%.
13.4 Withdrawal of Limited Partners. No Limited Partner shall have any
right to withdraw from the Partnership; provided, however, that when a
transferee of a Limited Partner's Units becomes a Record Holder, such
transferring Limited Partner shall cease to be a Limited Partner with respect to
the Units so transferred.
ARTICLE XIV
DISSOLUTION AND LIQUIDATION
14.1 Dissolution. The Partnership shall not be dissolved by the
admission of Substituted Limited Partners or Additional Limited Partners or by
the admission of a successor General Partner in accordance with the terms of
this Agreement. Upon the removal or withdrawal of the General Partner, any
successor General Partner shall continue the business of the Partnership. The
Partnership shall dissolve, and its affairs should be wound up, upon:
(a) the expiration of its term as provide in Section 1.5;
(b) an Event of Withdrawal of the General Partner as provided in
Section 13.1(a) (subject to Section 14.2) (other than Section 13.1(a)(ii)),
unless a successor is elected and an Opinion of Counsel is received as provided
in Section 13.1(b) or Section 13.2, as the case may be, and such successor is
admitted to the Partnership pursuant to Section 12.3;
(c) an election to dissolve the Partnership by the General Partner that
is approved by the holders of at least 66?% of the Outstanding Voting Units (and
all Limited Partners hereby expressly consent that such approval may be effected
upon written consent of the holders of at least 66?% of the Outstanding Voting
Units);
(d) entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Delaware Act; or
(e) the sale of all or substantially all of the assets and properties
of the Partnership or all of the Operating Companies, taken as a whole.
14.2 Continuation of the Business of the Partnership after Dissolution.
Upon (i) dissolution of the Partnership following an Event of Withdrawal caused
by the withdrawal or removal of the General Partner and a failure of the
requisite number of Partners to appoint a
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successor General Partner as provided in Section 13.1 or 13.2, as the case may
be, then within an additional 90 days or (ii) dissolution of the Partnership
upon an event constituting an Event of Withdrawal described in Section
13.1(a)(iv), then within 180 days thereafter, at least 66?% of the Outstanding
Voting Units may elect to reconstitute the Partnership and continue its business
on the same terms and conditions set forth in this Agreement by forming a new
limited partnership on terms identical to those set forth in this Agreement and
having as a general partner a Person approved by the holders of at least 66?% of
the Outstanding Voting Units. Upon any such election by the holders of at least
66?% of the Outstanding Voting Units, all Partners shall be bound thereby and
shall be deemed to have approved thereof.
Unless such an election is made within the applicable time period as set forth
above, the Partnership shall conduct only activities necessary to wind up its
affairs. If such an election is so made, then:
(a) the reconstituted Partnership shall continue until the end of the
term set forth in Section 1.5 unless earlier dissolved in accordance with this
Article XIV;
(b) if the successor General Partner is not the former General Partner,
then the interest of the former General Partner shall be treated thenceforth as
the interest of a Limited Partner and converted into Units in the manner
provided in Section 13.3(b); and
(c) all necessary steps shall be taken to cancel this Agreement and the
Certificate of Limited Partnership and to enter into and as necessary, to file a
new partnership agreement and certificate of limited partnership, and the
successor general partner may for this purpose exercise the powers of attorney
granted the General Partner pursuant to Section 1.4; provided that the right of
at least 66?% of Outstanding Voting Units to approve a successor general partner
and to reconstitute and to continue the business of the Partnership shall not
exist and may not be exercised unless the Partnership has received an Opinion of
Counsel that (x) the exercise of the right would not result in the loss of
limited liability of any Limited Partner and (y) neither the Partnership, the
reconstituted limited partnership nor the Operating Companies would become
taxable as a corporation or otherwise be taxed as an entity for federal income
tax purposes upon the exercise of such right to continue.
14.3 Liquidation. Upon dissolution of the Partnership, unless the
Partnership is continued under an election to reconstitute and continue the
Partnership pursuant to Section 14.2, the General Partner, or in the event the
General Partner has been dissolved or removed, become bankrupt as set forth in
Section 13.1 or withdrawn from the Partnership, a liquidator or liquidating
committee approved by at least a majority of the Outstanding Voting Units, shall
be the Liquidator. The Liquidator (if other than the General Partner) shall be
entitled to receive such compensation for its services as may be approved by at
least a majority of the Outstanding Voting Units. The Liquidator shall agree not
to resign at any time without 15 days' prior written notice and (if other than
the General Partner) may be removed at any time, with or without Cause by notice
of removal approved by at least a majority of the Outstanding Voting Units. Upon
dissolution, removal or resignation of the Liquidator, a successor and
substitute Liquidator (who shall have and succeed to all rights, powers and
duties of the original Liquidator) shall within 30 days thereafter be approved
by at least a majority of the Outstanding Voting Units. The right to approve a
successor or substitute Liquidator in the manner provided herein shall be deemed
to
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refer also to any such successor or substitute Liquidator approved in the manner
herein provided. Except as expressly provided in this Article XIV, the
Liquidator approved in the manner provided herein shall have and may exercise,
without further authorization or consent of any of the parties hereto, all of
the powers conferred upon the General Partner under the terms of this Agreement
(but subject to all of the applicable limitations, contractual and otherwise,
upon the exercise of such powers, other than the limitation on sale set forth in
Section 6.3(b)) to the extent necessary or desirable in the good faith judgment
of the Liquidator to carry out the duties and functions of the Liquidator
hereunder for and during such period of time as shall be reasonably required in
the good faith judgment of the Liquidator to complete the winding up and
liquidation of the Partnership as provided for herein. The Liquidator shall
liquidate the assets of the Partnership, and apply and distribute the proceeds
of such liquidation in the following order of priority, unless otherwise
required by mandatory provisions of applicable law:
(a) First, the payment to creditors of the Partnership, including,
without limitation, Partners who are creditors, in the order of priority
provided by law; and the creation of a reserve of cash or other assets of the
Partnership for contingent liabilities in an amount if any, determined by the
Liquidator to be appropriate for such purposes; and
(b) Second, to all Partners in accordance with the positive balances in
their respective Capital Accounts after taking into account adjustments to such
Capital Accounts pursuant to Section 5.1(d); and
(c) Third, to all Partners in accordance with their respective
partnership interests.
14.4 Distributions in Kind.
(a) Notwithstanding the provisions of Section 14.3, which require the
liquidation of the assets of the Partnership, but subject to the order of
priorities set forth therein, if prior to or upon dissolution of the Partnership
the Liquidator determines that an immediate sale of part or all of the
Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its absolute discretion, defer for a reasonable
time the liquidation of any assets except those necessary to satisfy liabilities
of the Partnership (including, without limitation, those to Partners as
creditors) or distribute to the Partners, in lieu of cash, as tenants in common
add in accordance with the provisions of Section 14.3, undivided interests in
such Partnership assets as the Liquidator deems not suitable for liquidation.
Any such distributions in kind shall be made only if, in the good faith judgment
of the Liquidator, such distributions in kind are in the best interest of the
Limited Partners and shall be subject to such conditions relating to the
disposition and management of such properties as the Liquidator deems reasonable
and equitable and to any agreement governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
(b) In accordance with Section 704(c)(1)(B) of the Code, in the case of
any deemed distribution occurring as a result of a termination of the
Partnership pursuant to Section 708(b)(1)(B) of the Code, to the maximum extent
possible consistent with the priorities of Section 14.3, the General Partner
shall have sole discretion to treat the deemed distribution of Partnership
assets to Partners as occurring in a manner that will not cause a shift of the
Book-Tax
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Disparity attributable to a Partnership asset existing immediately prior to the
deemed distribution to another asset upon the deemed contribution of assets to
the reconstituted Partnership, including, without limitation, deeming the
distribution of any Partnership assets to be made either to the Partner who
contributed such assets or to the transferee of such Partner.
14.5 Cancellation of Certificate of Limited Partnership. Upon the
completion of the distribution of Partnership cash and property as provided in
Sections 14.3 and 14.4, the Partnership shall be terminated and the Certificate
of Limited Partnership and all qualifications of the Partnership as a foreign
limited partnership in jurisdictions other than the State of Delaware shall be
canceled and such other actions as may be necessary to terminate the Partnership
shall be taken.
14.6 Reasonable Time for Winding Up. A reasonable time shall be allowed
for the orderly winding up of business and affairs of the Partnership and the
liquidation of its assets pursuant to Section 14.3 in order to minimize any
losses otherwise attendant upon such winding up, and the provisions of this
Agreement shall remain in effect between the Partners during the period of
liquidation, and shall have no obligation to contribute or loan any monies or
property to the Partnership to enable the Partnership to effectuate.
14.7 Return of Capital. The General Partner shall not be personally
liable for the return of the Capital Contributions of the Limited Partners, or
any portion thereof, it being expressly understood that any such return shall be
made solely from Partnership assets.
14.8 Capital Account Restoration. No Partner shall have any obligation
to restore any negative balance in its Capital Account upon liquidation of the
Partnership.
14.9 Waiver of Partition. Each Partner hereby waives any right to
partition of the Partnership property.
ARTICLE XV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
15.1 Amendments to be Adopted Solely by General Partner. Each Limited
Partner agrees that the General Partner (pursuant to its powers of attorney from
the Limited Partners and Assignees), without the approval of any Limited Partner
or Assignee, may amend any provision of this Agreement, and execute, swear to,
acknowledge, deliver, file and record whatever documents may be required in
connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the
principal place of business of the Partnership, the registered agent of the
Partnership or the registered office of the Partnership;
(b) admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement;
(c) a change that, in the sole discretion of the General Partner, is
reasonable and necessary or appropriate to qualify or continue qualification of
the Partnership as a limited partnership or a partnership in which the limited
partners have limited liability under the laws of
85
any state or that is necessary or advisable in the opinion of the General
Partner to ensure that the Partnership will not be taxable as a corporation or
otherwise taxed as an entity for federal income tax purposes;
(d) a change (i) that, in the sole discretion of the General Partner,
does not adversely affect the Limited Partnership in any material respect, (ii)
that is necessary or appropriate to satisfy any requirements, conditions,
guidelines or interpretations contained in any opinion, interpretative release,
directive, order, ruling or regulation of any federal or state agency or
judicial authority or contained in any federal or state agency or judicial
authority or contained in any federal or state statute (including, without
limitation, the Delaware Act) or that is necessary or appropriate to facilitate
the trading of the Units (including, without limitation, the division of
Outstanding Units into different classes to facilitate uniformity of tax
consequences within such classes of Units) or comply with any rule, regulation,
interpretative release, guideline or requirement of any National Securities
Exchange on which the Units are or will be listed for trading, compliance with
any of which the General Partner determines in its sole discretion to be in the
best interests of the Partnership and the Limited Partners or (iii) that is
required to effect the intent of the provisions of this Agreement or is
otherwise contemplated by this Agreement;
(e) an amendment that is necessary, in the Opinion of Counsel, to
prevent the Partnership or the General Partner or its directors or officers from
in any manner being subjected to the provisions of the Investment Company Act of
1940, as amended the Investment Advisers Act of 1940, as amended, or "plan
asset" regulations adopted under the Employee Retirement Income Security Act of
1974, as amended, whether or not substantially similar to plan asset regulations
currently applied or proposed by the United States Department of Labor;
(f) subject to the terms of Section 4.4, an amendment that the General
Partner determines in its sole discretion to be necessary or appropriate in
connection with the authorization for issuance of any class or series of Units
pursuant to Section 4.4;
(g) an amendment made after the Series A Preference Unit Preference
Period, the effect of which is to separate into a separate security (which may
be evidenced by a certificate(s) if determined by the General Partner to be
appropriate), separate and apart from the Series A Preference Units, the right
of the holders of Series A Preference Units then Outstanding to receive any
Series A Preference Unit Cumulative Deficiency;
(h) any amendment expressly permitted in this Agreement to be made by
the General Partner acting alone;
(i) an amendment effected, necessitated or contemplated by a Merger
Agreement approved in accordance with Section 16.3; or
(j) any other amendments substantially similar to the foregoing.
15.2 Amendment Procedures. Except as provided in Sections 15.1 and
15.3, all amendments to this Agreement shall be made in accordance with the
following requirements. Amendments to this Agreement may be proposed solely by
the General Partner. Each such proposal shall contain the text of the proposed
amendment. If an amendment is proposed, the General Partner shall seek the
written approval of the holders of the requisite percentage of
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Outstanding Voting Units or call a meeting of such Limited Partners to consider
and vote on such proposed amendment. A proposed amendment shall be effective
upon its approval by the holders of at least 66?% of the Outstanding Voting
Units, unless a greater or different percentage is required under this
Agreement, and an amendment that would materially and adversely affect the
rights and preferences of any type, series or class of partnership interests in
relation to other types or classes of partnership interests requires the
approval of the holders of at least a majority of the Outstanding Units of such
type, series or class of partnership interest (excluding those held by the
General Partner and its Affiliates). The General Partner shall notify all Record
Holders upon final adoption of any proposed amendment.
15.3 Amendment Requirement.
(a) Notwithstanding the provisions of Sections 15.1 and 15.2, no
provision of this Agreement that establishes a percentage of Outstanding Voting
Units or, if applicable, other voting percentage required to take any action
shall be amended, altered, changed, repealed or rescinded in any respect that
would have the effect of reducing such voting requirement unless such amendment
is approved by the written consent or the affirmative vote of Unitholders whose
aggregate percentage of such Outstanding Voting Units or, if applicable, other
voting percentage constitutes not less than the required percentage of such
Outstanding Voting Units or, if applicable, other voting percentage sought to be
reduced.
(b) Notwithstanding the provisions of Sections 15.1 and 15.2, no
amendment to this Agreement may (i) enlarge the obligations of any Limited
Partner without such Limited Partner's consent, which may be given or withheld
in its sole discretion, (ii) without the consent of the General Partner, which
may be given or withheld in its sole discretion, (A) modify the amounts
distributable to the General Partner in respect of its general partner interest
in the Partnership or the Operating Companies or modify the amounts reimbursable
or otherwise payable to the General Partner or any of its Affiliates by the
Partnership or the Operating Companies, (B) change Section 14.1(a) or (c), (C)
restrict in any way any action by or rights of the General Partner as set forth
in this Agreement, (D) change the term of the Partnership or, except as set
forth in Section 14.1(c), give any Person the right to dissolve be Partnership
or (E) otherwise enlarge the obligations of the General Partner.
(c) Except as otherwise provided, and without limitation of the General
Partner's authority to adopt amendments to this Agreement as contemplated in
Section 15.1, the General Partner may amend the Partnership Agreement without
the approval of holders of Outstanding Units, except that any amendment that
would have a material adverse effect on the rights or preferences of any class
of Outstanding Units in relation to other classes or series of Units must be
approved by the holders of at least a majority of the Outstanding Units of the
class or series affected (excluding those held by the General Partner and its
Affiliates).
(d) Notwithstanding any other provision of this Agreement, except for
amendments pursuant to Sections 6.2 or 15.1, no amendments shall become
effective without the approval of the Record Holders of at least 95% of the
Outstanding Voting Units unless the Partnership obtains an Opinion of Counsel to
the effect that (a) such amendment will not cause the Partnership or the
Operating Companies to be taxable as a corporation or otherwise taxed as an
entity for federal income tax purposes and (b) such amendment will not affect
the limited
87
liability of any Limited Partner or any member of the Operating Companies under
applicable law.
(e) This Section 15.3 shall only be amended with the approval of the
Record Holders of not less than (i) 95% of the Outstanding Voting Units and (ii)
95% of the Outstanding Series B Preference Units voting as a class or series.
15.4 Meetings. All acts of Limited Partners to be taken hereunder shall
be taken in the manner provided in this Article XV. Meetings of the Limited
Partners may be called only by the General Partner or, with respect to meetings
called to remove the General Partner, by Limited Partners owning 66?% or more of
the Outstanding Voting Units (excluding for this purpose Units held by the
General Partner and its Affiliates). Limited Partners shall call a meeting to
remove the General Partner by delivering to the General Partner one or more
requests in writing stating that the signing Limited Partners wish to call a
meeting to remove the General Partner. Within 60 days after receipt of such a
call from Limited Partners or within such greater time as may be reasonably
necessary for the Partnership to comply with any statutes, rules, regulations,
listing agreements or similar requirements governing the holding of a meeting or
the solicitation of proxies for use at such a meeting, the General Partner shall
send a notice of the meeting to the Limited Partners either directly or
indirectly through the Transfer Agent. A meeting shall be held at a time and
place determined by the General Partner on a date not more than 60 days after
the mailing of notice of the meeting. Limited Partners shall not vote on matters
that would cause the Limited Partners to be deemed to be taking part in the
management and control of the business and affairs of the Partnership so as to
jeopardize the Limited Partners' limited liability under the Delaware Act or the
law of any other state in which the Partnership is qualified to do business.
15.5 Notice of a Meeting. Notice of a meeting called pursuant to
Section 15.4 shall be given to the Record Holders of Voting Units in writing by
mail or other means of written communication in accordance with Section 18.1.
The notice shall be deemed to have been given at the time when deposited in the
mail or sent by other means of written communication.
15.6 Record Date. For purposes of determining the Limited Partners
entitled to notice of or to vote at a meeting of the Limited Partners or to give
approvals without a meeting as provided in Section 15.11, the General Partner
may set a Record Date, which shall not be less than 10 nor more than 60 days
before (a) the date of the meeting (unless such requirement conflicts with any
rule, regulation, guideline or requirement of any National Securities Exchange
on which the Units are listed for trading in which case the rule, regulation,
guideline or requirement of such exchange shall govern) or (b) in the event that
approvals are sought without a meeting the date by which Limited Partners are
requested in writing by the General Partner to give such approvals.
15.7 Adjournment. When a meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting and a new Record Date need not
be fixed if the time and place thereof are announced at the meeting at which the
adjournment is taken, unless such adjournment shall be for more than 45 days. At
the adjourned meeting, the Partnership may transact any business which might
have been transacted at the original meeting. If the
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adjournment is for more than 45 days or if a new Record Date is fixed for the
adjourned meeting a notice of the adjourned meeting shall be given in accordance
with this Article XV.
15.8 Waiver of Notice; Approval of Meeting; Approval of Minutes. The
transactions of any meeting of Limited Partners, however called and noticed and
whenever held shall be as valid as if had at a meeting duly held after regular
call and notice, if a quorum is present either in person or by proxy, and if,
either before or after the meeting, each of the Limited Partners entitled to
vote, present in person or by proxy, signs a written waiver of notice or an
approval of the holding of the meeting or an approval of the minutes thereof.
All waivers and approvals shall be filed with the Partnership records or made a
part of the minutes of the meeting. Attendance of a Limited Partner at a meeting
shall constitute a waiver of notice of the meeting, except when the Limited
Partner disapproves, at the beginning of the meeting, the transaction of any
business because the meeting is not lawfully called or convened and except that
attendance at a meeting is not a waiver of any right to disapprove the
consideration of matters required to be included in the notice of the meeting
but not so included in either case if the disapproval is expressly made at the
meeting.
15.9 Quorum. The holders of two-thirds of the Outstanding Voting Units
of the class for which a meeting has been called represented in person or by
proxy shall constitute a quorum at a meeting of Limited Partners of such class
unless any such action by the Limited Partners requires approval by holders of a
majority in interest of such Voting Units, in which case the quorum shall be a
majority (excluding, in each case, if such Voting Units are excluded from such
vote, Voting Units held by the General Partner and its affiliates). At any
meeting of the Limited Partners duly called and held in accordance with this
Agreement at which a quorum is present, the act of Limited Partners holding
Outstanding Units that in the aggregate represent at least a majority of the
Outstanding Voting Units entitled to vote and be present in person or by proxy
at such meeting shall be deemed to constitute the act of all Limited Partners,
unless a greater or different percentage is required with respect to such action
under the provisions of this Agreement, in which case the act of the Limited
Partners holding Outstanding Units that in the aggregate represent at least such
greater or different percentage shall be required. The Limited Partners present
at a duly called or held meeting at which a quorum is present may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
Limited Partners to leave less than a quorum, if any action taken (other than
adjournment) is approved by the required percentage of Outstanding Voting Units
specified in this Agreement. In the absence of a quorum, any meeting of Limited
Partners may be adjourned from time to by the affirmative vote of a majority of
the Outstanding Voting Units represented either in person or by proxy, but no
other business may be transacted except as provided in Section 15.7.
15.10 Conduct of Meeting. The General Partner shall have full power and
authority concerning the manner of conducting any meeting of the Limited
Partners or solicitation of approvals in writing, including, without limitation,
the determination of Persons entitled to vote, the existence of a quorum, the
satisfaction of the requirements of Section 15.4, the conduct of voting, the
validity and effect of any proxies and the determination of any controversies,
votes or challenges arising in connection with or during the meeting or voting.
The General Partner shall designate a Person to serve as chairman of any meeting
and shall further designate a Person to take the minutes of any meeting, in
either case including, without limitation, a Partner or a director or officer of
the General Partner. All minutes shall be kept with the records of the
89
Partnership maintained by the General Partner. The General Partner may make such
other regulations consistent with applicable law and this Agreement as it may
deem advisable concerning the conduct of any meeting of the Limited Partners or
solicitation of approvals in writing, including, without limitation, regulations
in regard to the appointment of proxies, the appointment and duties of
inspectors of votes and approvals, the submission and examination of proxies and
other evidence of the right to vote, and the revocation of approvals in writing.
15.11 Action Without a Meeting. Any action that may be taken at a
meeting of the Limited Partners may be taken without a meeting if an approval in
writing setting forth the action so taken is signed by Limited Partners holding
not less than the minimum percentage of the Outstanding Units that would be
necessary to authorize to take such action at a meeting at which all the Limited
Partners were present and voted. Prompt notice of the taking of action without a
meeting shall be given to the Limited Partners who have not approved in writing.
The General Partner may specify that any written ballot submitted to Limited
Partners for the purpose of taking any action without a meeting shall be
returned to the Partnership within the time period, which shall be not less than
20 days, specified by the General Partner. If a ballot returned to the
Partnership does not vote all of the Units held by the Limited Partner, the
Partnership shall be deemed to have failed to receive a ballot for the Units
that were not voted. If approval of the taking of any action by the Limited
Partners is solicited by any Person other than by or on behalf of the General
Partner, the written approvals shall have no force and effect unless and until
(a) they are deposited with the Partnership in care of the General Partner, (b)
approvals sufficient to take the action proposed are dated as of a date not more
than 90 days prior to the date sufficient approvals are deposited with the
Partnership and (c) an Opinion of Counsel is delivered to the General Partner to
the effect that the exercise of such right and the action proposed to be taken
with respect to any particular matter (i) will not cause the Limited Partners to
be deemed to be taking part in the management and control of the business and
affairs of the Partnership so as to jeopardize the Limited Partners' limited
liability, (ii) will not jeopardize the status of the Partnership as a
partnership, or cause the Partnership to be taxable as a corporation or
otherwise taxed as an entity, under applicable tax laws and regulations and
(iii) is otherwise permissible under the state statutes then governing the
rights, duties and liabilities of the Partnership and the Partners.
15.12 Voting and Other Rights.
(a) Only those Record Holders of Voting Units on the Record Date set
pursuant to Section 15.6 shall be entitled to notice of, and to vote at, a
meeting of Limited Partners or to act with respect to matters as to which
holders of the Outstanding Voting Units have the right to vote or to act. All
references in this Agreement to votes of, or other acts that may be taken by,
the holders of Outstanding Voting Units shall be deemed to be references to the
votes or acts of the Record Holders of such Outstanding Voting Units.
(b) With respect to Voting Units that are held for a Person's account
by another Person (such as a broker, dealer, bank trust company or clearing
corporation, or an agent of any of the foregoing), in whose name such Voting
Units are registered such broker, dealer or other agent shall, in exercising the
voting rights in respect of such Voting Units on any matter, and unless the
arrangement by two such Persons provides otherwise, vote such Voting Units in
favor of, and at the direction of, the Person who is the beneficial owner, and
the Partnership shall be
90
entitled to assume it is so acting without further inquiry. The provisions of
this Section 15.12(b) (as well as all other provisions of this Agreement) are
subject to the provisions of Section 10.4.
(c) Except to the extent expressly provided in this Agreement or as
expressly required by the Delaware Act, Limited Partners holding Series B
Preference Units do not have the right to vote in respect of such Units, either
with other holders of Units or as a class or series, with respect to any matter.
ARTICLE XVI
MERGER
16.1 Authority. The Partnership may merge or consolidate with one or
more corporations, business trusts or associations, real estate investment
trusts, common law trusts or unincorporated businesses, including, without
limitation, a general partnership or limited partnership, formed under the laws
of the State of Delaware or any other state of the United States of America
pursuant to a written agreement of merger or consolidation ("Merger Agreement")
in accordance with this Article.
16.2 Procedure for Merger or Consolidation. Merger or consolidation of
the Partnership pursuant to this Article XVI requires the prior approval of the
General Partner. If the General Partner shall determine, in the exercise of its
sole discretion, to consent to the merger or consolidation, the General Partner
shall approve the Merger Agreement, which shall set forth:
(a) the names and jurisdictions of formation or organization of each of
the business entities proposing to merge or consolidate;
(b) the name and jurisdictions of formation or organization of the
business entity that is to survive the proposed merger or consolidation
(hereafter designated as the "Surviving Business Entity");
(c) the terms and conditions of the proposed merger or consolidation;
(d) the manner and basis of exchanging or converting the equity
securities of each constituent business entity for, or into, cash, property or
general or limited partnership interests, rights, securities or obligations of
the Surviving Business Entity and (i) if any general or limited partnership
interests, securities or rights of any constituent business entity are not to be
exchanged or converted solely for, or into, cash, property or general or limited
partnership interests, rights, securities or obligations of the Surviving
Business Entity, the cash, property or general or limited partnership interests,
rights, securities or obligations of any limited partnership, corporation, trust
or other entity (other than the Surviving Business Entity) which the holders of
such general or limited partnership interest are to receive in exchange for, or
upon conversion of their securities or rights, and (ii) in the case of
securities represented by certificates, upon the surrender of such certificates,
which cash, property or general or limited partnership interests, rights,
securities or obligations of the Surviving Business Entity or any limited
partnership, corporation, trust or other entity (other than the Surviving
Business Entity), or evidences thereof, are to be delivered;
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(e) a statement of any amendments or other changes in the constituent
documents (the articles or certificate of incorporation, articles of trust,
declaration of trust, certificate or agreement of limited partnership or other
similar charter or governing document), or the adoption of new constituent
documents, in either case as contemplated in Section 17-211(g) of the Delaware
Act, of the Surviving Business Entity to be effected by such merger or
consolidation;
(f) the effective time of the merger, which may be the date of the
filing of the certificate of merger pursuant to Section 16.4 or a later date
specified in or determinable in accordance with the Merger Agreement; provided
that if the effective time of the merger is to be later than the date of the
filing of the certificate of merger, it shall be fixed no later than the time of
the filing of the certificate of merger and stated therein; and
(g) such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or appropriate by the General Partner.
16.3 Approval by Limited Partner of Merger or Consolidation.
(a) The General Partner of the Partnership, upon its approval of the
Merger Agreement, shall direct that the Merger Agreement be submitted to a vote
of Limited Partners holding Outstanding Voting Units as of the relevant Record
Date whether at a meeting or by written consent, in either case in accordance
with the requirements of Article XV. A copy or a summary of the Merger Agreement
shall be included in or enclosed with the notice of a meeting or the written
consent.
(b) The Merger Agreement shall be approved upon receiving the
affirmative vote or consent of the holders of at least a majority of the
Outstanding Voting Units, unless the Merger Agreement contains any provision as
to which, if contained in an amendment to this Agreement, the provisions of this
Agreement or the Delaware Act would require the vote or consent of a greater
percentage of the Outstanding Voting Units or of any class of Units (voting
separately as a class), in which case the vote or consent of such greater
percentage or of such class of Units shall be required for approval of the
Merger Agreement.
(c) After such approval by vote or consent of the Limited Partners, and
at any time prior to the filing of the certificate of merger pursuant to Section
16.4, the merger or consolidation may be abandoned pursuant to provisions
therefor, if any, set forth in the Merger Agreement.
16.4 Certificate of Merger. Upon the required approval by the General
Partner and Limited Partners of a Merger Agreement, a certificate of merger
shall be executed and filed with the Secretary of State of the State of Delaware
in conformity with the requirements of the Delaware Act.
16.5 Effect of Merger.
(a) Upon the effective date of the certificate of merger:
(i) all of the rights, privileges and powers of each of the
business entities that has merged or consolidated and all property,
real, personal and mixed and all debts due to
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any of those business entities and all other things and causes of
action belonging to each of these business entities shall be vested in
the Surviving Business Entity and after the merger or consolidation,
shall be the property of the Surviving Business Entity to the extent
they were part of each constituent business entity;
(ii) the title to any real property vested by deed or
otherwise in any of those constituent business entities shall not
revert and shall not be in any way impaired because of the merger or
consolidation;
(iii) all rights of creditors and all liens on or security
interest in property of any of those constituent business entities
shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent
business entities shall attach to the Surviving Business Entity, and
may be enforced against it to the same extent as if the debts,
liabilities and duties had been incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this Article XVI
shall not be deemed to result in a transfer or assignment of assets or
liabilities from one entity to another having occurred.
ARTICLE XVII
RIGHT TO ACQUIRE UNITS
17.1 Right to Redeem Preference Units.
(a) Notwithstanding anything to the contrary in this Agreement, the
Partnership may at any time after the second anniversary of the Conversion Date,
in the sole discretion of the General Partner, redeem any or all of the Series A
Preference Units then issued and Outstanding for an amount equal to the
Unrecovered Capital of such Series A Preference Units plus accrued arrearages,
if any, as of the date the General Partner mails the notice described in Section
17.3 of the Partnership's election to redeem such Series A Preference Units. If
after giving effect to an anticipated redemption, however, fewer than 1,000,000
Series A Preference Units would be held by Persons other than the General
Partner and its Affiliates, the Partnership shall redeem all of such Series A
Preference Units if it redeems any Series A Preference Units.
(b) Notwithstanding anything to the contrary in this Agreement, the
Partnership may at any time after the Series B Preference Unit Issuance Date, in
the sole discretion of the General Partner, redeem any or all of the Series B
Preference Units for (i) an amount per Series B Preference Unit equal to the
Series B Preference Unit Liquidation Value as of the Redemption Date or (ii) a
number of Series A Common Units per Series B Preference Unit such that the
Current Market Price (as of the third business day immediately preceding the
date on which the General Partner mails the notice described in Section 17.3 of
the Partnership's election to redeem such Series B Preference Units) of the
Series A Common Units issued in respect of each redeemed Series B Preference
Unit is equal to the Series B Preference Unit Liquidation Value as of the
Redemption Date.
(c) With respect to any Series A Common Units issued in redemption or
replacement of, or in exchange for, any Series B Preference Units pursuant to
Section 17.1(b), the holders of
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more than 50% of the Outstanding Series A Common Units so issued shall have
Demand Registration rights with respect to such Series A Common Units equivalent
to such rights granted to the General Partner and its Affiliates under Section
6.14, and Piggyback Registration rights with respect to such Series A Common
Units equivalent to such rights granted to the General Partner and its
Affiliates under Section 6.14, in each such case until the later to occur of (i)
the expiration of the two-year period established by Section 6.14(d) or (ii) two
years from such redemption, replacement or exchange date. To the extent that
holders of Series A Common Units so issued desire to exercise any rights held by
them under this Section 17.1(c), such exercise must be by the holders of more
than 50% of the Outstanding Series A Common Units so issued.
17.2 Right to Acquire Units. Notwithstanding any provision of this
Agreement if at any time less than 15% of the total Units of any class then
issued and Outstanding are held by Persons other than the General Partner and
its Affiliates, the General Partner shall then have the right (which right it
may assign and transfer to the Partnership or any Affiliate of the General
Partner) exercisable in its sole discretion, to purchase all, but not less than
all, of the Units of such class then Outstanding held by Persons other than the
General Partner and its Affiliates, at the higher of (a) the highest cash price
paid by the General Partner or any of its Affiliates for any Unit of such class
purchased during the 90 day period preceding the date that the notice described
in Section 17.3(b) is mailed or (b) the Current Market Price as of the date five
days prior to the date the General Partner (or any of its assignees) mails the
Notice of Election to Purchase with respect to its election to purchase such
Units. As used in this Agreement, (i) "Current Market Price" of a Unit listed or
admitted to trading on any National Securities Exchange means the average of the
daily Closing Prices per Unit of such class for the 20 consecutive Trading Days
immediately prior to, but not including such date; (ii) "Closing Price" for any
day means the last sale price on such day, regular way, or in case no such sale
takes place on such day, the average of the closing bid and asked prices on such
day, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Units of a class are not
listed or admitted to trading on the New York Stock Exchange as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal National Securities Exchange on which the Units of such
class are listed or admitted to trading or, if the Units of a class are not
listed or admitted to trading on any National Securities Exchange, the last
quoted price on such day or, if not so quoted the average of the high bid and
low asked prices on such day in the over-the-counter market, as reported by the
Nasdaq National Market or such other system then in use, or if on any such day
the Units of a class are not quoted by any such organization, the average of the
closing bid and asked price on such day as furnished by a professional market
maker making a market in the Units of such class selected by the Board of
Directors of the General Partner, or if on any such day no market maker is
making a market in the Units of such class, the fair value of such Units on such
day as determined reasonably and in good faith by the Board of Directors of the
General Partner, and (iii) "Trading Day" means a day on which the principal
National Securities Exchange on which the Units of any class are listed or
admitted to trading is open for the transaction of business or, if Units of a
class are not listed or admitted to trading on any National Securities Exchange,
a day on which banking institutions in New York City generally are open.
17.3 Notice of Election to Redeem or Acquire Units.
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(a) If the Partnership elects to exercise the right to redeem Series A
Preference Units granted pursuant to Section 17.1(a), or the right to redeem
Series B Preference Units granted pursuant to Section 17.1(b), the General
Partner shall deliver to the Transfer Agent written notice of such election to
redeem (the "Notice of Election to Redeem") and shall cause the Transfer Agent
to mail a copy of such Notice of Election to Redeem to the Record Holders of
such Preference Units (as of a Record Date selected by the General Partner) at
least 30, but not more than 60 days prior to the Redemption Date. Such Notice of
Election to Redeem also shall be published in daily newspapers of general
circulation printed in the English language and published in the Borough of
Manhattan, New York. The Notice of Election to Redeem shall specify the date
upon which such Preference Units shall be redeemed (the "Redemption Date") and
the price (determined in accordance with Section 17.1) at which such Preference
Units will be redeemed, and shall state that the Partnership elects to redeem
such Preference Units, upon surrender of Unit Certificates representing such
Preference Units (or, in the case of Series B Preference Units, such other
representation of such Units as the General Partner shall require) in exchange
for payment, at such office or offices of the Transfer Agent as the Transfer
Agent may specify, or as may be required by any National Securities Exchange on
which such Preference Units are listed or admitted to trading. Any such Notice
of Election to Redeem mailed to a Record Holder of Preference Units at his
address as reflected in the records of the Transfer Agent shall be conclusively
presumed to have been given whether or not the owner receives such notice. On or
prior to the Redemption Date, the General Partner shall deposit with the
Transfer Agent cash in an amount sufficient to pay the aggregate redemption
price of all of the Preference Units to be redeemed in accordance with this
Article XVII. If the Notice of Election to Redeem shall have been duly given as
aforesaid at least 30, but not more than 60 days prior to the Redemption Date,
and if on or prior to the Redemption Date the deposit described in the preceding
sentence has been made for the benefit of the holders of Preference Units
subject to redemption as provided herein, then from and after the Redemption
Date, notwithstanding that any Unit Certificate shall not have been surrendered
for redemption, all rights of the holders of such Preference Units (including,
without limitation, any rights pursuant to Article IV, Article V and Article
XIV) shall thereupon cease, except the right to receive the redemption price
(determined in accordance with Section 17.1) for the Preference Units therefor,
without interest, upon surrender to the Transfer Agent of the Unit Certificates
representing such Preference Units, and such Preference Units shall be deemed to
be no longer Outstanding and each holder of such Preference Units will cease to
be a Partner with respect to such Preference Units as of the Redemption Date.
(b) If the General Partner, any Affiliate of the General Partner or the
Partnership elects to exercise the right to purchase Units granted pursuant to
Section 17.2, the General Partner shall deliver to the Transfer Agent written
notice of such election to purchase (the "Notice of Election to Purchase") and
shall cause the Transfer Agent to mail a copy of such Notice of Election to
Purchase to the Record Holders of Units (as of a Record Date selected by the
General Partner) at least 30, but not more than 60 days prior to the Purchase
Date. Such Notice of Election to Purchase shall also be published in daily
newspapers of general circulation printed in the English language and published
in the Borough of Manhattan, New York. The Notice of Election to Purchase shall
specify the Purchase Date and the price (determined in accordance with Section
17.2) at which Units will be purchased and state that the General Partner, its
Affiliate or the Partnership, as the case may be, elects to purchase such Units,
upon surrender of Unit Certificates representing such Units in exchange for
payment at such office or
95
offices of the Transfer Agent as the Transfer Agent may specify, or as may be
required by any National Securities Exchange on which the Units are listed or
admitted to trading. Any such Notice of Election to Purchase mailed to a Record
Holder of Units at his address as reflected in the records of the Transfer Agent
shall be conclusively presumed to have been given whether or not the owner
receives such notice. On or prior to the Purchase Date, the General Partner, its
Affiliate or the Partnership, as the case may be, shall deposit with the
Transfer Agent cash in an amount sufficient to pay the aggregate purchase price
of all of the Units to be purchased in accordance with Article XVII. If the
Notice of Election to Purchase shall have been duly given as aforesaid at least
30 days but not more than 60 days prior to the Purchase Date, and if on or prior
to the Purchase Date the deposit described in the preceding sentence has been
made for the benefit of the holders of Units subject to purchase as provided
herein, then from and after the Purchase Date, notwithstanding that any Unit
Certificate shall not have been surrendered for purchase, all rights of the
holders of such Units (including, without limitation, any rights pursuant to
Article IV, Article V and Article XIV) shall thereupon cease, except the right
to receive the purchase price (determined in accordance with Section 17.2) for
the Units therefor, without interest, upon surrender to the Transfer Agent of
the Unit Certificates representing such Units, and such Units shall thereupon be
deemed to be transferred to the General Partner, its Affiliate or the
Partnership, as the case may be, on the record books of the Transfer Agent and
the Partnership, and the General Partner or any Affiliate of the General
Partner, or the Partnership, as the case may be, shall be deemed to be the owner
of all such Units from and after the Purchase Date and shall have all rights as
the owner of such Units (including, without limitation, all rights as owner
pursuant to Article IV, Article V and Article XIV).
17.4 Surrender of Unit Certificates. At any time from and after the
Redemption Date or the Purchase Date, as the case may be, a holder of an
Outstanding Unit subject to redemption or purchase as provided in this Article
XVII may surrender his Unit Certificate, evidencing such Unit to the Transfer
Agent in exchange for payment of the amount described in Section 17.1 or 17.2,
as the case may be, therefor without interest thereon.
ARTICLE XVIII
GENERAL PROVISIONS
18.1 Addresses and Notices. Any notice, demand, request or report
required or permitted to be given or made to a Partner or Assignee under this
Agreement shall be in writing and shall be deemed given or made when delivered
in person or when sent by first-class United States mail or by other means of
written communication to the Partner or Assignee at the address described below.
Any notice, payment or report to be given or made to a Partner or Assignee
hereunder shall be deemed conclusively to have been given or made, and the
obligation to give such notice or report or to make such payment shall be deemed
conclusively to have been fully satisfied, upon sending of such notice, payment
or report to the Record Holder of such Unit at his address as shown on the
records of the Transfer Agent or as otherwise shown on the records of the
Partnership, regardless of any claim of any Person who may have an interest in
such Unit or the Partnership Interest of a General Partner by reason of any
assignment or otherwise. An affidavit or certificate of asking of any notice,
payment or report in accordance with the provisions of this Section 18.1
executed by the General Partner, the Transfer Agent or the mailing organization
shall be prima facie evidence of the giving or mailing of such notice, payment
or report. If any notice, payment or report addressed to a Record Holder at the
address
96
of such Record Holder appearing on the books and records of the Transfer Agent
or the Partnership is returned by the United States Post Office marked to
indicate that the United States Postal Service is unable to deliver it, such
notice, payment or report and any subsequent notices, payments and reports shall
be deemed to have been duly given or made without further mailing (until such
time as such Record Holder or another Person notifies the Transfer Agent or the
Partnership of a change in his address) if they are available for the Partner or
Assignee at the principal office of the Partnership for a period of one year
from the date of the giving or making of such notice, payment or report to the
other Partners and Assignees. Any notice to the Partnership shall be deemed
given if received by the General Partner at the principal office of the
Partnership designated pursuant to Section 1.3. The General Partner may rely and
shall be protected in relying on any notice or other document from a Partner,
Assignee or other Person if believed by it to be genuine.
18.2 Titles and Captions. All article or section titles or captions in
this Agreement are for convenience only. They shall not be deemed part of this
Agreement and in no way define, limit extend or describe the scope or intent of
any provisions hereof. Except as specifically provided otherwise, references to
"Articles" and "Sections" are to Articles and Sections of this Agreement.
18.3 Pronouns and Plurals. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice-versa.
18.4 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
18.5 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives and permitted assigns.
18.6 Integration. This Agreement constitutes the entire agreement among
the parties hereto pertaining to the subject matter hereof and supersedes all
prior agreements and understandings pertaining thereto.
18.7 Creditors. None of the provisions of this Agreement shall be for
the benefit of, or shall be enforceable by, any creditor of the Partnership.
18.8 Waiver. No failure by any party to insist upon the strict
performance of any covenant duty, agreement or condition of this Agreement or to
exercise any right or remedy consequent upon a breach thereof shall constitute a
waiver of any such breach or any other covenant duty, agreement or condition.
18.9 Counterparts. This Agreement may be executed in counterparts, all
of which together shall constitute an agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto or, in the case of a
97
Person acquiring a Unit, upon executing and delivering a Transfer Application as
herein described, independently of the signature of any other party.
18.10 Applicable Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
18.11 Invalidity of Provisions. If any provision of this Agreement is
or becomes invalid illegal or unenforceable in any respect the validity,
legality and enforceability of the remaining provisions contained herein shall
not be affected thereby.
[The remainder of this page is intentionally left blank.]
98
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
EL PASO ENERGY PARTNERS COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
LIMITED PARTNERS:
All Limited partners now and hereafter
admitted as limited partners of the
Partnership, pursuant to Powers of Attorney
now and hereafter executed in favor of, and
granted and delivered to, the General
Partner.
By: El Paso Energy Partners Company,
General Partners, as
attorney-in-fact for all Limited
Partners pursuant to the Powers of
Attorney granted pursuant to
Section 1.4.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
EXHIBIT A-1
TO THE SECOND AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF
EL PASO ENERGY PARTNERS, L.P.
CERTIFICATE EVIDENCING SERIES A PREFERENCE UNITS
REPRESENTING LIMITED PARTNER INTERESTS
EL PASO ENERGY PARTNERS, L.P.
(A LIMITED PARTNERSHIP FORMED UNDER THE LAWS OF DELAWARE)
No.__________ _____________ Series A Preference Units
CUSIP 28368B 20 1
EL PASO ENERGY PARTNERS COMPANY, a Delaware corporation, as the General
Partner of EL PASO ENERGY PARTNERS, L.P., a Delaware limited partnership (the
"Partnership"), hereby certifies that ____________ (the "Holder") is the
registered owner of _______ Series A Preference Units (formerly referred to only
as Preference Units) representing limited partner interests in the Partnership
(the "Series A Preference Units") transferable on the books of the Partnership,
in person or by duly authorized attorney, upon surrender of this Certificate
properly endorsed and accompanied by a properly executed application for
transfer of the Preference Units represented by this Certificate. The rights,
preferences and limitations of the Series A Preference Units are set forth in,
and this Certificate and the Series A Preference Units represented hereby are
issued and shall in all respects be subject to the terms and provisions of, the
Second Amended and Restated Agreement of Limited Partnership of El Paso Energy
Partners, L.P., as amended, supplemented or restated from time to time (the
"Partnership Agreement"). Copies of the Partnership Agreement are on file at,
and will be furnished without charge on delivery of written request to the
Partnership at the principal office of the Partnership located at the El Paso
Building, 1001 Louisiana, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. Capitalized terms used herein
but not defined shall have the meanings given them in the Partnership Agreement.
The Holder, by accepting this Certificate, is deemed to have (a)
requested admission as, and agreed to become, a Limited Partner or a Substituted
Limited Partner, as applicable, and to have agreed to comply with and be bound
by and to have executed the Partnership Agreement, (b) represented and warranted
that the Holder has all right, power and authority and, if an individual, the
capacity necessary to enter into the Partnership Agreement, (c) appointed the
General Partner and, if a Liquidator shall be appointed, the Liquidator of the
Partnership as the Holder's attorney to execute, swear to, acknowledge and file
any document, including, without limitation, the Partnership Agreement and any
amendment thereto and the Certificate of Limited Partnership of the Partnership
and any amendment thereto, necessary or appropriate for the Holder's admission
as a Limited Partner or a Substituted Limited Partner, as applicable, in the
Partnership and as a party to the Partnership Agreement, (d) given the powers of
attorney provided for in the Partnership Agreement, (e) made the waivers and
given the consents and approvals contained in the Partnership Agreement and (f)
certified to the Partnership that the Holder (including, to the best of the
Holder's knowledge, any person for whom the Holder holds the Preference Units)
is an Eligible Citizen.
This Certificate shall not be valid for any purpose unless it has been
countersigned and registered by the Transfer Agent and Registrar.
EL PASO ENERGY PARTNERS COMPANY, Dated:
as General Partner -----------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ Countersigned and Registered by:
President
CHASEMELLON SHAREHOLDER SERVICES
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as Transfer Agent and Registrar
Secretary
By:
--------------------------------
Authorized Signature
A-1
[Reverse of Certificate]
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as follows according to applicable laws
or regulations:
TEN COM -- as tenants in UNIF GIFT MIN ACT Custodian
common -------- ---------
TEN ENT -- as tenants by (Cust) (Minor)
the entireties
JT TEN -- as joint tenants under Uniform Gifts to Minors Act
with right of
survivorship and
not as tenants in
common --------------------------------
(State)
Additional abbreviations, though not in the above list, may also be
used.
ASSIGNMENT OF PREFERENCE UNITS
in
EL PASO ENERGY PARTNERS, L.P.
IMPORTANT NOTICE REGARDING INVESTOR RESPONSIBILITIES
DUE TO TAX SHELTER STATUS OF EL PASO ENERGY PARTNERS, LP.
You have acquired an interest in El Paso Energy Partners, L.P., the El
Paso Building, 1001 Louisiana, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, whose taxpayer
identification number is ▇▇-▇▇▇▇▇▇▇. The Internal Revenue Service has issued El
Paso Energy Partners, L.P. the following tax shelter registration number:
__________________. If there is no number in the blank in the preceding
sentence, the number will be furnished to the Holder when it is received.
YOU MUST REPORT THIS REGISTRATION NUMBER TO THE INTERNAL REVENUE
SERVICE IF YOU CLAIM ANY DEDUCTION, LOSS, CREDIT, OR OTHER TAX BENEFIT OR REPORT
ANY INCOME BY REASON OF YOUR INVESTMENT IN EL PASO ENERGY PARTNERS, L.P.
You must report the registration number as well as the name and
taxpayer identification number of El Paso Energy Partners, L.P. on Internal
Revenue Code Form 8271. FORM 8271 MUST BE ATTACHED TO THE RETURN ON WHICH YOU
CLAIM THE DEDUCTION, LOSS, CREDIT, OR OTHER TAX BENEFIT OR REPORT ANY INCOME BY
REASON OF YOUR INVESTMENT IN EL PASO ENERGY PARTNERS, L.P.
If you transfer your interest in El Paso Energy Partners, L.P. to
another person, you are required by the Internal Revenue Service to keep a list
containing (a) that person's name, address and taxpayer identification number,
(b) the date on which you transferred the interest and (c) the name, address and
tax shelter registration number of El Paso Energy Partners, LP. If you do not
want to keep such a list, you must (1) send the information specified above to
the General Partner, who will keep the list for this tax shelter and (2) give a
copy of this notice to the person to whom you transfer your interest Your
failure to comply with any of the above-described responsibilities could result
in the imposition of a penalty under Section 6707(b) or 6708(a) of the Internal
Revenue Service Code of 1986, as amended, unless such failure is shown to be due
to reasonable cause.
A-1
ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS
INVESTMENT OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED, OR APPROVED
BY THE INTERNAL REVENUE SERVICE.
FOR VALUE RECEIVED, __________ hereby assigns, conveys, sells and
transfers unto
--------------------------------------------------------------------------------
(Please print or typewrite name and address of Assignee)
---------------------------------- -------------------------------------
(Please insert Social Security or
other identifying number of Assignee)
______________ Preference Units representing limited partner interests evidenced
by this Certificate, subject to the Partnership Agreement, and does hereby
irrevocably constitute and appoint ___________________ as its attorney-in-fact
with full power of substitution to transfer the same on the books of El Paso
Energy Partners, L.P.
Date: NOTE: The signature to any endorsement hereon must
-------------------- correspond with the name as written upon the face
of this Certificate in every particular, without
alteration, enlargement or change.
THE SIGNATURE(S) SHOULD BE
GUARANTEED BY AN "ELIGIBLE GUARANTOR
INSTITUTION" AS DEFINED IN RULE 17AD-15
UNDER THE SECURITIES & EXCHANGE ACT
OF 1934, AS AMENDED
----------------------------------
(Signature)
SIGNATURE(S) GUARANTEED:
----------------------------------
(Signature)
No assignment or transfer of the Preference Units evidenced hereby will
be registered on the books of El Paso Energy Partners, L.P. unless the
Certificate evidencing the Preference Units to be transferred is surrendered for
registration or transfer and an Application for Transfer of Preference Units (a
"Transfer Application") has been executed by a transferee either (a) on the form
set forth below or (b) on a separate application that the Partnership will
furnish on request without charge. A transferor of the Preference Units shall
have no duty to the transferee with respect to execution of the Transfer
Application in order for such transferee to obtain registration of the transfer
of the Preference Units.
-----------------------------------------
APPLICATION FOR TRANSFER OF PREFERENCE UNITS
The undersigned ("Applicant") hereby applies for transfer to the name
of the Applicant of the Preference Units evidenced hereby.
The Applicant (a) requests admission as a Substituted Limited Partner
and agrees to comply with and be bound by, and hereby executes, the Second
Amended and Restated Agreement of Limited Partnership of El Paso Energy
Partners, L.P., (the "Partnership") as amended, supplemented or restated to the
date hereof (the "Partnership Agreement"), (b) represents and warrants that the
Applicant has all right, power and authority and, if an individual, the capacity
necessary to enter into the Partnership Agreement, (c) appoints the General
Partner and, if a Liquidator shall be appointed, the Liquidator of the
Partnership as the Applicant's attorney to execute, swear to, acknowledge and
file any document, including, without limitation, the Partnership Agreement and
any amendment
A-1
thereto and the Certificate of Limited Partnership of the Partnership and any
amendment thereto, necessary or appropriate for the Applicant's admission as a
Substituted Limited Partner and as a party to the Partnership Agreement, (d)
gives the powers of attorney provided for in the Partnership Agreement, (e)
makes the waivers and gives the consents and approvals contained in the
Partnership Agreement and (f) certifies to the Partnership that the Applicant
(including, to the best of the Applicant's knowledge, any person for whom the
Applicant will hold the Preference Units) is an Eligible Citizen. Capitalized
terms not defined herein have the meanings assigned to such terms in the
Partnership Agreement.
Date:
---------------------------- -----------------------------------------
Signature of Applicant
--------------------------------------------------------------------------------
Name and Address of Applicant
--------------------------------- --------------------------------------------
Social Security or other Purchase Price including commissions, if any
identifying number of Applicant
Type of Entity (check one)
[ ] Individual [ ] Partnership [ ] Corporation [ ] Trust
[ ] Other (specify)
Nationality (check one)
[ ] United States Citizen, Resident or Domestic Entity [ ] Non-resident Alien
[ ] Foreign Corporation
If the United States Citizen, Resident or Domestic Entity box is
checked, the following certification must be completed.
Under Section 1445(c) of the Internal Revenue Code of 1986, as amended
(the "Code"), the Partnership must withhold tax with respect to certain
transfers of property if a holder of an interest in the Partnership is a foreign
person. To inform the Partnership that no withholding is required with respect
to the undersigned interest-holders interest in it, the undersigned hereby
certifies the following (or, if applicable, certifies the following on behalf of
the interest-holder):
Complete either A or B:
A. Individual Interest-Holder
1. I am not a non-resident alien for purposes of United
States income taxation.
2. My United States taxpayer identifying number (Social
Security Number) is _______________________ .
3. My home address is ________________________ .
4. My year end for tax reporting purposes is _________ .
B. Partnership, Corporate or Other Interest-Holder
1.
-----------------------------------------------------
(Name of Interest-Holder)
is not a foreign corporation, foreign partnership, foreign
trust or foreign estate (as those terms are defined in the
Code and Treasury Regulations).
A-1
2. The interest-holder's U.S. employer identification
number is _________________________ .
3. The interest-holder's office address and place of
incorporation (if applicable) is _______________ .
4. The interest-holder's year end for tax reporting
purposes is ________________________ .
The interest-holder agrees to notify the Partnership within sixty (60)
days of the date the interest-holder becomes a foreign person.
The interest-holder understands that this Certificate may be disclosed
to the Internal Revenue Service by the Partnership and that any false statement
contained herein could be punishable by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete and, if applicable, I further declare that I have authority to sign
this document on behalf of
--------------------------------------------------------------------------------
Name of Interest-Holder
--------------------------------------------------------------------------------
Signature and Date
--------------------------------------------------------------------------------
Title (if applicable)
NOTE: If the Applicant is a broker, dealer, bank, trust company,
clearing corporation, other nominee holder or an agent of any of the foregoing,
and is holding the Preference Units for the account of any other person, this
application should be completed by an officer thereof or, in the case of a
broker or dealer, by a registered representative who is a member of a registered
national securities exchange or a member of the National Association of
Securities Dealers, Inc., or, in the case of any other nominee holder, a person
performing a similar function. If the Applicant is a broker, dealer, bank, trust
company, clearing corporation, other nominee owner or an agent of any of the
foregoing, the above certification as to any Person for whom the Applicant will
hold the Preference Units shall be made to the best of the Applicant's
knowledge.
▇-▇
▇▇▇▇▇▇▇ ▇-▇
TO THE SECOND AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF
EL PASO ENERGY PARTNERS, L.P.
CERTIFICATE EVIDENCING COMMON UNITS
REPRESENTING LIMITED PARTNER INTERESTS
EL PASO ENERGY PARTNERS, L.P.
(A LIMITED PARTNERSHIP FORMED UNDER THE LAWS OF DELAWARE)
No.__________ _____________ Common Units
CUSIP 28368B 10 2
EL PASO ENERGY PARTNERS COMPANY, a Delaware corporation, as the General
Partner of EL PASO ENERGY PARTNERS, L.P., a Delaware Limited partnership (the
"Partnership"), hereby certifies that ____________ (the "Holder") is the
registered owner of _______ Common Units (referred to in the Partnership
Agreement as "Series A Common Units") representing limited partner interests in
the Partnership (the "Common Units") transferable on the books of the
Partnership, in person or by duly authorized attorney, upon surrender of this
Certificate properly endorsed and accompanied by a properly executed application
for transfer of the Common Units represented by this Certificate. The rights,
preferences and limitations of the Common Units are set forth in, and this
Certificate and the Common Units represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Second Amended and
Restated Agreement of Limited Partnership of El Paso Energy Partners, L.P., as
amended, supplemented or restated from time to time (the "Partnership
Agreement"). Copies of the Partnership Agreement are on file at, and will be
furnished without charge on delivery of written request to the Partnership at
the principal office of the Partnership located at the El Paso Building, 1001
Louisiana, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. Capitalized terms used herein but not defined
shall have the meanings given them in the Partnership Agreement.
The Holder, by accepting this Certificate, is deemed to have (a)
requested admission as, and agreed to become, a Limited Partner or a Substituted
Limited Partner, as applicable, and to have agreed to comply with and be bound
by and to have executed the Partnership Agreement, (b) represented and warranted
that the Holder has all right, power and authority and, if an individual, the
capacity necessary to enter into the Partnership Agreement, (c) appointed the
General Partner and, if a Liquidator shall be appointed, the Liquidator of the
Partnership as the Holder's attorney to execute, swear to, acknowledge and file
any document, including, without limitation, the Partnership Agreement and any
amendment thereto and the Certificate of Limited Partnership of the Partnership
and any amendment thereto, necessary or appropriate for the Holder's admission
as a Limited Partner or a Substituted Limited Partner, as applicable, in the
Partnership and as a party to the Partnership Agreement, (d) given the powers of
attorney provided for in the Partnership Agreement, (e) made the waivers and
given the consents and approvals contained in the Partnership Agreement and (f)
certified to the Partnership that the Holder (including, to the best of the
Holder's knowledge, any person for whom the Holder holds the Common Units) is an
Eligible Citizen.
This Certificate shall not be valid for any purpose unless it has been
countersigned and registered by the Transfer Agent and Registrar.
EL PASO ENERGY PARTNERS COMPANY, Dated:
as General Partner ------------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ Countersigned and Registered by:
President
CHASEMELLON SHAREHOLDER SERVICES
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as Transfer Agent and Registrar
Secretary
By:
---------------------------------
Authorized Signature
A-2
[Reverse of Certificate]
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as follows according to applicable laws
or regulations:
TEN COM -- as tenants in UNIF GIFT MIN ACT Custodian
common -------- ---------
TEN ENT -- as tenants by (Cust) (Minor)
the entireties
JT TEN -- as joint tenants under Uniform Gifts to Minors Act
with right of
survivorship and
not as tenants in
common --------------------------------
(State)
Additional abbreviations, though not in the above list, may also be used.
ASSIGNMENT OF COMMON UNITS
in
EL PASO ENERGY PARTNERS, L.P.
IMPORTANT NOTICE REGARDING INVESTOR RESPONSIBILITIES
DUE TO TAX SHELTER STATUS OF EL PASO ENERGY PARTNERS, LP.
You have acquired an interest in El Paso Energy Partners, L.P., the El
Paso Building, 1001 Louisiana, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, whose taxpayer
identification number is ▇▇-▇▇▇▇▇▇▇. The Internal Revenue Service has issued El
Paso Energy Partners, L.P. the following tax shelter registration number:
__________________. If there is no number in the blank in the preceding
sentence, the number will be furnished to the Holder when it is received.
YOU MUST REPORT THIS REGISTRATION NUMBER TO THE INTERNAL REVENUE
SERVICE IF YOU CLAIM ANY DEDUCTION, LOSS, CREDIT, OR OTHER TAX BENEFIT OR REPORT
ANY INCOME BY REASON OF YOUR INVESTMENT IN EL PASO ENERGY PARTNERS, L.P.
You must report the registration number as well as the name and
taxpayer identification number of El Paso Energy Partners, L.P. on Internal
Revenue Code Form 8271. FORM 8271 MUST BE ATTACHED TO THE RETURN ON WHICH YOU
CLAIM THE DEDUCTION, LOSS, CREDIT, OR OTHER TAX BENEFIT OR REPORT ANY INCOME BY
REASON OF YOUR INVESTMENT IN EL PASO ENERGY PARTNERS, L.P.
If you transfer your interest in El Paso Energy Partners, L.P. to
another person, you are required by the Internal Revenue Service to keep a list
containing (a) that person's name, address and taxpayer identification number,
(b) the date on which you transferred the interest and (c) the name, address and
tax shelter registration number of El Paso Energy Partners, LP. If you do not
want to keep such a list, you must (1) send the information specified above to
the General Partner, who will keep the list for this tax shelter and (2) give a
copy of this notice to the person to whom you transfer your interest Your
failure to comply with any of the above-described responsibilities could result
in the imposition of a penalty under Section 6707(b) or 6708(a) of the Internal
Revenue Service Code of 1986, as amended, unless such failure is shown to be due
to reasonable cause.
A-2
ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS
INVESTMENT OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED, OR APPROVED
BY THE INTERNAL REVENUE SERVICE.
FOR VALUE RECEIVED, __________ hereby assigns, conveys, sells and
transfers unto
--------------------------------------------------------------------------------
(Please print or typewrite name and address of Assignee)
------------------------------------ ---------------------------------------
(Please insert Social Security or
other identifying number of Assignee)
______________ Common Units representing limited partner interests evidenced by
this Certificate, subject to the Partnership Agreement, and does hereby
irrevocably constitute and appoint ___________________ as its attorney-in-fact
with full power of substitution to transfer the same on the books of El Paso
Energy Partners, L.P.
Date: NOTE: The signature to any endorsement hereon must
--------------------- correspond with the name as written upon the face
of this Certificate in every particular, without
alteration, enlargement or change.
THE SIGNATURE(S) SHOULD BE
GUARANTEED BY AN "ELIGIBLE
GUARANTOR INSTITUTION" AS
DEFINED IN RULE 17AD-15 UNDER
THE SECURITIES & EXCHANGE ACT
OF 1934, AS AMENDED -----------------------------------
(Signature)
SIGNATURE(S) GUARANTEED:
-----------------------------------
(Signature)
No assignment or transfer of the Preference Units evidenced hereby will
be registered on the books of El Paso Energy Partners, L.P. unless the
Certificate evidencing the Preference Units to be transferred is surrendered for
registration or transfer and an Application for Transfer of Preference Units (a
"Transfer Application") has been executed by a transferee either (a) on the form
set forth below or (b) on a separate application that the Partnership will
furnish on request without charge. A transferor of the Preference Units shall
have no duty to the transferee with respect to execution of the Transfer
Application in order for such transferee to obtain registration of the transfer
of the Preference Units.
-----------------------------------------
APPLICATION FOR TRANSFER OF PREFERENCE UNITS
The undersigned ("Applicant") hereby applies for transfer to the name
of the Applicant of the Common Units evidenced hereby.
The Applicant (a) requests admission as a Substituted Limited Partner
and agrees to comply with and be bound by, and hereby executes, the Second
Amended and Restated Agreement of Limited Partnership of El Paso Energy
Partners, L.P., (the "Partnership") as amended, supplemented or restated to the
date hereof (the "Partnership Agreement"), (b) represents and warrants that the
Applicant has all right, power and authority and, if an individual, the capacity
necessary to enter into the Partnership Agreement, (c) appoints the General
Partner and, if a Liquidator shall be appointed, the Liquidator of the
Partnership as the Applicant's attorney to execute, swear to, acknowledge and
file any document, including, without limitation, the Partnership Agreement and
any amendment thereto and the Certificate of Limited Partnership of the
Partnership and any amendment
A-2
thereto, necessary or appropriate for the Applicant's admission as a Substituted
Limited Partner and as a party to the Partnership Agreement, (d) gives the
powers of attorney provided for in the Partnership Agreement, (e) makes the
waivers and gives the consents and approvals contained in the Partnership
Agreement and (f) certifies to the Partnership that the Applicant (including, to
the best of the Applicant's knowledge, any person for whom the Applicant will
hold the Common Units) is an Eligible Citizen. Capitalized terms not defined
herein have the meanings assigned to such terms in the Partnership Agreement.
Date:
---------------------------- -----------------------------------------
Signature of Applicant
--------------------------------------------------------------------------------
Name and Address of Applicant
--------------------------------- --------------------------------------------
Social Security or other Purchase Price including commissions, if any
identifying number of Applicant
Type of Entity (check one)
[ ] Individual [ ] Partnership [ ] Corporation [ ] Trust [ ] Other (specify)
Nationality (check one)
[ ] United States Citizen, Resident or Domestic Entity [ ] Non-resident Alien
[ ] Foreign Corporation
If the United States Citizen, Resident or Domestic Entity box is
checked, the following certification must be completed.
Under Section 1445(c) of the Internal Revenue Code of 1986, as amended
(the "Code"), the Partnership must withhold tax with respect to certain
transfers of property if a holder of an interest in the Partnership is a foreign
person. To inform the Partnership that no withholding is required with respect
to the undersigned interest-holders interest in it, the undersigned hereby
certifies the following (or, if applicable, certifies the following on behalf of
the interest-holder):
Complete either A or B:
A. Individual Interest-Holder
1. I am not a non-resident alien for purposes of United
States income taxation.
2. My United States taxpayer identifying number (Social
Security Number) is _______________________ .
3. My home address is ________________________ .
4. My year end for tax reporting purposes is _________ .
B. Partnership, Corporate or Other Interest-Holder
1.
-----------------------------------------------------
(Name of Interest-Holder)
is not a foreign corporation, foreign partnership, foreign
trust or foreign estate (as those- terms are defined in the
Code and Treasury Regulations).
A-2
2. The interest-holder's U.S. employer identification
number is _________________________ .
3. The interest-holder's office address and place of
incorporation (if applicable) is _______________ .
4. The interest-holder's year end for tax reporting
purposes is ________________________ .
The interest-holder agrees to notify the Partnership within sixty (60)
days of the date the interest-holder becomes a foreign person.
The interest-holder understands that this Certificate may be disclosed
to the Internal Revenue Service by the Partnership and that any false statement
contained herein could be punishable by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete and, if applicable, I further declare that I have authority to sign
this document on behalf of
Name of Interest-Holder
Signature and Date
Title (if applicable)
NOTE: If the Applicant is a broker, dealer, bank, trust company,
clearing corporation, other nominee holder or an agent of any of the foregoing,
and is holding the Common Units for the account of any other person, this
application should be completed by an officer thereof or, in the case of a
broker or dealer, by a registered representative who is a member of a registered
national securities exchange or a member of the National Association of
Securities Dealers, Inc. or, in the case of any other nominee holder, a person
performing a similar function. If the Applicant is a broker, dealer, bank, trust
company, clearing corporation, other nominee owner or an agent of any of the
foregoing, the above certification as to any Person for whom the Applicant will
hold the Common Units shall be made to the best of the Applicant's knowledge.
▇-▇
▇▇▇▇▇▇▇ ▇-▇
TO THE SECOND AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF
EL PASO ENERGY PARTNERS, L.P.
CERTIFICATE EVIDENCING SERIES B PREFERENCE UNITS
REPRESENTING LIMITED PARTNER INTERESTS
EL PASO ENERGY PARTNERS, L.P.
(A LIMITED PARTNERSHIP FORMED UNDER THE LAWS OF DELAWARE)
No.__________ __________ Series B Preference Units
EL PASO ENERGY PARTNERS COMPANY, a Delaware corporation, as the General
Partner of EL PASO ENERGY PARTNERS, L.P., a Delaware Limited partnership (the
"Partnership"), hereby certifies that ____________ (the "Holder") is the
registered owner of _______ Series B Preference Units representing limited
partner interests in the Partnership (the "Series B Preference Units")
transferable on the books of the Partnership, in person or by duly authorized
attorney, upon surrender of this Certificate properly endorsed and accompanied
by a properly executed application for transfer of the Series B Preference Units
represented by this Certificate. The rights, preferences and limitations of the
Series B Preference Units are set forth in, and this Certificate and the Series
B Preference Units represented hereby are issued and shall in all respects be
subject to the terms and provisions of, the Second Amended and Restated
Agreement of Limited Partnership of El Paso Energy Partners, L.P., as amended,
supplemented or restated from time to time (the "Partnership Agreement"). Copies
of the Partnership Agreement are on file at, and will be furnished without
charge on delivery of written request to the Partnership at the principal office
of the Partnership located at the El Paso Building, 1001 Louisiana, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇. Capitalized terms used herein but not defined shall have the
meanings given them in the Partnership Agreement.
The Holder, by accepting this Certificate, is deemed to have (a)
requested admission as, and agreed to become, a Limited Partner or a Substituted
Limited Partner, as applicable, and to have agreed to comply with and be bound
by and to have executed the Partnership Agreement, (b) represented and warranted
that the Holder has all right, power and authority and, if an individual, the
capacity necessary to enter into the Partnership Agreement, (c) appointed the
General Partner and, if a Liquidator shall be appointed, the Liquidator of the
Partnership as the Holder's attorney to execute, swear to, acknowledge and file
any document, including, without limitation, the Partnership Agreement and any
amendment thereto and the Certificate of Limited Partnership of the Partnership
and any amendment thereto, necessary or appropriate for the Holder's admission
as a Limited Partner or a Substituted Limited Partner, as applicable, in the
Partnership and as a party to the Partnership Agreement, (d) given the powers of
attorney provided for in the Partnership Agreement, (e) made the waivers and
given the consents and approvals contained in the Partnership Agreement and (f)
certified to the Partnership that the Holder (including, to the best of the
Holder's knowledge, any person for whom the Holder holds the Common Units) is an
Eligible Citizen.
This Certificate shall not be valid for any purpose unless it has been
countersigned and registered by the Transfer Agent and Registrar.
EL PASO ENERGY PARTNERS COMPANY, Dated:
as General Partner ----------------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ Countersigned and Registered by:
President
CHASEMELLON SHAREHOLDER SERVICES
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as Transfer Agent and Registrar
Secretary
By:
-------------------------------------
Authorized Signature
A-3
[Reverse of Certificate]
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as follows according to applicable laws
or regulations:
TEN COM -- as tenants in UNIF GIFT MIN ACT Custodian
common -------- ---------
TEN ENT -- as tenants by (Cust) (Minor)
the entireties
JT TEN -- as joint tenants under Uniform Gifts to Minors Act
with right of
survivorship and
not as tenants in
common --------------------------------
(State)
Additional abbreviations, though not in the above list, may also be used.
ASSIGNMENT OF COMMON UNITS
in
EL PASO ENERGY PARTNERS, L.P.
IMPORTANT NOTICE REGARDING INVESTOR RESPONSIBILITIES DUE
TO TAX SHELTER STATUS OF EL PASO ENERGY PARTNERS, LP.
You have acquired an interest in El Paso Energy Partners, L.P., the El
Paso Building, 1001 Louisiana, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, whose taxpayer
identification number is ▇▇-▇▇▇▇▇▇▇. The Internal Revenue Service has issued El
Paso Energy Partners, L.P. the following tax shelter registration number:
__________________. If there is no number in the blank in the preceding
sentence, the number will be furnished to the Holder when it is received.
YOU MUST REPORT THIS REGISTRATION NUMBER TO THE INTERNAL REVENUE
SERVICE IF YOU CLAIM ANY DEDUCTION, LOSS, CREDIT, OR OTHER TAX BENEFIT OR REPORT
ANY INCOME BY REASON OF YOUR INVESTMENT IN EL PASO ENERGY PARTNERS, L.P.
You must report the registration number as well as the name and
taxpayer identification number of El Paso Energy Partners, L.P. on Internal
Revenue Code Form 8271. FORM 8271 MUST BE ATTACHED TO THE RETURN ON WHICH YOU
CLAIM THE DEDUCTION, LOSS, CREDIT, OR OTHER TAX BENEFIT OR REPORT ANY INCOME BY
REASON OF YOUR INVESTMENT IN EL PASO ENERGY PARTNERS, L.P.
If you transfer your interest in El Paso Energy Partners, L.P. to
another person, you are required by the Internal Revenue Service to keep a list
containing (a) that person's name, address and taxpayer identification number,
(b) the date on which you transferred the interest and (c) the name, address and
tax shelter registration number of El Paso Energy Partners, LP. If you do not
want to keep such a list, you must (1) send the information specified above to
the General Partner, who will keep the list for this tax shelter and (2) give a
copy of this notice to the person to whom you transfer your interest Your
failure to comply with any of the above-described responsibilities could result
in the imposition of a penalty under Section 6707(b) or 6708(a) of the Internal
Revenue Service Code of 1986, as amended, unless such failure is shown to be due
to reasonable cause.
A-3
ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS
INVESTMENT OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED, OR APPROVED
BY THE INTERNAL REVENUE SERVICE.
FOR VALUE RECEIVED, __________ hereby assigns, conveys, sells and
transfers unto
--------------------------------------------------------------------------------
(Please print or typewrite name and address of Assignee)
-------------------------------------- -------------------------------------
(Please insert Social Security or
other identifying number of Assignee)
______________ Series B Preference Units representing limited partner interests
evidenced by this Certificate, subject to the Partnership Agreement, and does
hereby irrevocably constitute and appoint ____________________ as its
attorney-in-fact with full power of substitution to transfer the same on the
books of El Paso Energy Partners, L.P.
Date: NOTE: The signature to any endorsement hereon must
---------------------- correspond with the name as written upon the face
of this Certificate in every particular, without
alteration, enlargement or change.
THE SIGNATURE(S) SHOULD BE
GUARANTEED BY AN "ELIGIBLE GUARANTOR
INSTITUTION" AS DEFINED IN RULE 17AD-15
UNDER THE SECURITIES & EXCHANGE ACT OF
1934, AS AMENDED -------------------------------
(Signature)
SIGNATURE(S) GUARANTEED:
-------------------------------
(Signature)
No assignment or transfer of the Series B Preference Units evidenced
hereby will be registered on the books of El Paso Energy Partners, L.P. unless
the Certificate evidencing the Series B Preference Units to be transferred is
surrendered for registration or transfer and an Application for Transfer of
Series B Preference Units (a "Transfer Application") has been executed by a
transferee either (a) on the form set forth below or (b) on a separate
application that the Partnership will furnish on request without charge. A
transferor of the Series B Preference Units shall have no duty to the transferee
with respect to execution of the Transfer Application in order for such
transferee to obtain registration of the transfer of the Series B Preference
Units.
-----------------------------------------
APPLICATION FOR TRANSFER OF PREFERENCE UNITS
The undersigned ("Applicant") hereby applies for transfer to the name
of the Applicant of the Series B Preference Units evidenced hereby.
The Applicant (a) requests admission as a Substituted Limited Partner
and agrees to comply with and be bound by, and hereby executes, the Second
Amended and Restated Agreement of Limited Partnership of El Paso Energy
Partners, L.P., (the "Partnership") as amended, supplemented or restated to the
date hereof (the "Partnership Agreement"), (b) represents and warrants that the
Applicant has all right, power and authority and, if an individual, the capacity
necessary to enter into the Partnership Agreement, (c) appoints the General
Partner
A-3
and, if a Liquidator shall be appointed, the Liquidator of the Partnership as
the Applicant's attorney to execute, swear to, acknowledge and file any
document, including, without limitation, the Partnership Agreement and any
amendment thereto and the Certificate of Limited Partnership of the Partnership
and any amendment thereto, necessary or appropriate for the Applicant's
admission as a Substituted Limited Partner and as a party to the Partnership
Agreement, (d) gives the powers of attorney provided for in the Partnership
Agreement, (e) makes the waivers and gives the consents and approvals contained
in the Partnership Agreement and (f) certifies to the Partnership that the
Applicant (including, to the best of the Applicant's knowledge, any person for
whom the Applicant will hold the Series B Preference Units) is an Eligible
Citizen. Capitalized terms not defined herein have the meanings assigned to such
terms in the Partnership Agreement.
Date:
---------------------------- ------------------------------------------
Signature of Applicant
--------------------------------------------------------------------------------
Name and Address of Applicant
-------------------------------- --------------------------------------------
Social Security or other Purchase Price including commissions, if any
identifying number of Applicant
Type of Entity (check one)
[ ] Individual [ ] Partnership [ ] Corporation [ ] Trust [ ] Other (specify)
Nationality (check one)
[ ] United States Citizen, Resident or Domestic Entity [ ] Non-resident Alien
[ ] Foreign Corporation
If the United States Citizen, Resident or Domestic Entity box is
checked, the following certification must be completed.
Under Section 1445(c) of the Internal Revenue Code of 1986, as amended
(the "Code"), the Partnership must withhold tax with respect to certain
transfers of property if a holder of an interest in the Partnership is a foreign
person. To inform the Partnership that no withholding is required with respect
to the undersigned interest-holders interest in it, the undersigned hereby
certifies the following (or, if applicable, certifies the following on behalf of
the interest-holder):
Complete either A or B:
A. Individual Interest-Holder
1. I am not a non-resident alien for purposes of United
States income taxation.
2. My United States taxpayer identifying number (Social
Security Number) is _______________________ .
3. My home address is ________________________ .
4. My year end for tax reporting purposes is ________ .
B. Partnership, Corporate or Other Interest-Holder
1.
-----------------------------------------------------
(Name of Interest-Holder)
A-3
is not a foreign corporation, foreign partnership, foreign
trust or foreign estate (as those- terms are defined in the
Code and Treasury Regulations).
2. The interest-holder's U.S. employer identification
number is _________________________ .
3. The interest-holder's office address and place of
incorporation (if applicable) is _______________ .
4. The interest-holder's year end for tax reporting
purposes is ________________________ .
The interest-holder agrees to notify the Partnership within sixty (60)
days of the date the interest-holder becomes a foreign person.
The interest-holder understands that this Certificate may be disclosed
to the Internal Revenue Service by the Partnership and that any false statement
contained herein could be punishable by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete and, if applicable, I further declare that I have authority to sign
this document on behalf of
Name of Interest-Holder
Signature and Date
Title (if applicable)
NOTE: If the Applicant is a broker, dealer, bank, trust company, clearing
corporation, other nominee holder or an agent of any of the foregoing, and is
holding the Series B Preference Units for the account of any other person, this
application should be completed by an officer thereof or, in the case of a
broker or dealer, by a registered representative who is a member of a registered
national securities exchange or a member of the National Association of
Securities Dealers, Inc. or, in the case of any other nominee holder, a person
performing a similar function. If the Applicant is a broker, dealer, bank, trust
company, clearing corporation, other nominee owner or an agent of any of the
foregoing, the above certification as to any Person for whom the Applicant will
hold the Series B Preference Units shall be made to the best of the Applicant's
knowledge.
A-3
ANNEX A TO THE THIRD AMENDMENT
TO THE SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF GULFTERRA ENERGY PARTNERS, L.P.
STATEMENT OF RIGHTS, PRIVILEGES AND LIMITATIONS
OF SERIES F CONVERTIBLE UNITS
OF
GULFTERRA ENERGY PARTNERS, L.P.
DATED MAY 16, 2003
TABLE OF CONTENTS
PAGE
----
1. DEFINITIONS..............................................................................................1
2. CONVERSION OF SERIES F CONVERTIBLE UNITS.................................................................8
2.1 Number of Series A Common Units; Term...........................................................8
2.2 Cashless Settlement; Cashless Conversion........................................................9
2.3 Extension of Term..............................................................................10
2.4 Manner of Conversion...........................................................................11
2.5 Conditions to Closing..........................................................................11
2.6 When Conversion Effective......................................................................14
2.7 Delivery of Series F Convertible Unit and Payment..............................................14
2.8 Delivery of Unit Certificates, etc.............................................................14
3. ADJUSTMENT OF UNIT PRICES AND SERIES A COMMON UNITS ISSUABLE UPON CONVERSION............................15
3.1 General; Conversion Unit Price.................................................................15
3.2 Treatment of Partnership Interest Adjusting Events.............................................15
3.3 Adjustments for Merger, Consolidation, Sale of Assets..........................................16
3.4 No Prohibition from Issuing Series A Common Units..............................................20
4. NATURE AND RIGHTS OF SERIES F CONVERTIBLE UNIT..........................................................20
4.1 Non-Voting.....................................................................................20
4.2 No Allocations.................................................................................20
4.3 No Distributions...............................................................................20
5. REGISTRATION STATEMENT AND BLACKOUT PERIODS.............................................................20
6. TRANSFERABILITY.........................................................................................24
6.1 Transfers of Series F Convertible Units........................................................24
6.2 Payment of Tax Upon Issue of Transfer..........................................................24
7. DENIAL OF PREEMPTIVE RIGHTS AND DISSENTERS' RIGHTS......................................................25
8. TRANSFER AGENT..........................................................................................25
9. NOTICES.................................................................................................26
10. CONSTRUCTION............................................................................................26
11. SEVERABILITY OF PROVISIONS..............................................................................27
Exhibits
Exhibit A - Certificate Representing Series F Convertible Unit
Exhibit B - Form of Conversion Notice
Schedules
Schedule A - Accounts
Annex A - i
STATEMENT OF RIGHTS, PRIVILEGES AND LIMITATIONS
OF SERIES F CONVERTIBLE UNITS
OF
GULFTERRA ENERGY PARTNERS, L.P.
The following is a Statement of Rights, Privileges and Limitations of
Series F Convertible Units (this "STATEMENT") of GulfTerra Energy Partners,
L.P., a Delaware limited partnership (the "PARTNERSHIP"). The Partnership has
authorized and established a new series of unit that shall be designated as the
"Series F Convertible Units" (the "SERIES F CONVERTIBLE UNITS"), which series
shall consist of two classes, the Series F1 Convertible Units (the "SERIES F1
CONVERTIBLE UNITS") and the Series F2 Convertible Units (the "SERIES F2
CONVERTIBLE UNITS"), which will each be comprised of eighty (80) units. Each
Series F Convertible Unit shall be represented by a certificate in the form of
Exhibit A to this Statement. The rights, privileges and limitations of the
Series F Convertible Units, including the convertibility into Series A Common
Units, are set forth in this Statement. References throughout this Statement to
the Series F Convertible Units mean the Series F1 Convertible Units and the
Series F2 Convertible Units.
1. DEFINITIONS. As used in this Statement, unless the context otherwise
requires, the following terms have the following respective meanings:
1.1 13D GROUP means the syndicate or group contemplated in
Section 13(d)(3) of the Exchange Act.
1.2 ACQUIRING PERSON means (i) in connection with any Business
Combination in which the Acquisition Consideration is payable in stock
or other equity securities, the Person issuing the Acquisition
Consideration, and (ii) in connection with any Business Combination in
which the Acquisition Consideration is payable in cash, (a) the Person
acquiring the Partnership by means of merger, consolidation, share
exchange, or other statutory acquisition in which ninety percent (90%)
or more of the outstanding Series A Common Units are exchanged for
cash, securities or other assets, (b) the Person or 13D Group becoming
the beneficial owner of over fifty percent (50%) of the outstanding
Series A Common Units, (c) the transferee of all or substantially all
of the assets of the Partnership (on a consolidated basis), or (d) at
Holder's election, any Person that (i) controls the Acquiring Person
directly or indirectly through one or more intermediaries, (ii) is
required to include the Acquiring Person in the consolidated financial
statements contained in such Parent's Annual Report on Form 10-K (if
such Person is required to file such a report) or would be required to
so include the Acquiring Person in such Person's consolidated financial
statements if they were prepared in accordance with U.S. GAAP and (iii)
is not itself included in the consolidated financial statements of any
other Person (other than its consolidated subsidiaries).
1.3 ACQUISITION CONSIDERATION is defined in Section 3.3.
1.4 BLACKOUT PERIOD is defined in Section 5.2.
Annex A - 1
1.5 BLACKOUT VIOLATION is defined in Section 5.5.
1.6 BUSINESS COMBINATION is defined in Section 3.3.
1.7 BUSINESS COMBINATION CASH CONSIDERATION means the value of
the cash consideration that a holder of a Series A Common Unit is
entitled to receive pursuant to a Business Combination.
1.8 BUSINESS COMBINATION CASH PAYMENT is defined in Section
3.3(c).
1.9 BUSINESS COMBINATION STOCK CONSIDERATION means the value
of the Acquiring Person's stock or other non-cash assets that a holder
of a Series A Common Units is entitled to receive pursuant to a
Business Combination as measured, with respect to the Acquiring
Person's stock, using the Daily Market Unit Price of the Acquiring
Person's stock on the Business Day immediately preceding the
consummation of the Business Combination and, with respect to other
non-cash assets, by an independent appraisal firm of established
national reputation selected by the Board of Directors of the General
Partner (the expenses of which firm shall be paid by the Partnership).
1.10 BUSINESS DAY means any day on which the Series A Common
Units may be traded on the Principal Securities Exchange, or if not
admitted for trading on any Principal Securities Exchange, on any day
other than a Saturday, Sunday or holiday on which banks in New York
City are required or permitted to be closed.
1.11 CASH PORTION means the value of (x) the Business
Combination Cash Consideration divided by the value of (y) the sum of
(A) the Business Combination Cash Consideration and (B) the Business
Combination Stock Consideration.
1.12 CASH SETTLEMENT AMOUNT is defined in Section 2.2.
1.13 CASHLESS CONVERSION is defined in Section 2.2(b).
1.14 CASHLESS CONVERSION TRIGGER PRICE means $26.00, subject
to adjustment pursuant to Section 3.
1.15 CASHLESS SETTLEMENT is defined in Section 2.2(a).
1.16 CHARTER DOCUMENTS mean the Certificate of Limited
Partnership and the Partnership Agreement of the Partnership, as each
may be amended from time to time.
1.17 CONTINGENT CONVERSION NOTICE is defined in Section
3.3(b).
1.18 CONVERSION CLOSING DATE is defined in Section 2.4.
1.19 CONVERSION CONSIDERATION means, with respect to each
Conversion Notice, the dollar amount that a Holder has a right to
designate and has so designated in such Conversion Notice. For a Deemed
Conversion, the Conversion Consideration shall be such amount
designated in the relevant Conversion Notice, notwithstanding that no
Annex A - 2
payment is made, or required to be made, to the Partnership in
connection with such conversion.
1.20 CONVERSION NOTICE is defined in Section 2.4.
1.21 CONVERSION NOTICE DATE means the Business Day on which
the Partnership receives a Conversion Notice from a Holder.
1.22 CONVERSION UNIT PRICE means, with respect to each
Conversion Notice, either (i) if the Prevailing Unit Price is equal to
or greater than the Measuring Date Unit Price, then the Conversion Unit
Price shall be equal to the Prevailing Unit Price; or (ii) if the
Prevailing Unit Price is less than the Measuring Date Unit Price, then
the Conversion Unit Price shall be equal to the Prevailing Unit Price
minus the product of fifty percent (50%) of the positive difference, if
any, of the Measuring Date Unit Price less the Prevailing Price;
provided that the Conversion Unit Price shall be subject to adjustment
or reduction as set forth in Sections 3 and 5.
1.23 DAILY MARKET UNIT PRICE means for any Business Day, the
last sale price on such day, regular way, or in case no such sale takes
place on such day, the average of the closing bid and asked prices on
such Business Day, regular way, in each case as reported by Bloomberg,
L.P., if the Series A Common Units are not listed or admitted to
trading on the Principal Securities Exchange as reported by Bloomberg,
L.P. on the principal National Securities Exchange on which the Series
A Common Units are listed or admitted to trading or, if the Series A
Common Units are not listed or admitted to trading on any National
Securities Exchange, the last quoted price on such Business Day or, if
not so quoted the average of the high bid and low asked prices on such
Business Day in the over-the-counter market, as reported by the Nasdaq
National Market or such other system then in use, or if on any such day
the Series A Common Units are not quoted by any such organization, the
average of the closing bid and asked price on such Business Day as
furnished by a professional market maker making a market in the Series
A Common Units selected by the Board of Directors of the General
Partner, or if on any such day no market maker is making a market in
the Series A Common Units, the fair value of a Series A Common Unit on
such Business Day as determined reasonably and in good faith by the
Board of Directors of the General Partner.
1.24 DEEMED CONVERSION means any conversion of Series F
Convertible Units pursuant to which the Partnership does not receive
any cash or Partnership Bonds, specifically any conversion (i) in
connection with a Cashless Settlement or a Cashless Conversion, (ii)
under Section 2.5(d), (iii) pursuant to which the Holder actually
receives Acquisition Consideration in the form of cash net of the
relevant Conversion Consideration, or (iv) under Sections 3.3(c),
3.3(d) and 3.3(f).
1.25 DELAWARE ACT means the Delaware Revised Uniform Limited
Partnership Act, as amended or replaced.
1.26 DELAYED CLOSING CONVERSION NOTICE is defined in Section
5.4(a).
Annex A - 3
1.27 EXCHANGE ACT means the Securities Exchange Act of 1934,
as amended or replaced.
1.28 GENERAL PARTNER means the General Partner of the
Partnership, as such term is defined in the Charter Documents.
1.29 HOLDER means any Person who is listed as a Holder of the
Series F Convertible Units in the Unit Register as of any relevant date
of determination.
1.30 MAXIMUM NUMBER means 8,329,679, subject to adjustment
pursuant to Section 3.
1.31 MEASURING DATE UNIT PRICE means $35.75, subject to
adjustment pursuant to Section 3.
1.32 MINIMUM CONVERSION PRICE means the Conversion Unit Price
below which the Partnership shall settle a Conversion Notice with the
Cash Settlement Amount or Settlement Units in lieu of Series A Common
Units on the relevant Conversion Closing Date, such amount as specified
by the Partnership with twenty (20) Business Days prior written notice
to the Holder and as amended by the Partnership at any time and from
time to time with twenty (20) Business Days prior written notice to the
Holder pursuant to Section 2.2.
1.33 NATIONAL SECURITIES EXCHANGE shall have the meaning set
forth in the Exchange Act.
1.34 PARTIAL STOCK ADJUSTMENT MEASURING PRICE means the
Measuring Date Unit Price multiplied by the ratio of the Daily Market
Unit Price of the Acquiring Person on the Business Day immediately
preceding the consummation of the Business Combination to the Daily
Market Unit Price of the Partnership on the Business Day immediately
preceding the consummation of the Business Combination.
1.35 PARTIAL STOCK ASSUMPTION AGREEMENT is defined in Section
3.3(d).
1.36 PARTNERSHIP is defined in the introduction.
1.37 PARTNERSHIP AGREEMENT means the Second Amended and
Restated Agreement of Limited Partnership effective as of the date
hereof of the Partnership, including all exhibits, schedules, annexes
and attachments thereto, as amended, supplemented or otherwise modified
from time to time, including the amendment creating the Series F
Convertible Unit.
1.38 PARTNERSHIP BOND means any of (a) the Partnership's 10?%
Senior Subordinated Notes due 2009, 8 1/2% Senior Subordinated Notes
due 2010, 8 1/2% Senior Subordinated Notes due 2011, 8 1/2% Senior
Subordinated Notes due 2011 and 10?% Senior Subordinated Notes due 2012
and (b) any other note, bond, debenture or similar instrument issued by
the Partnership pursuant to an indenture, so long as the exchange of
such securities as contemplated by this Statement would be permitted
under such
Annex A - 4
indentures, notes and related documents and the Partnership's other
credit arrangements (whether existing or modified or entered into in
the future), including the Partnership's Sixth Amended and Restated
Credit Agreement, as each may be amended from time to time.
1.39 PARTNERSHIP INTEREST ADJUSTMENT EVENT means any
subdivision or combination of the issued Series A Common Units, whether
by reason of any dividend or distribution of units, split,
recapitalization, reorganization, spinoff, combination or other similar
change.
1.40 PERSON means a corporation, an association, a
partnership, an organization, a business, an individual, a government
or political subdivision thereof or a governmental agency.
1.41 PREVAILING UNIT PRICE means, with respect to any
Conversion Notice Date, the lesser of the average Daily Market Unit
Price during (a) the sixty (60) consecutive Business Day period ending
on and including the fourth Business Day immediately preceding the
Conversion Notice Date, (b) the first seven (7) consecutive Business
Days of such sixty (60)-Business Day period or (c) the last seven (7)
consecutive Business Days of such sixty (60)-Business Day period.
1.42 PRINCIPAL SECURITIES EXCHANGE means the New York Stock
Exchange, but if the New York Stock Exchange is not the principal U.S.
trading market for the Series A Common Units, the "Principal Securities
Exchange" shall be deemed to mean the principal U.S. National
Securities Exchange on which the Series A Common Units are traded, or
if the Series A Common Units are not then listed or admitted to trading
on any National Securities Exchange but are designated as a national
market system security or a Nasdaq SmallCap Market Security by the
NASD, or any successor thereto, then such market system, or if the
Series A Common Units are not listed or quoted on any of the foregoing,
then the OTC Bulletin Board.
1.43 PROSPECTUS means the prospectus supplement dated the date
hereof, as such may be amended and supplemented from time to time, to
the Registration Statement, or any successor or replacement prospectus,
or as the Partnership may tender to a Holder in connection with any
Conversion Closing Date.
1.44 QIB means qualified institutional buyer as such term is
defined in Rule 144A of the Securities Act.
1.45 REGISTRATION STATEMENT means the Partnership's
Registration Statement on Form S-3 (Registration No. 333-81772) or any
successor or replacement registration statement.
1.46 RESTATEMENT means, with respect to the Partnership's
quarterly or annual actual (not pro forma) historical financial
statements that have been (i) filed with the SEC, (ii) included in a
press release or (iii) made public by any other method, any restatement
that materially affects the Partnership's consolidated statement of
income or consolidated statement of cash flows; provided, however, that
the term Restatement shall
Annex A - 5
not include any restatement (i) required as a result of a change
occurring after the closing date in (x) applicable law or (y) generally
accepted accounting principles promulgated by the Financial Accounting
Standards Board or the SEC, which change is implemented by the
Partnership in the manner and at the time prescribed by such law or
promulgation, or (ii) resulting in a change from one generally accepted
accounting principle to another; provided, that the Audit Committee of
the Board of Directors of the General Partner has made the
determination to change to another principle after discussions with the
Partnership's external auditors.
1.47 RESTATEMENT FILING DATE means the date on which the
Partnership files quarterly or annual actual (not pro forma) historical
financial statements that constitute a Restatement on a Form 10-K, Form
10-Q, Form 8-K or any other filing with the SEC (and if the Partnership
makes multiple filings of a Restatement with the SEC, the last of such
dates).
1.48 SEC means the United States Securities and Exchange
Commission.
1.49 SECURITIES ACT means the Securities Act of 1933, as
amended.
1.50 SERIES A COMMON UNITS mean the partnership interests of a
limited partner in the Partnership representing a fractional part of
the partnership interests of all limited partners having the rights and
obligations specified with respect to a Series A Common Unit, such term
to include any units into which all outstanding Series A Common Units
shall have been changed or any units resulting from any Partnership
Interest Adjustment Event.
1.51 SERIES F CONVERTIBLE UNITS mean the partnership interests
of a limited partner in the Partnership representing a fractional part
of the partnership interests of all limited partners having the rights
and obligations specified with respect to a Series F Convertible Unit,
such term to include any units into which all outstanding Series F
Convertible Units shall have been changed (excluding Series A Common
Units issued upon conversion of the Series F Convertible Units) or any
units resulting from any Partnership Interest Adjustment Event, which
term shall refer to the Series F1 Convertible Units and the Series F2
Convertible Units.
1.52 SERIES F1 CONVERSION CONSIDERATION is defined in Section
2.1(a).
1.53 SERIES F1 CONVERTIBLE UNITS mean the partnership
interests of a limited partner in the Partnership representing a
fractional part of the partnership interests of all limited partners
having the rights and obligations specified with respect to a Series F1
Convertible Unit, such term to include any units into which all
outstanding Series F1 Convertible Units shall have been changed
(excluding Series A Common Units issued upon conversion of the Series
F1 Convertible Units) or any units resulting from any Partnership
Interest Adjustment Event.
1.54 SERIES F1 EXPIRATION TIME means 4:00 p.m., New York City
time, on March 29, 2004, subject to adjustment pursuant to Section 2.3.
Annex A - 6
1.55 SERIES F2 CONVERSION CONSIDERATION is defined in Section
2.1(b).
1.56 SERIES F2 CONVERTIBLE UNITS mean the partnership
interests of a limited partner in the Partnership representing a
fractional part of the partnership interests of all limited partners
having the rights and obligations specified with respect to a Series F2
Convertible Unit, such term to include any units into which all
outstanding Series F2 Convertible Units shall have been changed
(excluding Series A Common Units issued upon conversion of the Series
F2 Convertible Units) or any units resulting from any Partnership
Interest Adjustment Event.
1.57 SERIES F2 EXPIRATION TIME means 4:00 p.m., New York City
time, on March 30, 2005, subject to adjustment pursuant to Section 2.3.
1.58 SERIES F2 VESTING AMOUNT means $40,000,000 or more of
aggregate Series F1 Conversion Consideration (i) received by the
Partnership upon conversion of Series F1 Convertible Units, (ii)
designated in any Conversion Notice for which the Holder receives a
Cash Settlement Amount or Settlement Units, (iii) designated in any
Conversion Notice for which the Holder receives an amount of cash
pursuant to Section 2.5(d)(ii), (iv) designated in any Conversion
Notice delivered in connection with a Cashless Conversion, and (v)
designated in any Conversion Notice or Contingent Conversion Notice
pursuant to which the Holder receives Acquisition Consideration in the
form of cash net of the relevant Conversion Consideration so long as
the conversion contemplated by such Conversion Notice or Contingent
Conversion Notice is consummated, but specifically excluding any
amounts deemed converted pursuant to Sections 3.3(d) and 3.3(f).
1.59 SETTLEMENT UNITS is defined in Section 2.2(a).
1.60 STATEMENT is defined in the introduction, and includes
all exhibits, schedules, annexes, or other attachments, as amended,
supplemented or otherwise modified from time to time.
1.61 STOCK ADJUSTMENT MEASURING PRICE means the Measuring Date
Unit Price divided by the conversion ratio for each Series A Common
Unit as provided by the terms of the Business Combination, where
conversion ratio means the number of shares or units of securities of
the Acquiring Person issued for each Series A Common Unit pursuant to
the Business Combination.
1.62 STOCK ASSUMPTION AGREEMENT is defined in Section 3.3(e).
1.63 STOCK PORTION means the value of (x) the Business
Combination Stock Consideration divided by (y) the sum of (A) the
Business Combination Cash Consideration and (B) the Business
Combination Stock Consideration.
1.64 TERMINATION TIME means the time at which the right of a
Holder to convert the Series F Convertible Units terminates being
either (i) if the Series F2 Convertible Units do not vest as provided
in Section 2.1(b), the Series F1 Expiration Time, or (ii) if the Series
F2 Convertible Units do vest as provided in Section 2.1(b), the
Annex A - 7
Series F2 Expiration Time with respect to the Series F2 Convertible
Units and the Series F1 Expiration Time with respect to the Series F1
Convertible Units; in each case, subject to extension as set forth in
Section 2.2.
1.65 TRANSFER AGENT is defined in Section 8.
1.66 UNIT REGISTER is defined in Section 8.
2. CONVERSION OF SERIES F CONVERTIBLE UNITS. The convertibility of the
Series F Convertible Units, in whole or in part, is subject to the terms and
conditions contained in this Statement. The Series F Convertible Units shall
expire worthless, and a Holder of such Series F Convertible Units shall have no
rights to convert the Series F Convertible Units, and the Partnership shall have
no obligations with respect to such rights, on the Termination Time.
2.1 NUMBER OF SERIES A COMMON UNITS; TERM. Subject to the
terms, conditions and adjustments set forth in this Statement, each
Series F1 Convertible Unit and Series F2 Convertible Unit shall be
convertible as provided in this Section 2.1.
(a) SERIES F1 CONVERTIBLE UNITS. On any Business Day
after August 12, 2003 (subject to Section 3.3(a)) and from
time to time thereafter on or prior to the Series F1
Expiration Time, each Series F1 Convertible Unit shall be
convertible into the number of Series A Common Units
determined pursuant to Section 3.1; provided that the
aggregate Conversion Consideration that the Partnership
receives (or is deemed to have received in connection with
Deemed Conversions) pursuant to conversions of any Series F1
Convertible Unit (the "SERIES F1 CONVERSION CONSIDERATION"),
shall not exceed $1,000,000.
(b) SERIES F2 CONVERTIBLE UNITS. If the Partnership
receives Conversion Notices with respect to the Series F1
Convertible Units in the aggregate equal to or greater than
the Series F2 Vesting Amount on or prior to the Series F1
Expiration Time, then upon the Partnership's receipt of the
Series F2 Vesting Amount (subject to Section 3.3(a)) on any
Business Day and at any time and from time to time on or prior
to the Series F2 Expiration Time, each Series F2 Convertible
Unit shall be convertible into the number of Series A Common
Units determined pursuant to Section 3.1; provided that the
aggregate Conversion Consideration that the Partnership
receives (or is deemed to have received in connection with
Deemed Conversions) pursuant to conversions of any Series F2
Convertible Unit (the "SERIES F1 CONVERSION CONSIDERATION"),
shall not exceed $500,000.
Notwithstanding anything to the contrary in this Statement, the
Partnership shall not be obligated to issue, and the Holder(s) shall
not have a right to acquire upon conversion of the Series F Convertible
Units, more than the Maximum Number of Series A Common Units.
Annex A - 8
2.2 CASHLESS SETTLEMENT; CASHLESS CONVERSION.
(a) CASHLESS SETTLEMENT. If the Conversion Unit Price with
respect to any Conversion Notice is below the Minimum Conversion Price,
then the Partnership shall, in lieu of issuing Series A Common Units
upon conversion of Series F Convertible Units covered by such
Conversion Notice, take one of the following actions (provided, that
the election between clauses (i) and (ii) below shall be in the
Partnership's sole discretion):
(i) pay an amount in cash to such Holder equal to the
difference of (x) the product of (A) the number of Series A
Common Units issuable on the relevant Conversion Closing Date
and (B) the Daily Market Unit Price as of the Business Day
immediately preceding the Conversion Notice Date and (y) the
Conversion Consideration designated in the relevant Conversion
Notice (the "CASH SETTLEMENT AMOUNT"), or
(ii) issue to such Holder a number of Series A Common
Units equal to the Cash Settlement Amount divided by the
Prevailing Unit Price (the "SETTLEMENT UNITS");
provided, that the Holder shall not be required to tender the
Conversion Consideration designated in the relevant Conversion Notice
(a "CASHLESS SETTLEMENT"). At any time and from time to time with
twenty (20) Business Days notice to the Holder, the Partnership shall
be entitled to establish a new Minimum Conversion Price
(b) CASHLESS CONVERSION ELECTION. If the Prevailing Unit Price
is below the Cashless Conversion Trigger Price, a converting Holder may
elect in the Conversion Notice to receive Settlement Units, in lieu of
the number of Series A Common Units otherwise issuable upon conversion
of the Series F Convertible Units covered by such Conversion Notice,
provided, that the Holder shall not be required to tender the
Conversion Consideration designated in the relevant Conversion Notice
(a "CASHLESS CONVERSION"). Notwithstanding the Holder's election to
receive Settlement Units in a Cashless Conversion, the Partnership
shall have the sole right to elect no later than the Business Day
immediately after the date such Conversion Notice is delivered to the
Partnership to consummate such Cashless Conversion with the payment of
the Cash Settlement Amount in lieu of the issuance of Settlement Units.
In addition, if the Prevailing Unit Price is below the Cashless
Conversion Trigger Price and the converting Holder does not elect
Cashless Conversion in a Conversion Notice, then the Partnership may,
no later than the one Business Day immediately after the date such
Conversion Notice is delivered to the Partnership, elect Cashless
Conversion (and whether the settlement shall be in the form of the Cash
Settlement Amount or the Settlement Units).
(c) CLOSING OF CASHLESS SETTLEMENT OR CASHLESS CONVERSION. The
Partnership shall close a Cashless Settlement or a Cashless Conversion
on the
Annex A - 9
relevant Conversion Closing Date. The Partnership shall (i) pay the
Cash Settlement Amount, if applicable, in immediately available funds
by 5:00 p.m., New York City time, on the relevant Conversion Closing
Date, to the account specified in the Holder's Conversion Notice, or
(ii) issue and deliver the Settlement Units, if applicable, pursuant to
Section 2.8(a) on the relevant Conversion Closing Date. Upon receipt of
the Cash Settlement Amount or the Settlement Units in connection with
any Cashless Settlement or Cashless Conversion, that number of Series F
Convertible Units with aggregate Series F1 Conversion Consideration and
Series F2 Conversion Consideration equal to the Conversion
Consideration designated in the Conversion Notice shall be deemed
converted. If the Conversion Consideration deemed to have been tendered
pursuant to Section 2.2(a) or 2.2(b) is less than the remaining,
unconverted portion of Series F Convertible Units represented by the
certificate(s) tendered to the Partnership on the Conversion Closing
Date, the Partnership shall issue a replacement certificate(s) as
provided in Section 2.8(b).
(d) CASHLESS CONVERSIONS INITIATED BY HOLDER. In computing the
Cash Settlement Amount or the Settlement Units on a Cashless Conversion
initiated by a Holder, in no event shall such computation be based on a
number of Series A Common Units in excess of the Maximum Number.
Further, in determining whether the Maximum Number has been reached,
computation shall be made based on the number of Series A Common Units,
if any, actually issued in the case of a Cashless Settlement or a
Cashless Conversion, provided, that if a Cashless Conversion is
initiated by a Holder, then such computation shall be based on the
number of Series A Common Units that would have been issued on the
relevant Conversion Closing Date without giving effect to such Cashless
Conversion and without regard to whether such Cashless Conversion was
settled with Settlement Units, all subject to adjustment by Section 3.
Notwithstanding the foregoing, nothing in this Section 2.2(d) shall be
construed to change the meaning or the intent of the Statement as
originally filed as Annex A to the Partnership Agreement with respect
to any provision other than as such may relate to Cashless Conversion
or, in the case of Cashless Settlement, as specifically provided in
this Section 2.2(d).
(e) The Partnership shall, within two (2) Business Days of a
Conversion Closing Date pursuant to this Section 2.2, give the Holder
written notice if the Partnership is unable to tender the Cash
Settlement Amount on such Conversion Closing Date. Within one (1)
Business Day after receipt of such notice, Holder shall give the
Partnership written notice, at its sole election, of its election to
(x) withdraw the Conversion Notice or (y) receive Series A Common Units
as determined pursuant to Section 3.1 in lieu of the Cash Settlement
Amount, which Conversion Closing Date shall occur within three (3)
Business Days of the Partnership's receipt of such Holder's election
pursuant to this Section 2.2(e)."
2.3 EXTENSION OF TERM. The Series F1 Expiration Time and the Series F2
Expiration Time, as applicable, shall be extended:
Annex A - 10
(a) by one Business Day for each Business Day:
(i) that a Blackout Period or a Blackout Violation
exists; and
(ii) during the period commencing on the earlier of
the day on which the Partnership (x) announces a Restatement
and (y) announces its intention to make a Restatement and
ending on the Restatement Filing Date; and
(b) to the extent that the Partnership (x) announces a
Restatement or (y) announces its intention to make a Restatement, in
either case, within 65 Business Days of the Series F1 Expiration Time
or Series F2 Expiration Time, as applicable, to a date that is 65
Business Days after the Restatement Filing Date.
Provided, that, if the conditions described in clauses (i) and (ii) of paragraph
(a) above both exist on the same Business Day, then the Series F1 Expiration
Time or the Series F2 Expiration Time, as applicable, shall be extended by only
one Business Day for each Business Day on which these conditions both exist.
2.4 MANNER OF CONVERSION. Subject to and upon compliance with the terms
and conditions set forth in this Statement, each Holder shall be entitled to
convert each Series F Convertible Unit that such Holder holds, in whole or in
part, from time to time, on any Business Day, by receipt by the Partnership of a
notice made pursuant to Section 9 in substantially the form of Exhibit B
attached to this Statement (or a reasonable facsimile thereof) duly executed by
such Holder (a "CONVERSION NOTICE"). The closing of each conversion shall take
place at or before 2:00 p.m. New York City time (i) on the third Business Day
following and excluding the date the Conversion Notice is received or (ii) on
any other date upon which such Holder and the Partnership mutually agree (each,
a "CONVERSION CLOSING DATE").
2.5 CONDITIONS TO CLOSING.
(a) HOLDER'S CONDITIONS TO CLOSING. It shall be a condition to
each Holder's obligation to close on each Conversion Closing Date that
each of the following is satisfied, unless waived by such Holder:
(i) the Registration Statement is effective and no
stop order has been issued; and
(ii) all Series A Common Units to be issued upon such
Conversion Closing Date shall be duly listed and admitted to
trading on the Principal Securities Exchange upon issuance.
(b) THE PARTNERSHIP'S CONDITIONS TO CLOSING. It shall be a
condition to the Partnership's obligation to close that each of the
following is satisfied, unless waived by the Partnership:
Annex A - 11
(i) each Holder shall represent and warrant that each
of the following is true and correct as of the Conversion
Closing Date:
(1) the Holder is a QIB, a large
institutional accredited investor, or an insurance
company or similar institutional investor whose
business is to invest funds entrusted to Holder;
(2) the Holder is acquiring the Series A
Common Units issuable upon conversion of the Series F
Convertible Units for its own account and in the
ordinary course of its business and is not
participating in a distribution, and has no
arrangement or understanding with any Person to
participate in the distribution of the Series A
Common Units; and
(3) the Holder is not a registered "broker"
or "dealer" as such terms are defined in Section 3 of
the Exchange Act;
(ii) there is no Blackout Period in effect; provided
that the Partnership has given notice of the commencement of a
Blackout Period to each Holder pursuant to Section 9;
(iii) the Partnership shall have received from such
Holder a completed Citizenship Certification stating the
requirements of the Partnership Agreement; and
(iv) the issuance of the Series A Common Units shall
not cause the Partnership to exceed the Maximum Number.
(c) AGREEMENT TO CAUSE CONDITIONS TO BE SATISFIED. The
Partnership with respect to Section 2.5(a) and each Holder with respect
to Sections 2.5(b)(i) and (iii) shall each use commercially reasonable
efforts to cause each of the foregoing conditions to be satisfied at
the earliest possible date.
(d) REMEDY OF HOLDER. If the conditions set forth in Section
2.5(a) are not satisfied or waived prior to the third Business Day
following the date the Conversion Notice is received and no Blackout
Period is in effect, then such Holder's exclusive remedies will be
those remedies provided in this Section 2.5(d). Upon satisfaction of
the condition set forth in the Section 2.5(a), the Partnership shall
deliver written notice to such Holder of such satisfaction. If such
condition is not satisfied or waived prior to the second Business Day
following, and excluding, the Conversion Notice Date, then such Holder
may, at its sole option, and at any time:
(i) withdraw the Conversion Notice by written notice
to the Partnership regardless of whether such condition has
been satisfied or waived as of the withdrawal date and, after
such withdrawal, shall have no further obligations with
respect to such Conversion Notice and may submit a Conversion
Notice on any future date with respect to any
Annex A - 12
remaining Series A Common Units underlying any such Series F
Convertible Units, including those referenced in the original
Conversion Notice, or
(ii) elect not to withdraw its Conversion Notice, in
which case, if no Blackout Period is in effect, the
Partnership shall pay such Holder, in immediately available
federal funds by 5:00 p.m., New York City time, on the third
Business Day following such Holder's delivery to the
Partnership of evidence of Holder's payment of the amount
described in clause (x) below and certificate(s) representing
Series F Convertible Units (including Holder's account
information to which such payment should be sent) an amount in
cash equal to the lesser of (x) the actual cost that such
Holder paid to satisfy its obligations to tender Series A
Common Units pursuant to an underlying sales contract for
Series A Common Units less the Conversion Consideration such
Holder would have tendered on such Conversion Closing Date
(or, if the Holder discharged its obligations under such
underlying sales contract by making a cash payment, the amount
of such cash payment), and (y) the number of Series A Common
Units that such Holder would receive on such Conversion
Closing Date multiplied by the positive difference, if any,
between the Daily Market Unit Price on the relevant Conversion
Closing Date and the Conversion Unit Price in effect on the
Conversion Notice Date. If the Conversion Consideration deemed
to have been tendered pursuant to this Section 2.5(d) is less
than the remaining, unconverted portion of Series F
Convertible Units represented by the certificate(s) tendered
to the Partnership, the Partnership shall issue a replacement
certificate(s) as provided in Section 2.8(b).
In the case of clause (ii) above, such Holder shall be deemed to have
converted a number of Series F Convertible Units with respect to the
Conversion Consideration designated in the relevant Conversion Notice,
but shall not be required to tender such Conversion Consideration, and
the Partnership shall be deemed to have satisfied its obligations with
respect to such Conversion Notice.
(e) EFFECT OF CLOSING. If any of the conditions contained in
this Section 2.5 are not satisfied prior to the Conversion Closing
Date, but any Holder and the Partnership consummate the transaction
contemplated by the Conversion Notice, then all unsatisfied conditions
shall be deemed to have been waived by the relevant party, and neither
any Holder nor the Partnership shall have any further rights or
remedies with respect to such unsatisfied condition, except any rights
and remedies provided under the Securities Act. Notwithstanding the
foregoing, Section 2.5(a)(ii) shall not be deemed to have been waived
by the Holder unless the Partnership shall have delivered written
notice pursuant to Section 9 of the failure to satisfy the condition
described in Section 2.5(a)(ii) at least one (1) Business Day before
the Conversion Closing Date.
Annex A - 13
2.6 WHEN CONVERSION EFFECTIVE. Each conversion under any
Series F Convertible Unit shall be deemed to have been effected on the
Conversion Closing Date upon receipt of the relevant Conversion
Consideration (or deemed to have been received in connection with
Deemed Conversions) and surrender of the certificate(s) representing
the Series F Convertible Unit(s) (or upon notation on the Transfer
Agent's registry if the Series F Convertible Units are in book-entry
form), and the Person or Persons in whose name or names any certificate
or certificates representing the Series A Common Units shall be
issuable upon such conversion as provided in Section 2.7 shall be
deemed to have become the holder(s) of record thereof.
2.7 DELIVERY OF SERIES F CONVERTIBLE UNIT AND PAYMENT. On the
Conversion Closing Date, a converting Holder shall surrender the
certificate(s) representing the Series F Convertible Unit(s) to the
Partnership at the address set forth for notices to the Partnership in
Section 9 and, except with respect to Deemed Conversions, shall deliver
payment:
(a) by wire transfer to an account designated by the
Partnership on Schedule A of immediately available federal
funds in the dollar amount of the Conversion Consideration,
(b) by tender of Partnership Bonds with an aggregate
principal amount plus accrued interest equal to the dollar
amount of the Conversion Consideration (with such
documentation and certificates as reasonably requested by the
Partnership), or
(c) any combination of cash and Partnership Bonds in
the dollar amount of the Conversion Consideration.
Upon the Partnership's receipt of the Conversion Consideration, or, in
the case of Deemed Conversions, upon delivery of the certificate(s)
representing the Series F Convertible Unit(s) subject to the Maximum
Number, a converting Holder shall be entitled to receive that number of
duly authorized, validly issued, fully paid and non-assessable Series A
Common Units upon conversion of a Series F Convertible Unit (except as
such non-assessability may be affected by the Delaware Act) as
determined pursuant to Section 3.1.
2.8 DELIVERY OF UNIT CERTIFICATES, ETC. On the Conversion
Closing Date, the Partnership at its expense (including payment by it
of any applicable issue taxes) shall cause to be issued in the name of
and delivered to a converting Holder or as such Holder may direct,
(a) at the election of such Holder, (1) at such
address specified by such Holder via reputable overnight
courier, one or more certificates for, or (2) via the
Depository Trust Company's Deposit and Withdrawal at Custodian
(or DWAC) system the number of duly authorized, validly
issued, fully paid and non-assessable (except as such
non-assessability may be affected by the Delaware Act) Series
A Common Units to which such Holder shall be entitled upon
such
Annex A - 14
conversion plus, in lieu of any fractional unit to which such
Holder would otherwise be entitled, cash in an amount equal to
the same fraction of the relevant Conversion Unit Price for
such relevant Conversion Closing Date, and
(b) if the Series F Convertible Units are
certificated, in case such conversion is in part only, at such
address specified by such Holder via reputable overnight
courier, a certificate representing the remaining, unconverted
portion of the Series F Convertible Unit, setting forth the
remainder of Series F1 Conversion Consideration or Series F2
Conversion Consideration, as applicable, for which such Series
F Convertible Unit shall be convertible (without giving effect
to any adjustment thereof) after giving effect to the
Conversion Consideration received by the Partnership, or
deemed to have been received in connection with Deemed
Conversions, or if the Series F Convertible Units are in
book-entry form, with adjustment to the Transfer Agent's
register to reflect the amount of Conversion Consideration
received by the Partnership, or deemed to have been received
in connection with Deemed Conversions.
3. ADJUSTMENT OF UNIT PRICES AND SERIES A COMMON UNITS ISSUABLE UPON
CONVERSION.
3.1 GENERAL; CONVERSION UNIT PRICE. The number of Series A
Common Units which a Holder shall be entitled to receive upon
conversion of Series F Convertible Units shall be determined by
dividing the Conversion Consideration for such conversion by the
Conversion Unit Price in effect for such conversion, all subject to the
adjustments, terms and conditions in this Statement. Notwithstanding
the foregoing, upon a Cashless Settlement or a Cashless Conversion, the
number of Series A Common Units which a Holder shall be entitled to
receive upon conversion of Series F Convertible Units shall be as set
forth in Section 2.2(a) or 2.2(b), respectively, subject to the
adjustments, terms and conditions in this Statement.
3.2 TREATMENT OF PARTNERSHIP INTEREST ADJUSTING EVENTS. In
case the Partnership may effect a Partnership Interest Adjusting Event,
including a pro rata distribution of Series A Common Units to all
holders of Series A Common Units, or a subdivision or combination of
the outstanding Series A Common Units, then (a) in the case of any such
distribution, immediately after the close of business on the record
date for the determination of holders of any class of securities
entitled to receive such distribution, or (b) in the case of any such
subdivision or combination, at the close of business on the day
immediately prior to the day upon which such partnership action becomes
effective, the Maximum Number, the Measuring Date Unit Price, and the
Conversion Unit Price, the Prevailing Unit Price, the Cashless
Conversion Trigger Price and, to the extent applicable, the Daily
Market Unit Price and other price or quantity (but excluding the Series
F1 Conversion Consideration and the Series F2 Conversion Consideration)
in effect immediately prior to such Partnership Interest Adjusting
Event shall be proportionately changed.
Annex A - 15
3.3 ADJUSTMENTS FOR MERGER, CONSOLIDATION, SALE OF ASSETS.
(a) If after the date of this Statement, (i) the
Partnership is acquired by means of merger, consolidation,
share exchange, or other statutory acquisition in which ninety
percent (90%) or more of the outstanding Series A Common Units
are exchanged for cash, securities or other assets, or (ii)
pursuant to a tender offer in which over fifty percent (50%)
of the outstanding Series A Common Units become beneficially
owned by any Person or 13D Group, or (iii) the Partnership
sells all or substantially all of the assets of the
Partnership (on a consolidated basis) (the transactions listed
in (i), (ii) and (iii) above are referred to individually as a
"BUSINESS COMBINATION") as part of such Business Combination,
(x) (1) each Series F Convertible Unit shall immediately upon
announcement by the Partnership that it has entered into
definitive agreements relating to a Business Combination
described in (i) or (iii) above or entered into a definitive
agreement to participate in or to endorse a Business
Combination described in (ii) above become convertible
(pursuant to Sections 2.1(a) and 2.1(b) regardless of whether
the announcement date is on or before August 12, 2003 and
regardless of whether the Series F2 Vesting Amount has been
received by the Partnership); provided that upon the earlier
of the consummation or termination of such Business
Combination (if not consummated), all Series F Convertible
Units that were not otherwise convertible pursuant to Sections
2.1(a) and 2.1(b) prior to acceleration of the vesting
requirements pursuant to this Section 3.3(a) and would not
otherwise be convertible pursuant to Sections 2.1(a) and
2.1(b) shall no longer be convertible until the satisfaction
of the conditions set forth in Sections 2.1(a) and 2.1(b) as
appropriate, or (2) each Series F1 Convertible Unit shall
immediately upon announcement by a Person of its intent to
effect a Business Combination described in clause (ii) without
the participation in or the endorsement of the Partnership
become convertible (pursuant to Section 2.1(a) regardless of
whether the announcement date is on or before August 12,
2003); provided that upon the earlier of the consummation or
termination of such Business Combination (if not consummated),
all Series F1 Convertible Units that were not otherwise
convertible pursuant to Section 2.1(a) or pursuant to this
Section 3.3(a) in connection with a different Business
Combination prior to acceleration of the vesting requirements
pursuant to this Section 3.3(a) and would not otherwise be
convertible pursuant to Section 2.1(a) or pursuant to this
Section 3.3(a) in connection with a different Business
Combination shall no longer be convertible until the
satisfaction of the condition set forth in Section 2.1(a); and
(y) proper provision shall be made as follows:
(b) Between the date a Business Combination is
announced and the effective date of the Business Combination,
each Holder at its sole option shall continue to have the
right to submit to the Partnership a Conversion Notice in
accordance with the terms and conditions of this Statement. In
addition, each Holder at its sole option may elect to submit
to the Partnership a special notice (a "CONTINGENT CONVERSION
NOTICE") to convert all or part of its unconverted Series F
Convertible Units in connection with such Business
Combination; in which case, notwithstanding the provisions of
Section 2.6:
Annex A - 16
(i) the effectiveness of such contingent
conversion shall be conditional upon the
effectiveness of the Business Combination;
(ii) such Holder shall have the right to
deliver a notice to withdraw such Contingent
Conversion Notice until the earlier of (x) the
expiration of any election period (if any) pursuant
to the Business Combination and (y) the effective
date of such Business Combination; provided that if
such Business Combination is not consummated within
five (5) Business Days of the expiration of such
election period, as such may be extended, Holder
shall be entitled to withdraw its Contingent
Conversion Notice up to the effective date of such
Business Combination; and
(iii) if such Contingent Conversion Notice
shall not have been withdrawn, then on the effective
date of such Business Combination, the Holder of such
Series F Convertible Units shall receive, upon
payment of the Conversion Consideration designated in
the Conversion Notice or Delayed Conversion Notice,
as the case may be, the same consideration, in the
form of cash, securities or other assets (the
"ACQUISITION CONSIDERATION") per Series A Common Unit
issuable to any other holder of Series A Common Units
in connection with such Business Combination based
upon the number of Series A Common Units into which
such Holder's Series F Convertible Units would be
convertible if such Holder had converted each Series
F Convertible Unit on the Business Day immediately
preceding the date on which such Business Combination
occurs. Upon receipt of the Conversion Consideration,
such Holder's Series F Convertible Units tendered for
conversion pursuant to a Conversion Notice or
Contingent Conversion Notice shall be fully converted
and shall no longer permit such Holder to convert
such Series F Convertible Units into Series A Common
Units; provided, that if the Acquisition
Consideration is in the form of cash, the Holder
shall not be required to tender the relevant
Conversion Consideration to convert its Series F
Convertible Units, but shall receive an amount in
connection with such Business Combination equal to
the Acquisition Consideration applicable to such
Holder based on the number of Series A Common Units
into which such Holder's Series F Convertible Units
would be convertible if such Holder had converted
each Series F Convertible Unit that it owns on the
Business Day immediately preceding the date on which
such Business Combination occurs, less such
Conversion Consideration.
(c) In the case of a Business Combination under
clause (i) or (iii) of paragraph (a) above, if the Acquisition
Consideration consists solely of cash, (A) the Partnership
shall not enter into an agreement with the Acquiring Person
resulting in a Business Combination unless such agreement
expressly obligates the Acquiring Person to assume the
Partnership's obligations under this Section 3.3.(c) and (B)
to the extent that any Series F Convertible Unit remains
unconverted upon consummation of the Business Combination, the
Holder thereof
Annex A - 17
shall receive from the Partnership or the Acquiring Person an
amount in cash equal to ten percent (10%) multiplied by the
Acquisition Consideration resulting from such Business
Combination to which such Holder would have been entitled in
such Business Combination if such Holder had converted each
Series F Convertible Unit held immediately before such
Business Combination (the "BUSINESS COMBINATION CASH
PAYMENT"); provided, that the Holder shall not under any
circumstances be obligated to pay any consideration to convert
such Series F Convertible Units in order to receive the cash
payment specified in this Section 3.3(c); and, provided,
further, that all Business Combination Cash Payments shall be
wire transferred to such Holder, in accordance with
instructions provided, at the earliest time that consideration
is transferred to any other holder of Series A Common Units
and, at which time, such Series F Convertible Units shall
deemed to be fully converted and, accordingly, the Holder
thereof shall have no further conversion rights with respect
thereto; or
(d) In the case of a Business Combination under
clause (i) or (iii) of paragraph (a) above, if the Acquisition
Consideration for the Series A Common Units is partially stock
or other securities or other non-cash assets and partially
cash, then the Partnership shall not enter into an agreement
with the Acquiring Person resulting in a Business Combination
unless such agreement expressly obligates the Acquiring Person
to assume all of the Partnership's obligations under this
Section 3.3(d). (x) With respect to the Stock Portion of each
unconverted Series F Convertible Unit that would be
convertible into Acquisition Consideration in the form of
stock or other non-cash assets (the "PARTIAL STOCK ASSUMPTION
AGREEMENT") the Holder thereof shall thereafter automatically
have equivalent rights with respect to the Acquiring Person
and from and after the effective date of the Business
Combination and under such Partial Stock Assumption Agreement
(A) all references to the Partnership in this Statement shall
be references to the Acquiring Person, (B) all references to
Series A Common Units in this Statement shall be references to
the type of securities for which the Series A Common Units are
exchanged in the Business Combination, (C) all references to
the Measuring Date Unit Price in this Statement shall be
references to the Partial Stock Adjustment Measuring Price,
and (D) all references to the Prevailing Unit Price, Cashless
Conversion Trigger Price, Daily Market Price and Conversion
Unit Price shall be references to such prices with respect to
the Acquiring Person and (y) with respect to the Cash Portion
of each unconverted Series F Convertible Unit that would have
been converted into Acquisition Consideration in the form of
cash, the Holder thereof shall be entitled to receive from the
Partnership or the Acquiring Person an amount in cash equal to
the Business Combination Cash Payment multiplied by the Cash
Portion; provided, that the Holder shall not under any
circumstances be obligated to pay any consideration to convert
any Series F Convertible Unit in order to receive the cash
payment specified in this Section 3.3(d); and, provided,
further, that all Business Combination Cash Payments shall be
wire transferred to such Holder, in accordance with
instructions provided, at the earliest time that consideration
is transferred to any other holder of Series A Common Units
and, at which time, the Cash Portion of each such Series F
Convertible Unit shall deemed to be fully
Annex A - 18
converted and, accordingly, the Holder thereof shall have no
further conversion rights with respect thereto; or
(e) In the case of a Business Combination under
clause (i) or (iii) of paragraph (a) above, if the Acquisition
Consideration for the Series A Common Units consists solely of
stock or other non-cash assets of the Acquiring Person, then
the Partnership shall not enter into an agreement with the
Acquiring Person resulting in a Business Combination unless
such agreement expressly obligates the Acquiring Person to
assume all of the Partnership's obligations under any
unconverted Series F Convertible Units (the "STOCK ASSUMPTION
AGREEMENT"). In the event that any Series F Convertible Unit
remains unconverted upon consummation of the Business
Combination, the Holder thereof shall thereafter automatically
have equivalent rights with respect to the Acquiring Person
and from and after the effective date of the Business
Combination and under such Stock Assumption Agreement (A) all
references to the Partnership in this Statement shall be
references to the Acquiring Person, (B) all references to
Series A Common Units in this Statement shall be references to
the securities for which the Series A Common Units are
exchanged, (C) all references to the Measuring Date Unit Price
in this Statement shall be references to the Stock Adjustment
Measuring Price, and (D) all references to the Prevailing Unit
Price, Cashless Conversion Trigger Price, Daily Market Price
and Conversion Unit Price shall be references to such prices
with respect to the Acquiring Person.
(f) In the case of a Business Combination under
clause (ii) of paragraph (a) above, if any Series F
Convertible Unit remains unconverted upon consummation of the
Business Combination, the Holder shall thereafter be entitled,
at its election, to receive from the Partnership an amount in
cash equal to ten percent (10%) of the product of (x) the
number of Series A Common Units into which such Holder's
Series F Convertible Units would be convertible if such Holder
had converted each Series F Convertible Unit, on the Business
Day immediately preceding the date such Business Combination
occurs, and (y) the weighted-average price paid per Series A
Common Unit (following the announcement of such Business
Combination by the Acquiring Person) by the Acquiring Person
in connection with such Business Combination; provided that
Holder shall be entitled to make such election under this
Section 3.3(f) only once and prior to the expiration of the
election period applicable to such Business Combination;
provided further, that if the election period for such
Business Combination is extended or if such Business
Combination is not consummated within five (5) Business Days
of the expiration of such election period, Holder shall be
entitled to withdraw such election up to the effective date of
such Business Combination (which shall be deemed to be the
date on which the Acquiring Person accepts for purchase fifty
percent (50%) or more of the outstanding Series A Common
Units). All cash payments under this Section 3.3(f) shall be
made by wire transfer of immediately available funds to the
relevant Holder, in accordance with instructions provided by
such Holder no later than the second (2nd) Business Day
following the consummation of such Business Combination. Upon
receipt of such payment, such Holder's Series F Convertible
Annex A - 19
Units shall be deemed to have been fully converted and shall
no longer permit such Holder to convert such Series F
Convertible Units into Series A Common Units; provided, that
unless and until such Holder elects to receive the cash
payment set forth in this Section 3.3(f) with respect to each
Series F Convertible Unit that such Holder holds, such Series
F Convertible Unit shall remain outstanding and may be
converted in the manner set forth in Section 2.1.
3.4 NO PROHIBITION FROM ISSUING SERIES A COMMON UNITS.
Notwithstanding anything contained in this Statement to the contrary,
nothing in this Statement shall prohibit the Partnership from issuing
Series A Common Units to any Person, regardless of whether or not such
issuance would result in an adjustment under this Section 3.
4. NATURE AND RIGHTS OF SERIES F CONVERTIBLE UNIT.
4.1 NON-VOTING. The Series F Convertible Units shall be
non-voting on all matters and no Holder thereof shall be entitled to
vote, separately or with all or any series, class or group of Limited
Partners, the Series F Convertible Units with respect to any matter
(except as set forth in the proviso to this Section 4.1) on which
holders of the Series A Common Units are entitled to vote, including,
without limitation, mergers, acquisitions, sales of all or
substantially all of the Partnership's assets, and similar
transactions; provided, that the Partnership shall not, without the
affirmative consent of the Holders having a majority-in-interest (based
on the unconverted Series F1 Conversion Consideration prior to the
vesting of the Series F2 Convertible Units, and on all unconverted
Series F Convertible Units after the Series F2 Convertible Units are
convertible) as of the date of determination, (i) alter or change the
rights, powers or limitations of the Series F Convertible Unit
including, without limitation, any changes to the certificate
representing the Series F Convertible Unit or the Partnership Agreement
that limit any Holder's ability to convert the Series F Convertible
Unit under this Statement or affect the enforceability of any Holder's
rights under this Statement, (ii) authorize or issue additional Series
F Convertible Units or (iii) effect any split or combination of the
Series F Convertible Units.
4.2 NO ALLOCATIONS. The Partnership shall not maintain a
capital account for any Holder of Series F Convertible Units.
Accordingly, the Partnership shall not make any allocations to any
Series F Convertible Unit of income, gains, losses or deductions.
4.3 NO DISTRIBUTIONS. The Series F Convertible Units shall not
be entitled to receive any distributions, whether regular, special,
liquidating or otherwise, of cash, or other assets or securities, but
shall be entitled to the adjustments set forth in Section 3.2.
5. REGISTRATION STATEMENT AND BLACKOUT PERIODS.
5.1 The Partnership shall:
(a) subject to the Partnership's ability to amend or
supplement the Registration Statement or the Prospectus, use
its commercially reasonable efforts to keep the Registration
Statement effective until the Termination Time;
Annex A - 20
(b) prepare and file with the SEC such amendments and
supplements to the Registration Statement and the Prospectus
as may be necessary to comply with the provisions of the
Securities Act with respect to the issuance of Series A Common
Units upon conversion of the Series F Convertible Units;
(c) cause all Series A Common Units to be listed on
each securities exchange and quoted on each quotation service
on which similar securities issued by the Partnership are then
listed or quoted;
(d) provide a transfer agent and registrar for all
Series A Common Units and a CUSIP number for all Series A
Common Units; and
(e) at all times reserve for issuance pursuant to the
Registration Statement such number of its Series A Common
Units as shall from time to time be sufficient to effect the
conversion of all the Series F Convertible Units then
outstanding and to satisfy its delivery obligations upon such
conversion.
5.2 At any time prior to the Termination Time, the Partnership
may, without any liability to the Partnership and upon notice to each
Holder pursuant to Section 9, suspend each Holder's rights to convert
pursuant to the Registration Statement upon the occurrence of any of
the following (each, a "BLACKOUT PERIOD"):
(a) a request by the SEC for amendments or
supplements to the Registration Statement or the prospectus
included therein for additional information;
(b) the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose;
(c) the filing of any post-effective amendments or
supplements to the Registration Statement or the prospectus
included therein that the Partnership deems necessary or
appropriate to maintain or utilize for any purpose the
Registration Statement or the prospectus included therein;
(d) the happening of any event that requires the
Partnership to make changes to the Registration Statement or
the prospectus included therein in order that the Registration
Statement or the prospectus do not contain an untrue statement
of a material fact nor omit to state a material fact required
to be stated therein or necessary to make the statements
therein (in the case of the prospectus, in light of the
circumstances under which they were made) not misleading; and
(e) the Partnership shall deliver to the Holder a
certificate signed by any of its Chief Executive Officer,
Chief Operating Officer, Chief Financial Officer, General
Counsel or Vice President that the Board of Directors of the
General Partner has made the determination in good faith and
using reasonable judgment that disclosure of information
sufficient to ensure that the Registration Statement and
related prospectus contain no misstatement or omission would
be
Annex A - 21
premature, could be reasonably expected to be significantly
and materially disadvantageous to the Partnership's financial
condition, or could be reasonably expected to be injurious to
the consummation of any material transaction.
If any of the above conditions or events should occur, the Partnership
shall immediately give the Holders written notice that a Blackout
Period is in effect; provided that the failure of the Partnership to
tender notice of the occurrence of any of the above shall not give rise
to any liability in excess of an amount described in Section 5.5.
5.3 Upon the commencement a Blackout Period, the Partnership
shall:
(a) with respect to any notice pursuant to paragraph
(b) of Section 5.2, use commercially reasonable efforts to
obtain the withdrawal at the earliest possible time of any
order suspending the effectiveness of the Registration
Statement;
(b) with respect to any notice pursuant to paragraphs
(a) or (c) of Section 5.2, as promptly as practical prepare
and file a post-effective amendment to the Registration
Statement or an amendment or supplement to the prospectus
included therein and any other required document so that, as
thereafter delivered to Holder upon conversion of the Series F
Convertible Unit, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading; or
(c) with respect to any notice pursuant to paragraphs
(d) or (e) of Section 5.2, use commercially reasonable efforts
to amend such Registration Statement and/or amend or
supplement the prospectus included therein if necessary and to
take all other actions necessary to allow the issuance of
registered Series A Common Units to take place as promptly as
possible, subject, however, to the right of the Partnership in
its sole discretion to determine whether to delay further
conversion of the Series F Convertible Unit pursuant to the
Registration Statement until the conditions or circumstances
referred to in the notice have ceased to exist or have been
disclosed.
5.4 Upon receipt of notice by the Partnership in accordance
with Section 5.1 above that a Blackout Period exists, the Series F
Convertible Unit shall immediately become unconvertible until each
Holder receives notice from the Partnership that the Blackout Period
has ended. Notwithstanding the foregoing, at any time during a Blackout
Period, each Holder may:
(a) tender a Conversion Notice providing for a
Conversion Closing Date delayed to a date that is three
Business Days after the termination of the relevant Blackout
Period (a "DELAYED CLOSING CONVERSION NOTICE"); each such
Delayed Closing Conversion Notice shall have the effect of
preserving the Conversion Unit Price, Prevailing Unit Price,
and Daily Market Unit Price that was in effect as of the date
of such Delayed Closing Conversion Notice, each
Annex A - 22
subject to adjustment pursuant to Sections 3 and 5.5;
provided, that such Holder may withdraw at any time a Delayed
Closing Conversion Notice prior to the relevant delayed
Conversion Closing Date; or
(b) tender a Conversion Notice requesting the
delivery on the Conversion Closing Date of Series A Common
Unit that have not been registered pursuant to the
Registration Statement, so long as (i) the offer, sale and
issuance of the Series A Common Units shall be exempt from the
registration requirements of the Securities Act and shall have
been registered or qualified (or exempt from registration or
qualification) under the registration, permit or qualification
requirements of all applicable state securities laws, and (ii)
such Holder delivers to the Partnership an opinion from
counsel of national repute reasonably satisfactory in the
Partnership's sole discretion to such effect. Any
certificate(s) representing unregistered Series A Common Units
shall be stamped or otherwise imprinted with a legend in the
following form (in addition to any legend required under
applicable state securities laws):
"THE SERIES A COMMON UNITS REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS, OR UNLESS AN
EXEMPTION FROM REGISTRATION IS AVAILABLE AND AN
OPINION OF COUNSEL, REASONABLY SATISFACTORY TO
GULFTERRA ENERGY PARTNERS, L.P., SHALL HAVE BEEN
FURNISHED TO GULFTERRA ENERGY PARTNERS, L.P."
The Partnership shall promptly (a) notify each Holder upon the end of a
Blackout Period, and (b) deliver copies of amendments or supplements,
if any, to the Registration Statement or the Prospectus.
5.5 The Partnership shall be entitled to exercise its rights
to suspend conversion of the Series F Convertible Units as provided in
this Section 5 (A) twice in any 12 month period, (B) each such period
during which conversion may be suspended at any time shall not exceed
30 days, and (C) no Blackout Period may commence less than 30 days
after the end of the preceding Blackout Period; provided, that if any
Blackout Period exceeds the duration or frequency limits set forth in
clauses (A) and (B) above (a "BLACKOUT VIOLATION"), then the Conversion
Unit Price for all unconverted Series F Convertible Units shall be
permanently reduced by one and one-half percent (1 1/2%) for each month
(or portion thereof) that a Blackout Violation exists. Other than the
reduction to the Conversion Unit Price as described in this Section
5.5, the Partnership shall incur
Annex A - 23
no liability to any Holder in connection with any Blackout Period or
Blackout Violation; provided that notwithstanding the foregoing, the
Partnership agrees that the provisions of this Section 5 shall be
specifically enforceable.
5.6 If a Blackout Period exists for at least four (4) months,
the Holders having a majority-in-interest (based on the unconverted
Series F1 Conversion Consideration prior to the vesting of the Series
F2 Convertible Units, and on all unconverted Series F Convertible Units
after the Series F2 Convertible Units are convertible) as of the date
of determination shall be entitled to demand that, to the extent
required by the securities laws to permit the issuance of Series A
Common Units pursuant to Section 5.4(b), the Partnership withdraw the
Registration Statement for a period necessary to effectuate a private
placement of the Series A Common Units issuable upon conversion of all
or part of the Series F Convertible Units. If so demanded, the
Partnership shall withdraw the Registration Statement within 5 Business
Days of its receipt of such written demand. Within 60 days of the
Partnership's receipt of the written demand of the Holders having a
majority-in-interest (based on the unconverted Series F1 Conversion
Consideration prior to the vesting of the Series F2 Convertible Units,
and on all unconverted Series F Convertible Units after the Series F2
Convertible Units are convertible) as of the date of determination, the
Partnership shall prepare and file a replacement registration statement
pursuant to which the Series F Convertible Units can be converted and
shall thereafter use its commercially reasonable efforts to cause such
registration statement to be declared effective as promptly as
practicable. Promptly after the issuance of unregistered Series A
Common Units, and at its own expense, the Partnership shall file a
registration statement under the Securities Act covering the resale of
all of the Series A Common Units issued pursuant to the private
placement exemption, and shall use commercially reasonable efforts to
cause such registration statement to be declared effective; provided,
that nothing in this Section 5.6 shall prevent the Partnership from
filing a registration statement prior to be requested to do so by any
Holders. Upon the withdrawal of the Registration Statement, the
percentage described in Section 5.5 shall be reduced to 1% for each
month (or portion thereof without duplication for any portion of a
month prior to the withdrawal of the Registration Statement) that a
Blackout Violation exists after the date on which the Partnership
withdraws the Registration Statement.
6. TRANSFERABILITY.
6.1 TRANSFERS OF SERIES F CONVERTIBLE UNITS. The Series F
Convertible Units shall not be sold, transferred or otherwise disposed
of without the prior written consent of the Partnership, which consent
shall be within the sole discretion of the Partnership. Sales,
transfers or other dispositions of Series F Convertible Units shall be
in increments of one whole unit, and not fractions thereof. The
provisions applicable to the Series F Convertible Units shall bind and
inure to the benefit of and be enforceable by the Partnership, the
respective successors of the Partnership, and by any Holder of Series F
Convertible Units.
6.2 PAYMENT OF TAX UPON ISSUE OF TRANSFER. The Partnership
shall pay all documentary stamp taxes (if any) attributable to the
issuance of Series A Common Units upon the conversion of the Series F
Convertible Unit; provided, however, that the
Annex A - 24
Partnership shall not be required to pay any tax or taxes which may be
payable in respect of any transfer involved in the registration of any
certificates for Series A Common Units in a name other than that of a
Holder upon the conversion of Series F Convertible Units, and the
Partnership shall not be required to issue or deliver the Series F
Convertible Units or certificates for Series A Common Units unless or
until the person or persons requesting the issuance thereof shall have
paid to the Partnership the amount of such tax or shall have
established to the reasonable satisfaction of the Partnership that such
tax has been paid.
7. DENIAL OF PREEMPTIVE RIGHTS AND DISSENTERS' RIGHTS. The Series F
Convertible Units are not entitled to any preemptive or subscription right in
respect of any securities of the Partnership, and do not have dissenters' rights
of appraisal.
8. TRANSFER AGENT. Initially, the Partnership (and upon a Business
Combination, the Acquiring Person) shall serve as the transfer agent (the
"TRANSFER AGENT") for the Series F Convertible Units. The Transfer Agent shall
at all times maintain a register (the "UNIT REGISTER") of the Holders of the
Series F Convertible Units. The Partnership may deem and treat each Holder of
Series F Convertible Units as set forth in the Unit Register as the true and
lawful owner thereof for all purposes, and the Partnership shall not be affected
by any notice to the contrary.
The Partnership may, at any time and from time to time, appoint another
Person to serve as the Transfer Agent, and shall upon acceptance by such Person,
give notice to each Holder of the change in Transfer Agent. Such new Transfer
Agent shall be a (i) Person doing business and in good standing under the laws
of the United States or any state thereof, and having a combined capital and
surplus of not less than $50,000,000 or (ii) an affiliate of such a Person. The
combined capital and surplus of any such new Transfer Agent shall be deemed to
be the combined capital and surplus as set forth in the most recent report of
its condition published by such Transfer Agent prior to its appointment;
provided that such reports are published at least annually pursuant to law or to
the requirements of a federal or state supervising or examining authority. After
acceptance in writing of such appointment by the new Transfer Agent, it shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named herein as the Transfer Agent, without any further
assurance, conveyance, act or deed; but if for any reason it shall be reasonably
necessary or expedient to execute and deliver any further assurance, conveyance,
act or deed, the same shall be done at the expense of the Partnership and shall
be legally and validly executed and delivered by the Partnership. Any Person
into which any new Transfer Agent may be merged or any corporation resulting
from any consolidation to which any new Transfer Agent shall be a party or any
corporation to which any new Transfer Agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor Transfer
Agent under this Transfer without any further act; provided that such Person (i)
would be eligible for appointment as successor to the Transfer Agent under the
provisions of this Section 8 or (ii) is a wholly owned subsidiary of the
Transfer Agent. Any such successor Transfer Agent shall promptly cause notice of
its succession as Transfer Agent to be delivered via reputable overnight courier
to the Holders of the Series F Convertible Units at such Holder's last address
as shown on the Unit Register.
Annex A - 25
9. NOTICES. All notices and other communications under this Statement
shall be in writing and shall be delivered by a nationally recognized overnight
courier, postage prepaid, addressed as provided below:
(i) If to the Partnership:
GulfTerra Energy Partners, L.P.
▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
El Paso Corporation
Attn: ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
Akin Gump ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP
Attn: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to a Holder, at the address of such Holder as listed
in the Unit Register, or to such other address as the Holder shall have
designated by notice similarly given to the Transfer Agent.
Any such notice or communication shall be deemed received (i) when made, if by
hand delivery, and upon confirmation of receipt, if made by facsimile, and in
each case if such notice is received on or before 11:59 p.m. New York City time
(except with respect to a Conversion Notice, in which case such notice must be
received on or before 3:59 p.m. New York City time), otherwise, such notice
shall be deemed to be received the following Business Day (ii) one Business Day
after being deposited with a next-day courier, return receipt requested, postage
prepaid or (iii) three Business Days after being sent certified or registered
mail, return receipt requested, postage prepaid, in each case addressed as above
(or to such other addresses as the Partnership or each Holder may designate in
writing from time to time).
10. CONSTRUCTION. Headings or other titles used in this Statement are
for convenience only and neither limit nor amplify the provisions of this
Statement, and all references herein to sections or subdivisions thereof will
refer to the corresponding section or subdivision thereof of this Statement
unless specific reference is made to such sections or subdivisions of another
Annex A - 26
document or instrument. Unless the context of this Statement clearly requires
otherwise, the words "include," "includes" and "including" will be deemed to be
followed by the words "without limitation," and the words "hereof," "herein,"
"hereunder" and similar terms in this Statement will refer to this Statement as
a whole and not any particular section or article in which such words appear.
Whenever the context may require, any pronoun used in this Statement shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns, pronouns and verbs shall include the plural and vice-versa.
References in this Statement to any party shall include such party's successor.
The word "shall" means will and vice versa.
11. SEVERABILITY OF PROVISIONS. If any right, preference, or limitation
of the Series F Convertible Units set forth in this Statement (as such Statement
may be amended from time to time) is invalid, unlawful, or incapable of being
enforced by reason of any rule of law or public policy, all other rights,
preferences, and limitations set forth in this Statement (as so amended) which
can be given effect without the invalid, unlawful or unenforceable right,
preference, or limitation will, nevertheless, remain in full force and effect,
and no right, preference, or limitation set forth in this Statement shall be
deemed dependent upon any other such right, preference, or limitation unless so
expressed in this Statement.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
Annex A - 27
EXHIBIT A
CERTIFICATE REPRESENTING SERIES F CONVERTIBLE UNIT
[SEE ATTACHED]
Annex A - Exhibit A - 1
EXHIBIT B
FORM OF CONVERSION NOTICE
(To Be Executed Upon Conversion of the Series F Convertible Unit)
[DATE]
GulfTerra Energy Partners, L.P.
▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Re: Statement of Rights, Privileges and Limitations Series F
Convertible Unit ("STATEMENT")
Ladies and Gentlemen:
Pursuant to the terms and conditions contained in the Statement,
[HOLDER] hereby elects to convert $[__________](1) of Series F(2) Convertible
Units into [ ] Series A Common Units, which would be purchased at a Conversion
Unit Price of $[____] [, AND SHALL DELIVER ON THE CONVERSION CLOSING DATE SUCH
AMOUNT VIA WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS AS PAYMENT FOR SUCH
SERIES A COMMON UNITS] [, AND SHALL DELIVER ON THE CONVERSION CLOSING DATE THAT
NUMBER OF PARTNERSHIP BONDS WITH AN AGGREGATE PRINCIPAL AMOUNT PLUS ACCRUED
INTEREST EQUAL TO SUCH DOLLAR AMOUNT AS PAYMENT FOR SUCH SERIES A COMMON UNITS]
[PURSUANT TO A [CASHLESS SETTLEMENT][CASHLESS CONVERSION]] in accordance with
the terms of the Statement. All undefined capitalized terms used in this
Conversion Notice shall have the meaning set forth in the Statement.
In accordance with the terms of the Statement, the undersigned requests
that certificates for such units be registered in the name of and delivered to
the undersigned at the following address:
[TO BE ADDED]
Any cash in lieu of fractional shares should be sent to:
[INSERT ACCOUNT INFORMATION OR ADDRESS INFORMATION]
The undersigned shall deliver the original of the certificate(s)
representing the Series F Convertible Units no later than the second Business
Day after and excluding the date of this
----------
(1) Insert the dollar amount of Series F Convertible Units being
converted. In the case of partial conversion, a new certificate representing the
Series F Convertible Unit shall be issued and delivered, representing the
unconverted portion of the Series F Convertible Unit.
(2) Indicate whether Series F1 or Series F2 is being tendered.
Annex A - Exhibit B - 1
notice as well as each document required to be delivered on the Conversion
Closing Date by the Statement.
[IF THE EXERCISED AMOUNT IS NOT IN INCREMENTS OF $1,000,000, INSERT THE
FOLLOWING: THE UNDERSIGNED REQUESTS THAT A NEW CERTIFICATE SUBSTANTIALLY
IDENTICAL TO THE ATTACHED SERIES F CONVERTIBLE UNIT BE ISSUED TO THE UNDERSIGNED
EVIDENCING THE RIGHT TO PURCHASE THE DOLLAR AMOUNT OF SERIES A COMMON UNITS
EQUAL TO (x) THE SERIES F1/SERIES F2 CONVERSION CONSIDERATION LESS (y) THE
TENDERED CONVERSION CONSIDERATION.]
[HOLDER]
By:
---------------------------------
Name:
Title:
Agreed to and Acknowledged as of
[INSERT DATE].
GULFTERRA ENERGY PARTNERS, L.P.
By:
------------------------------
Name:
Title:
Annex A - Exhibit B - 2
SCHEDULE A
ACCOUNT INFORMATION
Name: GulfTerra Energy Partners
ABA: 021 000 021
Bank: Mellon Bank
Pittsburgh, PA
Acct: 000-0609
Annex A - Schedule A - 1