EXHIBIT 3.7
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
TEPPCO PARTNERS, L.P.
September 21, 2001
TABLE OF CONTENTS
ARTICLE 1 - ORGANIZATIONAL MATTERS................................................................................2
1.1 Continuation..........................................................................................2
1.2 Name..................................................................................................2
1.3 Registered Office; Principal Office...................................................................2
1.4 Power of Attorney.....................................................................................2
1.5 Term..................................................................................................4
1.6 Possible Restrictions on Transfer.....................................................................4
ARTICLE 2 - DEFINITIONS...........................................................................................4
ARTICLE 3 - PURPOSE..............................................................................................13
3.1 Purpose and Business.................................................................................13
3.2 Powers...............................................................................................14
ARTICLE 4 - CAPITAL CONTRIBUTIONS................................................................................14
4.1 Issuances of LP Units and Other Securities...........................................................14
4.2 Limited Preemptive Rights............................................................................15
4.3 Capital Accounts.....................................................................................15
4.4 Interest.............................................................................................18
4.5 No Withdrawal........................................................................................18
4.6 Loans from Partners..................................................................................18
4.7 No Fractional LP Units...............................................................................18
4.8 Splits and Combinations..............................................................................18
4.9 Class B Units........................................................................................19
ARTICLE 5 - ALLOCATIONS AND DISTRIBUTIONS........................................................................21
5.1 Allocations for Capital Account Purposes.............................................................21
5.2 Allocations for Tax Purposes.........................................................................26
5.3 Requirement and Characterization of Distributions....................................................28
5.4 Allocations of Distributions.........................................................................28
5.5 Distributions of Cash from Interim Capital Transactions..............................................29
5.6 Definitions..........................................................................................29
5.7 Adjustment of Minimum Quarterly Distribution, Target Distribution Levels and Unrecovered Capital.....32
ARTICLE 6 - MANAGEMENT AND OPERATION OF BUSINESS.................................................................33
6.1 Management...........................................................................................33
6.2 Certificate of Limited Partnership...................................................................34
6.3 Restrictions on General Partner's Authority..........................................................34
6.4 Reimbursement of the General Partner.................................................................35
6.5 Outside Activities...................................................................................36
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6.6 Loans to and from the General Partner; Contracts with Affiliates.....................................36
6.7 Indemnification......................................................................................37
6.8 Liability of Indemnitees.............................................................................39
6.9 Resolution of Conflicts of Interest..................................................................39
6.10 Other Matters Concerning the General Partner.........................................................41
6.11 Title to Partnership Assets..........................................................................41
6.12 Purchase or Sale of LP Units.........................................................................41
6.13 Reliance by Third Parties............................................................................42
6.14 Registration Rights of Duke and its Affiliates.......................................................42
ARTICLE 7 - RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS...........................................................44
7.1 Limitation of Liability..............................................................................44
7.2 Management of Business...............................................................................44
7.3 Outside Activities...................................................................................44
7.4 Return of Capital....................................................................................44
7.5 Rights of Limited Partners Relating to the Partnership...............................................45
ARTICLE 8 - BOOKS, RECORDS, ACCOUNTING AND REPORTS...............................................................45
8.1 Records and Accounting...............................................................................45
8.2 Fiscal Year..........................................................................................46
8.3 Reports..............................................................................................46
ARTICLE 9 - TAX MATTERS..........................................................................................46
9.1 Preparation of Tax Returns...........................................................................46
9.2 Tax Elections........................................................................................46
9.3 Tax Controversies....................................................................................47
9.4 Organizational Expenses..............................................................................47
9.5 Withholding..........................................................................................47
9.6 Entity-Level Taxation................................................................................47
9.7 Entity-Level Arrearage Collections...................................................................48
9.8 Opinions of Counsel..................................................................................48
ARTICLE 10 - LP UNIT CERTIFICATES................................................................................48
10.1 LP Unit Certificates.................................................................................48
10.2 Registration, Registration of Transfer and Exchange..................................................48
10.3 Mutilated, Destroyed, Lost or Stolen LP Unit Certificates............................................49
10.4 Record Holder........................................................................................50
ARTICLE 11 - TRANSFER OF INTERESTS...............................................................................50
11.1 Transfer.............................................................................................50
11.2 Transfer of General Partner's Partnership Interest...................................................50
11.3 Transfer of LP Units.................................................................................51
11.4 Restrictions on Transfers............................................................................52
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11.5 Citizenship Certificates; Non-citizen Assignees......................................................52
11.6 Redemption of Interests..............................................................................53
ARTICLE 12 - ADMISSION OF PARTNERS...............................................................................54
12.1 Admission of Substituted Limited Partners............................................................54
12.2 Admission of Successor General Partner...............................................................55
12.3 Admission of Additional Limited Partners.............................................................55
12.4 Amendment of Agreement and Certificate of Limited Partnership........................................55
ARTICLE 13 - WITHDRAWAL OR REMOVAL OF PARTNERS...................................................................56
13.1 Withdrawal of the General Partner....................................................................56
13.2 Removal of the General Partner.......................................................................57
13.3 Interest of Departing Partner and Successor General Partner..........................................57
13.4 Withdrawal of Limited Partners.......................................................................59
ARTICLE 14 - DISSOLUTION AND LIQUIDATION.........................................................................59
14.1 Dissolution..........................................................................................59
14.2 Liquidation..........................................................................................59
14.3 Distributions in Kind................................................................................60
14.4 Cancellation of Certificate of Limited Partnership...................................................60
14.5 Reasonable Time for Winding Up.......................................................................61
14.6 Return of Capital....................................................................................61
14.7 No Capital Account Restoration.......................................................................61
14.8 Waiver of Partition..................................................................................61
ARTICLE 15 - AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE...........................................61
15.1 Amendment to be Adopted Solely by General Partner....................................................61
15.2 Amendment Procedures.................................................................................62
15.3 Amendment Requirements...............................................................................62
15.4 Meetings.............................................................................................63
15.5 Notice of a Meeting..................................................................................64
15.6 Record Date..........................................................................................64
15.7 Adjournment..........................................................................................64
15.8 Waiver of Notice; Approval of Meeting; Approval of Minutes...........................................64
15.9 Quorum...............................................................................................64
15.10 Conduct of Meeting...................................................................................65
15.11 Action Without a Meeting.............................................................................65
15.12 Voting and Other Rights..............................................................................66
ARTICLE 16 - MERGER..............................................................................................66
16.1 Authority............................................................................................66
16.2 Procedure for Merger or Consolidation................................................................66
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16.3 Approval by Limited Partners of Merger or Consolidation..............................................67
16.4 Certificate of Merger................................................................................68
16.5 Effect of Merger.....................................................................................68
ARTICLE 17 - RIGHT TO ACQUIRE LP UNITS...........................................................................68
17.1 Right to Acquire LP Units............................................................................68
ARTICLE 18 - GENERAL PROVISIONS..................................................................................70
18.1 Addresses and Notices................................................................................70
18.2 Titles and Captions..................................................................................71
18.3 Pronouns and Plurals.................................................................................71
18.4 Further Action.......................................................................................71
18.5 Binding Effect.......................................................................................71
18.6 Integration..........................................................................................71
18.7 Creditors............................................................................................71
18.8 Waiver...............................................................................................71
18.9 Counterparts.........................................................................................71
18.10 Applicable Law.......................................................................................71
18.11 Invalidity of Provisions.............................................................................71
18.12 Amendments to Reflect the Contribution Agreement.....................................................72
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THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
TEPPCO PARTNERS, L.P.
THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
TEPPCO PARTNERS, L.P., dated as of September 21, 2001, is entered into by and
among Texas Eastern Products Pipeline Company, LLC, a
Delaware limited liability
company (the "Company"), as the General Partner, and the Limited Partners of the
Partnership, as hereinafter provided.
WHEREAS, the General Partner and the other parties thereto entered into
that certain Agreement of Limited Partnership of the Partnership dated as of
March 7, 1990 (the "1990 Agreement"); and
WHEREAS, the General Partner, acting pursuant to Section 15.1 of the
1990 Agreement, amended and restated the 1990 Agreement, and such amendment and
restatement was evidenced by that certain Amended and Restated Agreement of
Limited Partnership of TEPPCO Partners, L.P. dated as of July 21, 1998 (the
"July 1998 Agreement"); and
WHEREAS, the General Partner, acting pursuant to Sections 4.1 and 15.1
of the July 1998 Agreement, amended and restated the July 1998 Agreement to
create a class of LP Units designated the "Class B Units," and to fix the
preferences and relative, participating, optional and other special rights,
powers and duties appertaining to the Class B Units, and such amendment and
restatement was evidenced by that certain Second Amended and Restated Agreement
of Limited Partnership of TEPPCO Partners, L.P. dated as of November 30, 1998
(the "November 1998 Agreement"); and
WHEREAS, the General Partner and the other parties thereto entered into
that certain Contribution, Assignment and Amendment Agreement dated as of July
26, 2001 (the "Contribution Agreement"), pursuant to which the General Partner
transferred its general partner interests in TE Products Pipeline Company,
Limited Partnership ("TE Products") and TCTM, L.P. ("TCTM") to the Operating
General Partner (as defined herein) and pursuant to which the Operating General
Partner became the general partner of TE Products and TCTM; and
WHEREAS, pursuant to the authority granted to the General Partner in
the 1990 Agreement, the July 1998 Agreement and the November 1998 Agreement, the
General Partner desires (i) to amend the November 1998 Agreement to more fully
reflect the transactions contemplated and the amendments made by the
Contribution Agreement, and (ii) to restate the November 1998 Agreement as so
amended; and
WHEREAS, Section 15.1 of the November 1998 Agreement permits the
General Partner, without the approval of any Limited Partner or Assignee, to
amend the November 1998 Agreement to effect the intent hereof;
NOW, THEREFORE, the General Partner does hereby amend and restate the
November 1998 Agreement to provide, in its entirety, as follows:
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ARTICLE 1 - ORGANIZATIONAL MATTERS
1.1 Continuation. 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 "TEPPCO 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
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. Notwithstanding the foregoing, unless
otherwise permitted by PEC and Duke, the Partnership shall change its name to a
name not including "TEPPCO," "Texas Eastern", "PanEnergy" or "Duke" and shall
cease using the name TEPPCO," "Texas Eastern," "PanEnergy", "Duke" or other
names or symbols associated therewith at such time as neither Texas Eastern
Products Pipeline Company nor another Affiliate of PanEnergy or Duke is the
general partner of the Partnership.
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 The Corporation Trust Center, 1209 Orange Street,
New Castle County, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and the registered agent for
service of process on the Partnership in the State of
Delaware at such
registered office shall be The Corporation Trust Company. The principal office
of the Partnership and the address of the General Partner shall be ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or such other place as the General Partner
may from time to time designate by notice to the Limited Partners. 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 14.2, the Liquidator severally (and any successor
to either thereof by merger, transfer, assignment, election or otherwise) and
each of their 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
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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 11, 12, 13 or 14 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 LP Units or other securities issued pursuant to Section 4.1; 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 16; and
(ii) execute, swear to, acknowledge, deliver, file and record
all ballots, consents, approvals, 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.
Nothing contained in this Section 1.4 shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article 15, 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 Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or the Liquidator acting in good faith pursuant to such power of
attorney; and each such Limited Partner or Assignee hereby waives any and all
defenses that may be available to contest, negate or disaffirm the action of the
General Partner or the Liquidator taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver to the
General Partner or the Liquidator, within fifteen days after receipt of the
General Partner's or the Liquidator's request therefor, such further
designation, powers of attorney and other instruments as the General Partner or
the Liquidator deems necessary to effectuate this Agreement and the purposes of
the Partnership.
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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 close of Partnership business on December 31, 2084, or until
the earlier termination of the Partnership in accordance with the provisions of
Article 14.
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 LP Units of Partnership Interests as may be required, in the
Opinion of Counsel, to prevent the Partnership from being taxed as a corporation
or otherwise 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 the Units on any National
Securities Exchange on which the Units are then traded must be approved by the
holders of at least 66 2/3% of the Outstanding Units, voting as a separate class
or (b) upon the recommendation of the General Partner and the approval of the
holders of at least 66 2/3% of the Outstanding LP 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 LP Units 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.
ARTICLE 2 - DEFINITIONS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Additional Limited Partner" means a Person admitted to the Partnership
as a Limited Partner pursuant to Section 12.3 and who is shown as such on the
books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each fiscal year of the Partnership, (a) increased
by any amounts that such Partner is obligated to restore under the standards set
by Treasury Regulation Section 1.704-2(g)(i) and 1.701-2(i)(5) to be allocated
to such Partner in subsequent years under items described in Treasury Regulation
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-2(b)(2)(ii)(d)(6). The foregoing definition of Adjusted Capital Account is
intended to comply
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with the provisions of Treasury Regulation Section 1.704-(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
"Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Section 4.3(d)(i) or 4.3(d)(ii).
"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. As used herein, the term "control" 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.
"Agreed Allocation" means any allocation, other than a Required
Allocation, of an item of income, gain, loss or deduction pursuant to the
provisions of Section 5.1 including, without limitation, a Curative Allocation
(if appropriate to the context in which the term "Agreed Allocation" is used).
"Agreed Value" of any Contributed Property means the fair market value
of such property or other consideration at the time of contribution as
determined by the General Partner using such reasonable method of valuation as
it may adopt; and 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 conveyed to the Partnership in a single or
integrated transaction among each separate property on a basis proportional to
the fair market value of each Contributed Property.
"Agreement" means this Third Amended and Restated Agreement of Limited
Partnership of TEPPCO Partners, L.P., as it may be amended, supplemented or
restated from time to time.
"Assignee" means a Non-citizen Assignee or a Person to whom one or more
LP 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.
"Available Cash" has the meaning assigned to such term in Section
5.6(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 4.3 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 Texas or New York shall not be regarded as a Business Day.
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"Capital Account" means the capital account maintained for a Partner or
Assignee pursuant to Section 4.3.
"Capital Contribution" means any cash, cash equivalents or the Net
Agreed Value of Contributed Property that a Partner has contributed or may
contribute to the Partnership pursuant to Section 4.1 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' and
Assignees' 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 time in accordance with Sections 4.3(d)(i) and 4.3(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 5.6(b).
"Cash from Operations" has the meaning assigned to such term in Section
5.6(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 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 hereof, as such Certificate may be amended and/or
restated 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.
"Class B Unit" means one of that certain class of LP Units with those
special rights and obligations specified in this Agreement as being appurtenant
to a "Class B Unit".
"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.
"Contributed Property" means each property or other asset, in such form
as may be permitted by the Delaware Act, but excluding cash, contributed to the
Partnership. Once the Carrying Value of a Contributed Property is adjusted
pursuant to Section 4.3(d)(i), such property shall no longer constitute a
Contributed Property, but shall be deemed an Adjusted Property.
"Contributing Partner" means each Partner contributing a Contributed
Property.
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"Contribution Agreement" has the meaning assigned to such term in the
recitals hereto.
"Curative Allocation" means any allocation of an item of income, gain,
deduction, loss or credit pursuant to the provisions of Section 5.1(d)(ix).
"Current Market Price" has the meaning assigned to such term in Section
17.1(a).
"Delaware Act" means the Delaware Revised Uniform Limited Partnership
Act, 6 Del. C. Section 17-101, et. seq., as amended, supplemented or restated
from time to time, and any successor to such statute.
"Departing Interest" has the meaning assigned to such term in Section
13.3(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 Section 13.2.
"Duke" means Duke Energy Corporation, a Delaware corporation.
"Economic Risk of Loss" has the meaning set forth in Treasury
Regulation Section 1.704-2(i)(1).
"Eligible Citizen" means a Person qualified to own interests in real
property in jurisdictions in which the Partnership or any Subsidiary 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 any
Subsidiary to a substantial risk of cancellation or forfeiture of any of its
properties or any interest therein.
"Event of Withdrawal" has the meaning assigned to such term in Section
13.1(a).
"Exchange Act" means the Securities Exchange Act of 1934 as amended,
supplemented or restated from time to time, and any successor to such statute.
"First Liquidation Target Amount" has the meaning assigned to such term
in Section 5.1(c)(i)(D).
"First Target Distribution" has the meaning assigned to such term in
Section 5.6(d).
"General Partner" means Texas Eastern Products Pipeline Company, LLC, a
Delaware limited liability company, and its successors as general partner of the
Partnership.
"General Partner Equity Value" means, as of any date of determination,
the fair market value of the General Partner's Partnership Interest, as
determined by the General Partner using whatever reasonable method of valuation
it may adopt; provided, however, if any such valuation occurs at a time that the
General Partner holds LP Units, such LP Units must be taken into account in
determining the General Partner Equity Value.
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"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, including the Operating
General Partner.
"Initial Offering" means the initial offering of Units to the public,
as described in the Registration Statement.
"Initial Unit Price" means $20 per LP Unit.
"Interim Capital Transactions" has the meaning assigned to such term in
Section 5.6(e).
"Issue Price" means $18.62 per LP Unit.
"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 Articles 4, 5 and 6 and Sections 14.3
and 14.4, shall include an Assignee.
"Limited Partner Equity Value" means, as of any date of determination,
the amount equal to the product obtained by multiplying (a) the total number of
LP Units Outstanding (immediately prior to an issuance of LP Units or
distribution of cash or Partnership property), other than LP Units held by the
General Partner by (b)(i) in the case of a valuation required by Section
4.3(d)(i) (other than valuations caused by sales of a de minimis quantity of LP
Units), the Issue Price of the additional LP Units referred to in Section
4.3(d)(i) or (ii) in the case of a valuation required by Section 4.3(d)(ii) (or
a valuation required by Section 4.3(d)(i) caused by sales of a de minimis
quantity of LP Units), the Closing Price.
"Liquidator" means the General Partner or other Person approved
pursuant to Section 14.3 who performs the functions described therein.
"LP 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, and includes Units and Class B Units.
"LP Unit Certificate" means a certificate in such form as may be
adopted from time to time by the General Partner in its sole discretion, issued
by the Partnership evidencing ownership of one or more LP Units of the class
designated in such certificate.
"Mandatory Redemption Notice" has the meaning assigned to such term in
Section 4.9(b).
"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).
8
"Minimum Quarterly Distribution" has the meaning assigned to such term
in Section 5.6(f).
"National Securities Exchange" means an exchange registered with the
Securities and Exchange Commission under Section 6(a) of the Exchange Act.
"Net Agreed Value" means, (a) in the case of any Contributed Property,
the Agreed Value of such property reduced by any liabilities either assumed by
the Partnership upon such contribution or to which such property is subject when
contributed, and (b) in the case of any property distributed to a Partner or
Assignee by the Partnership, the Partnership's Carrying Value of such property
(as adjusted pursuant to Section 4.3(d)(ii)) at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner or
Assignee upon such distribution or to which such property is subject at the time
of distribution, in either case, as determined under Section 752 of the Code.
"Net Income" means, for any taxable 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 those
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 4.3(b) and shall not
include any items specially allocated under Section 5.1(d). Once an item of
income, gain, loss or deduction that has been included in the initial
computation of Net Income is subjected to a Required Allocation or a Curative
Allocation, the applicable Net Income or Net Loss shall be recomputed without
regard to such item.
"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 4.3(b) and shall not include any items
specifically allocated under Section 5.1(d). 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 Curative Allocation, the applicable Net
Income or Net Loss shall be recomputed without regard to such item.
"Net Termination Gain" has the meaning assigned to such term in Section
5.6(g).
"Net Termination Loss" has the meaning assigned to such term in Section
5.6(h).
"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" means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Non-recourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to
9
Sections 5.2(b)(i)(A), 5.2(b)(ii)(A) or 5.2(b)(iv) 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 Sections 1.704-2(b)(1) and
1.704-2(c), 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 17.1(b).
"Notice of Intent to Convert" has the meaning assigned to such term in
Section 4.9(b).
"Operating General Partner" means TEPPCO GP, Inc., a Delaware
corporation and wholly owned subsidiary of the Partnership, and any successors
and permitted assigns as the general partner of the Operating Partnerships.
"Operating Partnerships" means TE Products Pipeline Company, Limited
Partnership, a Delaware limited partnership, TCTM, L.P., a Delaware limited
partnership, and such other Persons that are treated as partnerships for federal
income tax purposes and that are majority-owned directly by the Partnership and
controlled by the Partnership (whether by direct or indirect ownership of the
general partner of such Person or otherwise) and established or acquired for the
purpose of conducting the business of the Partnership.
"Operating Partnership Agreements" means the agreements of limited
partnership of any Operating Partnership that is a limited partnership, or any
limited liability company agreement of any Operating Partnership that is a
limited liability company that is treated as a partnership for federal income
tax purposes, as such may be amended, supplemented or restated from time to
time.
"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.
"Outstanding" means all LP Units or other Partnership Securities that
are issued by the Partnership and reflected as outstanding on the Partnership's
books and records as of the date of determination.
"Partner" means a General Partner or a Limited Partner and, solely for
purposes of Articles 4, 5 and 6 and Sections 14.3 and 14.4, shall include an
Assignee.
"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
10
accordance with the principles of Treasury Regulation Sections 1.704-2(i)(1) and
1.704-2(i)(2), are attributable to a Partner Nonrecourse Debt.
"Partnership" means TEPPCO Partners, L.P., a Delaware limited
partnership, and any successor thereto.
"Partnership Inception" means March 7, 1990.
"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 LP Units.
"Partnership Minimum Gain" means the amount determined in accordance
with the principles of Treasury Regulation Sections 1.704-2(b)(2) and
1.704-2(d).
"Partnership Securities" has the meaning assigned to such term in
Section 4.1(b).
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"PEC" means PanEnergy Corp., a Delaware corporation.
"Per LP Unit Capital Account" means, as of any date of determination,
the Capital Account, stated on a per LP Unit basis, underlying any LP Unit held
by a Unitholder.
"Percentage Interest" means as of the date of such determination (a) as
to the General Partner, 1.999999% and (b) as to any Limited Partner or Assignee
holding LP Units, the product of (i) 98.000001% multiplied by (ii) the quotient
of (x) the number of LP Units held by such Limited Partner or Assignee divided
by (y) the total number of all LP Units then Outstanding; provided, however,
that following any issuance of additional LP Units by the Partnership in
accordance with Section 4.1 hereof, proper adjustment shall be made to the
Percentage Interest represented by each LP Unit to reflect such issuance.
"Person" means an individual or a corporation, partnership, limited
liability company, trust, unincorporated organization, association or other
entity.
"Purchase Date" means the date determined by the General Partner as the
date for purchase of all Outstanding LP Units (other than LP Units owned by the
General Partner and its Affiliates) pursuant to Article 17.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Sections 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 income to notice of, or to vote at, any 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 lawful action
of
11
Limited Partners, or (b) the identity of Record Holders entitled to receive any
report or distribution.
"Record Holder" means the Person in whose name an LP Unit is registered
on the books of the Transfer Agent as of the opening of business on a particular
Business Day.
"Redeemable LP Units" means any LP Units for which a redemption notice
has been given, and has not been withdrawn, under Section 11.6.
"Registration Statement" means the Registration Statement on Form S-1
(Registration No. 33-32203), as it may have been 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 the
Units in the 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 clause of Section 5.1(b)(ii) or (b) Sections 5.1(d)(i), 5.1(d)(ii),
5.1(d)(iii), 5.1(d)(iv), 5.1(d)(v), 5.1(d)(vi) and 5.1(d)(viii), such
allocations (or limitations thereon) being directly or indirectly required by
the Treasury Regulations promulgated under Section 704(b) of the Code.
"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 Sections 5.2(b)(i)(A) or 5.2(b)(ii)(A), respectively, to eliminate
Book-Tax Disparities.
"Second Liquidation Target Amount" has the meaning assigned to such
term in Section 5.1(c)(i)(E).
"Second Target Distribution" has the meaning assigned to such term in
Section 5.6(i).
"Securities Act" means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to such statute.
"Subsidiary" means a Person controlled by the Partnership directly, or
indirectly though one or more intermediaries, including without limitation the
Operating Partnerships and the Operating General Partner.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 12.1 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).
"Termination Capital Transaction" has the meaning assigned to such term
in Section 5.6(j).
"Trading Day" has the meaning assigned to such term in Section 17.1(a).
12
"Transfer Agent" means 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.
"Transfer Application" means an application and agreement for transfer
of LP Units in the form set forth on the back of an LP Unit Certificate or in a
form substantially to the same effect in a separate instrument.
"Unit" means one of that certain class of LP Units with those special
rights and obligations specified in this Agreement as being appurtenant to a
"Unit".
"Unitholder" means a Person who holds LP Units.
"Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a) the fair
market value of such property as of such date (as determined under Section
4.3(d)) over (b) the Carrying Value of such property as of such date (prior to
any adjustment to be made pursuant to Section 4.3(d) as of such date).
"Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a) the Carrying
Value of such property as of such date (prior to any adjustment to be made
pursuant to Section 4.3(d) as of such date) over (b) the fair market value of
such property as of such date (as determined under Section 4.3(d)).
"Unrecovered Capital" means, at any time, with respect to an LP Unit
(whether such LP Unit was issued in the Initial Offering or thereafter), the
Initial Unit Price, less the sum of all distributions theretofore made in
respect of a Unit issued in the Initial Offering 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 issued in the Initial Offering.
ARTICLE 3 - 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 a partner in the Operating
Partnerships and, in connection therewith, to exercise all of the rights and
powers conferred upon the Partnership as a partner in the Operating Partnerships
pursuant to the Operating Partnership Agreements or otherwise, (ii) to serve as
the sole stockholder of the Operating General Partner and, in connection
therewith, to exercise on behalf of the Partnership all the rights and powers
held by the Partnership as the sole stockholder of the Operating General Partner
(iii) to engage directly in, or to enter into any partnership, joint venture or
similar arrangement to engage in, any business activity that may be lawfully
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,
(iv) to do anything necessary or appropriate to the foregoing (including,
without limitation, the making of capital contributions or loans to any
Subsidiary or in connection with its involvement in the activities referred to
in clause (iii) of this sentence), and (v) to engage in any other business
activity as permitted under Delaware law.
13
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 4 - CAPITAL CONTRIBUTIONS
4.1 Issuances of LP Units and Other Securities.
(a) The initial Capital Contributions of the General Partner and
the initial Limited Partners were made in accordance with Section 4.3 of the
1990 Agreement.
(b) The General Partner is hereby authorized to cause the
Partnership to issue, in addition to the Units heretofore issued by the
Partnership, such additional LP Units, 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 4.1 and the requirements of the Delaware
Act, in determining the consideration and terms and conditions with respect to
any future issuance of Partnership Securities.
(c) Notwithstanding any provision of this Agreement to the
contrary, additional Partnership Securities to be issued by the Partnership
pursuant to this Section 4.1 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, all as shall be
fixed by the General Partner in the exercise of its sole and complete
discretion, 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 LP Unit Certificates 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.
14
(d) Upon the issuance of any LP Units by the Partnership, the
General Partner shall be required to make additional Capital Contributions to
the Partnership such that the General Partner shall at all times have a balance
in its Capital Account equal to 1.999999% of the total positive Capital Account
balances of all Partners.
(e) The General Partner is hereby authorized and directed to take
all actions that it deems necessary or appropriate in connection with each
issuance of LP Units or other Partnership Securities pursuant to Section 4.1(b)
and to amend this Agreement in any manner that it deems 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 LP Units or other Partnership Securities being so issued.
(f) 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 any Subsidiary
maintained or sponsored by the General Partner, the Partnership, any Subsidiary
or any Affiliate of any of them.
(g) 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 LP Units or
other Partnership Securities are listed for trading.
4.2 Limited Preemptive Rights. 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 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 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 LP Units
or other Partnership Securities; or (e) issuance or sale of any other securities
that may be issued or sold by the Partnership.
4.3 Capital Accounts.
(a) The Partnership shall maintain for each Partner (or a
beneficial owner of LP 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) owning LP Units a separate Capital Account with
respect to such LP Units in accordance with the rules of Treasury Regulation
Section 1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i) the
amount of all Capital Contributions made to the Partnership with respect to such
LP Units 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 4.3(b) and allocated with respect to such LP Units
pursuant to Section 5.1 and decreased by (x) the amount of cash or Net Agreed
Value of all actual and deemed distributions of cash or property made with
respect to
15
such LP Units pursuant to this Agreement and (y) all items of Partnership
deduction and loss computed in accordance with Section 4.3(b) and allocated with
respect to such LP Units pursuant to Section 5.1.
The Partnership shall maintain for the General Partner a separate
Capital Account with respect to its Partnership Interest, held in its capacity
as a general partner, in accordance with the rules of Treasury Regulation
Section 1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i) the
amount of all Capital Contributions made to the Partnership with respect to such
Partnership Interest pursuant to this Agreement and (ii) all items of
Partnership income and gain (including, without limitation, income and gain
exempt from tax) computed in accordance with Section 4.3(b) and allocated with
respect to such Partnership Interest pursuant to Section 5.1, and decreased by
(x) the cash amount or the Net Agreed Value of all actual and deemed
distributions of cash or property made with respect to such Partnership Interest
pursuant to this Agreement and (y) all items of Partnership deduction and loss
computed in accordance with Section 4.3(b) and allocated with respect to such
Partnership Interest pursuant to Section 5.1.
(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 4.3, the Partnership
shall be treated as owning directly its proportionate share (as determined by
the General Partner) of all property owned by any Subsidiary.
(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)(l)(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
16
by the Partnership were equal to the Agreed Value of such property. Upon an
adjustment pursuant to Section 4.3(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.
(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)(l) 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 same manner to the Partners to whom such deemed deduction was
allocated.
(c) A transferee of a Partnership Interest shall succeed to a pro
rata portion of the Capital Account of the transferor relating to the
Partnership Interest so transferred.
(d) (i) Consistent with the provisions of Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), on an issuance of additional Partnership Interests
for cash or Contributed Property or the conversion of the General Partner's
Partnership Interest to LP Units pursuant to Section 13.3(b), the Capital
Account 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. In
determining such Unrealized Gain or Unrealized Loss, the aggregate cash amount
and fair market value of all Partnership assets (including, without limitation,
cash or cash equivalents) immediately prior to the issuance of Partnership
Interests shall be determined by the General Partner using such reasonable
method of valuation as it may adopt; provided, however, the General Partner, in
arriving at such valuation, must take into account the Limited Partner Equity
Value and the General Partner Equity Value at such time. 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.
(ii) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), immediately prior to any actual or deemed
distribution to a Partner of any Partnership property (other than a
distribution of cash that is not in redemption or retirement of a
Partnership Interest), the Capital Accounts of all Partners and the
Carrying Value of 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
17
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. Any Unrealized Gain or Unrealized Loss attributable to such property
shall be allocated in the same manner as Net Termination Gain or Net
Termination Loss pursuant to Section 5.1(c); provided, however, that, in
making any such allocation, Net Termination Gain or Net Termination Loss
actually realized shall be allocated first. In determining such
Unrealized Gain or Unrealized Loss, the aggregate cash amount and fair
market value of all Partnership assets (including, without limitation,
cash or cash equivalents) immediately prior to a distribution shall be
determined and allocated by the Liquidator using such reasonable methods
of valuation as it may adopt.
(e) Upon the conversion of a Class B Unit into one Unit, the
difference (whether positive or negative) between the Per LP Unit Capital
Account of such Class B Unit and the Per LP Unit Capital Account of the then
Outstanding Units shall be allocated proportionately among all Class B Units
Outstanding immediately after such conversion. After giving effect to such
reallocation, (i) the Per LP Unit Capital Account of the Unit issued upon such
conversion shall equal the Per LP Unit Capital Account of each Unit then
Outstanding, and (ii) such conversion shall not increase or decrease the
aggregate Per LP Unit Capital Accounts attributable to all Outstanding Units.
4.4 Interest. No interest shall be paid by the Partnership on Capital
Contributions or on balances in Partners' Capital Accounts.
4.5 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 herein.
4.6 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.
4.7 No Fractional LP Units. No fractional LP Units shall be issued by
the Partnership.
4.8 Splits and Combinations.
(a) Subject to Section 4.8(d), the General Partner may make a pro
rata distribution of LP Units or other Partnership Securities to all Record
Holders or may effect a subdivision or combination of LP Units or other
Partnership Securities; provided, however, that after any such distribution,
subdivision or combination, each Partner shall have the same Percentage Interest
in the Partnership as before such distribution, subdivision or combination.
(b) Whenever such a distribution, subdivision or combination of LP
Units or other Partnership Securities is declared, the General Partner shall
select a Record Date as of
18
which the distribution, subdivision or combination shall be effective and shall
send notice of the distribution, subdivision or combination at least twenty days
prior to such Record Date to each Record Holder as of the date not less than ten
days prior to the date of such notice. The General Partner also may cause a firm
of independent public accountants selected by it to calculate the number of LP
Units to be held by each Record Holder after giving effect to such distribution,
subdivision or combination. 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 distribution, subdivision or
combination, the General Partner may cause LP Unit Certificates to be issued to
the Record Holders of LP Units as of the applicable Record Date representing the
new number of LP Units held by such Record Holders, or the General Partner may
adopt such other procedures as it may deem appropriate to reflect such
distribution, subdivision or combination; provided, however, if any such
distribution, subdivision or combination results in a smaller total number of LP
Units Outstanding, the General Partner shall require, as a condition to the
delivery to a Record Holder of such new LP Unit Certificate, the surrender of
any LP Unit Certificate held by such Record Holder immediately prior to such
Record Date.
(d) The Partnership shall not issue fractional LP Units upon any
distribution, subdivision or combination of LP Units. If a distribution,
subdivision or combination of LP Units would result in the issuance of
fractional LP Units but for the provision of Section 4.7 and this Section
4.8(d), each fractional LP Unit shall be rounded to the nearest whole LP Unit
(and a 0.5 LP Unit shall be rounded to the next higher LP Unit).
4.9 Class B Units.
(a) Pursuant to Section 4.1, the General Partner hereby designates
and creates a special class of LP Units designated "Class B Units" and fixes the
designations, preferences and relative, participating, optional or other special
rights, powers and duties of the holders of the Class B Units as follows:
(b) Each Class B Unit shall be convertible from time to time, in
whole or in part, into one Unit from and after such date as the Partnership has
been advised by the New York Stock Exchange that the Units issuable upon any
such conversion are eligible for listing on the New York Stock Exchange. The
General Partner will promptly notify the holders of Class B Units upon receipt
of such advice. Upon written notice to the General Partner from the holders of
at least a majority of the Outstanding Class B Units (a "Notice of Intent to
Convert") given not earlier that one year after the date of this Agreement, the
General Partner will use its reasonable best efforts to cause the Partnership to
meet any unfulfilled requirements of the New York Stock Exchange for such
listing, including obtaining such approval of the Unitholders as may be required
by the New York Stock Exchange for the issuance of the additional Units to be
listed thereon. If, 120 days after the date of the Notice of Intent to Convert,
the Units issuable upon such conversion have not been approved for listing on
the New York Stock Exchange, then the Partnership shall give written notice
thereof to the holders of the Outstanding Class B Units, whereupon each holder
of Outstanding Class B Units may, at such holder's election at any time
thereafter, notify the General Partner in writing (a "Mandatory Redemption
Notice") of such holder's election to cause the Partnership to redeem such
holder's Outstanding Class B Units for
19
cash. All such Outstanding Class B Units shall be redeemed as of the 60th day
following the date of such Mandatory Redemption Notice unless, prior to such
60th day, the General Partner gives written notice to the holders of all
Outstanding Class B Units that it has been advised by the New York Stock
Exchange that the Units issuable upon a conversion of Class B Units have been
approved for listing on the New York Stock Exchange, in which case the Mandatory
Redemption Notice shall be deemed to have been withdrawn.
(c) Before any holder of Class B Units shall be entitled to receive
any redemption payment or to convert such holder's Class B Units into Units, as
the case may be, he shall surrender the LP Unit Certificates therefor, duly
endorsed, at the office of the General Partner or of any transfer agent for the
Class B Units. In the case of any such conversion, the Partnership shall, as
soon as practicable thereafter, issue and deliver at such office to such holder
of Class B Units LP one or more Unit Certificates, registered in the name of
such holder, for the number of Units to which he shall be entitled as aforesaid.
Such conversion shall be deemed to have been made as of the date of such
surrender of the Class B Units to be converted, and the person entitled to
receive the Units issuable upon such conversion shall be treated for all
purposes as the record holder of such Units on said date.
(d) Upon any request by Duke or any of its Affiliates to register
all or any part of the Class B Units pursuant to Section 6.14, the Class B Units
for which registration is so requested may be redeemed by the Partnership at its
election. The Partnership shall exercise its option under this Section 4.9(d) by
mailing written notice thereof to the holders of the Class B Units for which
registration is so requested. Such notice shall be given not later than 15 days
after the receipt by the General Partner of such registration request and shall
fix a date for redemption of such Class B Units not less than 30 nor more than
60 days after the date of such notice.
(e) Any redemption under Section 4.9(b) or Section 4.9(d) shall be
for a cash redemption price equal to the Current Market Price per Unit as of the
date fixed for redemption multiplied by 0.955.
(f) From and after a redemption date (unless default shall be made
by the Partnership in providing money for the payment of the redemption price),
the Class B Units redeemed shall no longer be deemed to be Outstanding, and all
rights of the holders thereof as Partners in the Partnership (except the right
to receive from the Partnership the redemption price) shall cease. Class B Units
redeemed pursuant to Section 4.9(b) or Section 4.9(d) shall be restored to the
status of authorized but unissued LP Units, without designation as to class.
(g) To preserve the allocation under Section 4.3(e),
notwithstanding anything herein to the contrary, no conversion of Class B Units
may be effected if such conversion would result in there being no Class B Units
Outstanding.
(h) Except as otherwise provided in this Agreement, each Class B
Unit shall be identical to a Unit, and the holder of a Class B Unit shall have
the rights of a holder of a Unit with respect to, without limitation,
Partnership distributions, voting and allocations of income, gain, loss or
deductions; but the LP Certificates evidencing Class B Units shall be separately
identified and shall not bear the same CUSIP number as the LP Certificates
evidencing Units.
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Except as otherwise provided herein, all LP Units shall vote or consent together
as a single class on all matters submitted for a vote or consent of the
Unitholders. Class B Units shall be represented by LP Unit Certificates in such
form as the General Partner may approve.
ARTICLE 5 - 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 4.3(b)) shall be allocated among the
Partners in each taxable year (or portion thereof) as provided hereinbelow.
(a) Net Income. After giving effect to the special allocations set
forth in Section 5.1(d), Net Income for each taxable period and all items of
income, gain, loss and deduction taken into account in computing Net Income for
such taxable period 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 Section
5.1(b)(iii) for all previous taxable years;
(ii) Second, 100% to the General Partner and the Limited
Partners, in accordance with their respective Percentage Interests, until the
aggregate Net Income allocated to such Partners 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 such Limited Partners and the General
Partner pursuant to Section 5.1(b)(ii) for all previous taxable years; and
(iii) Third, the balance, if any, shall be allocated between
the General Partner, in its capacity as general partner, and the Limited
Partners in each taxable year in the same proportion as Available Cash for such
taxable year (including, for this purpose, distributions of Available Cash made
in a subsequent taxable year with respect to the last quarter of the Partnership
year for which the item of income, gain, loss, deduction or credit as the case
may be, is being allocated) was distributed to the General Partner and the
Limited Partners. If the Partnership does not distribute any Available Cash in
respect of a taxable year, Net Income (computed in accordance with Section
4.3(b)) shall be allocated among the Partners in accordance with their
respective Percentage Interests. Except as otherwise provided in this Section
5.1, each item of income, gain, loss, deduction or credit (computed in
accordance with Section 4.3(b)) allocated to the Limited Partners, in the
aggregate, shall be allocated to each Limited Partner pro rata in accordance
with the number of LP Units held by such Limited Partner.
(b) Net Losses. After giving effect to the special allocations set
forth in Section 5.1(d), Net Losses for each taxable period and all items of
income, gain, loss and deduction taken into account in computing Net Losses for
such taxable period shall be allocated as follows:
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(i) First, 100% to the General Partner and the Limited
Partners until the aggregate Net Losses allocated pursuant to this Section
5.1(b)(i) for the current taxable year and all previous taxable years is equal
to the aggregate Net Income allocated to such Partners pursuant to Section
5.1(a)(iii) for all previous taxable years. For purposes of this Section
5.1(b)(i), Net Losses for any taxable year shall be allocated to the General
Partner and the Limited Partners in the same proportion as any Net Income was
allocated to such Partners pursuant to Section 5.1(a)(iii) in any previous
taxable years (beginning with the first such taxable year in which Net Income
was allocated to the Partners pursuant to Section 5.1(a)(iii) up to an amount
equal to the amount of Net Income allocated to the Partners in any such taxable
year);
(ii) Second, 100% to the General Partner and the Limited
Partners, in accordance with their respective Percentage Interests, 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 year
(or increase any existing deficit balance in its Adjusted Capital Account);
(iii) Third, the balance, if any, 100% to the General Partner.
(c) Net Termination Gains and Losses. After giving effect to the
special allocations set forth in Section 5.1(d), all items of gain and loss
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(c) 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 Section 5.4 have been made with
respect to the taxable period ending on the date of the Partnership's
liquidation pursuant to Section 14.3. References in this Section to the Minimum
Quarterly Distribution and the Target Distributions are to such items as
adjusted from time to time.
(i) If a Net Termination Gain is recognized (or deemed
recognized pursuant to Section 4.3(d)) from Termination Capital Transactions,
such Net Termination Gain shall be allocated between the General Partner and the
Limited Partners in the following manner (and the Capital Accounts of the
Partners shall be increased by the amount so allocated in each of the following
subclauses, in the order listed, before an allocation is made pursuant to the
next succeeding subclause):
(A) First, to each Partner having a deficit balance in its
Capital Account, in the proportion that such deficit balance bears to the total
deficit balances in the Capital Accounts of all Partners, until each such
Partner has been allocated Net Termination Gain equal to any such deficit
balance in its Capital Account;
(B) Second, 100% to the General Partner and to all Limited
Partners, in accordance with their respective Percentage Interests, until the
Capital Account in respect of each LP Unit then Outstanding is equal to the
Unrecovered Capital attributable to such LP Unit;
22
(C) Third, 100% to the General Partner and to all Limited
Partners, in accordance with their respective Percentage Interests, until the
Per LP Unit Capital Account (determined on a per Unit basis) in respect of each
Unit is equal to the sum of (l) the Unrecovered Capital attributable to each
such Unit plus (2) any cumulative arrearages in the payment of the Minimum
Quarterly Distribution in respect of such Unit for any quarter following
December 31, 1994;
(D) Fourth, 85.002627% to all Limited Partners, in
accordance with their respective Percentage Interests, and 14.997373% to the
General Partner until the Per LP Unit Capital Account in respect of each Unit
(determined on a per Unit basis) is equal to the sum of (l) the Unrecovered
Capital attributable to such Unit, plus (2) any cumulative arrearages in the
payment of the Minimum Quarterly Distribution in respect of such Unit for any
quarter following December 31, 1994, plus (3) the excess of the First Target
Distribution over the Minimum Quarterly Distribution for each quarter of the
Partnership's existence, less (4) the amount of any distributions of Cash from
Operations that were distributed pursuant to Section 5.4(b) (the sum of (2) plus
(3) less (4) is hereinafter defined as the "First Liquidation Target Amount");
(E) Fifth, 75.004647% to all Limited Partners, in
accordance with their respective Percentage Interests, and 24.995353% to the
General Partner until the Per LP Unit Capital Account in respect of each Unit
(determined on a per Unit basis) is equal to the sum of (l) the Unrecovered
Capital attributable to such Unit, plus (2) the First Liquidation Target Amount,
plus (3) the excess of the Second Target Distribution over the First Target
Distribution for each quarter of the Partnership's existence less (4) the amount
of any distributions of Cash from Operations distributed pursuant to Section
5.4(c) (the sum of (2) plus (3) less (4) is hereinafter defined as the "Second
Liquidation Target Amount"); and
(F) Sixth, the balance, if any, 49.999798% to all Limited
Partners, in accordance with their respective Percentage Interests, and
50.000202% to the General Partner.
(ii) If a Net Termination Loss is recognized (or deemed
recognized pursuant to Section 4.3(d)) from Termination Capital Transactions,
such Net Termination Loss shall be allocated to the Partners in the following
manner:
(A) First, 100% to the General Partner and the limited
Partners in proportion to, and to the extent of, the positive balances in their
respective Capital Accounts until all such balances are reduced to zero;
(B) Second, the balance, if any, 100% to the General
Partner.
(d) Special 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 any
other provision of this Section 5.1, if there is a net decrease in Partnership
Minimum Gain during any Partnership taxable period, each Partner shall be
allocated items of Partnership income and gain for such period (and, if
necessary, subsequent periods) in proportion to, and to the extent of,
23
an amount equal to the greater of (A) the portion of such Partner's share of the
net decrease in Partnership Minimum Gain during such taxable period that is
allocable (in accordance with the principles set forth in Treasury Regulation
Section 1.704-2(g)) to the disposition of Partnership property subject to one or
more Nonrecourse Liabilities of the Partnership, or (B) the deficit balance in
such Partner's Adjusted Capital Account at the end of such taxable period
(modified, as appropriate, by Treasury Regulation Section 1.704-2(g)). The items
to be so allocated shall be determined in accordance with Treasury Regulation
Sections 1.704-2(f)(6) and 1.704-2(j)(2) and, for purposes of this Section
5.1(d), each Partner's Adjusted Capital Account balance shall be determined, and
the allocation of income or gain required hereunder shall be effected, prior to
the application of any other allocations pursuant to this Section 5.1(d) with
respect to such taxable period. This Section 5.1(d)(i) is intended to comply
with the Partnership Minimum Gain chargeback requirement in Treasury Regulation
Section 1.704-2(f) and shall be interpreted consistently therewith.
(ii) Chargeback of Minimum Gain Attributable to Partner
Nonrecourse Debt. Notwithstanding the other provisions of this Section 5.1
(other than Section 5.1(d)(i)), 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 proportion to, and to the extent of, an amount equal to the greater
of (A) the portion of such Partner's share of the net decrease in the Minimum
Gain Attributable to Partner Nonrecourse Debt that is allocable (in accordance
with the principles set forth in Treasury Regulation Section 1.704-2(i)(4)) to
the disposition of Partnership property subject to such Partner Nonrecourse Debt
or (B) the deficit balance in such Partner's Adjusted Capital Account at the end
of such taxable period (modified, as appropriate, by Treasury Regulation Section
1.704-2(i)(4)). The items to be so allocated shall be determined in a manner
consistent with the principles of Treasury Regulation Sections 1.704-2(i)(4) and
1.704-2(j)(2) and, for purposes of this Section 5.1(d), each Partner's Adjusted
Capital Account balance shall be determined, and the allocation of income or
gain required hereunder shall be effected, prior to the application of any other
allocations pursuant to this Section 5.1(d), other than Section 5.1(d)(i), with
respect to such taxable period. This Section 5.1(d)(ii) is intended to comply
with the chargeback of items of income and gain requirement in Treasury
Regulation Section 1.704-2(i)(4) and shall be interpreted consistently
therewith.
(iii) Qualified Income Offset. Except as provided in Sections
5.1(d)(i) and 5.1(d)(ii), in the event any Partner unexpectedly receives any
adjustments, allocations or distributions described in Treasury Regulation
Section 1.704-1 (b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be
specifically allocated to such Partner in an amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations, the deficit
balance, if any, in its Adjusted Capital Account created by such adjustments,
allocations or distributions as quickly as possible; provided, that an
allocation pursuant to this Section 5.1(d)(iii) 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(d)(iii) were not in this Agreement.
24
(iv) Gross Income Allocations. In the event any Partner has a
deficit balance in its Capital Account at the end of any Partnership taxable
period that is in excess of the sum of (A) the amount such Partner is obligated
to restore pursuant to any provision of this Agreement and (B) the amount such
Partner is deemed to be obligated to restore pursuant to the penultimate
sentences of Treasury Regulation Section 1.704-2(g)(1) and 1.704-2(i)(5), such
Partner shall be specially allocated items of Partnership gross income and gain
in the amount of such excess as quickly as possible; provided, that an
allocation pursuant to this Section 5.1(d)(iv) shall be made only if and to the
extent that such Partner would have a deficit Capital Account in excess of such
sum after all other allocations provided for in this Section 5.1 have been
tentatively made as if Section 5.1(d)(iii) and this Section 5.1(d)(iv) were not
in this Agreement.
(v) Nonrecourse Deductions. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in the same ratios that Net
income or Net Losses, as the case may be, is allocated for the taxable year. if
the 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 that 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 with respect to the Partner Nonrecourse Debt to
which such Partner Nonrecourse Deductions are attributable in accordance with
Treasury Regulation Section 1.704-2(i)(1). 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.
(vii) Nonrecourse Liabilities. The Partners agree that
Nonrecourse Liabilities of the Partnership in excess of the sum of (A) the
amount of Partnership Minimum Gain and (B) the total amount of Nonrecourse
Built-in Gain shall be allocated among the Partners in accordance with their
respective Percentage interests.
(viii) Code Section 754 Adjustments. To the extent an
adjustment to the adjusted tax basis of any Partnership asset pursuant to
Section 734(b) or 743(b) of the Code is required, pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining
Capital Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the asset)
or loss (if the adjustment decreases such basis), and such item of gain or loss
shall be specially allocated to the Partners in a manner consistent with the
manner in which their Capital Accounts are required to be adjusted pursuant to
such Section of the Treasury regulations.
(ix) Curative Allocation. (A) Notwithstanding any other
provision of this Section 5.1, other than the Required Allocations provisions,
the Required Allocations shall be taken into account in making the Agreed
Allocations so that, to the extent possible, the net amount of items of income,
gain, loss and deduction allocated to each Partner pursuant to the Required
Allocations and the Agreed Allocations, together, shall be equal to the net
amount of
25
such items that would have been allocated to each such Partner under the Agreed
Allocations had the Required Allocations and this Curative Allocation not
otherwise been provided in this Section 5.1. Notwithstanding the preceding
sentence, Required Allocations relating to (l) Nonrecourse Deductions shall not
be taken into account except to the extent that there has been a decrease in
Partnership Minimum Gain and (2) Partner Nonrecourse Deductions shall not be
taken into account except to the extent that there has been a decrease in
Minimum Gain Attributable to Partner Nonrecourse Debt. Allocations pursuant to
this Section 5.1(d)(ix)(A) shall only be made with respect to Required
Allocations to the extent the General Partner reasonably determines that such
allocations will otherwise be inconsistent with the economic agreement among the
Partners. Further, allocations pursuant to this Section 5.1(d)(ix)(A) shall be
deferred with respect to allocations pursuant to clauses (1) and (2) hereof to
the extent the General Partner reasonably determines that such allocations are
likely to be offset by subsequent Required Allocations.
(A) The General Partner shall have reasonable discretion,
with respect to each taxable period, to (l) apply the provisions of Section
5.1(d)(ix)(A) in whatever order is most likely to minimize the economic
distortions that might otherwise result from the Required Allocations, and (2)
divide all allocations pursuant to Section 5.1(d)(ix)(A) among the Partners in a
manner that is likely to minimize such economic distortions.
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 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 follow:
(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)(iv), 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 (l)
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 4.3(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)(iv), any item of Residual Gain or Residual Loss attributable to
26
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) Except as otherwise provided in Section 5.2(b)(iv), all other
items of income, gain, loss and deduction shall be allocated among the
Partners in the same manner as their correlative item of "book" gain or
loss is allocated pursuant to Section 5.1.
(iv) Any items of income, gain, loss or deduction otherwise
allocable under Section 5.2(b)(i)(B), 5.2(b)(ii)(B) or 5.2(b)(iii)
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 and for the
preservation of uniformity of the LP 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 LP 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 amendments would not have a material adverse effect on the
Partners, the holders of any class or classes of LP Units issued and Outstanding
or 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 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 LP 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 LP Units that would not
have a material adverse effect on the Limited Partners or the Record Holders of
any class or classes of LP Units.
(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)
27
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 LP 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 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 rulings promulgated thereunder.
(h) Allocations that would otherwise be made to a Limited Partner
under the provisions of this Article 5 shall instead be made to the beneficial
owner of LP 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 fifty
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 5 by the Partnership to the Partners, as of the
Record Date selected by the General Partner in its reasonable discretion. All
amounts of Available Cash distributed by the Partnership on any date from any
source shall be deemed to be Cash from Operations until the sum of all amounts
of Available Cash theretofore distributed by the Partnership to Partners
pursuant to Section 5.4 equals the aggregate amount of all Cash from Operations
of the Partnership from the Partnership Inception through the end of he calendar
quarter prior to such distribution. Any remaining amounts of Available Cash
distributed by the Partnership on such date shall, except as otherwise provided
in Section 5.5, be deemed to be Cash from Interim Capital Transactions.
5.4 Allocations of Distributions. Available Cash that is deemed to be
Cash from Operations pursuant to the provisions of Section 5.3 or 5.5 shall be
distributed as follows:
(a) First, 98.000001% to all Limited Partners, in accordance with
their respective Percentage Interest, and 1.999999% to the General Partner until
there has been distributed in respect of each LP Unit then Outstanding an amount
equal to the Minimum Quarterly Distribution;
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(b) Second, 85.002627% to all Limited Partners, in accordance with
their respective Percentage Interest, and 14.997373% to the General Partner
until there has been distributed in respect of each LP Unit then Outstanding an
amount equal to the First Target Distribution;
(c) Third, 75.004647% to all Limited Partners, in accordance with
their respective Percentage Interests, and 24.995353% to the General Partner
until there has been distributed in respect of each LP Unit then Outstanding an
amount equal to the Second Target Distribution; and
(d) Fourth, 49.999798% to all Limited Partners, in accordance with
their respective Percentage Interest, and 50.000202% to the General Partner.
Provided, however, if the Minimum Quarterly Distribution, the First
Target Distribution and the Second Target Distribution have been reduced to zero
pursuant to Section 5.7(a)(ii), then distributions of Available Cash
constituting Cash from Operations with respect to any quarter will be made
98.000001% to all Limited Partners in accordance with their respective
Percentage Interest and 1.999999% to the General Partner until there has been
distributed in respect of each LP Unit then outstanding Cash from Operations
since Partnership Inception equal to the Minimum Quarterly Distribution (as from
time to time adjusted) for all periods since Partnership Inception, and
thereafter in accordance with Section 5.4(d) above.
5.5 Distributions of Cash from Interim Capital Transactions. Available
Cash that constitutes Cash from Interim Capital Transactions shall be
distributed, unless the provisions of Section 5.3 require otherwise, 98.000001%
to all Limited Partners, in accordance with their respective Percentage
Interests, and 1.999999% to the General Partner until a hypothetical holder of a
Unit acquired at the time of the Initial Offering has received with respect to
each 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 LP Unit equal to the Initial Unit Price. Thereafter, all
Available Cash shall be distributed as if it were Cash from Operations and shall
be distributed in accordance with Section 5.4.
5.6 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 any Subsidiary) and
(B) any reduction in reserves established in prior quarters, less (ii) the sum
of (aa) all cash disbursements of the Partnership during such quarter (including
disbursements for taxes of the Partnership as an entity, debt service and
capital expenditures) and (bb) any reserves established in such quarter 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 any Subsidiary (including reserves for future rate refunds or
capital expenditures) or (y) to provide funds for distributions with respect to
any of the next four calendar quarters and (cc) 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
29
which the Partnership or any Subsidiary 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, all or less than all of the Partners shall not be
considered cash disbursements of the Partnership which reduce "Available Cash,"
but the payment or withholding thereof 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 the payment
or withholding thereof shall not be deemed to be a distribution of Available
Cash to 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.
(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, $20 million plus all cash receipts of the Partnership or any
Subsidiary from their operations (excluding any cash proceeds from any Interim
Capital Transactions or Termination Capital Transactions) during the period
since the Partnership Inception through such date less the sum of (i) all cash
operating expenditures of the Partnership or any Subsidiary during such period,
including, without limitation, taxes imposed on the Partnership or any
Subsidiary as an entity, (ii) all cash debt service payments of the Partnership
or any Subsidiary during such period (other than payments or prepayments of
principal and premium required by reason of loan agreements (including,
covenants and default provisions therein) or by lenders, in each case in
connection with 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, shall 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
any Subsidiary 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), (iii) all cash capital expenditures of the Partnership or any
Subsidiary during such period (other than (A) all cash capital expenditures made
to increase the throughput or deliverable capacity or terminaling or storage
capacity (assuming normal operating conditions, including down-time and
maintenance) of the assets of the Partnership or any Subsidiary taken as a
whole, from the throughput or deliverable capacity or terminaling or storage
capacity (assuming normal operating conditions, including down-time and
maintenance) existing immediately prior to such capital expenditures and (B)
cash expenditures made in payment of transaction expenses relating to Interim
Capital Transactions), (iv) an amount equal to the incremental revenues
collected pursuant to a rate increase that are, at such date, subject to
possible refund, (v) any reserves outstanding as of such date which 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 (i) through (iii) of this sentence and (vi) any reserves outstanding as
of such date that the General Partner determines to be necessary or appropriate
in its reasonable discretion to provide funds for distributions with respect to
any one or more of the next four calendar quarters, all as determined on a
consolidated basis and after elimination of intercompany items and the
Company's general
30
partner interest in the Subsidiaries. Taxes paid by the Partnership on behalf
of, or amounts withheld with respect to, all or less than all of the Partners
shall not be considered cash operating expenditures of the Partnership which
reduce "Cash from Operations," but the payment or withholding thereof shall be
deemed to be a distribution of Available Cash constituting Cash From Operations
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 the payment or
withholding thereof shall not be deemed to be a distribution to Partners.
For purposes of the foregoing, reserves do not include reserves
outstanding at Partnership Inception. Cash from Operations shall be deemed to
have been reduced as of January l, 1994, by the amount of the initial $20
million cash balance that shall not have been expended by such date on expansive
capital expenditures. In determining the amount of the $20 million used for
expansive capital expenditures, any increase in Partnership consolidated
indebtedness after the Closing Date (other than working capital borrowings)
shall be deemed to have been used for expansive capital expenditures prior to
the expenditure of such $20 million. Therefore, the $20 million will be deemed
to have been used for expansive capital expenditures only to the extent such
expenditures exceed such increase in indebtedness.
(d) "First Target Distribution" means $0.65 per LP Unit, subject to
adjustment in accordance with Sections 5.7 and 9.6.
(e) "Interim Capital Transactions" means (i) borrowings 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 any Subsidiaries (ii) sales of equity interests by the Partnership or any
Subsidiaries and (iii) sales or other voluntary or involuntary dispositions of
any assets of the Partnership or any Subsidiaries (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 accounts 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 per calendar
quarter, subject to adjustment in accordance with Sections 5.7 and 9.6;
(g) "Net Termination Gain" means, for any taxable period, the sum,
if positive, of all items of income, gain or loss recognized by the Partnership
(including, without limitation, such amounts recognized through a Subsidiary)
from Termination Capital Transactions occurring in such taxable period. The
items included in the determination of Net Termination Gain shall be determined
in accordance with Section 4.3(b) and shall not include any items of income,
gain or loss specifically allocated under Section 5.1(d). Once an item of
income, gain or loss that has been included in the initial computation of Net
Termination Gain is subjected to a Required Allocation or a Curative Allocation,
the applicable Net Termination Gain or Net Termination Loss shall be recomputed
without regard to such item.
(h) "Net Termination Loss" means, for any taxable period, the sum,
if negative, of all items of income, gain or loss recognized by the Partnership
(including, without
31
limitation, such amounts recognized through a Subsidiary) from Termination
Capital Transactions occurring in such taxable period. The items included in the
determination of Net Termination Loss shall be determined in accordance with
Section 4.3(b) and shall not include any items of income, gain or loss
specifically allocated under Section 5.1(d). Once an item of gain or loss that
has been included in the initial computation of Net Termination Loss is
subjected to a Required Allocation or a Curative Allocation, the applicable Net
Termination Gain or Net Termination Loss shall be recomputed without regard to
such item.
(i) "Second Target Distribution" means $0.90 per LP Unit, subject
to adjustment in accordance with Sections 5.7 and 9.6.
(j) "Termination Capital Transactions" means any sale, transfer or
other disposition of property of the Partnership or the Operating Partnerships
occurring upon or incident to the liquidation and winding up of the Partnership
and the Operating Partnerships pursuant to Article 14.
5.7 Adjustment of Minimum Quarterly Distribution, Target Distribution
Levels and Unrecovered Capital.
(a) (i) The Minimum Quarterly Distribution, First Target
Distribution Second Target Distribution and Unrecovered Capital shall be
proportionately adjusted in the event of any distribution, combination or
subdivision (whether effected by a distribution payable in LP Units or
otherwise) of LP Units or other Partnership Securities in accordance with
Section 4.8.
(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 and Second Target Distribution shall be adjusted
proportionately downward to equal the product obtained by multiplying the
otherwise applicable Minimum Quarterly Distribution, First Target Distribution
and Second Target Distribution, as the case may be, by a fraction of which the
numerator is the Unrecovered Capital immediately after giving effect to such
distribution and of which the denominator is the Unrecovered Capital immediately
prior to giving effect to such distribution.
(b) The Minimum Quarterly Distribution and First and Second Target
Distributions may also be adjusted if legislation is enacted which causes the
Partnership to become taxable as a corporation or otherwise taxable as an entity
for federal income tax purposes. In such event, the Minimum Quarterly
Distribution and First and Second Target Distributions for each quarter
thereafter would be reduced to an amount equal to the product of (i) each of the
Minimum Quarterly Distribution and First and Second Target Distributions
multiplied by (ii) l minus the sum of (x) the maximum marginal federal income
tax rate to which the Partnership is subject as an entity (expressed as a
fraction) plus (y) any increase that results from such legislation in the
effective overall state and local income tax rate to which the Partnership is
subject as an entity (expressed as a fraction) 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).
32
ARTICLE 6 - 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 desirable (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 any Subsidiary, the lending of
funds to other Persons (including, without limitation, any Subsidiary) and the
repayment of obligations of the Partnership and any Subsidiary and the making of
capital contributions to any Subsidiary; (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 such insurance for
the benefit of the Partnership and the Partners as it deems necessary or
appropriate; (I) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general partnerships,
limited liability companies, joint ventures or other relationships (including,
without limitation, the acquisition of interests in, and the contributions of
property to, any Subsidiary 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
33
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 LP Units of
other Partnership Securities 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
LP Units or other Partnership Securities; and (ii) the undertaking of any action
in connection with the Partnership's interest in any Subsidiary (including,
without limitation, contributions or loans of funds by the Partnership to a
Subsidiary and exercising, on behalf of and for the benefit of the Partnership,
the Partnership's rights as the sole stockholder of the Operating General
Partner).
(b) For so long as the Company or any Affiliate of Duke is the
General Partner of the Partnership, the General Partner shall provide insurance
to the Partnership covering its assets and operations on terms and conditions as
it shall deem appropriate in its sole discretion.
6.2 Certificate of Limited Partnership. The General Partner has caused
the Certificate of Limited Partnership to be filed with the Secretary of State
of the State of Delaware as required by the Delaware Act and shall use all
reasonable efforts to cause to be filed such other certificates or documents as
may be determined by the General Partner in its sole discretion to be reasonable
and necessary or appropriate for the formation, continuation, qualification and
operation of a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware or any other state in
which the Partnership may elect to do business or own property. To the extent
that such action is determined by the General Partner in its sole discretion to
be reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate of Limited Partnership and do
all things to maintain the Partnership as a limited partnership (or a
partnership 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 (v)
transfer its interest as general partner of the Partnership, except as otherwise
provided in this Agreement.
(b) Except as provided in Article 14, the General Partner may not
sell, exchange or otherwise dispose of all or substantially all of the
Partnership's assets in a single
34
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 any of the Operating Partnerships, without
the approval of at least a majority of the Outstanding LP 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 assets of any Subsidiary
and shall not apply to any forced sale of any or all of the Partnership's assets
or the assets of any Subsidiary pursuant to the foreclosure of, or other
realization upon, any such encumbrance. Without the approval of at least 66 2/3%
of the Outstanding LP Units, the General Partner shall not, on behalf of the
Partnership, (i) consent to any amendment to any of the Operating Partnership
Agreements or, except as expressly permitted by Section 6.9(d), take any action
permitted to be taken by the limited partner of any of the Operating
Partnerships, in either case, that would adversely affect the Partnership as the
limited partner of the Operating Partnerships or (ii) except as permitted under
Sections 11.2 and 13.1, elect or cause the Partnership to elect a successor
general partner of the any of the Operating Partnerships.
(c) Unless approved by the affirmative vote of at least 66 2/3% of
the Outstanding LP Units, 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 any of the Operating
Partnerships to be taxable as a corporation or otherwise taxed as an entity for
federal income tax purposes.
(d) At all times while serving as the general partner of the
Partnership, the General Partner shall not make any dividend or distribution on,
or repurchase any shares of, its stock or take any other action within its
control if the effect of such dividend, distribution, repurchase or other action
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.
6.4 Reimbursement of the General Partner.
(a) Except as provided in this Section 6.4 and elsewhere in this
Agreement or in the Operating Partnership Agreements, the General Partner shall
not be compensated for its services as general partner of the Partnership or any
Subsidiary.
(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, amounts paid to any
Person to perform services for the benefit of the Partnership or any Subsidiary
and including payments made for the benefit of the Partnership to or on behalf
of the Operating General Partner or any of the Operating Partnerships) 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 allocable to the Partnership or
35
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). 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) 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 LP Units), for the benefit of employees of the General
Partner, the Partnership, any Subsidiary or any Affiliate of any of them in
respect of services performed, directly or indirectly, for the benefit of the
Partnership or any Subsidiary.
6.5 Outside Activities.
(a) After the Closing Date, the General Partner shall limit its
activities to those required or authorized by this Agreement.
(b) Except as 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 LP Units or other Partnership
Securities and shall be entitled to exercise all rights of an Assignee or
Limited Partner, as applicable, relating to such LP Units or Partnership
Securities, as the case may be.
(c) Without limiting Sections 6.5(a) and 6.5(b), but
notwithstanding anything 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 any Subsidiary, and the Partnership and any Subsidiary may
borrow, funds needed or desired by the Partnership and any Subsidiary for such
periods of time as the General Partner may determine; provided, however, that
the General Partner or any of its Affiliates may not charge the Partnership or
any Subsidiary interest at a rate greater than the rate that would be charged
the Partnership or any Subsidiary, as the case may be (without reference to the
General Partner's financial abilities or guarantees) by unrelated lenders on
comparable loans. The Partnership or the Subsidiary, as the case may be, shall
reimburse the General Partner or any of its Affiliates, as the case may be, for
any costs (other than any additional interest costs) incurred by it in
connection with the borrowing of funds obtained by the General Partner or any of
its Affiliates and loaned to the Partnership or the Subsidiary.
(b) The Partnership may lend or contribute to any Subsidiary, and
any Subsidiary may borrow, funds on terms and conditions established in the sole
discretion of the
36
General Partner. The foregoing authority shall be exercised by the General
Partner in its sole discretion and shall not create any right or benefit in
favor of any Subsidiary or any other Person. The Partnership may not lend funds
to the General Partner or any of its Affiliates, otherwise than for short-term
funds management purposes.
(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).
(d) The Partnership may transfer assets to joint ventures, other
partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.
(e) Neither the 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 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 will have no obligation
to permit the Partnership or any Subsidiary 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 wish such use, nor shall there be any
obligation on the General Partner or its Affiliates to enter into such
contracts.
(g) Without limitation of Sections 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 under the caption
"Conflicts of Interest and Fiduciary Responsibility" 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, each Indemnitee shall be
indemnified and held harmless by the Partnership 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, a 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
37
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. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere, or its equivalent,
shall not create a presumption that the Indemnitee acted in a manner contrary to
that specified above. Any indemnification pursuant to this Section 6.7 shall be
made only out of the assets of the Partnership.
(b) To the fullest extent permitted by law, expenses (including,
without limitation, legal fees and expenses) incurred by an Indemnitee 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 Indemnitees' 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, and shall continue as to an
Indemnitee who has ceased to serve in such capacity and as to actions in any
other capacity.
(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
shall 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.
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(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.
(h) The provisions of this Section 6.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 6.7 or any
provision hereof shall in any manner terminate, reduce or impair the right of
any past, present or future Indemnitee to be indemnified by the Partnership, nor
the 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 damages to the
Partnership, the Limited Partners, the Assignees or any other Persons who have
acquired interests in the LP Units or other Partnership Securities, for losses
sustained or liabilities incurred as a result of any act or omission if such
Indemnitee acted in good faith.
(b) Subject to 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 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 Conflicts of Interest.
(a) Unless otherwise expressly provided in this Agreement or the
Operating Partnership Agreements whenever a potential conflict of interest
exists or arises between the General Partner or any of its Affiliates, on the
one hand, and the Partnership or any Subsidiary, 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 Operating Partnership
Agreements, of any agreement contemplated herein or therein, or of any duty
stated or implied by law or equity, if
39
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 in connection with 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 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 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 a General Partner or any of its Affiliates is permitted or
required to make a decision (i) in its "sole discretion" or "discretion," that
it deems "necessary or appropriate" or 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 or any Subsidiary, any Limited Partner or any Assignee, or (ii)
in "good faith" or under another express standard, the General Partner or such
Affiliate shall act under such express standard and shall not be subject to any
other or different standards imposed by this Agreement, the Operating
Partnership Agreements, 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. The General Partner shall have no duty,
express or implied, to sell or otherwise dispose of any asset of any Subsidiary
or of the Partnership, other than in the ordinary course of business. No
borrowing by the Partnership or any Subsidiary 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 enable
the General Partner to receive incentive distributions.
(c) Whenever a particular transaction, arrangement or resolution of
a conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transactions.
(d) The Limited Partners hereby authorize the General Partner, on
behalf of the Partnership as limited partner of the Operating Partnerships, to
approve of actions by the general partner of the Operating Partnerships similar
to those actions permitted to be taken by the General Partner pursuant to this
Section 6.9.
40
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 such General Partner reasonably believes to
be within such Person's professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance with such
opinion.
(c) The General 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 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 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 record title to the
Partnership impracticable) to be vested in the Partnership as soon as reasonably
practicable. 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 LP Units. The General Partner may cause the
Partnership to purchase or otherwise acquire LP Units or other Partnership
Securities. As long as LP Units are held by the Partnership or any Subsidiary,
such LP Units shall not be considered Outstanding for
41
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 LP Units or other Partnership Securities for its own
account, subject to the provisions of Articles 11 and 12.
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 Duke and its Affiliates.
(a) If (i) Duke or any of its Affiliates (including, for purposes
of this Section 6.14, Persons that are Affiliates at the date hereof
notwithstanding that they may later cease to be Affiliates) hold LP Units 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 Duke or such
Affiliates to dispose of the number of LP Units it desires to sell at the time
it desires to do so, then upon the request of Duke or any of its Affiliates, the
Partnership shall file with the Securities and Exchange Commission as promptly
as practicable 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 under the Securities Act
registering the offering and sale of the number of LP Units specified by Duke or
any of its Affiliates; provided, however, that if the General Partner or, if at
the time a request pursuant to this Section 6.14 is submitted to the
Partnership, Duke or its Affiliate 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, the filing of such registration statement of the effectiveness
thereof may be deferred for up to six months, but not thereafter. In connection
with any registration pursuant to the preceding sentence, 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 Duke or any of its Affiliates shall reasonably request;
42
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 Duke or such
Affiliates shall reasonably request, and do any and all other acts and things
that may reasonably be necessary or advisable to enable Duke or any of its
Affiliates to consummate a public sale of such LP Units in such states. Except
as set forth in subsection (c) below, all costs and expenses of any such
registration and offering shall be paid by Duke or any of its Affiliates,
without reimbursement 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 LP Units of
the Partnership for cash (other than an offering relating solely to an employee
benefit plan); the Partnership shall use its best efforts to include such number
or amount of LP Units held by Duke and any of its Affiliates in such
registration statement as Duke or any of such Affiliates shall request. If the
proposed offering pursuant to this Section 6.14(b) shall be an underwritten
offering, then, in the event that the managing underwriter of such offering
advises the General Partner and Duke or any of such Affiliates in writing that
in its opinion the inclusion of all or some of Duke's or any of its Affiliates'
LP Units 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 held by Duke or any of its Affiliates which, in the opinion of the
managing underwriter, will not so adversely and materially affect the offering.
In connection with any registration pursuant to this Section 6.14(b), Duke or
any of its Affiliates shall bear the expense of all underwriting discounts and
commissions attributable to the LP Units sold for its own account and shall
reimburse the Partnership for all incremental costs incurred by the Partnership
in connection with such registration resulting from the inclusion of LP Units
held by Duke or any of its Affiliates.
(c) If underwriters are engaged in connection with any registration
referred to in this Section 6.14, 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 hereof, the Partnership shall, to the fullest extent permitted by law,
indemnify and hold harmless Duke or such other holder, its officers, directors
and each Person who controls Duke 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 LP Units 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
43
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) hereof shall
continue to be applicable with respect to Duke and its Affiliates after any
affiliate of Duke ceases to be a general 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 Duke (or its Affiliates) to sell all of
the LP Units of the Partnership with respect to which it has 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) hereof shall
continue in effect thereafter.
ARTICLE 7 - RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
7.1 Limitation of Liability. The Limited Partners and the Assignees
shall have no liability under this Agreement except as expressly provided in
this Agreement or the Delaware Act.
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 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 a Subsidiary. 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
44
then only to the extent provided for in this Agreement. Except to the extent
provided by Article 5 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 Partners 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;
(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 interest of the Partnership or could damage
the Partnership or any Subsidiary or that the Partnership or a Subsidiary is
required by law or by agreements with third parties to keep confidential.
ARTICLE 8 - BOOKS, 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
45
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 LP 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 an LP 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, 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 ninety days
after the close of each calendar quarter except the last calendar quarter of
each year, the General Partner shall cause to be mailed to each Record Holder of
an LP 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 LP Units are listed for trading, or as
the General Partner determines to be necessary or appropriate.
ARTICLE 9 - TAX MATTERS
9.1 Preparation of Tax Returns. 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 all reasonable efforts to furnish,
within ninety 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
46
revocation is in the best interests 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 LP Units will be deemed to be the
lowest quoted trading price of the LP Units on any National Securities Exchange
on which such LP 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.
9.4 Organizational Expenses. The Partnership shall elect to deduct
expenses, if any, incurred by it in organizing the Partnership ratably over a
sixty-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 its
Subsidiaries 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 pursuant to
Section 5.3 in the amount of such withholding from such Partner.
9.6 Entity-Level Taxation. If legislation is enacted that causes the
Partnership to become treated as an association taxable as a corporation for
federal income tax purposes or otherwise subjects the Partnership to
entity-level taxation for federal income tax purposes, the Minimum Quarterly
Distribution, First Target Distribution or Second Target Distribution, as the
case may be, shall be equal to the product obtained by multiplying (a) the
amount thereof by (b) l minus the sum of (x) the highest marginal federal
corporate (or other entity, as applicable) income tax rate for the Partnership
Year in which such quarter occurs (expressed as a percentage) plus (y) any
increase that results from such legislation in the effective overall state and
local income tax rate (expressed as a percentage) applicable to the Partnership
for the calendar year next preceding the calendar year in which such quarter
occurs (after taking into account the benefit of any deduction allowable for
federal income tax purposes with respect to the payment of state and local
income taxes). Such effective overall state and local income tax rate shall be
determined for the calendar year next preceding the first calendar year during
which the Partnership is taxable for federal income tax purposes as a
corporation or otherwise taxed as
47
an entity by determining such rate as if the Partnership had been subject to
such state and local taxes during such preceding calendar year.
9.7 Entity-Level Arrearage 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 constitute a
distribution out of Available Cash to such Partner or Assignee pursuant to
Section 5.3 (except as otherwise provided in Section 5.6(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 LP 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 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 Assignees 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 association taxable as a corporation, such requirement for an
Opinion of Counsel shall be deemed automatically waived.
ARTICLE 10 - LP UNIT CERTIFICATES
10.1 LP Unit Certificates. Upon the Partnership's issuance of LP Units
to any Person, the Partnership shall issue one or more LP Unit Certificates in
the name of such Person evidencing the number of such LP Units being so issued.
LP Unit Certificates shall be executed on behalf of the Partnership by the
General Partner. No LP Unit Certificate shall be valid for any purpose until it
has been countersigned by the Transfer Agent.
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 "LP 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
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the registration and the transfer of such LP Units. The Transfer Agent is hereby
appointed registrar and transfer agent for the purpose of registering and
transferring of LP Units as herein provided. The Partnership shall not recognize
transfers of LP Unit Certificates representing LP Units unless same are effected
in the manner described in this Section 10.2. Upon surrender for registration of
transfer of any LP Units evidenced by an LP Unit 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 LP Unit Certificates evidencing
the same aggregate number of LP Units as was evidenced by the LP Unit
Certificate so surrendered.
(b) Except as otherwise provided in Section 11.5, the Partnership
shall not recognize any transfer of LP Units until the LP Unit Certificates
evidencing such LP Units are surrendered for registration of transfer and such
LP Unit 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 LP Unit 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 LP Unit Certificates.
(a) If any mutilated LP Unit 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 countersign and deliver in
exchange therefor, a new LP Unit Certificate evidencing the same number of LP
Units as the LP Unit 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 LP
Unit Certificate in place of any LP Unit Certificate previously issued if the
Record Holder of the LP Unit Certificate:
(i) makes proof by affidavit, in form and substance
satisfactory to the General Partner, that a previously issued LP Unit
Certificate has been lost, destroyed or stolen;
(ii) requests the issuance of a new LP Unit Certificate before
the Partnership has noticed that the LP Unit 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 such 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 LP Unit Certificate; and
(iv) satisfies any other reasonable requirements imposed by
the General Partner.
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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 an LP
Unit Certificate, and a transfer of the LP Units represented by the LP Unit
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 LP Unit Certificate.
(c) As a condition to the issuance of any LP Unit 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 LP Units and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such LP 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 and LP 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 LP Units, as between the Partnership on the one hand and such other
Persons on 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 11 - TRANSFER OF INTERESTS
11.1 Transfer.
(a) The term "transfer," when used in this Article 11 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 an LP Unit assigns
such LP 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 11. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article 11 shall be null and void.
11.2 Transfer of General Partner's Partnership Interest.
(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 66 2/3% of the Outstanding LP Units approve of such
transfer and of the admission of such
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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 (iii) 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 any limited partner of any of the Operating Partnerships or cause
the Partnership or any of the Operating Partnerships to be taxable as a
corporation or otherwise taxed as an entity for federal income tax purposes.
(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 to an
Affiliate or (ii) the transfer by the General Partner of all its Partnership
Interest upon its merger, consolidation or other combination into any other
Person or the transfer by it of all or substantially all of its assets to
another Person 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 Partnership Interest so transferred are assumed by the transferee and the
transferee agrees to be bound by the provisions of this Agreement; provided,
that in either such case, that such transferee furnishes to the Partnership an
Opinion of Counsel that such merger, consolidation, combination, transfer or
assumption will not result in a loss of limited liability of any Limited Partner
or of any limited partner of the any of the Operating Partnerships or cause the
Partnership or any of the Operating Partnerships to be taxable as a corporation
or otherwise taxed as an entity for federal income tax purposes. 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 LP Units.
(a) LP Units may be transferred only in the manner described in
Section 10.2. The transfer of any LP 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 12, the Record Holder of an LP Unit shall be an Assignee in respect of
such LP 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 LP 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, (iv)
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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 11, no transfer of any LP 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) result in the
taxation of the Partnership 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.
(a) If the Partnership or a Subsidiary 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 a Subsidiary has an interest based on the
nationality, citizenship or other status of a Limited Partner or Assignee, the
General Partner may request any Limited Partner or Assignee to furnish to the
General Partner, within thirty days after receipt of such request, 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
thirty-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 LP 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 LP Units.
(b) (b) The General Partner shall, in exercising voting rights in
respect of LP 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 LP
Units other than those of Non-citizen Assignees are cast, either foil 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).
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(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
LP Units of such Non-citizen Assignee not redeemed pursuant to Section 11.6, and
upon his 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 LP
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 thirty-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 LP 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:
(i) The General Partner shall, not later than the thirtieth
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 LP Units, the date fixed for redemption, the
place of payment, that payment of the redemption price will be made upon
surrender of the LP Unit Certificate evidencing the Redeemable LP Units and that
on and after 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 LP Units will accrue or be made.
(ii) The aggregate redemption price for Redeemable LP 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 LP Units of the class to be
so redeemed multiplied by the number of LP Units of each such class included
among the Redeemable LP 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 LP Unit
Certificate evidencing the Redeemable LP 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 LP Units shall no
longer constitute issued and Outstanding LP Units.
53
(b) The provisions of this Section 11.6 shall also be applicable to
LP 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 LP 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 LP 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 a Subsidiary has 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 Citizenship
Certification or transferred its Partnership Interest or LP 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 as provided in Section 11.7(a). If such redemption includes a
redemption of the Departing 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
LP Units then Outstanding, in each such case multiplied by the number of LP
Units of such class into which the Departing 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 interest,
commencing one year after the redemption date.
ARTICLE 12 - ADMISSION OF PARTNERS
12.1 Admission of Substituted Limited Partners. By transfer of an LP
Unit in accordance with Article 11, 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 an LP Unit 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 LP Unit 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 LP Units. Each transferee of an LP Unit
(including, without limitation, any nominee holder or an agent acquiring such LP
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 LP 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
54
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 LP 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 LP Units on any matter, vote such LP Units at the written discretion of the
Assignee who is the Record Holder of such LP Units. If no such written direction
is received, such LP Units will not be voted. An Assignee shall have no other
rights of a Limited Partner.
12.2 Admission of Successor General Partner. A successor General
Partner approved pursuant to Section 13.1 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 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 the terms of Section 11.2 have been complied with. 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
required to effect the admission.
12.3 Admission of Additional Limited Partners.
(a) A person (other than 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 and (ii) such other documents or instruments as may be required in
the discretion of the General Partner to effect such Person's admission as an
Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section 12.3,
no Person shall be admitted as an Additional Limited Partner without the consent
of the General Partner, which consent may be given or withheld in the General
Partner's 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.
12.4 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.
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ARTICLE 13 - WITHDRAWAL OR REMOVAL OF PARTNERS
13.1 Withdrawal of the General Partner.
(a) The General Partner shall be deemed to have withdrawn from the
Partnership upon the occurrence of any one of the following events (each such
event herein referred to as an "Event of Withdrawal");
(i) the General Partner voluntarily withdraws from the
Partnership by giving written notice to the other Partners;
(ii) the General Partner transfers all of its rights as
General Partner pursuant to Section 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 ninety 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 thirty 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, 2000 the General Partner voluntarily withdraws by giving at
least ninety 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 66 2/3% of the Outstanding LP Units
(including for this purpose LP Units held by the General Partner and its
Affiliates); (ii) at any time after December 31, 1999, the General Partner
voluntarily withdraws by giving at least ninety days' advance
56
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)(i) 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 ninety 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 that time
such notice is given more than 50% of the Outstanding LP Units that are held by
Persons other than by the General Partner and its Affiliates are owned
beneficially or of record or controlled at any time by one Person or its
Affiliates. If the General Partner gives a notice of withdrawal pursuant to
Section 13.1(a)(i) or if the General Partner is removed pursuant to Section
13.2, holders of at least a majority of the Outstanding LP Units (excluding for
purposes of such determination LP 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 an Opinion of Counsel that
such withdrawal (following the selection of the successor General Partner) would
not result in the loss of the limited liability of any Limited Partner or of the
limited partner of any of the Operating Partnerships or cause the Partnership or
any of the Operating Partnerships to be taxable as a corporation or otherwise
taxed as an entity for federal income tax purposes, the Partnership shall be
dissolved in accordance with Section 14.1. If a successor General Partner is
elected and the Opinion of Counsel is rendered as provided in the immediately
preceding sentence, such successor shall be admitted (subject to Section 12.2)
immediately prior to the effective time of the withdrawal or removal of the
Departing Partner and shall continue the business of the Partnership without
dissolution.
13.2 Removal of the General Partner. The General Partner may be removed
if such removal is approved by at least 66 2/3% of the Outstanding LP Units held
by Persons other than the General Partner and its Affiliates. Any such action by
the Limited Partners for removal of the General Partner must also provide for
the election and succession of a new General Partner. Such removal shall be
effective immediately following the admission of the successor General Partner
pursuant to Article 12. The right of the Limited Partners to remove the General
Partner shall not exist or be exercised unless the Partnership has received an
Opinion of Counsel that the removal of the General Partner and the selection of
a successor General Partner will not result in the loss of limited liability of
any Limited Partner or of the limited partner of any of the Operating
Partnerships or the taxation of the Partnership or any of the Operating
Partnerships as a corporation or otherwise taxed as an entity for federal income
tax purposes.
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 is removed by the Limited Partners under circumstances where
Causes exists or if the General Partner withdraws under circumstances where such
57
withdrawal violates this Agreement or the Operating Partnership Agreements, its
successor shall have the option described in the immediately preceding sentence,
and the Departing Partner shall not have such option. In either event, 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 any
Subsidiary. 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 the general partner of the
Partnership herein (the "Departing Interest") shall be determined by agreement
between the Departing Partner its successor or, failing agreement within thirty
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 forty-five days after the effective date or 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 Departing Interest. In making its determination, such
independent investment banking firm or other independent expert shall consider
the then current trading price of LP Units on any National Securities Exchange
on which LP 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 Interest is not acquired in the manner
set forth in Section 13.3(a) the Departing Partner and its Affiliate shall
become a Limited Partner and their Departing Interest 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). 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.
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.
(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 4.3(d)(i), shall be equal to that
percentage of the Capital Accounts of all Partners that is equal to its
Percentage Interest as the General Partner. 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
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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 1.999999%, and that of the Unitholders
shall be 98.000001%.
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 LP Units becomes a Record Holder, such
transferring Limited Partner shall cease to be a Limited Partner with respect to
the LP Units so transferred.
ARTICLE 14 - 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 provided in Section 1.5;
(b) an Event of Withdrawal of the General Partner as provided in
Section 13.1(a), unless a successor is named as provided in Section 13.1(b) and
the continuation of the business of the Partnership is approved by at least
66 2/3% of the Outstanding LP Units (and all Limited Partners hereby expressly
consent that such approval may be effected upon written consent of at least
66 2/3% of the Outstanding LP Units);
(c) an election to dissolve the Partnership by the General Partner
that is approved by at least 66 2/3% of the Outstanding LP Units (and all
Limited Partners hereby expressly consent that such approval may be effected
upon written consent of at least 66 2/3% of the Outstanding LP 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 and its Subsidiaries, taken as a whole.
14.2 Liquidation. Upon dissolution of the Partnership, 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 66 2/3% of the
Outstanding LP 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
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least 66 2/3% of the Outstanding LP Units. The Liquidator shall agree not to
resign at any time without fifteen 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 66 2/3% of the Outstanding LP 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 thirty days thereafter be
approved by at least 66 2/3% of the Outstanding LP Units. The right to approve a
successor or substitute Liquidator in the manner provided herein shall be deemed
to refer also to any such successor or substitute Liquidator approved in the
manner herein provided. Except as expressly provided in this Article 14, 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) 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;
(b) 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(c).
14.3 Distributions in Kind. 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) and/or distribute to the Partners, in lieu of cash, as
tenants in common and 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.
14.4 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
60
Delaware shall be canceled and such other actions as may be necessary to
terminate the Partnership shall be taken.
14.5 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.
14.6 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.
14.7 No Capital Account Restoration. No Partner shall have any
obligation to restore any negative balance in its Capital Account upon
liquidation of the Partnership.
14.8 Waiver of Partition. Each Partner hereby waives any right to
partition of the Partnership property.
ARTICLE 15 - AMENDMENT OF PARTNERSHIP AGREEMENT;
MEETINGS; RECORD DATE
15.1 Amendment 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 the
qualification of the Partnership as a limited partnership or a partnership in
which the limited partners have limited liability under the laws of any state or
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 Partners in any material respect,
(ii) that is necessary or appropriate to satisfy any requirements, conditions or
guidelines contained in any opinion, directive, order, ruling or regulation of
any federal or state agency or judicial authority or contained in any federal or
state 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
61
of the LP Units (including, without limitation, the division of Outstanding LP
Units into different classes to facilitate uniformity of tax consequences within
such classes (of LP Units) or comply with any rule, regulation, guideline or
requirement of any National Securities Exchange on which any LP 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 Advisors 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 4.1, 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 LP
Units pursuant to Section 4.1;
(g) any amendment expressly permitted in this Agreement to be made
by the General Partner acting alone;
(h) an amendment effected, necessitated or contemplated by a Merger
Agreement approved in accordance with Section 16.3; or
(i) any other amendments 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 requisite percentage of Outstanding LP Units or call a
meeting of the 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 2/3% of the Outstanding LP Units unless a greater or different
percentage is required under this Agreement; provided that if the effect of any
amendment shall be to affect materially and adversely any holders of LP Units of
a particular class in relation to any other class of LP Units, the affirmative
vote of the holders of at least a majority in interest of the Outstanding LP
Units of the class so affected shall be required to adopt such amendment. The
General Partner shall notify all Record Holders upon final adoption of any
proposed amendment.
15.3 Amendment Requirements.
(a) Notwithstanding the provisions of Sections 15.1 and 15.2, no
provision of this Agreement that establishes a percentage of Outstanding LP
Units 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
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consent or the affirmative vote of Unitholders whose aggregate percentage of
Outstanding LP Units constitute not less than the voting requirement sought to
be reduced.
(b) (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 or, without its consent, which may be given or withheld in its sole
discretion, of the General Partner, (ii) modify the compensation payable to the
General Partner or any of its Affiliates by the Partnership or any Subsidiary,
(iii) change Section 14.1(a) or (c), (iv) restrict in any way any action by or
rights of the General Partner as set forth in this Agreement, (v) change the
term of the Partnership or, except as set forth in Section 14.1(c), give any
Person the right to dissolve the Partnership or (vi) modify the last sentence of
Section 1.2.
(c) Except as otherwise provided, the General Partner may amend the
Partnership Agreement without the approval of Unitholders, except that any
amendment that would have a material adverse effect on the holders of any class
of Outstanding LP Units must be approved by the holders of not less than 66 2/3%
of the Outstanding LP Units of such class.
(d) Notwithstanding any other provision of this Agreement, except
for amendments pursuant to Section 6.3 or 15.1, no amendments shall become
effective without the approval of the Record Holders of 95% of the LP Units
unless the Partnership obtains an Opinion of Counsel to the effect that (a) such
amendment will not cause the Partnership or any of the Operating Partnerships 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 liability of any
Limited Partner or any limited partner of any of the Operating Partnerships
under applicable law.
(e) This Section 15.3 shall only be amended with the approval of
not less than 95% of the Outstanding LP Units.
15.4 Meetings. All acts of Limited Partners to be taken hereunder shall
be taken in the manner provided in this Article 15. Meetings of the Limited
Partners may be called by the General Partner or by Limited Partners owning 20%
or more of the Outstanding LP Units of the class for which a meeting is
proposed. Limited Partners shall call a meeting by delivering to the General
Partner one or more requests in writing stating that the signing Limited
Partners wish to call a meeting and indicating the general or specific purposes
for which the meeting is to be called. Within sixty 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 sixty 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.
63
15.5 Notice of a Meeting. Notice of a meeting called pursuant to
Section 15.4 shall be given to the Record Holders in writing by mail or other
means of written communication in accordance with Section 17.1. 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 ten nor more than sixty 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 any LP 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
forty-five days. At the adjourned meeting, the Partnership may transact any
business which might have been transacted at the original meeting. If the
adjournment is for more than forty-five 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 15.
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 66 2/3% of the Outstanding LP 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 LP Units, in which case the quorum shall be a
majority. 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 LP Units that in the aggregate represent at least
66 2/3% of the Outstanding LP 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
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Outstanding LP 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 LP Units
specified in this Agreement. In the absence of a quorum, any meeting of Limited
Partners may be adjourned from time to time by the affirmative vote of a
majority of the Outstanding LP 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
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 owning
not less than the minimum percentage of the Outstanding LP 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
twenty days, specified by the General Partner. If a ballot returned to the
Partnership does not vote all of the LP Units held by the Limited Partner, the
Partnership shall be deemed to have failed to receive a ballot for the LP 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 ninety 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 under applicable tax laws and regulations
65
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 LP 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 LP 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 Outstanding LP Units shall be deemed to be references to the votes or acts
of the Record Holders of such Outstanding LP Units.
(b) With respect to LP 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 LP Units
are registered, such broker, dealer or other agent shall, in exercising the
voting rights in respect of such LP Units on any matter, and unless the
arrangement between such Persons provides otherwise, vote such LP Units in favor
of, and at the direction of, the Person who is the beneficial owner, and the
Partnership shall be entitled to assume it is so acting without further inquiry.
The provisions of this Section 15.12(b) (as well as all other provisions of this
Agreement) are subject to the provisions of Section 10.4.
ARTICLE 16 - 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, limited liability companies 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 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 name and jurisdiction 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
66
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;
(e) A statement of any 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) 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) Any amendment to this Agreement or the adoption, if any, of a
new
limited partnership agreement for any limited partnership that is the
Surviving Business Entity, as permitted by Section 211(g) of the Delaware Act.
(h) 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 Partners 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 whether at a meeting or by written consent, in either
case in accordance with the requirements of Article 15. 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 66 2/3% of the
Outstanding LP Units, unless the Merger Agreement contains any provision 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 LP Units of the Limited Partners or of any class of Limited
Partners, in which case such greater percentage vote or consent 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
67
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 any of those business entities and all
other things and causes of action belonging to each of those business entities
shall be vested in the Surviving Business Entity and after the merger or
consolidation shall be the property of the Surviving Business Entity to the
extent they were of each constituent business entity;
(ii) the title to any real property vested by deed or
otherwise in any of those constituent business entities shall not revert and
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
shall not be deemed to result in a transfer or assignment of assets or
liabilities from one entity to another having occurred.
ARTICLE 17 - RIGHT TO ACQUIRE LP UNITS
17.1 Right to Acquire LP Units.
(a) Notwithstanding any provision of this Agreement, if at any time
less than 15% of the total LP Units 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 LP Units 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 LP Unit purchased during the ninety-day period
preceding the date that the notice described in Section 17.1(c) is mailed and
(b) the Current Market Price (as defined below) as of the date the General
Partner (or any of its assignees) mails the notice described in Section 17.1(b)
of its election to purchase such LP Units.
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As used in this Agreement, (i) "Current Market Price" of an LP Unit listed or
admitted to trading on any National Securities Exchange means the average of the
daily Closing Prices (as hereinafter defined) per LP Unit of such class for the
twenty consecutive Trading Days (as hereinafter defined) 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 LP 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 LP Units of such class are listed or
admitted to trading or, if the LP 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 National Association of
Securities Dealers, Inc. Automated Quotation System or such other system then in
use, or if on any such day the LP Units of a class are not quoted by any such
organization, the average of the closing bid and asked priced on such day as
furnished by a professional market maker making a market in the LP 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 LP Units of such class, the
fair value of such LP 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 LP
Units of any class are listed or admitted to trading is open for the transaction
of business or, if LP 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. Notwithstanding anything herein to the contrary,
the Current Market Price of each Class B Unit shall be deemed to be the same as
the Current Market Price of one Unit.
(b) If the General Partner, any Affiliate of the General Partner or
the Partnership elects to exercise the right to purchase LP Units granted
pursuant to Section 17.1(a), 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 LP Units (as of a Record Date
selected by the General Partner) at least ten, but not more than sixty 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 17.1(a) at which LP Units will be purchased and state
that the General Partner, its Affiliate or the Partnership, as the case may be,
elects to purchase such LP Units, upon surrender of LP Unit Certificates
representing such LP Units 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 the LP Units are listed or admitted to
trading. Any such Notice of Election to Purchase mailed to a Record Holder of LP
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
69
of all of the LP Units to be purchased in accordance with this Section 17.1. If
the Notice of Election to Purchase shall have been duly given as aforesaid at
least ten 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 LP Units subject to purchase as provided herein, then
from and after the Purchase Date, notwithstanding that any LP Unit Certificate
shall not have been surrendered for purchase, all rights of the holders of such
LP Units (including, without limitation, any rights pursuant to Articles 4, 5
and 14) shall thereupon cease, except the right to receive the purchase price
(determined in accordance with Section 17.1(a)) for the LP Units therefor,
without interest, upon surrender to the Transfer Agent of the LP Unit
Certificates representing such LP Units, and such LP 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 LP Units from and after the Purchase Date and shall have all rights
as the owner of such LP Units (including, without limitations, all rights as
owner pursuant to Articles 4, 5 and 14).
(c) At any time from and after the Purchase Date, a holder of an
Outstanding LP Unit subject to purchase as provided in this Section 17.1 may
surrender his LP Unit Certificate, as the case may be, evidencing such LP Unit
to the Transfer Agent in exchange for payment of the amount described in Section
17.1(a), therefor without interest thereon.
ARTICLE 18 - 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 LP 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 making 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 making of such notice, payment or
report. If any notice, payment or report addressed to a Record Holder at the
address of such Record Holder appearing on the books and records of the Transfer
Agent or the Partnership is returned by the United States Post Office marked to
indicate that the United States Postal Service is unable to deliver it, such
notice, payment or report and any subsequent notices, payments and reports shall
be deemed to have been duly given or made without further mailing (until such
time as such Record Holder or another Person notifies the Transfer Agent or the
Partnership of a change in his address) if they are available for the Partner or
Assignee at the principal office of the Partnership for a period of one year
from the date of the giving or making of such notice, payment or report to the
other Partners and Assignees. Any notice to the Partnership shall be deemed
given if received by the General Partner at the principal office of the
70
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 including 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 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
Person acquiring an LP 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.
71
18.12 Amendments to Reflect the Contribution Agreement. In addition to
the amendments to this Agreement contained in the Contribution Agreement and
notwithstanding any other provision of this Agreement to the contrary, this
Agreement shall be deemed to be further amended and modified to the extent
necessary, but only to the extent necessary, to carry out the purposes and
intent of the Contribution Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior V.P., C.F.O. and Treasurer
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: Texas Eastern Products Pipeline
Company, LLC, General Partner, as
attorney-in-fact for all Limited
Partners pursuant to the Powers of
Attorney granted pursuant to Section
1.4.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior V.P., C.F.O. and Treasurer
73
EXHIBIT A
No transfer of the LP Units evidenced hereby will be registered on the
books of TEPPCO Partners, L.P. (the "Partnership"), unless the LP Unit
Certificates evidencing the LP Units to be transferred are surrendered for
registration of transfer and an Application for Transfer of LP Units 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 LP 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 LP Units.
APPLICATION FOR TRANSFER OF LP UNITS
The undersigned ("Assignee") hereby applies for transfer to the name of
the Assignee of the LP Units evidenced hereby.
The Assignee (a) requests admission as a Substituted Limited Partner
and agrees to comply with and be bound by, and hereby executes, the Agreement of
Limited Partnership of TEPPCO Partners, L.P. (the "Partnership"), as amended or
restated to the date hereof (the "Partnership Agreement"), (b) represents and
warrants that the Assignee 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 the liquidator if one is appointed his attorney
to execute, swear to, acknowledge and file any document, including, without
limitation, the Partnership Agreement, any amendment to the Partnership
Agreement and the Certificate of Limited Partnership of the Partnership,
necessary or appropriate for the Assignee'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 and (e) makes the consents
and waivers and gives the approvals contained in the Partnership Agreement.
Capitalized terms not defined herein have the meanings assigned to such terms in
the Partnership Agreement.
Date:
--------------------------------------- ----------------------------
Signature of Assignee
--------------------------------------------- ----------------------------
Social Security or other Name and Address of Assignee
identifying number of
Assignee
---------------------------------------------
Purchase Price
(including commissions, if any)
A-1
TYPE OF ENTITY (CHECK ONE):
--------------- Individual -------------- Partnership -------------- Corporation
------------------- Trust ----------------- Other (specify): -------------------
Note: If the Assignee is a broker, dealer, bank, trust company,
clearing corporation, other nominee holder or an agent of any of the foregoing,
and is holding 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 Assignee 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 Assignee will hold the LP Units
shall be made to the best of the Assignee's knowledge.
A-2